How to become a property developer

housebuyer7

Hello, I’ve been buying, living in and renovating properties since 2018:

1. First house bought in 2018 for £157,000. 10% deposit, spent £10,000 on renovations and sold for £215,000 in 2021. With equity etc I had £70,000 in the bank.

2. Second house bought in 2022 for £462,000. 15% deposit. Spent £60,000 on renovations and sold in 2025 for £580,000. With equity etc I had £130,000 in the bank. 

3. Just bought the third house for £465,000 with a 15% deposit and have £40,000 cash to renovate. 

I would like to somehow get to a point where I’m buying houses for under £200,000 to renovate, not live in and sell whilst still being able to live and afford my mortgage for my home. My salary is £56,000 and my husband’s salary is £43,000. We enjoy renovating Victorian properties and bringing the character back to life.
 Is there a way to make this dream a reality?

Exodi

housebuyer7 said:

I would like to somehow get to a point where I’m buying houses for under £200,000 to renovate, not live in and sell whilst still being able to live and afford my mortgage for my home. My salary is £56,000 and my husband’s salary is £43,000. We enjoy renovating Victorian properties and bringing the character back to life.
 Is there a way to make this dream a reality?

Firstly, well done, it looks like you've done well so far.

Unfortunately I'm not totally clear on what the question is? It appears as if you're already doing it? Do you mean buying project houses without a mortgage?

It sounds like when the third house sells (hopefully for a profit), you'll have the cash in the bank to buy a house worth >£200k outright?

Sorry if I've misunderstood.

FreeBear

housebuyer7 said: We enjoy renovating Victorian properties and bringing the character back to life.

Older properties need to be treated with sympathy and respect. Using modern materials (plastic paints & cement for example) can be hugely damaging. Unfortunately, traditional materials, and workmen experienced in their use are expensive.

Buying a property to "do up" and flip invariably means corners are cut and cheap materials get used in order to maximise profits.

Mr.Generous

The finances change when you don't live in them, the stamp duty and council tax are now stacked against you. I did it by buying the worst house in the street every time, and finishing to a high standard. It was very hard work, and myself and my brother did it full time. Very rewarding from a satisfaction point of view, less so from a financial position. Once I had a £50k terrace owned outright and rented it started to work, but only because my wife was working full time and I had a redundancy payment to help finance things. One lucky buy of a repossession later and I had monthly rent of £1400 (at todays prices), just enough to live a frugal life on, so the renovation work no longer had to deliver a monthly income but could deliver the profit into expanding the portfolio. 

It was touch and go several times waiting for a sale to complete in the early days. Renovating is very much one way traffic with the money going out until pay day. Once completed an empty house cost us money every month until sold, and the next project was racking up utility bills, council tax and renovation costs. About 10 months of the year my outgoings exceeded my income, nervous times! It worked, by luck and our best efforts, but I think the market has changed. The differential in price between a wreck and a done up place has narrowed, building materials and trades have gone up in cost more than I could budget, and as mentioned all the extra tax doesn't help. A few thousand here and there really does make a difference. Our worst flip turned a gross profit of about £30k, it took 6 months work which takes it to £15k each. Slam in an extra grand in council tax, an extra £3k in stamp duty and an extra grand for materials and trades and then you are basically working for minimum wage.

Best of luck if you do it though! I enjoyed it far more than working in the rat race.

TroubledTarts

housebuyer7 said:

Hello, I’ve been buying, living in and renovating properties since 2018:

1. First house bought in 2018 for £157,000. 10% deposit, spent £10,000 on renovations and sold for £215,000 in 2021. With equity etc I had £70,000 in the bank.

2. Second house bought in 2022 for £462,000. 15% deposit. Spent £60,000 on renovations and sold in 2025 for £580,000. With equity etc I had £130,000 in the bank. 

3. Just bought the third house for £465,000 with a 15% deposit and have £40,000 cash to renovate. 

I would like to somehow get to a point where I’m buying houses for under £200,000 to renovate, not live in and sell whilst still being able to live and afford my mortgage for my home. My salary is £56,000 and my husband’s salary is £43,000. We enjoy renovating Victorian properties and bringing the character back to life.
 Is there a way to make this dream a reality?

