Buying house to do up and sell

Slithery

Don't forget to account for the fact that you will need to pay income tax on any profit.

Disjoint

Math isn't great for that deal
You are putting £40k of equity
Debt £60k
Profit £15k
9 months of work + 3 months of selling so you are in for one year if all goes extremely well
Conveyancing is gonna cost you if you really scrimp £2000 for both ways
Mortgage payments assume you take a regular mortgage will be about £1200 of interest if you get a 2% rate
You will get an early repayment charge of £1200 on this.
Round it to £5k all in, that's already your profit down to £10k

Let's say you have to replace the boiler, that's £2k (can't DIY as you'll need certificate when you sell)
Appliances are old and run down, you'll likely need to change them. You might be able to gumtree some of it. Cost of material has drastically increased. Just having to run copper pipes here and there will likely take you over budget. Let's just assume your overun are only 5k. Profit is now down to £5k

Your levered returned on your equity is 12.5% - that's assuming market holds and you don't end up in a small correction or freeze.

If you valued your labor, you would pay yourself more than 5k getting you into negative territory.
Looking at this deal from an outside perspective - it stinks.

Good luck. Profit should go 50/50 if she puts her labor into this and puts up with living in a dump for a year. This is a common project you will be living together. She could have a claim on your house as well regardless even as your girl friend. With a business partner you would probably do 80/20 as you are the one putting your capital at risk, but the immense labor demand and living on a building site is awful and would skew majorly that balance. Given it's a relationship, less than 50/50 doesn't make sense. Or just take it as a side project and don't put her through this !!!!!!.

hazyjo

Watch a few of those Simon O'Brien programmes (if still available) to realise just how tight budgets and profit are. And they're auction properties usually bought at a much lower price!

[Deleted User]

kazwookie said:

If I was the GF, I would live else where and leave you to get on with it, that way any money / work is all yours.  I might visit for an odd hours or so here and there, but wouldn't be doing any work.

That’s exactly what I would do too. 

jacko74

Unless you're a multi-skilled tradesman and can get everything, plumbing, gas, electrics, joinery, plastering, kitchen and bathroom fitting, tiling... all done for literally zero labour costs then I very much doubt there will be a profit to be made.

And even then you have to factor in your own earnings from that profit.

justwhat

dimbo61 said:

What makes you think you will sell for £10/15K more 6/9 months after you have bought the place ?
In order to buy a property it has to have a " working kitchen and bathroom " 
Now unless your a qualified electrician with mates in the trade you will struggle to add value unless you extend the property.
New kitchen and bathroom may make the property more attractive but when the surveyor looks at the value he/she will see what you bought the place for 6/9 months ago.
They can even see the old photos before you bought the property. 

Sweeping statement i have flipped a few properties. Most i bought  20-30% below market value. i never extended any. We sorted any major faults on survey. spruced them up for next to nothing and flipped.  Sometimes tradesman were used sparks / plumbers and still turned a good profit. it can be done provided you know what you are doing.

justwhat

Slithery said:

Don't forget to account for the fact that you will need to pay income tax on any profit.

Sole permanent residence , maybe no tax. see an accountant

lesalanos

justwhat said:

dimbo61 said:

What makes you think you will sell for £10/15K more 6/9 months after you have bought the place ?
In order to buy a property it has to have a " working kitchen and bathroom " 
Now unless your a qualified electrician with mates in the trade you will struggle to add value unless you extend the property.
New kitchen and bathroom may make the property more attractive but when the surveyor looks at the value he/she will see what you bought the place for 6/9 months ago.
They can even see the old photos before you bought the property. 

Sweeping statement i have flipped a few properties. Most i bought  20-30% below market value. i never extended any. We sorted any major faults on survey. spruced them up for next to nothing and flipped.  Sometimes tradesman were used sparks / plumbers and still turned a good profit. it can be done provided you know what you are doing.

Possible but a lot more difficult nowadays to fund those bargains 

teachfast

'flipping' for these amounts is very unlikely to be successful, in my humble opinion.