We have £200k cash to invest in buy-to-flip. Any advice?

[jayproperties]

My partner and I have recently acquired £250,000 cash. We want to keep £50,000 as an emergency fund so have £200,000 to invest.

We want to grow the capital as quickly as possible over the next 3 years, to a level where eventually we can purchase buy-to-let properties and build a portfolio for passive income.

We're thinking the buy-to-flip strategy. We have family in the building trade and are currently in-between jobs so have full weeks to commit to searching for properties, design, decorating and labour etc.

We're new to the industry so really need as much advice as possible. What would you do in our situation? Is it worth taking out bridging loans to free up more of the cash per flip? Is there a way to maximise profits for doing more than one project at once? or best to start slow.

We appreciate any comments. Thank you.

 

[Gordon - Commercial Finance]

Good idea to start slow. Is this going to be your first property-based venture?

As to the rest of your questions, they all have the same answer: “it depends”....

 

[Stedurham]

My partner and I have recently acquired £250,000 cash. We want to keep £50,000 as an emergency fund so have £200,000 to invest.

We want to grow the capital as quickly as possible over the next 3 years, to a level where eventually we can purchase buy-to-let properties and build a portfolio for passive income.

We're thinking the buy-to-flip strategy. We have family in the building trade and are currently in-between jobs so have full weeks to commit to searching for properties, design, decorating and labour etc.

We're new to the industry so really need as much advice as possible. What would you do in our situation? Is it worth taking out bridging loans to free up more of the cash per flip? Is there a way to maximise profits for doing more than one project at once? or best to start slow.

We appreciate any comments. Thank you.

Dont do it now's not the time prices are high and will drop in Jan and you will be left with next to no profit or a loss
Start slow with standard say terrace type house, learn and make the mistakes there cheap and easy to fix and grow from there
DO NOT get into bridging loans expensive and for experienced people, ive used them once but wouldnt recommend them ,especially to a new bie

 

[DontAsk]

Dont do it now's not the time prices are high and will drop in Jan

Jan? A lot will depend on whether the stamp duty holiday is extended.

 

[estwig]

I'm seeing a lot of 'property developers' buying up distressed properties at the moment.

2 months ago I thought it was just the occasional numpty, always get those. There are too many of them now, I'm starting to think they know something!

 

[jayproperties]

Good idea to start slow. Is this going to be your first property-based venture?

As to the rest of your questions, they all have the same answer: “it depends”....

Thanks for the response. Yes it will be our first property project.

 

[Darren_Ssc]

I'm seeing a lot of 'property developers' buying up distressed properties at the moment.

2 months ago I thought it was just the occasional numpty, always get those. There are too many of them now, I'm starting to think they know something!

Interest rates are virtually zero, stock markets looking likley to be volatile for the forseeable, gold prices have risen sharply. Not much left to invest in?

Should OP take comfort from all of this, probably not.

 

[The Byre]

We're new to the industry so really need as much advice as possible.

An ex-girlfriend of mine spent 30 years in property management as a career before she went in for B2L. It is very much a know-how and experience business.

Everything depends on the object and your timing. If you don't know enough to be able to look at a building and assess straight away how much it will cost to bring it up to rentable standard, what you can get for it and what you should pay now and what you should probably have to pay in five year's time - you ain't ready yet.

We are heading into an economic maelstrom and although house prices are at record highs, true underlying unemployment is at about 20% and may go higher. Zombie companies are everywhere and they will start to fail next year. The housing market is fractured and prices in different parts of the UK are moving in different directions.

Russell Galley, CEO of Halifax, "Despite the various positive factors supporting the market in the short term, it remains highly unlikely that this level of price inflation will be sustained. Rising house prices contrast with the adverse impact of the pandemic on household earnings and with most economic commentators believing that unemployment will continue to rise, we do expect greater downward pressure on house prices in the medium term. 2021 could end up being the year the pandemic hits the housing market.”

In short - something and/or someone has to give! Don't let that be you!

 

[Mark T Jones]

I'm always amazed watching Homes Under The Hammer how little some of these projects make - and that's with no mention of many secondary costs

In a nutshell, if you want to learn the trade, then take a punt with your own money - you will probably lose money on the first but the experience will b valuable.

Don't go borrowing money to speculate with, particularly in a precipce economy. It's madness!

 

[estwig]

I'm always amazed watching Homes Under The Hammer how little some of these projects make - and that's with no mention of many secondary costs

I've been 30 years in this line of work, the only 'property developers' I've ever seen make any money, excluding the crazy property boom of the 90's are........

Builders who need a hospital job, don't make money but keep the men busy between jobs
DIY couples who use it to move up the property ladder
Guys who understand finance and mortgages, they turn properties into HMO's and sit on them

Everyone else would make more money for less stress, stacking shelves in Tesco.

