Already on to her seventh renovation and hoping to double that output over the next year, Diana Levinzon has a three-year plan to buy her own long-term rentals.

Wanting to create wealth for her family, Levinzon says flipping is hard work, but satisfying and a means to an end for her and her partner.

“We had no other means for getting ahead and with a child and government jobs that didn’t allow us to earn much more, I realised we would be forever in the cycle of paying off our mortgage and never being able to upgrade or provide anything for our future.”

Levinzon woke up one day and thought property investment would be a good, tangible asset. “It has been tried and true for a long time.” She immediately looked at an online property investor forum, started researching, reading, learning and watching content about which strategies worked and which didn’t.

It was right at the time the market was crashing a bit and investors were finding themselves in a cashflow negative position. “In a way it worked because I could see what we were going to do.”

In her observations, Levinzon noticed investors with cash flow negative properties were bleeding money. “For us in government jobs, and if we were just relying solely on equity, that would cripple us. It’s not viable, and I didn’t want to put my family into that kind of stress.”

Joint Ventures

At the same time, Levinzon learned about joint ventures and found a partner in their circle of friends who had most of the capital and was willing to invest. She and her partner funded part of the first renovation with bank revolving credit. “Essentially our joint venture partner funded the flip and we managed it.”

Since then, Levinzon has found another four joint venture partners, all built from relationships with different people. Some are involved in multiple flips. “It depends on their risk appetite, but I tend to find properties that suit the joint venture partner as it has to work for everyone.”

Making joint ventures successful requires constant communication and discussion, she says. As the communication is embedded into each joint venture, the partners now leave her to just get the flip done.

Buying basically uninhabitable houses to renovate and sell, Levinzon knew she had the capacity to be hands-on with renovation work and had the ability to turn around flips in a short time.

On some of the initial flips, Levinzon got her hands dirty with a lot of demolition, painting, landscaping and building fences. “We can’t really be hands-on anymore with three or four projects on the go at the same time. Now, we limit ourselves to fencing, curtains and that sort of easy thing.”

The first flip at 58 Coast Road, Wainuiomata, a dormitory suburb of Lower Hutt, was a full renovation – new kitchen, bathroom, flooring, painting the deck and landscaping. “It was full noise making the interior open plan.”

Most flips have been in this suburb, apart from one in Christchurch, which Levinzon says was stressful. “Some have been more extreme than others, but all of them have had new kitchens, bathrooms, paint, carpet and been opened up. None have been just a spruce up.”

The Lessons

She has found every flip is a lesson ... presentation, garaging, fencing and privacy have been key for buyers.

Levinzon says it’s impossible to work to a strict budget. “It depends on the market, whether it’s a first-home buyer house in the $600,000 price range or at $1 million-plus.

“For the million dollar and up properties, we’re getting custom joinery for kitchens, for example, and so while I can look at something and say, ‘Hey, this is how much we’re going to spend’, it comes down to what it’s going to sell for on the other side.”

Aiming for $45,000 after tax return on each flip, Levinzon works backwards from the price she puts the property on the market for and then factors in the budget.

She learned from the first flip that things always come up. “You cannot be hell-bent on focusing on sticking with the budget because there will always be the unexpected, such as large rotten windows that only became apparent when tradies went to paint them.

“It’s all well and good having a strict budget, but it’s never going to fall within that. There has to be room for overrun as well.

“I can say to my team I’d like the renovation to cost roughly this much, and your building costs need to come within this amount. What can we do to work within this amount? What’s important? But then I also factor in things you cannot skimp on; things that are going to fail in a building report.”

The joint ventures don’t touch two-bedroom properties or units. Stand-alone houses that appeal to families are the focus because everything is about resale. “It has to be about how we would feel living in the home – would it be good, would it be comfortable?”

The Profits

Typically, the profit from each renovation goes into the next project and some is set aside for accumulation.

For the projects where Levinzon is not providing finance, the profit is split 50/50 with the joint venture partner. For those where she is providing some cash and doing some hands-on work, the split is different. If she is not providing finance the joint venture partners will typically have a little bit more say and creative license.

Until she builds up a cash pile to own cashflow positive rentals, Levinzon is happy to keep on flipping Wellington properties, moving from Wainuiomata into more swish areas.

Finding houses to renovate is no walk in the park, however. For every house that’s a solid flip there are a minimum of five to six offers. On one property there were 17 offers. “There are a lot of people in the game, particularly in Wellington. We were told by a lot of people, ‘Don’t do it. It’s a risk’, but to me it’s a calculated risk. If you’re buying cheap and selling cheap, you’re still making money, you’re still in the market.”

She hopes to be flipping only two to three houses a year within two years and is starting to look at buying long-term rentals. “We’re trying to build up cash that we can actually pour into houses that we’re going to hold. We’re not doing it for a lifestyle in terms of blowing it on frivolous things.”

The Future

Her goal was to have two rentals this year because now is a good time to buy if a bit of cash has been built up. Many other investors hold the same sentiment, Levinzon says.

“We are figuring out the best strategy for long-term holds now that I am good with flips. We don’t want to rely on second-tier lenders for finance, or the government’s rules which can change at the election of each new government, otherwise we would be up the creek.”

She doesn’t envisage giving up flipping now that her teams and contacts have been established.

“It doesn’t feel like a job to me. There’s something special about it because a lot of people hate flippers. They think we’re taking away homes from first-home buyers and we’re pricing people out of the market. But the houses we’ve bought have all been pretty much uninhabitable. They’ve all been really bad with major issues that have cost good money to fix, so I love that. I love seeing that we’ve actually created something really nice for someone.”

The Right Agent

Choosing a good real estate agent is key to successful flipping, says Diana Levinzon.

It was a big lesson when she started out. She had an agency that struggled to sell the first property and Levinzon ended up going for a conjunctional with the first and a second agency. The other agency managed to deliver.

It was difficult because she had built a good relationship with the original agents. “But, with flipping you really need to get things sold. You can’t sit on them for long.”

She says the agency that had the property originally was struggling quite a bit to sell it, but the second agency had a buyer and the property was sold for a good price.

Having established good relationships with agents, Levinzon often gets a first look at off-market deals and predominantly buys that way. She says the key is to be competitive, have cash and move quickly. “That’s our sort of strategy. We’re pretty much always cash, are quick and I do all the due diligence prior to buying.”