It's all gone wrong, is this a feasible alternative?

missminx007

We have sold our house and were planning on buying the next stage up of house that needed some work doing to it, it had more space and would have been a house we could have stayed in until we needed to downsize. Unfortunately the valuation came back with a zero value due to structural movement.
So, we are now having to find an alternative route, the sort of house that we want could take some time to find so could this idea work.
We continue with house sale freeing up the capital we have in the house. We rent a home to take the pressure off finding somewhere.
We then buy another home like the one we are selling, we bought this needing a complete overhaul and did the work while living here and made a bit of profit (husband is builder so would do the work himself). We'd live in it for a year or so then sell and do the same again to hopefully build a bit more in capital.
I don't know if this would work or not, I get the feeling I may be missing something.

Hoploz

It can work, but there are costs involved in the buying and selling process which will eat into your profit. Also for a short term proposition you are slightly dependent on the market rising alongside improvements you may make. You need to ensure you buy something in a popular area in order to resell fast, not try and get a bargain buying something that's been languishing on the market for ages

However, if you can live there while renovating you would be saving on the rent you'd otherwise be paying out, so this would offset things.

booksurr

as husband is a builder then he would have to pay income tax on the profits as it would be treated as part of his trade, not as an exempt house due to you living in it as your main home, patently you won't, you'd be renting elsewhere

apart from that, it is no different to any other method of making money and if he is happy to do the work then go for it

missminx007

booksurr wrote: »

as husband is a builder then he would have to pay income tax on the profits as it would be treated as part of his trade, not as an exempt house due to you living in it as your main home, patently you won't, you'd be renting elsewhere

apart from that, it is no different to any other method of making money and if he is happy to do the work then go for it

It would be our main home, we would only rent while looking for somewhere to live.
Argh, its all such a nightmare, I'd rather we were able to buy the original house

Davesnave

missminx007 wrote: »

It would be our main home,

.....And it would be husband's 'hobby.'

But do you both want to live in a building site for the next however many years?

eddddy

I've known of lots of builders who have done what you describe.

But it seems like it's increasingly difficult to make a decent profit doing this. And you can come really unstuck if the market turns.

It seems that people are increasingly keen to buy homes that need doing-up - so there is more competition.

So you need to do your sums carefully, especially buying and selling costs: stamp duty, legal fees, EA fees, mortgage application fees, mortgage redemption fees etc.

missminx007

Of course husband would have to work so I suppose yes, it would be his hobby! I don't mind living in a building site, we did it with the house we are selling at the moment.
What are your opinions on auctions, we could potentially buy a property outright. The speed of it all worries me though, I automatically think they must all be absolutely knackered to be going through the auction.

Davesnave

Auctions certainly have 'knackered' properties in them, but they may also have some sound but cosmetically challenged houses, or repos where the owner has removed the kitchen/bathroom etc.

There are also one-off properties where it might be hard to decide on a valuation, so the market decides.

Be aware that auctions tend to list properties with guide prices significantly below that at which they are likely to sell.