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Do you own a property flipping co?

F

FND Property

New Member
Just wondering if anyone on here owns their own property flipping company?


Im in the process of starting my own ltd company & have a few questions.


Cheers
 
D

diyhelp

Active Member
Fire away with your questions - I dont have a flipping company but myself and other members might be able to help.
 
F

FND Property

New Member
Just a few general questions really...

Bank accounts
Any recommendations for a bank account as most business accounts charge for money paid in, this will be a large fee when the proceeds of a property sale are paid in.


Insurance policies (household insurance)
Do these need to be in the name of the business or can they be in personal names. If they are in personal names can we still offset these against tax?


What items we can we offset against tax?
Fuel for travelling to and from property
Vehicle depreciation
Office costs, laptop, software, internet etc
Utility bills for the house where the office is (in personal names)
Phone bills (personal names)


Building Materials
Most of the trade accounts we have already are in personal names, can we use these to purchase materials in the name of the individual or will the invoices etc need to be in business name to allo offset of these against tax?
 
F

FWL

Active Member
Ideally, to avoid any problems further down the line, all business expense accounts should be in the name of the business as opposed to individuals. It should be fairly easy to transfer the name over?

Bank accounts, there must be some business accounts out there which operate on a set monthly fee basis?

Insurance policies, again, it would be more beneficial and straightforward if these were in the name of the business.

Offsetting expenses against tax, in simple terms any direct business costs can be offset against income although you will need to be careful where equipment, such as phones, are also used for personal affairs. By the letter of the law, personal use of business equipment would be deemed to be a benefit in kind and therefore taxable to the individual.

Building materials, in order to keep things simple and unified, it would be better to have these in the name of the company.

* While I have given my general opinion of the above subjects, this information should be ratified with an accountant who will be aware of your personal situation and any changes in legislation which may impact the above comments.
 
R

realdeals

Active Member
I agree with what FWL has listed - I am curious how you are going to finance the company. Do you have significant capital to inject or is it going to be heavily geared with finance?

I have considered such a route myself which is why this post caught my eye.
 
F

FND Property

New Member
I agree with what FWL has listed - I am curious how you are going to finance the company. Do you have significant capital to inject or is it going to be heavily geared with finance?

I have considered such a route myself which is why this post caught my eye.
The business model is:
There is 3 of us, all friends who have worked together in the past on various projects.

Between us we are qualified & can carry out most trades (other than electric work or plastering, however, we do plaster boarding ourselves & get a plasterer to do final plastering).

The plan is to each invest an equal share of capital (directors loans) then cash buy property, renovate on a 16 week schedule of works, then sell all within 8 months (30 weeks) of purchase (hopefully). Reinvest the profits and do it again. Risk is minimised as we are adding value to each property and only hold onto the property for no more than 8 months. Our exit strategy is if the market begins to turn then to not buy one again until we see confidence return to the market.

Once we have a reasonable amount of cash (after first 2-3 properties) we plan on continuing to cash buy & adding square footage to each property in the form of a single story extension across the back of a property to make the currently desired kitchen / diner which should allow us to achieve larger profit margins.
 
F

FWL

Active Member
All seems sensible - I presume you have a legal agreement in place between all 3 of you? Unfortunately it can be tricky mixing friends and business.

Your plan seems safe and with a long term view in mind - if you were not able to sell a property within the 8 month timescale might be worth mortgaging the property (on the enhanced value) and renting it out on a short term lease, assuming that rental income would cover the mortgage payments. This would leave you with a propetry which pays for itself, prior to being sold, and release your capital to move onto the next investment?
 
P

PostBrexitInvestor

Member
If done correctly, flipping property can be extremely lucrative but unfortunately one “dud” property could potentially wipe out all of your previous returns. The company set-up and the taxation side are very important but I would take some time out to research and study flipping as this is a fine art.
 
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