NSW’s Labor government utilised the budget to announce several long-term reforms aimed at beginning the lengthy task of confronting the housing crisis. At the heart of the budget’s commitments to the state’s housing sector is a $2.2 billion investment towards more housing, critical infrastructure and better planning for housing.
The Minns government’s housing and infrastructure plan includes:
- $1.5 billion to build infrastructure such as roads, parks, hospitals, and schools to support the construction of new homes across Sydney, the Lower Hunter, Central Coast, and the Illawarra through the Housing and Productivity Contribution.
- $400 million reserved in Restart NSW for the new Housing Infrastructure Fund, to deliver infrastructure that will increase housing supply across the state.
- $300 million for Landcom to accelerate the construction of thousands of new homes, with 30 per cent dedicated to affordable housing.
The government believes these reforms “provide the backbone infrastructure so that more homes can be delivered”, Premier Chris Minns stated.
“It is critical that new communities where housing growth is occurring have access to high-quality infrastructure and open space,” he said.
The 30 per cent of new housing allocated for affordable housing will target infill sites and government land for their development.
Outlined in the budget was the establishment of Homes NSW, an organisation tasked with delivering better outcomes for public and social housing tenants, delivering more affordable and social housing, and reducing the number of people experiencing homelessness within the state.
The government’s $224 million Essential Housing Package, aimed at addressing supply and providing crucial support to the state’s most vulnerable residents, includes:
- $70 million in debt financing to accelerate the delivery of social, affordable, and private homes, primarily in regional Australia.
- $35.3 million to continue providing housing services to Aboriginal and Torres Strait Islander families.
- $35 million to support critical maintenance for social housing.
- $20 million reserved in Restart NSW for dedicated mental health housing.
- $15 million to establish an NSW Housing Fund for urgent priority housing and homelessness measures to confront the existing crisis.
- $11.3 million to extend the Together Home program.
- $11 million in urgent funding to Temporary Accommodation in 2023–24 to support rising homelessness.
- $10.5 million in funding to the Community Housing Leasing Program.
- $10 million Modular Housing Trial to deliver faster quality social housing.
- $5.9 million towards specialist homelessness services to address the increasing demand for 2023–24.
In addition to this, the government will invest $60 million to support new build-to-rent trials in the South Coast and Northern Rivers.
Premier Minns also revealed the budget includes measures aimed at increasing the number of homes built in the state by quickening the planning system, including:
- $24 million to establish a NSW Building Commission to support high-quality housing and protect home buyers from substandard buildings.
- $9.1 million to assess housing supply opportunities across government-owned sites, including for the delivery of new social housing.
- $5.6 million for artificial intelligence to deliver planning system efficiencies.
- Overhauling and simplifying the planning system by redirecting resources from the Greater Cities Commission and Western Parkland City Authority.
Mr Minns stressed that “the creation of a standalone Building Commission won’t just deliver better-quality homes; it will also let NSW Fair Trading focus on its core business – protecting consumers”.
He explained NSW Fair Trading will do this by:
- Working with the NSW rental commissioner to better protect the rights of renters and modernise the system to make it fairer.
- Delivering an additional $1 million in funding for renters’ advocacy organisations.
- Making sure products are safe and holding businesses that break the law accountable.
- Working to resolve strata disputes before they end in expensive legal battles.
On top of the measures outlined in the budget, Mr Minns detailed the government’s intentions to tackle the housing crisis by developing further policies to complement existing work.
This includes rebalancing population growth around major infrastructure investments and moving significantly higher-density planned development closer to central Sydney, auditing all NSW government’s landholdings to identify surplus land that could be used to address the state’s housing crisis, and changing self-assessment powers for certain social, affordable, and public housing providers to ensure more homes can be built quicker.
“Today is another step in the right direction to rebuild our housing system,” the Premier added.
“That means more money to build social and affordable homes as well as funding for vital homelessness services that some of the most vulnerable people of NSW need,” he concluded.
