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Property/DIY

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First time flipping - have we considered everything?

99 replies

Oncetwicethreetimesalady · 13/03/2024 18:09

We have just put an offer in on a 2up 2down terrace. It’s a deceased estate and not been updated since the 80s. It’s small but in a pretty location in a desirable village. Plan is for us to lend dd the money out of our mortgage (which is flexible and effectively paid off). She will pay us back once it’s sold (including interest that we will have paid in the meantime). Dd (20) will pay for the renovations out of her savings/income. She has no other property so she won’t pay capital gains when she sells.

Dh, aided by dd, will do the majority of the work- he has the skills to fit new bathroom and kitchen, lay new flooring and decorate. He and dd recently worked together brilliantly at my mum and dad’s house, fitting a new utility room and new electric heating etc etc. We will just need to get professionals for boiler/plumbing and rewiring (and laying carpets upstairs). We have budgeted 20k for renovations. it will be a no frills finish but we’re very good at making ordinary things look their best. We have previously done a major extension/remodel of our 4/5 bed home and also renovated our previous terraced house.

They were asking £180k but reduced it to £160k. We are offering 148k. Estate agent says would be worth £200-210k when finished. two doors down sold for 195k two years ago. We’d hope to spend 170 all in so there should be a decent profit we think.

OP posts:
Tupster · 13/03/2024 19:02

I don't know your area specifically, but most places peaked about 2 years ago and property prices have dropped since then. I would do a hell of a lot of looking at property sales in the area and researching that potential selling price before you count on what the estate agent says. Also - have you factored in the mortgage costs for the length of time you'll own the property - and again look closely at the local property market - how long area houses waiting to sell?

Town I'm buying in has lots of houses that have been sitting on Rightmove for the best part of a year and some have dropped over 100k from original asking. That's not a market I'd want to be flipping in. Obviously you know your area, but really check out the realistic situation.

Hostilehabitat · 13/03/2024 19:07

What about 2 x lots of moving costs - maybe £3k at least? Do you have a contingency fund? We are renovating some of our house currently, DH is doing most work himself and everything costs more/needs more material/needs more tools etc than you think.

Edited to say I was shocked at some price rises. A few years ago a new combi boiler cost me £1100 and now it’s about double that. We’re in the north too where labour is cheaper.

DrJoanAllenby · 13/03/2024 19:28

Budget of 20k is extremely low and I would imagine it being double that.

minipie · 13/03/2024 20:25

We will just need to get professionals for boiler/plumbing and rewiring (and laying carpets upstairs). We have budgeted 20k for renovations.

Have you had ballpark quotes for the plumbing/wiring? And the carpets?

Also your maths on total spend doesn’t seem to include the extra mortgage interest you’ll be paying?

Oncetwicethreetimesalady · 13/03/2024 20:51

No moving costs other than legal fees as she won’t actually be moving.
we have factored in £3.5k for boiler and we have a friend who will do mates rates fitting it. However, it may be possible to just resite the existing boiler which has just been serviced. 3.5k for wiring too though dh will do all prep and make it as easy as poss. This is only a small house!
We have got more money in the bank should it be needed.

OP posts:
Octavia64 · 13/03/2024 20:55

It's a tough market to be flipping in.

I understand what you are doing. You risk it being on the market for a while once done up.

Diyextension · 13/03/2024 20:57

Hostilehabitat · 13/03/2024 19:07

What about 2 x lots of moving costs - maybe £3k at least? Do you have a contingency fund? We are renovating some of our house currently, DH is doing most work himself and everything costs more/needs more material/needs more tools etc than you think.

Edited to say I was shocked at some price rises. A few years ago a new combi boiler cost me £1100 and now it’s about double that. We’re in the north too where labour is cheaper.

Edited

Why would there be moving costs ? They aren’t living in it.

you sound like you have experience so its doable i think on £20k

Ive seen my brother do it lots of times….

tigger1001 · 13/03/2024 21:01

Is your dd going to be living in it?

Changingplace · 13/03/2024 21:02

I think £20k budget seems low if you’re doing the whole house including kitchen/bathroom, if you take off the £7k you’re factoring in for boiler/wiring so you’re looking at £13k to cover absolutely everything else doesn’t seem enough.

I’ve just been quoted £2.5k for carpets with fitting for x3 bedrooms and hall/stairs so that’s taking another chunk out.

What’s your back up plan if it doesn’t sell quickly, would you rent it out?

DragonFly98 · 13/03/2024 21:06

people who do this have very little morals houses are places for people to live in not for you to make money from. At first I thought you were buying a home for your daughter but no it's just a way to make more money.

tigger1001 · 13/03/2024 21:06

Saw your other post to say not going to be living in it.

Your daughter very well may have a tax problem. Principal private residence relief won't be in effect as she isn't living in it. Irrelevant if she doesn't own any other property - got to live in it to get the relief.

And if buying it to flip it - cgt isn't the issue it very well may get taxed to income tax as buying it to make a profit.

Hostilehabitat · 13/03/2024 21:11

Diyextension · 13/03/2024 20:57

Why would there be moving costs ? They aren’t living in it.

you sound like you have experience so its doable i think on £20k

Ive seen my brother do it lots of times….

By moving costs I meant legal fees! I would usually class those as moving costs regardless of if I was living in it.

StormsAreNeverNamedAfterMe · 13/03/2024 21:14

Don’t forget to factor in your DD will lost her first time buyer stamp duty exemption on her next purchase, which could be almost £10k

£20k cannot possibly cover solicitors for buying & selling, estate agent fees for selling, mortgage interest to you, Electrician & Gas engineer, council tax, utilities, skips, kitchen & bathroom, other fixtures. It’s just too tight a budget.

