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I have £200k cash to invest in buy-to-flip. Any advice?!


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My partner and I have recently acquired £250,000 cash. We want to keep £50,000 as an emergency fund so have £200,000 to invest. 

We want to grow the capital as quickly as possible over the next 3 years, to a level where eventually we can purchase buy-to-let properties and build a portfolio for passive income. 

We're thinking the buy-to-flip strategy. We have family in the building trade and are currently in-between jobs so have full weeks to commit to searching for properties, design, decorating and labour etc.

We're new to the industry so really need as much advice as possible. What would you do in our situation? Is it worth taking out bridging loans to free up more of the cash per flip? Is there a way to maximise profits for doing more than one project at once? or best to start slow. 

We appreciate any comments. Thank you. 

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This may not be as easy as you think!

it is quite difficult to pick up a bargain at present as the market has been really hot since the SDLT holiday started. If you did pick up a bargain by the time you have flipped it we may be in a quieter market as the SDLT holiday will be over. It is much easier to make money in a rising market and we may not  be in that for much longer.

If you already own property you will also pay the extra 3% so that is extra you need to make up.

So you could buy your property, do it up and then either not be able to sell it or not be able to sell for a profit. You may also find that friends and family will only give you so much free help when you are trying to make money yourself.

You are more likely to make money by holding your property for longer so perhaps rent the first one out while it appreciates in value and provides an income.

I would only buy one at a time - flipping is hard work! And you will learn a lot from the first one. It can be tricky to get a BTL mortgage with no experience so perhaps you need to buy cash - bridging loans may be expensive. If you keep the first one you may be able to mortgage later or for the next one.

I think you need to adjust your timeframe - property is a long term investment and 3 yrs is a it short.

Good luck :)

 

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I agree with Julia that it is not easy but if you feel that is the best way you will generate capital quickly then why not? It's about finding the right deal and being patient, not rushing into things and finding a versatile property (i.e. one that you will be happy to sit on for a bit if Julia's predictions of a quieter market come true). Of course property is long term, but it sounds like jayproperties is just starting out and figuring out the best way of generating capital to ensure they can have enough to invest with more long term strategies. By the very nature of flipping, it's not long term, but it doesn't mean that's not the overall goal.

Not sure I agree on Julia's suggestion to adjust your timeframe either, on the basis I don't think you are saying that's the "be all and end all", it's just the timeframe for your flipping strategy, before moving into buy to let, right?

I am in a similar situation to jayproperties albeit I don't have quite that much money to invest. I am looking to build up a pot of money and as mentioned in a lot of PropertyHub education, flipping is a recommended strategy for this initial goal. I am currently torn between an aggressive approach, using bridging finance, or to stay within my means which will obviously take a bit longer (i.e. one property at a time). I think I'll go for the latter due to the risks of a first investment, but I don't think that necessarily equates to "buy and hold".

Jayproperties - can I ask where you are looking to invest with this money, and how much are you targeting as an overall pot to invest after the 3 years of flipping?

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