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kuro507

Getting started with flipping

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Morning All

 

I've had a couple of bad relationships/marriages and subsequently lost a significant amount of my equity over the years. Now at 46 I want to spend a few years building my capital/equity back up, with a longer term desire to build my own home.

 

I find myself in a position of having no significant dependents, my Kids are largely independent at 16/18, with a reasonable salary and some equity in my existing home.

 

If every the time was right for me to take a few risks, its now.

 

I am thinking of selling my existing 3 bed end-terrace home early next year, with the plan of purchasing a property that needs renovation, maybe a small single story extension etc. With a goal of flipping it within 6-9 months for a profit, which I then invest in the next property. Slowly building up my equity.

 

Property development is the only other career I would enjoy doing, apart from IT. I understand how a building is constructed and have completed a large 2 story extension myself in the past. (Including electrics, plumbing etc)

 

Now I have to accept that although I can do most DIY jobs, I am time precious so will need to carefully choose which bits I would enjoy doing vs the time it would take and the cost for somebody to do it for me. Plus of course the delays taken for me to do it, as afterall this is supposed to be a profit making exercise.

 

I am planning spending the next few months researching and absorbing as much information as I can, to make sure I enter this with my eyes open.

I will be planning on purchasing within the Bromsgrove/South West Midlands area as that is easy for work and seeing my Kids. I would be looking for a 3 bed house that just needs modernisation to start with, not too much work.

 

Onto my questions:-

 

  • Where to start with this?

 

  • Best sources of advice?

 

  • Could you give me a list of things to avoid? Obvious pitfalls that newbies fall into?

 

  • Any advice for somebody new to this? Something you wish you'd known yourself when you started?

 

  • How to quickly calculate work and costs involved?

 

  • How do you calculate expected profits up front? The project needs to be worthwhile, with a good level of profit. What sort of profits should I expect? Whats reasonable?

 

  • Would you be up front with Estate agents about your intentions, or not? Advantages/disadvantages?

 

  • Best type of house to look for? Most desirable, greatest chance of increasing value etc.

 

  • Would you buy the most expensive you can afford, biggest mortgage etc, or keep it simple and affordable? Interest only mortgage?

 

 

I'm planning on living in the house as I do the work, so it will always be my primary residence and not something I have to worry about paying tax on profits etc.

 

Thanks in advance for advice and suggestions :) :)

 

 

 

 

 

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if buying with a mortgage then you need to be careful as most mortgage companies are not keen on people using their mortagess for short term flipping. May be better to find a JV partner to finance and then share the profits in some way. or look at bridging finance.

The 2 main types of flips i would look at are

1. deceased estate and just do a full internal refurb to add value

2. add space by kitchen extension, garage conversions, loft conversion, onsuite etc

 

Just remember the cost of buying/sellling/stamp-duty etc will need to be factored into the profit. Its a competitive area but with the right property, it can be done. Bromsgrove is pretty decent as have looked there a bit myself so its a case of doing your research about the market and then sorting out your finance.

There are various articles podcasts on all aspects of flipping so plenty of knowledge out there.

 

I suspect that you will initially find that you are super conservative and will struggle to find a deal that stacks up and you may end up doing the first at minimul profit but gain lost of experience

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Thanks for the advice :)

 

I am happy to go slow, I will still have a full-time job to juggle.

So taking my time over 12 months, to ensure mortgage Company is happy and giving myself some rest would be ok. As long as there is a good return available.

I've also subsequently read something about doing it < 12 months could open you up to having to pay tax on income/profit. 

 

Your thoughts on flips are very similar to mine. Repossessed or deceased, just needs complete redecoration, new kitchen, bathrooms etc. Pretty much cosmetic.

Possibly rear kitchen extension and making it open-plan.

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There are short term lenders that will lend against purchase and refurbishment with immediate sale as the exit. You will always be required to invest in the purchase yourself but some lenders will then lend you 100% of the refurbishment costs. As a general idea you can get between 60 and 75% LTV (or purchase price whichever is lower) and up to 100% of the refurbishment costs. You can roll up interest so you do not need to make term repayments and then redeem the loan when the property sells but you will be tied to a loan term (usually minimum 3 months max 18 months). Most lenders will want experience evidenced so if you are doing the work yourself with no prior similar success projects to show then it is likely to affect the advance they will consider but if you are using an experienced contractor that may not be an issue. In essence you will need to input a deposit of circa 30% yourself. You may therefore not make a profit until you have done several projects. 

 

Best of luck with things.

 

Kind Regards

 

Jessica Harrison 

Outstanding Growth Ltd.

Commercial Finance Brokers

www.outstandinggrowth.com

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