The Government’s planned budgetary package risks keeping inflation higher for longer, the Central Bank of Ireland has warned. Proposed changes to income tax and spending increases above the 5 per cent spending rule, were likely to “amplify demand in an economy already operating at capacity”, the bank said in its latest quarterly bulletin. Eoin Burke-Kennedy reports. The warning comes as the Central Bank downgraded the nation’s economic growth forecasts.
Eoin also reports that higher mortgage costs are continuing to take the heat out of the property market with prices rising at an annualised rate of just 1.5 per cent in July, with Dublin prices dropping the most in three years.
Local radio stations will have to sign up to new commitments on Irish language programmes when their licences are being renewed, the media regulator has decided. John Burns has the story.
In her column, Bernice Harrison looks at the new road safety campaign, and if marketing drive to reduce road deaths can work.
The Government should increase the tax-free threshold of its rent-a-room scheme from the current level of €14,000 in order to combat the State’s growing accommodation crisis, according to most respondents to a survey carried out by Taxback.com. Joe Brennan reports.
Grocery price inflation has fallen to its lowest level in a full year and has now declined for the fourth successive month, with retail analysts Kantar suggesting the rate of price growth will ease further as the year comes to an end. Conor Pope reports.
Food group Glanbia has signed up as the lead sponsor of Kilkenny’s camogie team, having previously backed the team under the Avonmore brand, which is now under different ownership. Ciaran Hancock has the details.
Wine sales in the Republic remained below pre-pandemic levels last year as per capita consumption continued to fall in line with a general trend towards more moderate drinking. Ian Curran has the story.
Four shareholders of a liquidated company must now pay a combined income tax bill of €1.56 million after they lost an 11-year-long tax battle with Revenue Commissioners concerning a €7.59 million payout arising from the voluntary liquidation of the company at the Tax Appeals Commission. Gordon Deegan has read the commission’s report.
Dublin-based agricultural technology company Micron Agritech has raised €2.7 million in funding. Colin Gleeson reports.
Colin also reports that Irish oil explorer Petrel Resources incurred a loss of €164,206 in the six months to end of June as the company warned of “significant doubt” on its ability to continue as a going concern.
In Me & My Money, screenwriter Susan E Connolly talks through her finances.
Finally StockTake looks at should Smurfit Kappa shareholders be celebrating its planned takeover of WestRock.
Stay up to date with all our business news: sign up to our Business Today daily email news digest. If you’d like to read more about the issues that affect your finances try signing up to On the Money, the weekly newsletter from our personal finance team, which will be issued every Friday to Irish Times subscribers.
Minister of Conservation, Willow-Jean Prime. Photo / Michael Cunningham
The Department of Conservation (DoC) is spending close to half a million dollars on consultants in an effort, paradoxically, to tackle a considerable and looming budget shortfall.
In May DoC hired PwC to analyse its
Poor spending controls
Auckland councillors have two choices when they reconvene today to finalise this year’s budget: support Mayor Wayne Brown’s proposal for a partial sale of airport shares, or keep the shares for now.
At a nine-hour meeting yesterday, Brown withdrew his plan to sell the council’s entire airport shareholding after it became clear he did not have the numbers.
After the lunch break, he proposed a partial sale of the shares in a bid to strike a “consensus” with fellow councillors in what he called his “latest, latest, latest budget”.
Brown’s new proposal is to sell 8.09 per cent of the 18.09 per cent holding, which he said would achieve savings of $28 million next year, instead of $60m from selling all the shares.
“I’m proposing we will fill the gap with a general rates increase of 7.7 per cent for the average residential property,” said Brown – 1 per cent higher than his previous figure of 6.7 per cent to hold the household increase at the rate of inflation.
The new overall rate rise is 11 per cent, with businesses paying more than households.
