Buying a second home

spollard1977

Hello all,


And thank you in advanced for any comments received.


I have the opportunity to buy a second property from my wife's family at a below market value rate as they would like a quick sale, What are the implications with doing this. I would be looking at a bridging loan to buy the property, and then refurbish and then sell on when complete. Properties within the same street are selling for around 230-240k and I could buy this for about 180k.


Any info would be much appreciated.


Regards


Simon

AdrianC

spollard1977 wrote: »

I have the opportunity to buy a second property from my wife's family at a below market value rate as they would like a quick sale, What are the implications with doing this.

You already own your own home, right? So +3% on the SDLT.
CGT when you sell.

I would be looking at a bridging loan to buy the property, and then refurbish and then sell on when complete.

Income tax on the profits from your refurbishment trading activity.

Properties within the same street are selling for around 230-240k and I could buy this for about 180k.

And how much for the refurbishment?

spollard1977

Hi Adrian C,


Thank you for the quick response, The property already has a brand new kitchen and Central heating system, So just requires a rewiring, plastering and painting,


Regards

AdrianC

"Just" is one of my favourite words.

...and carpets and second-fix electrics and...

Would you be DIYing, or point-and-pay?

spollard1977

Well I am an electrician buy trade, so Just a rewire is quite correct for that statement. I would probably only pay someone to carryout the plastering for me, but everything else I would do myself. and have a few friends in the trade to give me a good rate, would be looking at £10K on the refurb as a max spend

need_an_answer

Work out your costs carefully and I don't mean just the cost of doing any work.

Property can take 6 months to sell and complete so you need to factor in costs of utilities and solicitor fees/agent selling fees

Don't assume there will be a big profit on this once you factor in the timeframe...homes under the hammer might disagree with me but having renovated in the past I know things don't always run t time and on budget however well you plan

Often when the true costs are worked out there is very little profit for you especially if you genuinely cost out the hours you put into it.
Additional stamp duty has hit flipping properties hard.

davidmcn

If it's owned by family, why not agree to do the work and take a share of the proceeds, rather than go through all the costs of buying and selling?

spollard1977

Hi David,


The family members want a quick sale (death breeds greed) But I am also looking at potentially keeping it as a rental property and addition to my pension portfolio. I currently have no mortgage on my own property so wold look at freeing up capital from my property for the deposit and then a buy to let mortgage.

lees80

The figures you're mentioning don't give the best short term return given the figures you haven't mentioned (SDLT + 3%, legals, remortgage fees for you, mortgage payments whilst it's empty, council tax whilst it's empty, unknown costs that you might not be aware of etc)