Diyextension · 13/03/2024 21:14

tigger1001 · 13/03/2024 21:06

Saw your other post to say not going to be living in it.

Your daughter very well may have a tax problem. Principal private residence relief won't be in effect as she isn't living in it. Irrelevant if she doesn't own any other property - got to live in it to get the relief.

And if buying it to flip it - cgt isn't the issue it very well may get taxed to income tax as buying it to make a profit.

Then you just tell whoever she is living in it while its being done.

Maddy70 · 13/03/2024 21:16

Hes a teacher. He is not allowed his phone in a classroom. He cant take calls .... im surprised he could even possibly be back home for 6pm on a parents evening

Maddy70 · 13/03/2024 21:17

Sorry wrong thread

Hostilehabitat · 13/03/2024 21:17

Is the £170k to cover everything? If you’re buying for £148k I guess that means £22k for literally all the things @StormsAreNeverNamedAfterMe has listed - it seems super tight and I’m struggling to see how much profit you’d make. Couldn’t she just take her £20k and use it as a deposit on somewhere to live herself?

sheeplikessleep · 13/03/2024 21:18

We are just coming to end of renovation and extension of our forever home.
Im not even getting an estate agent to value it out of curiosity as I know it’ll be nowhere near what we spent on it (I would have done if it was 5 years ago). That said I love it, but no way would I be flipping a house in the current climate!

Diyextension · 13/03/2024 21:28

If your dh is doing all the prep work for the wiring then £3.5k sounds a lot for a empty 2 up 2 down . The actual wiring is the easy bit if everything is chased out ,boxes in floor up.

TBOM · 13/03/2024 21:30

I’ve flipped a lot of houses in my life - double digits. No way would I consider doing it in this market.

SpicyNoodleSoup · 13/03/2024 21:34

I don't think £20k is too low. Yes you will have to be careful but it is doable.
We did a full renovation on a 3 bed detached which was new kitchen, 2 new bathrooms, flooring through out entire house, log burner installation, re-wire, update plumbing (granted we didn't have to replace the boiler) and decorate. We did most of this ourselves but we did pay to have a structural wall removed too. Everything has been finished to a very good standard. We shopped around and got good deals.
I am always astounded at some of the prices some people quote on here for new kitchen and bathrooms.

Oncetwicethreetimesalady · 13/03/2024 21:34

She can live in it temporarily while it’s on the market. Thought we might also rent it out either on 6 months tenancy or air bnb as it’s a pretty house in a nice location. That would cover some of the interim costs.
We won’t need skips as the place has been pretty much stripped (carpets and everything gone) and the tip is only round the corner so can take waste everyday if needed.
I’ve priced up fixtures eg basic ikea kitchen even though we might be able to upcycle parts of the existing kitchen. I’ve costed in bath and tiling even though again we may be able to upcycle existing.
dh is happy to give his labour for free. Dd has decided against university so we have the budget we would otherwise have spent on her accommodation/subsistence over three years and then she would come out with a big debt. We are thinking that we should invest that money in an alternative and hopefully she will come out with a profit.
like I say, we do have more money if needed so it wouldn’t be a problem if we ended up spending more. It wouldn’t actually matter if she just broke even on it as she has a job anyway. Luckily, she will be able to take the chunks of time out for this project. Likewise dh has a flexible job. Also she will have access to more low cost labour from her younger brother who will soon finish a levels.

OP posts:
SpicyNoodleSoup · 13/03/2024 21:35

SpicyNoodleSoup · 13/03/2024 21:34

I don't think £20k is too low. Yes you will have to be careful but it is doable.
We did a full renovation on a 3 bed detached which was new kitchen, 2 new bathrooms, flooring through out entire house, log burner installation, re-wire, update plumbing (granted we didn't have to replace the boiler) and decorate. We did most of this ourselves but we did pay to have a structural wall removed too. Everything has been finished to a very good standard. We shopped around and got good deals.
I am always astounded at some of the prices some people quote on here for new kitchen and bathrooms.

Forgot to say we did all of ours for £20k!

Diyextension · 13/03/2024 21:42

Oncetwicethreetimesalady · 13/03/2024 21:34

She can live in it temporarily while it’s on the market. Thought we might also rent it out either on 6 months tenancy or air bnb as it’s a pretty house in a nice location. That would cover some of the interim costs.
We won’t need skips as the place has been pretty much stripped (carpets and everything gone) and the tip is only round the corner so can take waste everyday if needed.
I’ve priced up fixtures eg basic ikea kitchen even though we might be able to upcycle parts of the existing kitchen. I’ve costed in bath and tiling even though again we may be able to upcycle existing.
dh is happy to give his labour for free. Dd has decided against university so we have the budget we would otherwise have spent on her accommodation/subsistence over three years and then she would come out with a big debt. We are thinking that we should invest that money in an alternative and hopefully she will come out with a profit.
like I say, we do have more money if needed so it wouldn’t be a problem if we ended up spending more. It wouldn’t actually matter if she just broke even on it as she has a job anyway. Luckily, she will be able to take the chunks of time out for this project. Likewise dh has a flexible job. Also she will have access to more low cost labour from her younger brother who will soon finish a levels.

Well put, even if she doesn’t make a huge profit at the end of it, all the experience/ skills she gets out of it will be well worth it ……i know people twice her age that wouldn’t even know where to start putting a shelf up 😵‍💫. Good luck 👍

Papricat · 13/03/2024 21:50

Sounds like a waste of money and energy.