First time buyer wanting to buy and sell

firsttimebuyer101

Hi!

New to the forum!!

Me and my partner are looking to buy a house in the near future, but we want to buy something a bit run down, do it up, sell it on and repeat the process a couple of times to build up enough equity to buy our dream house!!

Between us we’ve got about £9k saved and would probably look to purchase something between £50k-£100k, all dependent on the area and condition of the property.

How do we go about borrowing money on a mortgage or paying for the actually cost of doing the renovations as we don’t have access to any more savings!! Would probably need c. £10k-£20k depending on the work needed (some I’ve looked at need central heating etc.)

Help greatly appreciated! :j

tlc678910

Hi, if you buy a house and live in it as your main home while you make improvements to it then you won't need to pay income or capital gains tax when you sell it even if you make a profit. If you buy a house not as a home but purely to "flip it" then these taxes may be due.

If you buy a house to live in you can use a residential mortgage even if it is a doer upper. It will need to be mortgageable which usually means having a kitchen and bathroom (even if they are old and could do with replacing) and being basically structurally sound and of a standard contruction type.

You can fund your renovations through your wages over time or you could choose to use a personal loan or credit card for some of it if you are sure you can afford to.

Tlc

AlexMac

Finq75 is already my favourite correspondent after only a handful of posts, and despite their cutting reply (and in the event that the OP is serious?), l would just add that while you might now have to go to Tolkien's Middle Earth to make wondrous riches on a £120k investment in a primary residence, there was a fabled land where that once was possible.

The trouble is, you'll need a time machine and lots of luck to get there.

There were parts of the UK where, if you bought at the right time and in the right place, property would appreciate at 20 percent or more in a year or two whether or not you improved it.

Examples include the leaky dump I got for £67k in SE London in about 1996 or 1997, which lacked CH, a decent bathroom or kitchen, but (£25k, a new roof, rewire, replumb and total refurb later) which sold in 2001 for £180k as the bourgeoisie moved into the manor.

But those days are gone. And even in the fabled land of the past there were sloughs of despond; the 20-25% drops in house prices after the peaks of 1987 and 2007 caught lots of "homes under the hammer " aspirants out.

If you only have a renovation budget of £10-20k, the good news is that the place you buy will not require so much work as to be unmortgageable, so start by approaching a few lenders and read the advice elsewhere on this website to see what you can borrow.

And buy a place you'd like to live in. You'll learn new skills. As someone from a totally non technical background I actually liked replacing ceilings and building stud walls, lifting and relaying original Victorian flooring and learning decoration, carpentry and kitchen fitting (although I left the electrics, plumbing and gas fitting to experts).

And you won't be paying rent nor spending time and money in the pub as you won't have time!

So if I was 45 years younger I'd still go for it, as you can.

Davesnave

There's nothing wrong with your idea, but like Blockbuster Video, it was of its time a few decades ago.


'Doing up' houses is now what everyone thinks they can do, and what many must undertake anyway, so to make serious money over and above inflation, it's very important that you are at least as good as they are, or preferably much better. As Alex Mac implies this means buying the right house in the right place to start with, or your scheme could be a dead duck before you've stripped a wall.

Nowhere in your post is there any indication that you have special skills, so I'd also be worried that you could take as long as Alex Mac or myself to do things that the pros achieve in a mere fraction of the time, leading to delays and, frankly, too much work and no play.

And if you have children anywhere in your Plan, I'd say their cost and the time they rightly take up will be among the greatest of your concerns, not just where the next 10k may be borrowed from.


P.S I'm just at the end of a renovation that was to take 3-4 years. That was 9 years ago!:rotfl:

Doozergirl

Davesnave wrote: »

There's nothing wrong with your idea, but like Blockbuster Video, it was of its time a few decades ago.


'Doing up' houses is now what everyone thinks they can do, and what many must undertake anyway, so to make serious money over and above inflation, it's very important that you are at least as good as they are, or preferably much better. As Alex Mac implies this means buying the right house in the right place to start with, or your scheme could be a dead duck before you've stripped a wall.

Nowhere in your post is there any indication that you have special skills, so I'd also be worried that you could take as long as Alex Mac or myself to do things that the pros achieve in a mere fraction of the time, leading to delays and, frankly, too much work and no play.