 

[Gordon - Commercial Finance]

If this is your first venture then definitely start slow, and then you don't need to take on any debt to add to the pressure.
Bridging loans etc would help you to scale up quickly and do multiple projects on your investment, but I would not recommend starting there. One at a time, learn the lessons as cheaply as possible and then on to the next one.

 

[Darren_Ssc]

Everyone else would make more money for less stress, stacking shelves in Tesco.

Also applies to most other 'easy money' business one could think of. People often overlook the cost of their own labour.

 

[gpietersz]

Going into a business you do not know is a risk.

Investing in property at the moment is risky.

You are combining the two.

Interest rates are virtually zero, stock markets looking likley to be volatile for the forseeable, gold prices have risen sharply. Not much left to invest in?

As always, diversified portfolio. Stock markets are volatile, but do best in the long term. A rise in interest rates would be bad for stock markets, but would also be bad for property prices. Both are real assets to hedge inflation, but stock markets (especially defensive shares) are better.

 

[DontAsk]

Reminds me of Beany's "Property Ladder!" program on which "Developers" would almost always ignore her advice and often the only reason they made anything was due to generally rising house prices. It was great to watch the ones that managed to fail to turn a profit even in that environment.

 

[Gill Courage]

1. There’s no such thing as “easy money”. Who was it said, “the harder I work, the luckier I get”?
2. If you think that BTL is passive income you are in for a shock.
If you appreciate the advantages of working for yourself and aren’t afraid of hard work, by all means go for it. But the advantages are not always financial.

 

[gpietersz]

There’s no such thing as “easy money”.

Of course there is: you can inherit money or be given the means to make it (e.g. contacts), or steal it, or win a lottery.

Its not going to come from a recipe for making money though

If you think that BTL is passive income you are in for a shock

Surely you can pay someone else to manage it for you? It would cut your margins, of course, but its possible?

 

[Gill Courage]

Yes, you can pay somebody. But they will still be coming to you for decisions, expenses - there's always things needing replacement or repair, or tenants that haven't paid. Doing nothing yourself is just a recipe for a dwindling cash pile because nobody else really cares like you do or spends your money as carefully as you would.

 

[The Byre]

Who was it said, “the harder I work, the luckier I get”?

Coleman Cox.

2. If you think that BTL is passive income you are in for a shock.

If they're not complaining about something trivial, then they're doing something stupid to the building that you have to later undo. Either that or they need a payment holiday.

Second best complaint so far "The village snowplough is mounted incorrectly!"

Best ever -
Tennant: "The terrace is crooked! You'll have to send somebody to re-lay the stones."
Me: "But that is only going to be put in next week when the ground has settled!"
Tennant: "My husband laid all the stones because he said he couldn't wait!"
Me: "I thought your husband was bed-ridden!"
Tennant: "He's in hospital now. Laying the terrace was too much for him!"

 

[Gordon - Commercial Finance]

Who was it said, “the harder I work, the luckier I get”?

I was going to say Gary Player but I think he said "the more i practice the luckier I get"...

 

[Joseph K]

I would buy Premium bonds with a small fraction of the funds, and look for less risky properties investments. With the current uncertainty in the economy, I probably would invest on something else, not in property at the moment.

 

[Talay]

I am tentatively looking for a new house to live in but I am not desperate to move just yet.

Looking around, what seems surprising is the daft prices people are paying for very simple fully finished houses and equally, how people are avoiding houses which require work.

There is a fine line, where the professional developer can't make enough but there is still a decent uplift to be had but you need to know how to get it turned around quickly.

 

[JpeeL]

These property threads always confuse the life out of me. I’ve met a ton of people who do buy to let, they never have a bad word to say about it. One of them has just bought himself a £750k house.
Then you come to places like this and it’s full of people saying how bad it is and to avoid it.

 

[Darren_Ssc]

These property threads always confuse the life out of me. I’ve met a ton of people who do buy to let, they never have a bad word to say about it. One of them has just bought himself a £750k house.
Then you come to places like this and it’s full of people saying how bad it is and to avoid it.

I rented a house of such a guy, Range Rover with private plates, the full kit.

Long story short, his wife divorce d him and he had to share half his fortune. She walked away with 19 grand.

Don't judge a book by its cover or a big shot by his mouth.

 

[The Byre]

Same gig in the music biz - rap star - reported $16m earnings according to PR guy. On 'Kribs' in front of a huge Beverly Hills house worth millions, Lambo and G-Waggon in the driveway, etc.

She bought herself a nice normal house outside of LA with a smaller one for her mother. All on a mortgage. Drives a Honda people carrier.

 

[Opinion87]

Same gig in the music biz - rap star - reported $16m earnings according to PR guy. On 'Kribs' in front of a huge Beverly Hills house worth millions, Lambo and G-Waggon in the driveway, etc.