He has also proposed cutting local boards’ discretionary funds by $4m and requiring council chief executive Jim Stabback to find another $5m in cuts.
Just before the meeting adjourned at 5pm yesterday without any decisions on Brown’s latest proposal, Manukau councillor Lotu Fuli tabled an alternative proposal, seconded by her Manukau colleague Alf Filipaina, to consider selling the shares as part of next year’s 10-year budget, holding household rates to 6.8 per cent and increasing debt from the $100m in Brown’s proposal to $160m.
It is understood this amendment has been worked up by 10 councillors opposed to the sale of the airport shares, valued at $2.2 billion.
If Fuli’s amendment passes today with 11 or more votes, it will seal the budget and Brown’s proposal will not proceed.
Earlier in the day, council group chief finance officer Peter Gudsell said increasing debt is a short-term answer that could make the remainder of the year or next year harder and was not a prudent approach.
Gudsell said debt “reduces headroom to deal with future shocks”.
He called it “not a credible or prudent approach to financial management” and said it would only defer decisions on how to close the budget gap.
In an unusual move, Brown gauged the mood of the room before lunch by giving each councillor five minutes to say what kind of budget they would like, adjourning the meeting for an “open workshop” for councillors to speak freely without jeopardising their speaking rights during the formal business of the budget meeting.
Both sides of the airport debate gave impassioned speeches, with Mike Lee calling the sale the biggest asset sale in Auckland’s history and Maurice Williamson saying even the good times are bad for holding the shares.
Williamson said more costs are coming down the pipeline for the council, warning that he had been told the final cost of the City Rail Link will be $7.5b instead of $5.5b.
“We do not need to own an asset that is not washing your face,” Williamson said.
Councillor Kerrin Leoni said the airport shares should only be sold as a last resort, and she would be happy to consider a small increase in council debt.
Several councillors said a lot of the issues – the sale of the shares, spending cuts, revenue and debt – would be better dealt with in the 10-year budget, which comes next year.
Deputy Mayor Desley Simpson said Aucklanders deserve a budget that doesn’t hurt too much, and that’s for both residential and business ratepayers.
She said inflation and Reserve Bank rate rises had heaped extra costs on the council.
While the council had expected these as potential costs, devastating weather in summer had made the situation much more difficult, she said.
Simpson said councillors should be careful in raising rates too much because of the cost-of-living expenses people are facing for things like transport and food costs and paying mortgages.
Cr Richard Hills said he didn’t like any of the budget levers – spending cuts, raising debt, higher rates or selling the airport shares.
“The focus for me was reducing the level of those cuts to our community, reducing the staff cuts, reducing what I feel is mean cuts to what is going on in the city, the environment … I could keep going on,” he said.
The North Shore councillor said public feedback on the budget was the biggest on record, with more than 70 per cent of people saying they weren’t happy with the scale of the cuts.
Last month, Brown reduced suggested deep cuts to arts and social services, including the Citizens Advice Bureau, following public feedback.
In a late twist just hours before yesterday’s meeting, Albany councillor Wayne Walker declared he is the beneficiary of a $3m shareholding in Auckland Airport held in the estate of his late father.
Walker and two other councillors with family links to airport shares, Julie Fairey and Chris Darby, were cleared by council staff and the Office of the Auditor-General to vote on the share issue.
Brown closed the meeting by saying it “is a very hard budget and I want to ensure that we take our time to work through the process properly”.
“I have always said it may take a couple of days of constructive debate. There is no issue with that, we are simply adjourning to another day,” he said.
The meeting resumes at 10am today.
Finance Minister Grant Robertson is digging in for war with the Reserve Bank by announcing a multi-billion-dollar spending package that threatens to undermine the Bank’s attempts to tackle inflation.
Labour will be hoping the Government’s cost-of-living spending announcements – expanding free early childhood education, abolishing prescription co-payments, and free public transport for children – will blunt the effects of higher interest rates and inflation, which Treasury now expects will be higher for longer.
