Anyone dabbled in property investment?
- Thread starter Hedgie
- Start date
Jobs can turn into something completely unexpected.
Ive done up 2 properties and occasionally things have cropped up that have been bigger jobs than were expected. Thankfully nothing that has cost a lot more than planned but it could have quite easily.
Also, just bare in mind any property you buy and do up you would struggle to sell for 6 months - most lenders require the current owner to have owned it for 6 months, so that would mean your buyers are either limited in who they can apply to or need to wait.
Ive done up 2 properties and occasionally things have cropped up that have been bigger jobs than were expected. Thankfully nothing that has cost a lot more than planned but it could have quite easily.
Also, just bare in mind any property you buy and do up you would struggle to sell for 6 months - most lenders require the current owner to have owned it for 6 months, so that would mean your buyers are either limited in who they can apply to or need to wait.
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Of course, buying it and living in it whilst doing it up, is a tax free activity (if its your only house). Tax of course only applies to profit so shouldn't be feared too much.
My personal tip, always work out the cost per square metre when looking at properties, for some reason agents don't do this for you, but it is very enlightening. If a property is more expensive per square metre ask yourself why, is it because it is in a better location or is it just the price is too high.
'retail' purchaser tend to buy on trivial cosmetic things like decor, and even furnishing (that won't be part of the deal any way) so best to buy a structurally sound larger property that needs painting up and the garden tidying rather than something that needs serious building work. (in my opinion)
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I've made a similar thread on here before. the tax you pay was about 29% I think on any profit made.for you to avoid some of the tax as your only place of residence you need to live in the property for a year. Also where the hell can you get a 2-3 bed terrace for 25-30k! I'd be lucky to get a studio flat for 100k!
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Length of residence is only one of the criteria. Anyone thinking of using this exemption may find this article interesting
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There are areas where you can buy properties for 25 - 30k but spending 10k and expecting a return on them doesn't sound feasible. They're cheap for a reason and it's usually the area and the area will have a market price ceiling. Factor in selling fees, cost, tax etc etc and there's not much in it at the end.
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I disagree, if you are capable of doing a lot of the work yourself you can do a lot for £10k.
I managed a new kitchen and bathroom, GCH, rewire, carpets, decorating, front and back doors on a 2 bedroom house for under £10k.
Admittedly my gf's dad came and fit the GCH but I had to buy all the stuff (took my grandad to B&Q on a Wednesday for 10% off
). The largest expense was the rewire as I did not know anyone who could do it.
But that was my second house and by spending £10k it added about 4x that.
The house cost a bit more than £30k so its important you find out what the ceiling price is for that street/area. You do not want to be spending £10k on a £30k property that is unlikely to sell for more than £50k as your £10k profit could easily be wiped out. Its probably not £10kprofit either by the time you factor in solicitors costs, estate agents fees etc.
I managed a new kitchen and bathroom, GCH, rewire, carpets, decorating, front and back doors on a 2 bedroom house for under £10k.
Admittedly my gf's dad came and fit the GCH but I had to buy all the stuff (took my grandad to B&Q on a Wednesday for 10% off
). The largest expense was the rewire as I did not know anyone who could do it.But that was my second house and by spending £10k it added about 4x that.
The house cost a bit more than £30k so its important you find out what the ceiling price is for that street/area. You do not want to be spending £10k on a £30k property that is unlikely to sell for more than £50k as your £10k profit could easily be wiped out. Its probably not £10kprofit either by the time you factor in solicitors costs, estate agents fees etc.
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We buy properties as BTL, well my wife does, she buys at auction and has written a book on it (link in my sig). For us it's our pension pot as we don't have pensions.
It can be hassle we have one empty in a fairly deprived area so having to deal with alot of timewasters but by and large a good second income.
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I disagree, if you are capable of doing a lot of the work yourself you can do a lot for £10k.
I managed a new kitchen and bathroom, GCH, rewire, carpets, decorating, front and back doors on a 2 bedroom house for under £10k.
Admittedly my gf's dad came and fit the GCH but I had to buy all the stuff (took my grandad to B&Q on a Wednesday for 10% off
But that was my second house and by spending £10k it added about 4x that.
