To flip in this climate?

[CPHB2021]

We are considering buying a house, with no intention of making it our home, but to live in, do up and then sell in about 2 years. It's run down and needs modernisation but it's structurally fine.
The house in question is £380k and most houses on the same road sell for £450k onwards.
The works would be roughly £15k-20k. We do feel we have a realistic idea of costs.
My husband is in the trades so a lot would be free labour, though I understand it's his time.
We know it wouldn't be a huge profit but we've no other way of getting a lump sum of cash to help enable us to buy a house that we aim to be in longer term.
Would you do it in this housing market? We do have quite a healthy deposit but are struggling to find a house that we can really see ourselves in long term, we need to save a bit more to get to the next price bracket. We thought this may be a way to help us on the way, whilst paying a mortgage, not rent and because it's a lot under budget, have a much lesser mortgage than if we stretched ourselves to the top of our current budget....

Yes @Feelingstrange2 , It was also 1991 for us! 3 bed terrace for £47k, (I think we overpaid looking back, prices were already beginning to stagnate) and we could only get £43k when we sold in 1996. After many viewings we were just glad to get rid of it, as we were moving to a different county for work and began there by renting and getting to know the area.

Those prices though, compared with nowadays! I should have hung onto it and rented it out if only I could have predicted what would happen to prices over the next couple of decades. Oh well.

I suppose over the long term prices will gradually rise, barring some disaster, but if it is short term flipping you intend you run the risk of price drops and losing all the money and effort you have put into that property. We know the economy is not doing well and the world situation seems a bit unstable, I don't really think it's a time for house price growth. A lot of people simply can't afford the prices that many sellers are asking.

What do work do you think you'll have done for 15-20 grand?
We recently paid £2.5k to have the hall, stairs and landing painted... (and that didn't include the paint).

Mortgage don't come free and at current rates the interest only portion may be higher than their rent.

Quite a lot as my husband is a tradie. Unless you have extremely high ceilings and a huge staircase, I think you've been over charged.

We are quite realistic in our pricing but it is only really applicable to us, personally, as he can do such a lot of the work needed and we have lots of friends and family who owe us favours!

@kerryBlues do you have a huge Victorian style house? I painted my halllway, landing and stairs myself using an extendable roller and a stepladder, but admittedly it’s a 70s house so low ceilings.

I wouldn't say huge, but it's Edwardian with very high ceilings. That was a very competitive quote, too (we had around 6 quotes) 🤷🏻‍♀️

It’s quite tight for a flip. I think you also have to be careful that you don’t get in the mindset of doing everything on the “cheap”.

ie you put in cheap carpet, cheap looking kitchen and bathroom and when you come to sell it all looks exactly as though it’s been done cheaply. I’ve seen houses like this where they’ve been done up to sell but even though it’s got new stuff in I would want to rip it all out and do it again.

Two houses I’ve seen didn’t achieve asking prices because of this reason.

I also think you have to be realistic when you say you have friends and family who owe you favours. Fine your husband can do the work, but when you try calling in those presumed favours from others you might not find them as willing and able as you thought.

Definitely true for some but others I know will pull through. We helped my sister and BIL renovate their house, I know for certain he will help. Friends are more flaky but their help would be paid work, just a lesser rate than most people would pay. But of course, they could suddenly be 'fully booked' so I do take this with a pinch of salt!

@friendlycat great point about not doing it on the cheap. I complete agree. We would do it with our personal touch. I've seen two houses recently that have been flipped, now back on the market, the bathrooms are horrible and with no thought whatsoever and like you say, although new, I'd rip out! We would do it as cost effective as possible but also with a view that we also may end up living there longer than we thought, so would choose wisely!

If the market moved against you and you were stuck in the house for longer than you wanted, could you do a loft or garage conversion to ease the lack of space?

There is scope for quite a large extension, subject to planning, though I think you'd get it, it's a very residential area. Could do loft conversion too. We just wouldn't do these as they'd be very expensive and we wouldn't re coop the cost if we sold after, say, 2 years but definitely scope to add more space.

Don't forget solicitors fees, and SDLT.

Yes we've accounted for these. SDLT is the killer!

Of course, you're right. In my defence, I'm full of cold, hence I'm now posting at this hour 😫

It is not going to cost you 25k for legals and estate agent!

Yes, it’s always obvious when it’s been flipped – grey-look laminate flooring, white B&Q kitchen cupboards, pinky-beige carpet, brilliant white or magnolia emulsion slapped on. It looks cheap and feels suss, makes you assume corners have been cut. It’s also so wasteful as any buyer sees the wobbly-looking Crossroads set kitchen as something to rip out even though it’s new.

OP, you’re assuming you can rip out a bathroom and kitchen and fit a new one without plasterboard, plastering, other materials – but you have no idea what horrors lie beneath. I’ve never done anything in any of the properties I’ve lived in (all fixer-uppers) without knock-on discoveries. I think your margins are very tight and your profit will be eaten up with exposing dodgy things as you renovate.

I’d wait until a much cheaper property comes up, or get DH to do shitloads of overtime – round here, trades seem to work eight days a week! – or accept that you can’t afford to start on the rung on the ladder that you want to.