Flipping a property – Week 2 – Nhan Nguyen

29 Aug Flipping a property – Week 2 – Nhan Nguyen

 
This is week 2 of the 30 day flipping exercise with Nhan Nguyen.
He is attempting to buy and sell a property in 30 days and make a big profit along the way. We will continue to follow his journey to see what we can learn. He gets some good news today.
 

Transcript:

Kevin:  You might recall last week, I was talking to Nhan Nguyen from Advanced Property Strategies about his flipping exercise, where he secured last week a property that he intends to onsell within a 30-day period. He joins us again.
Good morning, Nhan.
Nhan:  Good day, Kevin. How are you going?
Kevin:  Tell me what’s happened since last weekend. You secured the property. I understood it was under contract, and you’ve said to me – if I remember correctly – that you’re planning not to do much work to it. Where are you at with that?
Nhan:  We put the property on the market I think about three or four days after signing the contract. It had a little bit of response, but what happened is we have a buyer who’s missed out on a house in the street, and I thought the other house had sold for $418,000. We purchased ours for $320,000 and he’s coming in with an offer. I think in this last 24 hours, we’ve recently just signed a contract at $410,000 with him. Very keen on the property, because he’s missed out on the other property.
He then proceeded to tell me that the other property on the street, which is lower, he’d missed out and his offer was 440. So I’m thinking maybe I’ve sold the property too cheap, but we’d been out there doing a bit of marketing, and when you’re in the right place at the right time, it’s pretty uncanny. We’d just put it out there, put offers over $399,000 on the Internet to see what happens, and it looks like we have someone who’s really keen and can go on from there.
Kevin:  I understand the process, but let’s talk it through, because a lot of people are probably scratching their head and saying “Hang on a minute. You haven’t even settled on this property yet. How can you onsell it?” Take me through that process. What are the legalities there?
Nhan:  Really, once you’ve signed a contract, my understanding is that you have the right to do whatever you want with it. Obviously, I can’t move in without their permission, I can’t take position, but I can market it for rent and market it for sale. The only challenge is I can’t do the transaction from a transfer point of view until I have title.
I could do what’s called a transfer by direction, which is a simultaneous settlement on the same day, however I don’t have the authority to do that. We’d have to settle first, and then 24 or 48 hours, later do another settlement on selling the property.
Kevin:  You could do what’s called a simultaneous and contemporaneous settlement, which is where you settle, then you settle the purchase the property, and then you settle to sell the property again in the same transaction. Is that what you’re planning to do?
Nhan:  At this stage, it hasn’t worked out that way. I think the dates between the first contract and the second contract have been 13 days or so, so with the new buyer, he has 30 days to settle, so it’s going to be a bit of a lag of possibly up to two weeks between my settlement and his settlement.
Kevin:  So you’ll have to fund the purchase and carry it for 13 days, but you’ve a profit in there of some $50,000 I think was the original projection. Is that right?
Nhan:  Yes, that’s right. A purchase price of $320,000, on-purchase price of $410,000, so we’re looking at a gross profit of $90,000 after stamp duty and legals. Yes, we’re talking about somewhere between $70,000 and $75,000. It hasn’t been quite the 30-day challenge I’d planned, but once we settle and we settle again, it’s going to be 13, 14, maybe 15 days from settlement to settlement and I’m really happy with that, assuming it goes through.
Look, even if it doesn’t go through, at the moment, I’m working on a backup contract with someone else to sign a contract on it at a higher price, so basically, I’m leaving nothing to chance.
Kevin:  This is a great response. Is it because you purchased well or purchased in an area that’s in high demand?
Nhan:  I personally believe that I’m an area expert in this area. I have two other projects – one is finished and the other one is being finished – and I know that the property was worth at least $390,000 – so $390,000 to $410,000 – like I mentioned on our last interview. Median price is $384,000, so I just knew that the property is under market value. It has four bedrooms, tile roof, and 700-odd square meters.
With that 700-odd square meters zoned low-to-medium residential, there is a huge demand, especially at this price point. If you go into Sydney or Melbourne, anything like this within 15 kilometers, you’re talking at least $700,000, $800,000, $1 million even. There’s a lot of interest in this particular property, and we love it.
Kevin:  You purchased this property on the south side of Brisbane. You are based in Brisbane. Would you do this in other parts of Australia if you were not living there?
Nhan:  Mate, I’d do it wherever I could. I think it’s having a marketing strategy and finding properties off-market. Oftentimes, people go to RealEstate.com.au to find deals, and by the time it’s hit the Net, I believe it’s too late.
RealEstate.com.au is a really good tool for selling property, to get top dollar and get it out there because everybody is on the Net, but to get properties under market value or dealing with property owners direct, I think you do need to either door knock, send out letters, [5:06 inaudible], and deal directly with owners. That’s how real estate agents get leads.
Kevin:  Yes. And what you’ve explained to us last week in the show, too, is how you actually secured that is that you have a marketing person who’s doing exactly that.
Nhan, we’re going to continue to follow this through. I want to follow it all the way through to the final settlement, if we may, to see what – if any – problems do emerge that we can learn from. Thanks for your time.
It’s an interesting journey that Nhan Nguyen is taking us on as he’s looking at flipping or turning over a property within 30 days. It’s probably going to be a little bit longer than that, but it will be successful by the looks of it. Nhan, of course, from Advanced Property Strategies.
Thanks for your time, mate.
Nhan:  Thanks, Kevin. Thanks for having me.