Far from trimming back or reprioritising significant amounts of money, Robertson announced a Budget with billions more spending and billions more borrowing than expected six months ago, adding $300 million more this year, then $500m more in his next three Budgets, leaving the Crown with net core Crown debt of $181b in 2027 (37 per cent of GDP), up from $128b now and $59b when Labour took office in 2017.
The books will be in deficit until 2026, one year longer than previously forecast.
Robertson said he did not believe the Reserve Bank would need to hike interest rates to deal with his increased spending.
“I don’t think this is the impact of what is in that Budget,” he said.
The key highlights:
Meanwhile Treasury believes a toxic combination of higher interest rates and weak wage growth will smash house prices.
In December, it forecast prices would eventually reach their pandemic peak by 2027 – but now it forecasts no end to the crisis.
Prices will plummet to 21.3 per cent of their pandemic highs, before recovering, ever so slowly – but not regaining anything close to their pandemic peak in the forecast period.
Labour will be hoping the additional spending is enough to win them an election – and this Budget is full of election goodies.
But National says it contains “no ideas” to tackle the underlying causes of inflation and retain skilled Kiwis.
ARTICLE CONTINUES AFTER LIVE BLOG
The Government’s 20 hours of early childhood education programme for three-to-five year-olds will be extended to two-year-olds at a cost of $1.2b over the four-year forecast period.
The $5 prescription co-payment will be abolished at a cost of $619m over the same forecast period, meaning people will pay nothing for most prescriptions.
Public transport will be made free for children under 13 and half-price for under 25s, costing $327m over the forecast period.
The Government also announced subsidies to fit 100,000 more insulation and heating retrofits, which it said will reduce energy bills for the vulnerable.
Whanau Ora has been given a boost and kapa haka festival Te Matatini has been given a long-sought funding injection of more than $30m,
Govt’s banks $5b election year war chest
Robertson has cannily left $5.1b in the unallocated operating contingency, giving Labour a heavy election year war chest from which to fund campaign announcements.
Even the gaming sector gets a win, a $40 million a year subsidy, offering a 20 cent rebate on every dollar spent in New Zealand up to a cap.
The industry has lobbied hard for the change – its lobbyists even scored a seat at the Budget lock-up and a patsy question to the finance minister. The film industry also secured a $20m boost.
A new gender budgeting approach has delivered new investments for women. The Government will spend $20m on KiwiSaver contributions that “match” an employer’s contribution to people while they take paid parental leave.
Inflation is everywhere in the Budget. One of the larger announcements was $2.3b in new operating spending over the forecast period to give effect to public sector pay claims under the Public Sector Pay Adjustment.
This Budget was pointed squarely at the election, with Robertson making an oblique reference to National’s tax promises.
“There are many things that the government might like to do, or tax cuts that other parties might decide to promise, but for me keeping our children safe, warm and dry at school has to come first,” Robertson said.
Infrastructure is another big winner, with Labour promising a massive $71b spend on infrastructure over the next five years.
Robertson said this investment would initially focus on the recent weather events, but also include “future proofing road, rail, and local infrastructure wiped out by the extreme weather, as well as telecommunications and electricity transmission infrastructure”.
Infrastructure Megan Woods won $6b for a National Resilience Plan which will go towards “building back better” from recent weather events.
“The North Island weather events have added a level of urgency to our infrastructure investment planning and highlighted the importance of building strong and resilient infrastructure,” Robertson said.
“It was unacceptable that basic lifeline services like telecommunications, power and transport links were knocked out for so long. It identified a serious basic infrastructure problem that this investment will help fix,” Robertson said.
Woods also secured funding for an additional 3000 public homes by June 2025, on top of the 14,050 funded to June 2024
There is also support for Maori housing, which added 322 more homes for Māori and 400 relocatable cabins to assist people displaced by the North Island storms.
