Thinking about investing to start property flipping with friend - need advice please

MrJaiga

Hi all, this is my first post, i hope its in the right place.

Basically my friend and I are both in the same position, we both earn the same amount, both live at home and both have roughly the same amount saved already (£33k between us).

We have long been thinking of how we can have a go at trying to make an additional income to help our dream of one day living in Asia (we both traveled together and realised it was the place we want to be)

Property seems to be a good investment after reading various sources and obviously speaking to our parents and friends etc.

We have decided that we should look into start doing property flipping.

Our plan

Save for the next 2-3 years. Accumulate roughly £80k between us
Buy a house, do it up and sell it.

Rinse and repeat (obviously still keeping our jobs to pay for additional costs)

Now my question is what is the best route to do this?

1. should we buy a house outright or with a small mortgage?
2. Is there an average % that you can expect to make on property flipping (i know there are many variables but it would be nice to know what other flippers usually make on stuff like this)
3. Where do you go from there, say you flip a house make 10k profit, would you just keep that 10k in the savings and start over again or would you invest that 10k into a better house and try to flip it.
4. What should our long term goals be? simply to amass large savings from the profits or perhaps do up and home and rent it out??

Joe_Bloggs

I thought you had to be a Member of Parliament to do this.
J_B.

guitarman001

Disgusting (IMO).

bigfreddiel

try watching 'homes under the hammer' bbc1 - 10am for a few weeks - that should give you a feel for how other people do it.

fj

laurel7172

And spend the next two years acquiring every DIY skill you can...

grey_gym_sock

hmm ... if you work 2 full time jobs (your existing job plus decorating), and investing some capital, and house prices happen to be rising, then you might make a packet.

investing your capital (rather than keeping it on deposit) is often a good idea - more so if it's for a longer timescale - but it may or may not make sense to combine that with working. do you want to work at decorating?

where in asia do you want to live, with what kind of lifestyle? because some places would be very cheap living compared to the UK.

MrJaiga

bigfreddiel wrote: »

try watching 'homes under the hammer' bbc1 - 10am for a few weeks - that should give you a feel for how other people do it.

fj

thanks ill be sure to catch it when im off work.

laurel7172 wrote: »

And spend the next two years acquiring every DIY skill you can...

I work in a Facilities Department so i can do the general stuff, plus we have one friend who is an electrician and another who is a plasterer, plus my friend who wants to do this with me has a property developer contact through his parents friends who can give us tips

My dad is also very good at DIY so im sure he will give us a hand.

I definitely think i should learn the basics myself over the next few years like you say. It's a valuable skill and something that help retain my profts

grey_gym_sock wrote: »

hmm ... if you work 2 full time jobs (your existing job plus decorating), and investing some capital, and house prices happen to be rising, then you might make a packet.

investing your capital (rather than keeping it on deposit) is often a good idea - more so if it's for a longer timescale - but it may or may not make sense to combine that with working. do you want to work at decorating?

where in asia do you want to live, with what kind of lifestyle? because some places would be very cheap living compared to the UK.

Thanks for the encouraging words grey, there is no way we would be leaving our jobs and are both happy to work long and hard to get this done. Also we wouldn't be going on holiday ever (part of being strict at saving) so we could use all our holiday time having extended weekends to get the house done up. This is all a few years down the line .

im a bit confused about this part of your reply -

investing your capital (rather than keeping it on deposit) is often a good idea - more so if it's for a longer timescale - but it may or may not make sense to combine that with working. do you want to work at decorating?

are you saying that i should be investing my savings that i have now and accumulate over the next few years into something??

Combining what with working???

I don't want to work as a decorator no, i prefer to keep my office job, the property will be additional income. I basically need to accumulate as much as possible to see myself comfortable in Asia.

I came back to UK last year after travelling Asia for 2.5 years. I visited China, Nepal, Vietnam, Thailand, Cambodia, Laos My friend stayed with me in HCMC and also travelled for a year on his own too, we both stayed in Vietnam for around 3 months and fell in love with it. We both would love to live there (or go back there for periods of time) and move around to various countries travelling again.

