Doing up houses for a living

aivijo

I'm currently an experienced property professional working for a private company and after buying my own house and doing it up to live in, i'd now really like to do it for a living. The aim is that I could maybe carry on working for the duration of my first project and then take it up full time ready for the second one - just so that I still have a good income to fall back on.


With my own mortgage and other bills to pay, I don't think I have much scope to borrow a lot of money so my question is what options do I have to borrow enough to buy a house and pay for all the required works? I'm guessing that I wouldn't just apply for a regular mortgage - would it be a business mortgage...? I honestly have no idea! In my profession, I've never had to deal with obtaining funding myself so this is new to me.


TIA

csgohan4

Have a link at the link:
https://forums.moneysavingexpert.com/discussion/4930313

specifically about getting mortgages although you are not a FTB, the concept is similar.

If your self employed you need 2 years of accounts and you need some amount for deposit, at least 5% but more the better.

If your buying another house, it would be a buy to let mortgage. Unsure how much you can claim back on renovations.

DaftyDuck

In my opinion, you'd be much better off doing it as a second job - unless you have huge reserve funds. One major problem is in being able to "flip" a property fast enough to keep it profitable, yet not spook the market & lower your selling price. Buy a property and spend a year doing it up, then what? Stick it straight back on the market, and you often have a problem convincing a buyer it really has increased in value by 45% in a year. Sure, you re-roofed it, rewired, new DG, floors, added a conservatory, kitchen, bathroom, painted absolutely every available surface, fixed all the woodwork, and made the garden look great. But, what have you really done to add any value? (Cue Life of Brian clip)....

Another, if you are doing it for profit alone is, you have to sell. When the doing-up is done, if you don't sell then & there, you are wasting time & profit. What if the market is pants at that time? It's not in your hands, you'll have to sell. If you have a job as well, timing is more flexible. If you manage to get a job with relocation payments, and switch jobs at the appropriate time.... now, that's good news.

So, what happens when you don't make money on the house? Maybe the market has turned, maybe you've not done a good job of this one (does happen; I fail a third as often as I succeed, but have the job (and wifey's) to see me through those projects). If you make a loss, you will have to buy a smaller/worse one next... downward spiral starts.

Even builders who do this tend to do this as well as working out in their field.

What skills do you bring What kind of

experienced property professional

are you? If you have a trade (plumber/carpenter), it can save a bomb. If, like me, you are an unqualified idiot (well, I suppose I'm qualified to be an idiot), it's not such a surefire way to riches.

I have made a lot of money through doing it for 30 odd years. However, that came from i) luck, ii) starting prior to the ever-revealing internet, iii) starting in the early 1990's in a fast-growing town, iv) having cheap slave (student) labour - willing cheap slave labour at that, v) luck again, vi) a wife who acted as moneylaunderer, ladderholder, nursemaid and bandager of wounds, vii) luck, viii) ability to flip jobs every 3 years, and get paid relocation based on the house valuation ix) luck, and x) luck.

It is not easy. In my case, it was mainly ... luck.

theartfullodger

If doing up houses for a living then you would be charged INCOME TAX on the capital gain... rather that CGT

Probably better to either live in them for a bit or rent them out for a few years before selling as soon as done up.

csgohan4

Rental is where the money is to be made out of London of course. Also you need quite a bit of capital to do this in the first place.

Maybe save up for a cheap flat to do up for rental and move up the ladder and get a portfolio.

Also with upcoming dividends changes, you will be taking alot of a tax hit now a days.

Doozergirl

You need a big enough pot of money to pay for deposits and the renovations. No one will lend the money to buy and renovate a property unless you can secure yourself a private investor - and for that you'll need skill beyond theirs to renovate.

On major renovations in the past, we've had business loans with a specific LTV secured against the property and been able to borrow more with a series of valuations once we've increased the value. But the bank will always expect adequate security and the LTVs are lower than regular mortgages. They don't take the risks for you - those are very firmly your own.

Better to be buying your own home, adding value and moving on for a while.

DaftyDuck

... and, I suspect Dg finds it quite easy to convince lenders she knows what she's talking about....

{I might find it rather more difficult... }

aivijo

I buy land for a housebuilder so i'm pretty clued up market conditions, valuing property, viabilties, negotiation, the cost of having the work done, knowing contractors and suppliers etc. I think I could do it full time if I wanted to, its just seeing if there's a way of affording it without waiting on a good lottery win to start the ball rolling!


With my own house, we spent close to £20k (with a personal loan) renovating it over 6 months (rewiring, damp course, new lintels above windows, feature fireplace, new floor joists, whole new central heating system, new kitchen and all integ appliances, vaulting some ceilings, decorating etc) and when we got it revalued it had increased in value by £37,000. The house wasn't even finished at this point. We have since done more work, including sprucing up the garden (only spent about £100 on some materials) and the integral garage has been turned into a utility room (only the cost of a few tins of paint and some cheap hardwearing carpet). We've probably increased the value by a further £5k since it was last valued.