The Government snuck in a fairly sizable tax hike – lifting the trust rate from 33 per cent to 39 per cent, netting more than $1.12b over the forecast period .
Robertson denied this was a significant tax change,
“This is a change that we signalled that it would make, we saw evidence that we would make,” Robertson said.
This was a Budget characterised by a number of smaller, niche funding announcements.
The SIS was given $645,000 to improve its “capabilities and activities” in an increasingly uncertain world. It was given an additional $5.98m to fund inflation cost pressures.
Also in the security space, the Department of Prime Minister and Cabinet was given $5.18m to counter foreign interference and enhance “the resilience of New Zealand’s critical infrastructure system in the face of growing foreign interference risks”.
Robertson’s “implementation unit” was given an additional $3.9m to fund another two years of work.
A total of $30m was set aside for a grants scheme to fund zero emissions trucks.
Also, $38m is allocated to establish “market governance regulation” for the Emissions Trading Scheme, which has suffered a collapse in the unit price since last December.
Rather ominously, Robertson has also given $14m to “enhance security measures” at MPs’ homes and offices and at Parliament. The security of MPs has been a concern since the pandemic.
The federal government’s decision to introduce a “competitive income tax associated with foreign investment” by halving the withholding tax rate from 30 per cent to 15 per cent for eligible build-to-rent (BTR) projects for income earned from managed investment trusts, according to Colliers’ national director for BTR and residential, Robert Papaleo.
He commented that the budget’s doubling down on a recent National Cabinet commitment to expand the First Home Guarantee Scheme and the Regional First Home Buyer Guarantee will open doors for joint applications to both schemes, and will “enable more market entrants and provide support for those seeking properties experiencing higher demand.”
More broadly, several other commercial asset classes could experience an increase in investment interest off the back of momentum inspired by certain budget schemes according to Colliers’ head of healthcare and retirement living transaction services, Ian Sanders.
“While we saw a shift in cap rates for premium hospital and healthcare assets from 4 per cent to the mid-4 to 5 per cent range over Q1 2022 due to broader market fluctuations, the budget allocation and strong reputation of Australia’s healthcare sector will drive investment flows when interest rates moderate mid-year,” he said.
Mr Sanders welcomed budget support for the national aged care sector, before adding a moderation in interest rates will “also likely prove most powerful in supporting both aged care and specialist disability accommodation.”
He noted that top-tier operators have begun experiencing a movement of cap rates by 25 basis points (bps) and 75 bps, respectively, over the first quarter of the year.
Moving forward, Australia’s ageing population will see an increased demand for aged care facilities. Mr Sanders said, “Asset owners are facing crucial strategic decisions, with several choosing to future-proof by consolidating and enhancing scale.”
“While cap rates for land lease communities currently range from 4.5 per cent to 5 per cent, this remains the most resilient home and retirement living asset class, which is tightly held due to multiple income streams and strong demand at value-driven price points,” he said.
On the industrial and logistics front, Colliers noted the budget is conservative in comparison to recent years, with the government announcing a review of its Infrastructure Investment Program.
“We continued to witness soaring demand for industrial assets, with the highest performing market nationally — Western Sydney — experiencing land take-up by occupiers 54 per cent above the five-year average, establishing a record at almost 290 hectares last year,” explained Collier’s head of industrial capital markets, Gavin Bishop.
He added that the defence, energy, and renewables sectors are set to outperform this year, aided by increased population growth amidst other key fundamental drivers.
Cameron Williams, the network’s managing director of office leasing, said the sector’s current ESG trend will be boosted by the budget’s emphasis on sustainability and the introduction of increased energy ratings required for managed investment trusts.
“ESG increasingly wields influence over lease budgeting decisions, with occupiers now seeking offices with a lower carbon footprint due to development in addition to lower operational carbon during their tenancy,” he shared.