What I would be interested in is what the houses would have been worth it you had done no renovating as you aren't doing this quickly in and out in 6-12 months you are taking years.

silvercar

Are you allowing for the mortgage interest you are paying while you own the properties? Also, hmrc is going to see you as trading sooner or later, so I hope you are declaring the profit properly, rather than just paying CGT.

Mr.Generous

silvercar said:

Are you allowing for the mortgage interest you are paying while you own the properties? Also, hmrc is going to see you as trading sooner or later, so I hope you are declaring the profit properly, rather than just paying CGT.

Aimed at the OP?

Ha Ha, yeah, tax on the profits and lots of CGT due when selling the home you live in .... even although NOBODY else has to pay it. The green eyed monster makes an appearance.

Mortgage interest is paid by everyone with a mortgage, difficult to see it as a business cost when you live there.

MeteredOut

TroubledTarts said:

housebuyer7 said:

Hello, I’ve been buying, living in and renovating properties since 2018:

1. First house bought in 2018 for £157,000. 10% deposit, spent £10,000 on renovations and sold for £215,000 in 2021. With equity etc I had £70,000 in the bank.

2. Second house bought in 2022 for £462,000. 15% deposit. Spent £60,000 on renovations and sold in 2025 for £580,000. With equity etc I had £130,000 in the bank. 

3. Just bought the third house for £465,000 with a 15% deposit and have £40,000 cash to renovate. 

I would like to somehow get to a point where I’m buying houses for under £200,000 to renovate, not live in and sell whilst still being able to live and afford my mortgage for my home. My salary is £56,000 and my husband’s salary is £43,000. We enjoy renovating Victorian properties and bringing the character back to life.
 Is there a way to make this dream a reality?

What I would be interested in is what the houses would have been worth it you had done no renovating as you aren't doing this quickly in and out in 6-12 months you are taking years.

This was my first thought too. OP, have you checked what other similar houses in the same postcode area have increased by from 2018-2021 (you made 29%,perhaps partly due to the Covid spike?) and 2022-2025 (you made 11%).

What are you expecting to sell the latest house for (total outlay expected to be £505K?)

As others have said, as soon as you do this as a business, the costs build up. Do you know have a set of trusted builders who could turn properties around much quicker?

EDIT: A quick google suggests UK house prices rose 20.2% in the 3 years to the end of 2021, and around 16% in the 3 years to the end of 2024 (this was Google AI so may be wrong).

silvercar

Mr.Generous said:

silvercar said:

Are you allowing for the mortgage interest you are paying while you own the properties? Also, hmrc is going to see you as trading sooner or later, so I hope you are declaring the profit properly, rather than just paying CGT.

Aimed at the OP?

Ha Ha, yeah, tax on the profits and lots of CGT due when selling the home you live in .... even although NOBODY else has to pay it. The green eyed monster makes an appearance.

Mortgage interest is paid by everyone with a mortgage, difficult to see it as a business cost when you live there.

It was aimed at the OP's future plans ie to buy a property, develop and sell without ever moving in and making it their home.

No green eyed monster from me, I bought my first home in the 80s and have moved upwards 3 times since. Current home worth twice what I paid in 2005 and would be totally unaffordable if I was starting out now. 

sheramber

silvercar said:

Mr.Generous said:

silvercar said:

Are you allowing for the mortgage interest you are paying while you own the properties? Also, hmrc is going to see you as trading sooner or later, so I hope you are declaring the profit properly, rather than just paying CGT.

Aimed at the OP?

Ha Ha, yeah, tax on the profits and lots of CGT due when selling the home you live in .... even although NOBODY else has to pay it. The green eyed monster makes an appearance.

Mortgage interest is paid by everyone with a mortgage, difficult to see it as a business cost when you live there.

It was aimed at the OP's future plans ie to buy a property, develop and sell without ever moving in and making it their home.

No green eyed monster from me, I bought my first home in the 80s and have moved upwards 3 times since. Current home worth twice what I paid in 2005 and would be totally unaffordable if I was starting out now. 

If the OP was operating a business as a property developer there would not be CGT. It would be business profit.