I lived in HCMC for 1 year and also Bangkok for 6 months during the travels so i have a pretty good understanding of the cost of living and was living off approx $500 per month. If i could increase this to $800-1000 per month i would live very comfortably.

Investing in property in these countries is our end goal most likely as we both do not want to stay in UK for too long but this goal is probably 10-15 years down the line.

This is basically my end goal, to have this sort of residual income each month to pay for myself.

I live VERY cheaply, im a very simple guy. 3 meals a day, music, a bed, my laptop and internet connection and im perfectly happy. i don't drink, smoke, or practically spend any money on myself.

grey_gym_sock

i meant that you're putting 2 things into a property, your money and your time ... so the return needs to be pretty good for it to be worthwhile ... otherwise, you'd be better off separating the 2, i.e. investing your money in something that doesn't also take up your time, and meanwhile working (for long hours, if you're happy to) at something else ... i don't know what the right answer is for you; just pointing out alternatives.

i'd think there's more chance of making money from bigger transformations of properties (extensions, converting to flats, where it's uninhabitable to begin with, etc). less drastic redecorating may well not increase the value of the property by as much as it costs to it carry out.

you are always vulnerable to the state of the (local) property market when doing this kind of thing. if it rises quickly, you're almost certain to do well. if it falls, it may wipe out your expected profits.

just a few random thoughts there.

MrJaiga

grey_gym_sock wrote: »

i meant that you're putting 2 things into a property, your money and your time ... so the return needs to be pretty good for it to be worthwhile ... otherwise, you'd be better off separating the 2, i.e. investing your money in something that doesn't also take up your time, and meanwhile working (for long hours, if you're happy to) at something else ... i don't know what the right answer is for you; just pointing out alternatives.

i'd think there's more chance of making money from bigger transformations of properties (extensions, converting to flats, where it's uninhabitable to begin with, etc). less drastic redecorating may well not increase the value of the property by as much as it costs to it carry out.

you are always vulnerable to the state of the (local) property market when doing this kind of thing. if it rises quickly, you're almost certain to do well. if it falls, it may wipe out your expected profits.

just a few random thoughts there.

I work in an office so i cant work more hours to earn more money.

I dont have many other ways to make money, i dont have many skills, just simply am able to save large amounts of my monthly pay.

Bigger transformations is something we probably wouldnt be looking to do at first, we have no experience plus not enough money to think about doing something like that.

yes of course we are at mercy of the local market not much we can do there except choose a good location.

What are the worst case scenarios to buying a property then?

Say we bought it and couldnt sell it, we could try renting it out to cover the costs right?

Seeing as we would have paid most of the house in cash we wouldnt have that much of mortgage to pay off either and both our full time jobs would cover that easily.

grey_gym_sock

well, in the worst case the property is worth a similar amount to what you paid for it, and you've got little or no reward for the improvements you've made to it. (ok, that's not the very worst, but there's no need to be over-pessimistic.)

property is perfectly decent as a longer term investment. in the longer term, you've got to think about the state of the local economy, as that will affect prices more than anything. that's why property is doing relatively well in london & the south-east. if the local economy is OK, location is OK, and you haven't borrowed much, then there's not a lot to worry about.

but i think it's better to have a plan for how long you'll keep a property, rather than keep it if you "can't" sell it. a property will always sell if the price is dropped far enough; when ppl say they can't sell, it means they won't drop the price (though some properties do take longer to sell than others).

there are significant costs for buying and selling properties. if you don't keep a property for very long, it's harder to cover those costs and still make a decent profit.

Reaper

MrJaiga wrote: »

Buy a house, do it up and sell it.

This used to be a sure fire way of making money, but not so much now.

The market is slow because buyers won't/can't buy at at these prices and sellers won't/can't reduce them. A house on our road was done up at great expense and sat empty for over a year.

You can still make money but you would have to carefully research what to buy. For example that house in our road that did not sell was because it was a luxury development in an area that does not appeal to the top end. I think they would have done better to just take a cheap, run down property and bring it up to match the standard of the others.

As you are putting everything into a single investment you need to be very confident about your skills and ability to stick to budget.