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Investor ‘flipping’ – the idea of buyers buying rundown properties, giving them a lick of paint, and selling for overs – has all but been killed off by the multitude of real estate data sites, say brokers.
Easy access to sites such as RP Data means buyers can see what the investor recently paid for a property and the renovations that were undertaken meaning they’re unlikely to pay ‘top dollar’ for nominal work.
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Mortgage Solutions director, Colin Lamb, agrees some investors are still “out to make a fast buck” through ‘flipping’, but they’ve become the minority.
“They [flippers] would buy a $400,000 property, do a quick reno, put some lipstick on it and try and make a fast $50,000,” Mr Lamb said in an investor report that appears in December's issue of The Adviser.
“That’s not happening as much now, buyers are shrewder; they can see what the investor bought the property for a few months ago from data sites like RP Data and so there’s a lot less of that stuff going on now.”
Mr Lamb agreed that with less ‘flippers’ and more long-term clients his exposure to things like clawback has been markedly reduced.
“It’s actually not a market I target and obviously with clawbacks etc. there’s no real advantage in dealing with that sort of client,” Mr Lamb said of short-term investors.
Ed Nixon from Canberra’s Trilogy Finance agrees ‘flippers’ aren’t customers he’s overly keen on dealing with either.
“Sure, some investors are looking to make a fast dollar but we’re not really interested in working with them. We want strong, long-term clients who will be on the books for a long time; any business model wants clients for a long period of time,” he said, adding that the average loan life of a Trilogy customer was now nine years.
RP Data’s senior research analyst also agrees that ‘flipping's’ time has come. “Housing has always been a long-term asset class,” he says.
However, Mr Kusher is concerned that some investors have recently bought into a hot market in the hope of selling quickly for a tidy profit.
“Are these [current] investors in there for the short or the long term? If it’s just for the short term, then yes, you could very well see a huge amount of investor stock coming onto the market as the market’s slowing,” Mr Kusher warned.
Related: Who's getting property advice right?]
