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Don’t believe the media

Be very careful with what you believe in the media. Especially in the property investment, business, making money fields.

This article states this ‘flipper’ made $350,000 in just 4 months.

I have broken it down to a more realistic version of events. (Please bear in mind I don’t have the exact information, but do have a very good understanding of the property flipping space)

So they bought the property for $1,150,000 and sold it 4 months later for $1,500,000 – That is an increase of $350,000. -Well Done !

But wait…. there are costs involved.

I estimate $150,000 renovation cost, $30,000 finance costs ($1,150,000 x 8% interest, for 4 months), $75,000 Sales cost (Real Estate agent and legal costs – I average 5% combined)

Which leaves you $105,000 Profit…. then you need to take tax off. When flipping you need to pay GST – so 15% on profits and then income tax which I’m assuming at 28%. So take off $40,000 for both of those…. and you are left with a grand total of $65,000.

Still a pretty good outcome for 4 months work…. but a long way off the $350,000 the media would lead you to believe.

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