Is "flipping" property a thing of the past?

minx1985

Good afternoon all

I have been pondering whether or not to begin buying property to do up and sell on (start small- paint/flooring/new kitchen rather than renovating a wreck) for some time as I am keen to get out of my sales job and work for myself. I don't have a massive budget but could afford to pay the mortgage on an £80k property (90% LTV) for up to 8 months without suffering any hardship whilst still doing my day job.

My burning question is- are the days of flipping properties for profit over? I appreciate there's always a risk, but am I 8-10 years too late?

Nobbie1967

It's easy to make money at it when prices are rising fast, although you're generally just benefitting from house price rises rather than your improvements. If the market is flat, then you need to know what you are doing. Experience and knowledge count for a lot when assessing what properties to buy and what to do with them to turn a profit as you are up against professional property developers.

I suppose it's popular because banks will lend you money to buy a house to speculate on, whereas if you said give me £80k to buy some shares as I'm going to become a day trader they would laugh you out of the door.

The downside is if you're caught with a house and mortgage when interest rates rise and property prices fall. We're currently in a rising market, but who knows when it will turn?

audigex

Your problem is that you're unlikely to do much more than cover your costs

Buying a house = £1k solicitors fees
Selling a house = £1k solicitors fees + 1% of property price or more in estate agents

So on a £100k house you're looking at having to increase the value by 3% before you put any time/effort into it.

Generally people truly "flipping" houses are builders/decorators etc doing so by buying a wreck at a knock down price and then doing most of the work themselves.

At the end of the day anyone can slap a couple of coats of paint on, so buying a house that doesn't need much work doesn't give you much advantage: why buy yours for £80k + paint costs + the £2k fees you need to cover + your profit, when I can buy the one down the street and paint it myself?

It's not to say it can't be done, but I can't see you making enough out of it to quit your day job.

agrinnall

Even if you can make money you'll struggle to sell to anyone other than a cash buyer if you've owned for less that 6 months, so you might only be able to do 2 a year.

nubbins

No, is the short answer. As Nobbie says easier to do in a rising market, in a stagnant or falling market you need to have contacts, cash and probably some sort of trade skill or at least be an excellent DIY'er. With a 90% LTV against an 80K property do not give up your day job.

Thrugelmir

In the boom years there was no need to even do work on a property. Simply buying, holding and selling would have a made a tidy profit.

Giving a property a quick makeover is unlikely to be a way of making a good living.

ognum

In the area Ilive properties are still rising in value and flipping is still going on but property is pricy to start with so its still risky!

booksurr

do you actually understand what is meant by "flipping"

it is a tabloid expression applied to legitimate avoidance of capital gains tax through making a nomination of which of your multiple properties is your main home

your plan therefore comes unstuck at the first hurdle since you will be a property developer, not a property investor, therefore you will be liable to income tax not CGT. You cannot "flip" income tax

minx1985

Thanks all for the replies. Back to the drawing board...

gharrower

plus early repayment on mortgage unless you ported it to next property you buy

minx1985

agrinnall wrote: »

Even if you can make money you'll struggle to sell to anyone other than a cash buyer if you've owned for less that 6 months, so you might only be able to do 2 a year.

Hence why I would hang onto it for 7-8 months