Buying to sell straight away

Discussion in 'General Property Investment Discussion' started by Hal j, Jan 17, 2019.

  1. Hal j

    Hal j New Member

    Hi, in the coming months I will have £100,000 to invest in property.

    From the £100,000 I will need to be able to generate enough money to live off, I have a lot of experience in renovations and can do everything needed.

    My plan atm is to buy something outright with cash for say £60,000 i areas I know, renovating and selling straight away and continue gradually up to more expensive properties.

    My question is, is there anyone on here currently making a living buying and selling and moving from property to property and if so any advice?

    TIA
     
  2. realdeals

    realdeals Member

    Hopefully someone will be able to give you some practical advice but whatever happens you need to be very careful in the current environment with Brexit still up in the air. If the market turned then you might get locked into a property for some time. That said, if you were able to add enough value with renovations then you might be able to give yourself some wiggle room on price and still bank a profit.

    Obviously buy to let, collect the rent, paying down debt and increasing equity is the steadier and more sensible strategy.
     
  3. Hal j

    Hal j New Member

    Hi, thanks for reply. I would be hoping to do this full time so would need to make enough to live off. If successful after a few years I would be looking to go down the BTL route but to start with I would need the income from buying to sell.
     
  4. michael1978

    michael1978 Member

    I think you have a great idea, I would totally do that and with your experience I think you will be successful. But it's true, with the incertainty of Brexit I would wait a bit to see what is hapening. But well done for your plan.
     
  5. diyhelp

    diyhelp Active Member

    Hi @michael1978

    I think flipping properties is a little less risky if you have capital behind you. However, if you are effectively risking all of your capital each time and living off the "flip profits" then inevitably you will at some point suffer a setback.
     
  6. AYHAN KHALILLI

    AYHAN KHALILLI New Member

    The most ideal way for a scenario such as buying to sell would be going with online agents. For example, companies such as (moderated) do not take commission on sale of property therefore, allowing you to have that advantage of keeping the whole offered amount thus resulting in more to invest.
     
    Last edited by a moderator: Feb 23, 2019
  7. John Wilson

    John Wilson Member

    Hey Hal, I think that if you’re buying well below market value (eg by going direct, dealing with motivated sellers and getting 20-30% discounts) then it won’t matter of the market falls a little, you’ll still have enough room in there to make a profit, especially after you’ve added value by refurbishing it. Plus, if that’s where you’re living then you have much less risk (and obviously the excellent tax advantages, too!)


    Sent from my iPhone using Property Forum mobile app
     
  8. diyhelp

    diyhelp Active Member

    Yip, no capital gains in the UK on the home you live in.

    The more headroom you can give yourself between total investment in a property and market value, the safer you will be. Adding value doing your renovations will further enhance any good buys you can find.
     
  9. Karen R

    Karen R New Member

    In case you have not considered all options, with that level of cash available, you could consider using a portion of that money as a deposit on a property rather than purchasing outright. The benefit to doing so is not only you begin to build a credit history with a lender but also now that many short term funding products are available on properties that may be in a state of disrepair meaning standard lenders will not lend against them, it gives you many options. Short term finance whilst it can be expensive, does have benefits such as no term repayments and in many cases for amounts such as you are seeking, no valuation is even required so your initial up front costs would be minimal. Once the loan is in place, you perform the work and then either refinance on to a long term buy to let product and let the property but then you still have money in the pot to do the same again. You also retain an asset for future leverage.
     
  10. FWL

    FWL Member

    The key to any type of short term finance is the uplift it can bring to your property valuation. If for example your short term finance costs £50k (capital and interest) but the renovations lead to a £100k uplift in the value of the property, this is a no brainer. When the work has been completed, assuming you are keeping the property, you simply refinance on the new valuation, pay off the short term debt and you should be left with a decent profit :)
     
  11. Longterminvestor

    Longterminvestor Active Member

    How much would you be looking for to cover your living costs for the next 12 months? The problem with flipping properties is the time taken to find a suitable property, purchase it, renovate it and sell it - then get the cash. I would presume somewhere in the region of £30k+ would be enough to see you by for the year?
     
  12. Neil E

    Neil E New Member

    I`ve flipped over 60 properties in the past 12 yrs. Even though we have some funds, it is always better to leverage your finances so you can do more deals. Doing one or two a year is a slow way to build up a warchest or even use the profits to live on.
    I wouldn`t really go as low as £60k per prop as the uplift is small for the amount of time and work you put in. Aim for around the £100-£150k value properties using bridging and a deposit to purchase. This is the ideal FTB territory and if you finish them to a good standard and not over price them on re-sale, they`ll fly out. We typically sell our properties within 2 weeks of going to market.
     
  13. Longterminvestor

    Longterminvestor Active Member

    Hi @Neil E

    I would be interested to hear about your early days in the FTB market. Sounds like you have a fair amount of experience :)
     
  14. FWL

    FWL Member

    I am always intrigued how those who make a living off flipping properties can ensure their cashflow even in difficult markets. I presume the value they add to a property ensures there is always sufficient margin to bank a profit even if the sale ends up being below the market value.
     
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