Obviously if I picked the right property to do up that doesn't need as much structural work doing to it (the builder and his associated works cost the most out of the budget we had) and just needs modernising, in the right location I think I can make enough to be on at least what i'm currently salaried. I can turn it over quicker too because we had to wait 3 months after buying the house to apply for the personal loan which sped up getting the major works done. We also spent a lot of time and money making sure everything was done to our personal taste - for a 'work' project I wouldn't do this because you can't sell personal taste! We bought some extravagant items seeing as it was our own house.


It's just getting to initial lump of money to start the first project. I think after I've done the first/second project i'd hope to be in a better position to do it as my full time job.

aivijo

Oh, and I definitely don't want to be living in the properties as we do them up. I've got two small children and we're quite settled now :-)

makeitstop

DaftyDuck wrote: »

In my opinion, you'd be much better off doing it as a second job - unless you have huge reserve funds. One major problem is in being able to "flip" a property fast enough to keep it profitable, yet not spook the market & lower your selling price. Buy a property and spend a year doing it up, then what? Stick it straight back on the market, and you often have a problem convincing a buyer it really has increased in value by 45% in a year. Sure, you re-roofed it, rewired, new DG, floors, added a conservatory, kitchen, bathroom, painted absolutely every available surface, fixed all the woodwork, and made the garden look great. But, what have you really done to add any value? (Cue Life of Brian clip)....

Another, if you are doing it for profit alone is, you have to sell. When the doing-up is done, if you don't sell then & there, you are wasting time & profit. What if the market is pants at that time? It's not in your hands, you'll have to sell. If you have a job as well, timing is more flexible. If you manage to get a job with relocation payments, and switch jobs at the appropriate time.... now, that's good news.

So, what happens when you don't make money on the house? Maybe the market has turned, maybe you've not done a good job of this one (does happen; I fail a third as often as I succeed, but have the job (and wifey's) to see me through those projects). If you make a loss, you will have to buy a smaller/worse one next... downward spiral starts.

Even builders who do this tend to do this as well as working out in their field.

What skills do you bring What kind of are you? If you have a trade (plumber/carpenter), it can save a bomb. If, like me, you are an unqualified idiot (well, I suppose I'm qualified to be an idiot), it's not such a surefire way to riches.

I have made a lot of money through doing it for 30 odd years. However, that came from i) luck, ii) starting prior to the ever-revealing internet, iii) starting in the early 1990's in a fast-growing town, iv) having cheap slave (student) labour - willing cheap slave labour at that, v) luck again, vi) a wife who acted as moneylaunderer, ladderholder, nursemaid and bandager of wounds, vii) luck, viii) ability to flip jobs every 3 years, and get paid relocation based on the house valuation ix) luck, and x) luck.

It is not easy. In my case, it was mainly ... luck.

I have only read up to this post, but I think Dafty is being a bit too heavy on the "luck" part. If a decent amount of money has been made, then it's often down to hard graft first and foremost. Whether that graft is on the research and management side, the practical side or whatever, it takes effort to be successful to any reasonable degree in developing property. As he states, it does help massively to have some skills in a practical sense, as this can and does save enormous amounts of cost in labour, and also provides some idea of what's needed or not needed in improving a place and bringing it up to a good standard.

Having said that, doing this for a living is no picnic and can go horribly wrong, so think long and hard before making any commitment to that. Luck does play it's part, but foolishness will always outweigh any kind of luck that comes your way, so ensuring you have what it takes to make it viable is pretty essential. Knowledge and money are key, not that it takes a genius to figure that. Without either, you're likely on a hiding to nothing.

DaftyDuck

I suppose the reason I stress the luck side is that, even with enough graft to leave me physically exhausted, working to midnight, knuckles raw and feet frozen, I've made a loss (market forces, whims of employers), whilst I have also made hefty profits from marginal improvements, smartening garden, and selling at the right time - which was generally without my control. Certainly would be, if I depended on it for income.

Having a hefty employment relocation allowance has topped that up rather well and rather frequently... and that has nothing whatsoever to my grafting on properties.

I'd guess around half the profit has come from hard work within the house. {Edit: I also choose property very carefully, details of a few hundred studied, maybe looking at thirty to fifty before buying; already having an eye as to who I'd expect to sell to, and what I can bring - even if through workmen I know well - to make that work ... some of that can translate as luck, but much of it is hard, hard graft, even before I start offering dosh for a house}

Directed at the OP: it's not the modernisation that brings in the money - any fool (like me) can do that. It's the structural renovation that brings a property out of a narrow "unsellable" market, and into the mainstream "desired" market that brings in the real money. I've seen many, many "tarted up" properties come a real cropper when a survey reveals the sole plate is rotted through, or there's some structural movement... mind you, the Fired Earth tiling and the Aga still look the part...