And if you have children anywhere in your Plan, I'd say their cost and the time they rightly take up will be among the greatest of your concerns, not just where the next 10k may be borrowed from.


P.S I'm just at the end of a renovation that was to take 3-4 years. That was 9 years ago!:rotfl:

There really wasn't that much time between leaving my first job at Blockbuster Video and starting to 'do up' houses. I too must be of a particular time Hoping not to go the way of Blockbuster any time soon.

sal_III

The only way to gain value from doing up a house is if you put in a lot of your own labour into the project essentially earning from a second job, rather than the house flip. In such case you better be at least decent in your skills, otherwise you might do more harm than good to the value. One of the most of-putting "features" in a properties is signs of shoddy DYI work left right and centre.

If you are going to mainly rely on contractors for the work, putting 10-20k in the house will increase it's value by as much at best. Making it a zer-sum game. Not that you appear to have the 10-20k anyway.

kingstreet

You won't be able to use mortgage money to do your improvement work. If you can get a 95% mortgage, whatever you have left of your deposit is it.

Unless you go the unsecured loan route, of course.

nubbins

firsttimebuyer101 wrote: »

Hi!

New to the forum!!

Me and my partner are looking to buy a house in the near future, but we want to buy something a bit run down, do it up, sell it on and repeat the process a couple of times to build up enough equity to buy our dream house!!

Between us we’ve got about £9k saved and would probably look to purchase something between £50k-£100k, all dependent on the area and condition of the property.

How do we go about borrowing money on a mortgage or paying for the actually cost of doing the renovations as we don’t have access to any more savings!! Would probably need c. £10k-£20k depending on the work needed (some I’ve looked at need central heating etc.)

Help greatly appreciated! :j

Don't get put off by anyone saying money cannot be made in property anymore because you can. I bought a detached property in 2015 for 429k got planning permission for a detached 4 bed in the garden last year, approx 180k spend on the new build plus 100k refurb of the current building will realise 2 properties worth between 1.2 and 1.5 depending on market conditions..... and i'm not a developer.
There are gems out there but you need to do your homework and absolutely be in a position where you are able to buy as soon as something comes up. You will need more than 9k behind you, more like 20-30k if you want to buy and refurb straight away. Look for something that you can add good useful floor space, loft extension small extension, open plan kitchen/diner etc. Ugly duckling in a nice area always works. Good luck.

Davesnave

nubbins wrote: »

Don't get put off by anyone saying money cannot be made in property any more, because you can.

I'd add caution to to your opening statement, because you're implying that the OP or anyone else can make this money, while the reality is that not everyone does. That doesn't make individuals who fail lesser persons.

Some of us have witnessed the messes people get into by over-reaching themselves, monetarily and in terms of personal resources. I'm sure you know without me elaborating, it can be very sad.

I don't think people here want to say money can't still be made, just to caution that it isn't especially easy.

Hoploz

Just buy something you can afford in the best area you can. Live in it while you decorate. When you can afford it replace the bathroom then the kitchen. You'll sell it for more than you pay out. Especially if you stay there for several years.

Best advice I can give, stick to sought after areas, as when the market falters, the run down areas suffer, better areas hold their value more.

And definitely do it while you're young, before responsibilities like children come along. Good luck.

AdrianC

firsttimebuyer101 wrote: »

Me and my partner are looking to buy a house in the near future, but we want to buy something a bit run down, do it up, sell it on and repeat the process a couple of times to build up enough equity to buy our dream house!!
...
How do we go about borrowing money on a mortgage or paying for the actually cost of doing the renovations as we don’t have access to any more savings!!

The big question has to be whether you're planning on living in the property while doing the work.


If so, then you might be able to borrow under a normal residential mortgage - BUT the lender may well balk at many places that you can find in your budget, as they need the place to be inhabitable to a certain standard.

Between us we’ve got about £9k saved and would probably look to purchase something between £50k-£100k, all dependent on the area and condition of the property.
...
Would probably need c. £10k-£20k depending on the work needed (some I’ve looked at need central heating etc.)

That's going to be one impossible market to make money in, tbh.
You're effectively looking at a 100%+ mortgage - you want to borrow £110k against a £100k property (£100k purchase + £20k pot - £9k equity).

In addition, anywhere that's £100k before renovation, with headroom to make money on the project, is going to be snapped up in short order by builders and developers who do not need to get a mortgage against it.