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  • Property-a-holics

    How many can I flip in a year with £120K N/W?

    This forum is such a good find for me. Iv'e only been a member a few days and i have doubled what i knew about property.

    I posted my strategy about Buy 2 Let. Buying in cash, renovating, re-mortgaging at a higher value and renting out (repeat).]

    Now another seemingly lucrative sector in my are is Buy 2 Sell. Bring an old house to new build standard plus add a room or two and demand a good price. If i'm honest the returns seem better than Buy 2 Let but it's serious business and very taxing.

    I have done a couple already so i am happy to go back to brick and start again in a run down property.

    The situation is this,

    I have £120K - for that amount of money i can only afford 1 property at a time, the problem i have is that it takes 3 month to buy a house, 3 month to renovate a house and at least 3 month to complete a sale. also a risk of sale falling through wich would add more time.

    Now i know i can renovate 4 houses a year but the damn complicated buying and selling process triples the time it should take Sad

    If i could flip 4 houses a year using the £100k a year and i made 15% each time thats £60k !!

    If you stagger the sale of house 1 with the purchase of house 2 you can shorten it to 6 months.

    ( 1 quater = 3 month )

    End of 1st Quarter - house renovated & up for sale. (when its at offer accepted start buying process on house 2) 

    End of second quarter - house no.1 sold - house no.2 bought.

    Can anybody either suggest some kind of finance strategy so 2 can be bought at a time or a way that the process can be shortened somehow.

    It seems to be something within the solicitors that takes the time. is there anything you can pre-do ready for the sale?

    I have learned that i need to get planning permission where required from experience this can make an awkward sale.

    Another lesson i have learned is to pre book contractors, i have a good team i just need to make sure they have notice and i think i can do 10-12 weeks per prop.

    what are your guys thoughts?

    Thank you in advance........

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    Hi Michael,

    Very gratifying to hear that you are finding Property Tribes a useful resource.

    With regards to ramping up your activity, as suggested by me in the other thread, you need to speak to a reputable mortgage broker.  You may be able to access bridging finance, which would help leverage your funds to greater effect.

    A word of caution - BTS is very different to BTL so have a look at this thread for further insights:

    Buy to let vs. Buy to sell - trying to compare an apple to an orange.

    Using bridging finance you could potentially do 4 projects per year as you would only be putting the the deposit and paying for the refurb and using a bridge for the rest - redeeming the bridge via a sale or a re-finance to a BTL mortgage.  Shawbrook Bank, for instance, have some good products in this niche that could help you move forwards, but you need to access their products via a broker.

    An experienced mortgage broker will help you structure things to ensure that you can maximise your cash.

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    Yes the UK property purchased process is flawed. Auction purchase are quick as you only have 28 days to complete the purchase. But be mindful you do your due diligence on the place as there are lemons around.

    Also be mindful it can be harder to sell a property within 6 month of purchase as some lenders doesn’t like this.

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    u have just read that 6 month guideline. that throw a spanner in my strategy. it should be common enough for them just to lend on the valuation results no matter who has had it and for how long.

    Do you think it would be fine if i keep the completion certificates and get building control for any nock through walls and document the renovation with photographs?

    that 6 month guideline makes it nearly a year to get the money from the sale.

    Do you think you would have to own 4 at once to do 4 in a year?

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    The 6 month guideline is only a guideline!

    If you are aware of it, you can work with it.

    The main thing to do, is educate your buyer that the property has not been owned for 6 months, and they will need to work with a lender who will agree to a mortgage being taken out on a property that has not been owned by the previous owner for a minimum of 6 months.

    I would recommend that you take "before" photos and keep all receipts and documents as a record for the incoming lender.

    ​Of course, if you sell to a cash buyer, then the 6 month rule is not a problem. Smile

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    Thanks Vanessa.

    another thought, can you set a rule to the sale that the exchange of the contracts needs to be completed in 28 days? Auctions and Repo's seem to be able to do it, could an investor?

    TY

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    As a general rule, no, you can't do that.  A cash purchaser may be able to achieve that but purchasers will generally want to work to their timeframe, not yours.

    However, if someone tried to negotiate a discount, you could make it a condition of the sale that it completes in 28 days.

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    thanks, i would make an incentive for a 28 dayyer.

    Not sure if it would complicate things but it would make more money to give a £1k - £2k discount on a 28 day sale.

    The alternative of a 8-10 weeks sale would cost your annual yield far more than that if your aiming for a £50k-£60k annual profit. another month or two interest and costs of ownership.


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    Also, HMRC tend to view flippers as property traders, not landlords.  If you are currently a basic rate tax payer you would pay capital gains tax at 18% on each property, but if you are classed as a trader and the profit takes you over the basic rate level you could end up paying 40% tax on each property

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    What about a Ltd company. does the purchase of the house + Renovation costs become an expense that can be deducted from the sale of house then the profit is subject to standard Corporation Tax (20%)?

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