She bought herself a nice normal house outside of LA with a smaller one for her mother. All on a mortgage. Drives a Honda people carrier.

I would pay good money to hear you say "rollin' with a Lambo and a G-Wagon on the driveway" in one of your YouTube videos!

 

[Aniela]

These property threads always confuse the life out of me. I’ve met a ton of people who do buy to let, they never have a bad word to say about it. One of them has just bought himself a £750k house.
Then you come to places like this and it’s full of people saying how bad it is and to avoid it.

It's because buy to let businesses are usually not as profitable as they appear and BTL people are usually not honest about the realities of being a landlord.

It tends to (not always) attract a breed of people that like to make out they are worth more than they actually are. They'll tell you about the 10 homes they own, but wont tell you about the debt and £1000 a month profit they're actually left with.

Most are operating on interest only mortgages. Yes, someone may have 20 houses that are 'worth' £2.6 million on paper but what good is that if you have £2.6 million in debt and making £3,000 a month in profit?

It's just like any other job at that stage.

Just because someone has 10-20 properties doesn't mean all that much.

 

[The Byre]

I would pay good money to hear you say "rollin' with a Lambo and a G-Wagon on the driveway" in one of your YouTube videos!

On my to-do list!

 

[Financial-Modeller]

It's because buy to let businesses are usually not as profitable as they appear and BTL people are usually not honest about the realities of being a landlord.

It tends to (not always) attract a breed of people that like to make out they are worth more than they actually are...

Agreed.

BTL also seems to highlight a disparity between those who genuinely and professionally run a Property company as a business, and those who simply own one or more leveraged assets, but think it confers some kind of tycoon status upon them. And tell you about it. Repeatedly.

 

[UKSBD]

Agreed.

BTL also seems to highlight a disparity between those who genuinely and professionally run a Property company as a business, and those who simply own one or more leveraged assets, but think it confers some kind of tycoon status upon them. And tell you about it. Repeatedly.

It's like gamblers.
Always tell you about the big wins and are out partying that night.
You then don't hear a word from them again until the next win.

 

[HomesWarehouse]

feel free to drop me a message, this is what i do for a living.

 

[bodgitt&scarperLTD]

feel free to drop me a message, this is what i do for a living.

Why not post some of your wealth of experience here for all to benefit?

 

[Alan]

eventually we can purchase buy-to-let properties and build a portfolio for passive income.

Just FYI running a BTL business is far from passive income

 

[HomesWarehouse]

Why not post some of your wealth of experience here for all to benefit?

No problem, i am a full time landlord and developer and my wife runs an estate agent, happy to advise or answer any questions

www.fletchersproperty.co.uk
www.flyingkeys.co.uk

 

[estwig]

No problem, i am a full time landlord and developer and my wife runs an estate agent, happy to advise or answer any questions

www.fletchersproperty.co.uk
www.flyingkeys.co.uk

It's great having you here, this is a forum, a platform for sharing knowledge, no one is going to ask you anything. The idea is you share your opinion or offer advice, then with any luck a discussion ensues.

 

[UKSBD]

No problem, i am a full time landlord and developer and my wife runs an estate agent, happy to advise or answer any questions

Advising and answering questions in the forum is fine, asking people to drop you a message isn't - Please read the rules if you intend staying.

 

[Vin Gupta]

My partner and I have recently acquired £250,000 cash. We want to keep £50,000 as an emergency fund so have £200,000 to invest.

We want to grow the capital as quickly as possible over the next 3 years, to a level where eventually we can purchase buy-to-let properties and build a portfolio for passive income.

We're thinking the buy-to-flip strategy. We have family in the building trade and are currently in-between jobs so have full weeks to commit to searching for properties, design, decorating and labour etc.

We're new to the industry so really need as much advice as possible. What would you do in our situation? Is it worth taking out bridging loans to free up more of the cash per flip? Is there a way to maximise profits for doing more than one project at once? or best to start slow.

We appreciate any comments. Thank you.

That is a very good budget for flips. Right now, the flipping capital of the UK is Burnley. Because property prices are low, Stamp Duty is very low.

My main advice would be to know your area like the back of your hand. To execute a succesful flips, you need to price it well. You need to know exactly how much the refurb will cost and exactly how much it will sell for. Only then will you know if you have a good deal.

To get this information you need to do some old fashioned legwork. Visit properties, talk to estate agents, talk to builders etc.

 

[HomesWarehouse]

Advising and answering questions in the forum is fine, asking people to drop you a message isn't - Please read the rules if you intend staying.

sorry, only being helpful

 

[HomesWarehouse]

My advice would be to find a mentor who is an expert in your local area, this is the critical part, you make your money when you buy, if you buy wrong theres no saving you