The office sector has seen a shift towards greater emphasis on employee experience and ESG over headcount to space ratios, Mr Williams explained, adding this trend is “ensuring greater rental recovery for higher quality assets in coveted locations.” It’s most notable throughout the nation’s CBDs, where average premium net face rents achieved 2 per cent growth over Q1 2023.
Moreover, the national retail property sector can breathe collective sighs of relief after the budget failed to amend the stage three tax income legislation, stated Colliers’ managing director of retail capital markets, Lachlan MacGillivray.
The managing director outlined this means that, from 1 July 2024, more than 95 per cent of taxpayers will pay a marginal tax rate of 30 per cent or less.
“There is significant potential for a tax concession of roughly 50 per cent to flow through to the retail sector,” he said.
All in all, Colliers’ stance is the first full-year budget delivered by the Albanese government boosts Australia’s strong economic platform.
The network’s national director of research, Joanne Henderson, concluded:
“The Australian property sector presents greater growth potential globally, due to our ability to weather market fluctuations, ensuring values and pricing certainty attract increased investment when interest rates are due to moderate mid-year.”
By LIAM MAYO
ALBANY, NY — It took over a month, but New York State has passed its budget for fiscal year 2024.
The $229 billion budget, originally due April 1, was signed by Gov. Hochul on Wednesday, May 3. Bail reform changes and housing policies, among other items, held up negotiations between Hochul and the heads of the Senate and Assembly.
In the end, Hochul landed an agreement in the budget to give judges greater discretion in setting bail, but a proposal to create 800,000 new homes across the state did not survive.
A press release from Hochul’s office highlights “smart, responsible investments” in areas such as housing, public safety and the environment.
“With this budget, we are delivering on our promise to make the Empire State a more affordable, more livable, safer place for all New Yorkers,” said Hochul in the press release. “These bold investments will lift up New Yorkers today—and tomorrow—while maintaining a solid fiscal footing, and I thank my partners in the legislature for their collaboration throughout this process.”
Assemblywoman Aileen Gunther
This year’s budget process was “one of the most courteous we’ve had” in terms of getting along in the New York State Assembly, with Republican and Democratic members talking with one another, Assemblywoman Aileen Gunther told the River Reporter. Gunther has 20 years of experience in the Assembly with those negotiations.
Gunther highlights additional investment in veterans, farmers and infrastructure, as well as in mental health.
The budget makes a long-term, $1 billion investment in mental health care, including $890 million to build new residential units for mental health patients.
The budget also invests a total of $34.5 billion in public schools, including the provision of free lunch for all students, says Gunther. Figures provided by Gunther’s office show a 14.17 percent increase on average in aid over the previous year’s budget given to Sullivan County schools; Sullivan West CSD got an extra $654,910 or 3.70 percent, while aid to Eldred CSD dropped slightly by $96,556 or 1.57 percent.
The change that gives judges more discretion in setting bail is very important to keep counties safe, says Gunther.
Sen. Peter Oberacker
The record amount of spending in the budget results in a few benefits, Sen. Peter Oberacker said in a statement. He supports the budget’s spending on education aid, mental health services and a new grant program for volunteer fire departments. But on the whole, he says, the bad outweighs the good.
“It outlaws gas appliances in new homes, fails to make substantive changes to bail reform, and forces additional costs on counties that will increase local taxes… the bad far outweighs the good in this budget which was crafted by one party in complete secrecy and rushed to the floor for a vote without allowing any opportunity for substantial review,” said Oberacker. “New York is number one in outmigration and this budget will do nothing to reverse that sorry status.”
A much talked-about proposal included in the budget, the All-Electric Buildings Act, mandates that new buildings be built without using gas heating, stoves or other utilities (though it does not address the use of gas in preexisting buildings). It takes effect in 2026 for buildings up to seven stories tall, and in 2029 for larger buildings.
The act “is a significant step toward decarbonizing our buildings sector,” according to a statement from the New York League of Conservation Voters (NYLCV).
