I always openly talk about the three ways to make money from property investment. I did this with good reason even though I knew of a fourth and potentially very lucrative way to make money out of property.
The reason for the secrecy of the fourth way is that its a very easy strategy for unscrupulous companies to sell to uneducated and ill-experienced property investors; to add to this it's an extremely dangerous strategy in the wrong market.
The 4th Way to make money in Property WAS Flipping
I was prompted by a conversation with an investor who was about to buy a unit through a competitor on the basis of them selling before completion or Flipping. I stopped them mid sentence!
That's right, 2013 through to early 2016 was the right market for this but since 2016 Flipping has become a lot harder and I would suggest impossible. Why?
Plain and simple, it's one of the reasons as a company we have steered clear of this strategy.
Flipping is an investment strategy whereby you actually make money from a property you will actually never own. You buy it low and find someone to buy it higher. This is achieved through either great negotiation skills or through waiting long enough for the market to grow the value of the property.
Now before you run off and think that flipping is the new fad, that you'll make quick and easy money. You won't. Not by any stretch of the imagination.
I am extremely cautious as the strategy is easily sold as easy riches by unscrupulous salespeople. You need to made aware of the risks associated with property flipping.
As a rule I always say that you must have the money to complete on every property you buy otherwise don't do it. It's just far too great a risk.
So great, now that we have that out of the way let me also put a limiter of the strategy. Flipping at this stage of the market is (Nov 2017) is unlikely unless you are doing long-term off-plan in a super duper hotspot, the problem in these are few and far between and there are so many risks.
I have to agree flipping in the right market is a great investment strategy but remember that if you flip it you won't own the property and this goes against our portfolio building strategies.
Live with passion,
Brett Alegre-Wood
PS. The three other ways are having your property cash flow positive, selling and remortgaging your property.
