The Glenholme house which made $200,000 in nine months. Photo/Stephen Parker
A Rotorua house selling twice in nine months for a profit of nearly $200,000 is an example of the handful of houses "flipped" in the city last year.
The Glenholme property was bought for $192,500 on September 30, 2016 and resold on July 2, 2017 for $390,000, after being held for just over nine months. The total profit was $197,500.
The property made its resellers $21,944 a month; $5064 a week; $718 a day.
Fifty-four other residential properties were sold for a profit last year after being held for less than 12 months, according to figures released to the Rotorua Daily Post by CoreLogic.
The practice, called "flipping", was loosely defined as properties sold twice or more within a single year for profit.
Flipping can mean buying a property and doing it up or sitting on it for a relatively short time until the market is more favourable, and then selling it.
But local real estate agents have been quick to say the practice is not common in Rotorua and it is hard to define when a property has been flipped.
According to CoreLogic, the 55 properties made a total profit of $4.4m, at an average of $80,000 per transaction.
The property sales made up 4.4 per cent of all transactions in 2017 in Rotorua.
In comparison, 275 properties changed hands more than once within 12 months in 2005 - making up 10.4 per cent of all transactions.
Sixty-one houses were flipped in 2016, making up 3.4 per cent of Rotorua's property transactions.
Simon Anderson, chief executive of Realty Services which operates Eves and Bayleys, said while he had not witnessed too much house flipping, he understood how it could happen in Rotorua.
"The city has seen huge growth in the last two years, but there are a number of reasons people buy and sell.
"In the case of the Glenholme property, that level of profit is highly unusual. There has been growth in Rotorua's values, but not at that level - it is possible the property underwent major renovations in that nine months."
Anderson said the strong demand in Rotorua and "surge in people" were continuing to create competition in the market and drive up property values.
Professionals McDowell Real Estate co-owner Steve Lovegrove said it was a "wild assumption" that every property sold more than once in a 12-month period had been flipped.
"There are plenty of reasons why a house would sell more than once in a year. This figure could also include a deed being transferred to a trust or another person.
"Additionally, the total profit made can be misleading as that does not take into account the money spent to bring a house in a poor state up to a sellable standard."
Lovegrove said people who bought properties in disrepair and renovated them to be sold for a profit should be encouraged.
"These people are bringing liveable properties into the market and improving general areas. It's a good thing. Those who do it well make money, and that's to be encouraged."
Ray White co-owner and principal Anita Martelli said the number of houses came as a surprise, but agreed that could include transactions where the house deed was transferred to a trust or other family member.
"Given the state of the market, it's not surprising people are buying houses and doing them up. When you put it into context that these houses only made up 4.4 per cent of total transactions for the year, I don't think it's a problem.
"It's good people are seeing the value of spending money on homes. It adds to the overall value of an area and adds quality stock to the property market.
"There is always a market for nicely done up houses, it's all about disclosure and people knowing why the property is being sold again in less than a year."