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mike wood

Strategy for flips - Correct?

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Hi all,

 

Happy Friday - hope you are all doing well! I wanted to get some advice on a potential strategy I have to get into property development once and for all!

 

I currently own my own home with a mortgage and have built up savings & access to approx. £50K. I currently work full-time but looking to reduce this to part-time or work as a consultant to enable me time to commit to flipping properties. I have been thinking of going down the flip route for 2 reasons, 1 - building up further capital, 2 - providing an income to top-up my part-time wage. I have been speaking to the family accountant and he has recommended the strategy of buying a house to renovate but make this my residential property (live in it) for the time it takes me to get it ready for sale. Then sell that property, buy the next and repeat. He has said that I should only really look at flipping 1 property per tax year to avoid capital gains. Hopefully if this works, he has said that I should setup a company to minimise tax and increase profit for future purchases.

 

A few questions

1. Does this sound like a sound idea?

2. From what i've researched, unless I set-up a company straight away I would be in for the 3% stamp duty as I already own a house

3. I'm still not 100% on how you would 'top-up'/pay myself from the proceeds of each sale either from within a company or not

4. What other ideas does anyone have given my current situation?

 

As always really appreciate and love your replies and ideas!

 

Mike

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Ah yea sorry forgot some of those details!

I would be looking at buying at 50K in cash, and use a bridging loan/loan from parents to do the renovation (max. 10K)

In terms of reinvesting and earning - I guess that would all depend on if I rent out my current home, if I do then I would say my part-time income would be sufficient and most of the profits made would go straight back into the next development 

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a company will pay the extra 3% stamp duty I'm afraid

flipping better via a company to save national insurance especially if you reinvest profit in next project 

unless you are carrying out work yourself you need to operate the construction industry scheme 

HMRC have plenty you can read on this

deb

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Also, if you buy through a company, then it won't be your residential home, as you would have to rent it from the company...the company owns the property, not you! I think incorporating would only be the way forward if you were doing multiple flips that were never your residence. Not professional advice, just my take on things! :-)

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Hi All - Thanks for all your input, always very worthwhile :)

 

So just to confirm the best idea here would be:

1. Keep my own property as it is (private), maybe rent it out to reduce out goings and live back with the parents (hopefully short-term!)

2. Buy any flips through a Ltd company

3. BTL - I would like to add some to the portfolio at some stage - this I would also do through the Ltd company. Planning on using BTL interest only mortgages. Are there any things I need to be aware of here? What income do I need to show to be able to get a BTL mortgage?

 

Hopefully this will fly B)

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