Buy, renovate, sell...?

GreatBigBookcase

Looking for people's views on whether I'm mad to be considering flipping properties as a way of earning a small income in the current market...?

My situation is this:
I'm moving back to the UK in a few months time. I have around GBP100k that I was intending to buy myself a little 3 bed terrace with in Sheffield and so be able to live mortgage free. I'm currently pregnant and have enough savings to be a stay at home mum for around two years if I'm mortgage/rent free. :T

Then I had this thought:
What if I buy a renovation project, renovate, then re-sell in order to generate a bit of an income for myself? I know the profit will be pretty small at this end of the market, but I'll not have any mortgage fees, interest payments, etc. due to being a cash buyer.

So, the plan is:
Me and BabyKay live in my parents' attic (can be turned into studio type flat for little money so we can be fairly self-contained). I buy a property for around 80k, renovate/modernise, sell for around 105-110k. Stash away the profit, and use the initial investment to repeat the process. And I keep doing that until, several years down the line, I have enough savings to buy myself my own place and the original 100k to keep flipping properties to generate an income.

Clearly it's a long term plan, and not one that I expect to become rich from, but property is something that I've always been interested in and I very much fancy a career change, so if I can make just a small living from it, I'll be happy.

So, I guess my questions are:
- is there any money to be made by doing this at this bottom end of the market? (My own online research tells me there's not much, but certainly some.)
- is there anyone out there still doing this and making a living in the current market? (Seems most property people are buying to let, rather than buying to sell?)
- am I mad for even considering it?

I guess the way I see it is, I have a go with a 'test' property and after buying and renovating I decide there's no profit in selling, or I try and sell and no-one's interested, then I just move into it. Nothing lost really.

Would love to hear people's views on this. Of course once I'm back in the UK I'll be bending the ear of every EA willing to talk to me, and also looking at a range of properties to get a better feel for the market. But meanwhile, if anyone has any thoughts, please share. Oh, but I'm a newbie, so I appreciate honesty, but please be nice to me too!

becominganobsessivesaver

Sorry to be the bearer of bad news but you're 10 years too late, gone are the days when buyers will pay an additional £20k for a lick of paint. You'd be in a much better position buying a house you want tonlive in, then getting a part time job while your parents look after the baby.

RAS

If you are seen to be flipping properties every couple of years the HMRC will treat this as a business.

GreatBigBookcase

Would they pay an additional 20k for a turn-key property with a new bathroom, kitchen, flooring *and* a lick of paint? But, yes, I realise I've missed the boat somewhat when it comes to making easy money from property.

That said, people clearly pay something for these things, otherwise there would be no differentiation between asking prices for similar properties, right?

RAS, of course, and I'd be treating it as a business myself and paying taxes accordingly.

nomoneytoday

IMHO the only way to make real money flipping is if you have a skill such as being an electrican or chippy.

Otherwise anyone else would arbitrage the same house at 80k, spend £15k and sell for £100k too.

C_Mababejive

I guess it depends how much you can get the project property for and how much you can skillfully do yourself.

somethingcorporate

RayKay wrote: »

Would they pay an additional 20k for a turn-key property with a new bathroom, kitchen, flooring *and* a lick of paint? But, yes, I realise I've missed the boat somewhat when it comes to making easy money from property.

That said, people clearly pay something for these things, otherwise there would be no differentiation between asking prices for similar properties, right?

RAS, of course, and I'd be treating it as a business myself and paying taxes accordingly.

The differences in asking price is usually a reflection of how much those differences cost to put in. If you cannot get a decent profit margin in there you will not be making any money. If it costs £20k to add £20k value to a house once you have all your fees paid for you won't make a bean.

I'm with the ten years too late brigade.

motherofstudents

I do think it would be very difficult to make much money. You would need to get the property at rock bottom price to start with. If you were able to do the work yourself then yes, you should then make some money. I take your point about buying a house to renovate and if it doesn't sell then just move in. Why not give it a try and see how you get on.

GreatBigBookcase

Yep, agree, I need to acquire me some skills! Have looked into the possibilities and am actually really excited at the thought of learning a trade...or a bit of one at least... Am ready for something completely different after 16 years working in the same field. But yeah, that's not going to happen overnight, so I'd be paying other people to do the skilled work initially at least.

somethingcorporate

RayKay wrote: »

Yep, agree, I need to acquire me some skills! Have looked into the possibilities and am actually really excited at the thought of learning a trade...or a bit of one at least... Am ready for something completely different after 16 years working in the same field. But yeah, that's not going to happen overnight, so I'd be paying other people to do the skilled work initially at least.

Out of interest, what precisely do you think you would have been bringing to the party? Just some cash?

If you cannot do any of the work yourself there is going to be absolutely no money for you to make here. I'd be surprised if you could even break even.

AlexMac

You clearly have the right stuff in terms of attitude..."Yep, agree, I need to acquire me some skills....really excited at the thought of learning a trade...(but)... I'd be paying other people to do the skilled work initially at least"

So although I'm also with the "10 years too late" brigade, (been there, dunnit and got really lucky- bought at auction, rewired, re-roofed, replumbed, re-dec'd and doubled my money in 3 years- but that was in 1999 when I'd have made a profit if I'd merely sat on a wreck!) it would be worth putting your cash into property, learning a trade , declaring the house as your "principle private residence" and living in it if only for a few months then either continuing to live in it, or letting it out, or taking a lodger (probably under the tax threshold for letting rooms). And if you do manage to acquire a trade, in a few years time you'll really be in demand (especially from female clients) as a woman electrician or plumber or whatever.

The world's your lobster as Del-Boy sez