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claudia t

Wise to sell house and start flipping with Brexit?

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Hi, my partner and I are planning to buy and renovate properties for a quick sale (flip houses) that we're living in and would like to do this twice a year for several years until we are mortgage free. Brexit is making us nervous and wondering if it's the right time to do this?

I own a 4 bed semi (in Wirral, nr Liverpool) I bought for £210k in 2015. We plan to sell asap and buy a house for around £100k to start our venture. It doesn't help that we've been given different advice by estate agents. The house is in need of work - nothing major, decorating, new carpet, sort garden out, biggest one is replacing the wrecked decking - but to do it all could take a few months.

Estate agents have valued it as it stands from £210k to £230k. Similar houses nearby done to high spec have gone for £235-£245k in the past year. My partner feels we should sell asap before Brexit as having a large house if houses prices are going to drop is riskiest, even if we take a slight hit on it, and crack on with flipping. I'm hesitant to sell lower without it being fully done up and miss out on getting top whack for it.

As excited I am abour flipping houses, I'm also nervous about if it's the right time to flip houses, worried we could do our sums and our expected profit will be hit by house price drop.

I owe £130k on the mortgage.

The north does seem less affected than the south but noone really knows for sure what Brexit will bring.

Any advice please?

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If you dont DIY the works sound like it should take days, not months. Though no one knows as no one really knows what will happen with brexit. My guess with the property market is what you example there, indecision will mean little movement. Few houses for sale and few people wanting to move up or down the ladder. It may be an opportunity to get some distressed sales at auction if you have the cash. 

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Hi Claudia,

Understand your dilemma fully as I have this niggling thought in the back of my mind about our house. Not giving financial advice, but if the numbers work with regards to doing your current place up and selling it, I'd do that first and not be scared into just trying to sell ASAP because of looming Brexit. As you rightly point out, nobody actually knows what's going to happen with it all and you could be letting fear cause you to leave money on the table unnecessarily . Then, if we are still in this Brexit deadlock when you come to sell, you could possibly sell for top whack, which is great. If not, you will have hopefully built in enough equity by doing your place up to cover any possible decline in the market, which nobody can actually quantify the extent to which that will happen anyway, so you could still make money! So to me, this all seems like a calculated risk worth taking.

Regarding whether its the right time to start at all, again, not giving financial advice, but I would again go for it personally. Imagine you were having these thoughts back in 2016 when it first happened......you'd have been waiting 3 years to see that there has still been no outcome and therefore would have done nothing. According to your plan, that would have been 6 projects of missed opportunity which is potentially more expensive than not getting involved. I think there will always be "reasons not to act", but if you let these affect you then you'll end up never doing anything. You could even end up picking up a property or two at the bottom of the market if there is a decline, which would be a bonus! Remember what Warren Buffett said......"be greedy when people are fearful, and fearful when people are greedy"!!

I have a tendency to be over-cautious with things in a similar way and am really trying to change my thinking to one that encourages calculated risk! Read/listen to Rich Dad Poor Dad if you haven't already. I just finished it on Audible and am listening again! Robert Kiyosaki talks about this concept of fear. He also talks about the idea of letting your "financial genius" inspire you to take challenging situations and turn them around. So for me, the key is to take calculated risk with plans for how you might be able to turn the situation around if the worst happens.

As I understand, your aim is to use this model to simply trade your way out of your mortgage as opposed to it being a business interest as such. So you are at an advantage in that the worst case is that if you REALLY wanted, you could just stay in any house you are in and flip it when you feel it is good to; after all, you'll be living in it, so no real holding costs! Also, as your looking to be in and out of the market quickly each time (6 months-ish), you will be less exposed than someone who wishes to hold only for the medium term; the market is unlikley to crash overnight and so the effect of a decline may not be as pronounced, assuming that each project has a good margin in it.

Be creative......perhaps don't just look to buy houses that need a kitchen/bathroom. Maybe you could mitigate risk by looking to buy houses that have a large garden that could be turned into à building plot. Or potential to add a loft conversion or extension for increased profit (assuming the numbers worked out). More margin = more risk protection!

Please note that I'm a newbie......someone of more experience will hopefully chime in with some more/better advice!

Also, beware of the CGT implications of your chosen model, in case you haven't considered them already and build this into your numbers.

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I’m doing the same - took months to get house ready and just on market - honestly wish I’d gone for it as was in April because things in south here have slowed even more. Up north might be ok? Just consider mid nov - jan might be slow my agent suggested we rent rather than keep it on coming up to Xmas, but then with brexit who knows? 

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