The NYCLV praised other measures in the budget including $400 million for the Environmental Protection Fund and $500 million for the Clean Water Infrastructure Act.
Hochul proposed an extensive housing plan in her initial budget. It called for the creation of 800,000 new homes throughout the state and included ways to bypass local zoning if needed to accomplish it.
That proposal didn’t make it in the final budget. Instead, the fund puts $391 million toward the Emergency Rental Assistance Program, a fund to help renters in arrears, and $40 million toward nonprofits that help homeowners in default and foreclosure.
Housing advocates, including Hudson Valley advocacy group For the Many and the Family Homelessness Coalition, have criticized the budget for not doing more to address the state’s housing-affordability issues.
In the run-up to the budget negotiations, county leaders—including in Sullivan County—pushed back against a Medicaid proposal from Hochul. The proposal takes funds earmarked by the federal government for local governments and gives them to the state; the proposal is included in the final budget, with the addition of an agreement to phase out the funding over several years.
“The state’s decision to intercept these funds is totally unnecessary and counterproductive… New York State is at a crossroads with a soaring cost of living and a declining population,” said New York State Association of Counties president Michael Zurlo. “Reversing this trend starts with reversing the state’s self-sabotaging habit of disguising the true cost of its budget actions by passing those costs on to local governments, who in turn must raise property and sales taxes to cover those new costs.”
You have probably seen it somewhere. An old apartment block, or a house, in a not-so-bad neighbourhood. You pass by the building without giving it much thought, and if asked whether you would buy it, chances are you would say no. The structure is old and, why buy old when you can buy or rent new? But the saying goes ‘old is gold’, and this is where house flipping comes in, a real estate concept, especially practised in the west. The term ‘house flipping’ refers to buying a home with a short holding period with the intent to resell it quickly.
It is a form of real estate investment where the buyer finds houses on the market that are below market rate for instance because they are in a state of disrepair, fixes them and resells them for a profit.
Unlike buying real estate as a long-term investment, house flipping is a short-term way to make some money after your initial investment. Most investors buy homes that require some updates and repairs at a low cost.
The idea is to “buy low” and then “sell high” later after making a few changes, and you are ready to put the home back on the market. It is important to note that there are no guarantees with house flipping since the real estate market can fluctuate widely. To succeed in this field, it is important to have access to the right information, resources, and connections. While these types of properties may not be easily accessible, with the right strategies, it is possible to find them.
Look for properties that are being sold at a discount, such as those that are being foreclosed on or are in need of significant repairs. These may be more challenging to fix, but they can also offer a higher potential return on investment.
How to get started
If you are considering entering the world of house flipping, it is important to keep a few key things in mind.
Come up with a budget
In addition to researching the market, it is crucial to budget your house-flipping plan carefully. This includes setting a limit on how much you are willing to pay for a property and including the costs of renovations and upgrades in your overall budget. This will help you avoid overpaying for a property and ensure that you have a realistic idea of your potential return on investment.
Engage a home inspector
Before making an offer on a property, it is also advisable to hire a home inspector to assess any necessary repairs. This will give you a better understanding of the total repair costs and help you determine your bottom line before making a purchase.
Once you have a better idea of your proposed asking price, you can subtract the home’s cost and all of the repairs and upgrades. The final number will be your bottom line and show you what you’ll gain financially once the flipped home is sold.
The house flipping 70 per cent rule
When looking for houses to flip, it can be helpful to use this rule as a guide. It suggests that you should not pay more than 70 per cent of the home’s estimated value after repair (ARV), minus the cost of necessary repairs.
For example, if the home has an ARV of Shs5.6m and requires Shs1.5m in repairs, you should aim to pay around Shs2.5m for the property. This leaves you with a wiggle room of 30 per cent to cover any unexpected repairs or costs and accounts for the amount of money you will receive when the home is sold.
