Re: Would like advice please regarding flipping houses

flaneurs_lobster

Mr.Generous said:

What I predict if stupidly go ahead is that the renovation takes much longer than expected. The utility bills and council tax will rack up. If the place has been empty expect penalty council tax. When you take out the bathroom you find the floor poor, with smelly rotting boards and failing plaster board. Also needs a complete re-pipe. The ceiling may well need to be renewed too. An experienced renovator might be able to do this room in 3 weeks. Materials will cost more than expected. The person doing the work will expect a return on their time, remember 6 months labour they will be expecting at least 2k a month. Then there are fee's - estate agent, solicitor, gas and electricity specialists - If you do work yourself get it certified otherwise you can just cross your fingers that nobody gets hurt and takes legal action.

The place will eventually get done, and re-sold for less than expected. The renovator will consider this most unfair, will claim it's not their fault that unable to repay the sum and fall out with investor and stop all communication. The gaurantee will prove to be useless as others have mentioned, already mortgaged or in joint names or just not enforceable. The OP will post a new thread asking for help getting SOME money back.

This is probably the 'Best Case scenario'.

It could also go horribly wrong.....

MeteredOut

So many red flags in what the OP has said and how the details have been drip-fed.

OP, without looking like prying, can you confirm you know you partner well and for some time. There have been cases where people refer to someone as their partner, but they've never met them face-to-face. The whole "use my bank account" sounds like a money laundering risk. 

And have you actually seen the solicitors advice, in writing, or just been told what was said. Was that paid-for advice?

And, even if this is an above-board offer, there's simply too much risk for too little reward. I'd even suggest crypto would be a less risky "investment".

mark_cycling00

She does seem to live with her partner unless it's a new one. But one interpretation of previous threads is:
1. Partner was declared bankrupt by HMRC and they don't seem to have money coming in.
2. Partner seems to have sold their farm, possibly to pay HMRC and have spare cash available.
3. The person who bought the farm is now trying to convince partner to invest the partner's remaining assets into a renovation project. 

This is pure speculation from a few facts in some previous threads though. Hope it isn't all true.

If the farm was sold for 1 million+ then putting 200,000 into a property scheme isn't that bad and isn't an unethical proposal. But it's most of your assets then it's very risky and the buyer of the farm will know this fact and it feels unethical to suggest that someone you know well does this. 

Who knows...

DjangoUnchained

im sure its against banks terms and conditions to do these transactions on someone elses behalf, if it isnt it should be.  Ive lost the plot of what is really going on here but as soon as i see anything where people ask others do to their banking for them i take that as an enormous red flag. As someone else said, you are likely to have your account frozen.

MeteredOut

mark_cycling00 said:

She does seem to live with her partner unless it's a new one. But one interpretation of previous threads is:
1. Partner was declared bankrupt by HMRC and they don't seem to have money coming in.
2. Partner seems to have sold their farm, possibly to pay HMRC and have spare cash available.
3. The person who bought the farm is now trying to convince partner to invest the partner's remaining assets into a renovation project. 

This is pure speculation from a few facts in some previous threads though. Hope it isn't all true.

If the farm was sold for 1 million+ then putting 200,000 into a property scheme isn't that bad and isn't an unethical proposal. But it's most of your assets then it's very risky and the buyer of the farm will know this fact and it feels unethical to suggest that someone you know well does this. 

Who knows...

Interesting, because we were told "he is relying on me to do the internet transfer due to him being computer illiterate"

If it is actually because he was declared bankrupt and does not have an account to transfer from, I have to question what other facts have been left out.

Roger175

Andrea2528

Sorry, I'm late to this tread, but my background is that of a retired construction professional who has over the years acted as an expert witness in numerous construction related legal cases.

You question raises load of red flags for me.

I can think of one case which was broadly along the following lines:- Mr A buys a plot of land an obtains planning consent to build two houses, he needs funds to build these so gets put in touch with Mr B who is an investor. They enter into a proper joint venture agreement with Mr B funding the majority of the build work and he employs a builder who he knows to build the two houses. So both parties are putting up finance, Mr A the land and some initial build costs and Mr B the remaining build costs. Everything is tied up legally, all charges in place etc. The builder is being paid monthly, but about 90% into the build period, the builder goes bust. Upon further investigation, it turns out he (the builder) has made the most appalling job of things, the houses are littered with serious defects, the NHBC who were dealing with both the Warranty and Building Regs have already washed their hands of it and the properties are effectively worthless. The defects are so serious, they can't really be address without total demolition. After years of wrangling, the properties are eventually sold at action for little more than the cost of the land and both Mr A and Mr B have both lost everything.

I know the above is nowhere near the same circumstances, but the point is, that this is a high risk business with huge opportunities for things to go seriously wrong. As others have said, 10% is a poor return for the risk involved. Imagine if the property concerned ended up with planning issues, no Building Regulation approval and a shed-load of serious defects. Having a first charge on the property would be of little comfort if the property is seriously devalued as a result of such !!!!!!-ups. 

Your partner needs to make sure the works are being done correctly, with all the right consents in place and should be supervised by an appropriately qualified professional.   

Andrea2528

I'll explain the situation to you.  The person wanting to purchase a house in order to flip it only has assets and doesn't have the available cash to purchase it.  Therefore, my partner and him came up with an agreement that my partner loans him the £200,000 to do the work in return for repayment and 10% of the loan provided and that is all my partner has to do with it.  There is to be a first charge put in place against the borrower's property.

ColdIron

You are just repeating yourself

But top marks for keeping this thread spinning for 10 pages now

swingaloo

Andrea2528 said:

I'll explain the situation to you.  The person wanting to purchase a house in order to flip it only has assets and doesn't have the available cash to purchase it.  Therefore, my partner and him came up with an agreement that my partner loans him the £200,000 to do the work in return for repayment and 10% of the loan provided and that is all my partner has to do with it.  There is to be a first charge put in place against the borrower's property.

Rather than explaining and repeating the same thing you have already told us it would be better if you could clarify some of the points raised by the posters who have answered and asked questions.

flaneurs_lobster

Andrea2528 said:

I'll explain the situation to you.  The person wanting to purchase a house in order to flip it only has assets and doesn't have the available cash to purchase it.  Therefore, my partner and him came up with an agreement that my partner loans him the £200,000 to do the work in return for repayment and 10% of the loan provided and that is all my partner has to do with it.  There is to be a first charge put in place against the borrower's property.

...and every single person who has replied (I don't remember an exception) has said that it's a stupid idea and to have nothing more to do with it.

There's very little point in just repeating the same scenario over and over again. If you are not happy taking advice from random people off the internet then seek professional advice from your bank, solicitor or accountant.