To calculate this figure, use the following formula: (ARV x 70 percent) – cost of repairs = cost price.
This rule can help you make informed decisions about which properties to invest in and ensure that you are making a financially sound decision.
Before flipping a home, it is important to carefully assess its condition and identify any necessary upgrades. Even if the property appears to be in decent shape, there are a few key areas you should focus on.
For example, if the home has an old knob and tube wiring, a full electrical upgrade may be necessary. It is also important to inspect the plumbing for signs of rust or wear, and ensure the house is properly insulated.
The roof should also be in good condition with no leaks or missing shingles. By taking a close look at the home’s key components, you can determine which upgrades are necessary and plan accordingly.
Room-by-room renovation guide
When flipping a home, inspect every room and identify the types of renovations that will be necessary. Here are a few key areas to focus on:
Façade: Improving the curb appeal of the home can help attract potential buyers. This may involve painting the exterior, adding new siding, updating the landscaping, and repairing any broken outdoor lighting.
Bathrooms: Updating the flooring and fixtures in the bathroom can give it a fresh, modern look. Make sure all plumbing is in good working order and consider adding a new tile job around the shower or tub.
Living room: A fresh coat of paint and new flooring can quickly transform an outdated living room. If the home has a “choppy” floor plan (broken up into several separate rooms), consider knocking down a wall to create a more open layout. Extending the windows and making them oversized can also help bring in more natural light.
Kitchen: Replacing outdated appliances with new ones and updating the countertops can give the kitchen a more modern look. Repainting older cabinets can also be a cost-effective way to update the space.
Garden: Removing weeds and dead plants, planting new flowers or shrubbery, and checking for pest signs can help give the garden area a fresh, lively appearance.
Bedrooms: New paint colours and flooring can easily update the look of a bedroom. If the master closet is small, consider altering the layout to create more storage space.
Addition or extension: If you have a larger budget, consider adding an extension to the home. This will be more costly and time-consuming, but it can also help you get a higher asking price. The extension can be anything from an extra bedroom, living area or outdoor dining area.
Adding the most value
In today’s market, modern homebuyers are often looking for unique properties. If you want to add the most value to your house flip, consider making some updates that will appeal to younger buyers.
Add a glass railing along a staircase: This modern design element can be a great alternative to traditional spindle designs.
Install high-tech upgrades: Options such as remote security cameras or doorbell alarm cameras can be easy and affordable ways to add value.
Replace an old garage door: Choosing a sleek, contemporary design can make a big impact on the overall look of the home.
Install energy-efficient windows: Not only will this make the entire home look new, it is also a great selling point for buyers.
Pay attention to the outdoor space: Adding a new covered patio or deck can be a great way to add value and appeal to buyers who enjoy spending time outside.
Selling the flip
Once you have completed the renovations on your property, it is time to put it on the market. Make sure your listing includes all of the home’s details, including the square footage, special features, and significant upgrades.
Hiring a professional photographer to take clear, detailed pictures of every room, both inside and out, can also help attract potential buyers. With the right marketing plan in place, you can sell your newly flipped home quickly and for a good return on investment.
Keep in mind that house flipping is not for everyone, but with the right knowledge and resources, it can be a smart investment choice. It is also important to understand the local real estate market and partner with professionals you trust.
Sticking to a budget is also crucial to ensure that you don’t overpay for a property. By focusing on the right updates in every room, you can quickly flip a house and achieve a great return on your investment.
The importance of ceiling value
When the time comes to sell a flipped home, it is important to have an understanding of the ceiling value. This is the maximum asking price that you can put on the property.
If you ask for too much, the home may sit on the market for a long time, which can be off-putting to potential buyers, and which will hold your finances.
To help determine a fair market value for the property, consider working with an experienced real estate agent. They can provide insight into current market trends and help you set an appropriate asking price.
It is also a good idea to leave room for negotiation by starting with a slightly higher asking price and being willing to negotiate with buyers.