The house cost a bit more than £30k so its important you find out what the ceiling price is for that street/area. You do not want to be spending £10k on a £30k property that is unlikely to sell for more than £50k as your £10k profit could easily be wiped out. Its probably not £10kprofit either by the time you factor in solicitors costs, estate agents fees etc.
Thats assuming the OP is capable of doing that, and if the OP is doing it as an investment, then the cost of their labour needs to be included otherwise it distorts the investment level.
Generally speaking, £10k won't buy a lot in terms of materials and labour (not forgetting fees).
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It is dependent on their skills of course, but the more work you do yourself the more profit there is. On £30-50k properties I do not think anyone is expecting master craftsmen to come do the work so there is probably some room for the OP to have a bash themselves.
A few jobs I could turn my hand to and save a couple of grand would be fitting a kitchen (worktop and gas/electrical appliances being the exception) and tiling. I have also fitted a carpet but I would never EVER do that again as the savings are not worth the blood, sweat (there was a fair bit of that) and tears (there were a lot of those).
Each to their own but I think on lower priced properties with smaller profits are going to need a lot of the work to be done by the purchaser to make it viable.
I did enjoy learning and getting involved with it all and would love to do a couple more but its hard graft and only worth it if you get the returns at the end as there is a big riskyou could end up buying a money pit.
A few jobs I could turn my hand to and save a couple of grand would be fitting a kitchen (worktop and gas/electrical appliances being the exception) and tiling. I have also fitted a carpet but I would never EVER do that again as the savings are not worth the blood, sweat (there was a fair bit of that) and tears (there were a lot of those).
Each to their own but I think on lower priced properties with smaller profits are going to need a lot of the work to be done by the purchaser to make it viable.
I did enjoy learning and getting involved with it all and would love to do a couple more but its hard graft and only worth it if you get the returns at the end as there is a big riskyou could end up buying a money pit.
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T
The Byre
Before you start chucking money about, please remember that buying and selling property is a deep skill, renovating is also a difficult skill to acquire.
I have just 'done-up' our kitchen and any work like that can run into serious money. I thought it would be a simple task, until I saw the state of the floor joists. The building materials just to redo the floor and put new plasterboard on the walls and ceiling came to nearly £4k. That, I hasten to add, was just for the naked room and does not take into account windows, electrics, plumbing, fittings and all the stuff that a kitchen requires and does not include labour. The cost of building materials has truly escalated in the past few years!
It's one thing to find a fixer-upper that just requires a bit of paint and tidying up, but the moment floors and roofs need fixing, you have to take the costs off the value of the house. The trick to valuing a house is to ask yourself (a) what would this property fetch in PERFECT condition? Then ask yourself (b) what would it cost to get this house into perfect condition, if I hired a builder to do all the work? Subtract B from A and multiply by any other factors, such as expected movement in the market and the value of the location.
And as was pointed out above, each area has a maximum value. If all the houses in one street go for £200k max, there is nothing you can do to go any higher. On the other hand, if you can find a run-down property in a good area, anything you do to that property will be 'amplified' by the location. The trick is to find such opportunities!
Also, it usually pays (for a small operator) to hang onto a property and live in the thing for a while, as house prices rise in times of low interest rates. They ain't gonna stay low for ever though!
I have just 'done-up' our kitchen and any work like that can run into serious money. I thought it would be a simple task, until I saw the state of the floor joists. The building materials just to redo the floor and put new plasterboard on the walls and ceiling came to nearly £4k. That, I hasten to add, was just for the naked room and does not take into account windows, electrics, plumbing, fittings and all the stuff that a kitchen requires and does not include labour. The cost of building materials has truly escalated in the past few years!
It's one thing to find a fixer-upper that just requires a bit of paint and tidying up, but the moment floors and roofs need fixing, you have to take the costs off the value of the house. The trick to valuing a house is to ask yourself (a) what would this property fetch in PERFECT condition? Then ask yourself (b) what would it cost to get this house into perfect condition, if I hired a builder to do all the work? Subtract B from A and multiply by any other factors, such as expected movement in the market and the value of the location.
And as was pointed out above, each area has a maximum value. If all the houses in one street go for £200k max, there is nothing you can do to go any higher. On the other hand, if you can find a run-down property in a good area, anything you do to that property will be 'amplified' by the location. The trick is to find such opportunities!
Also, it usually pays (for a small operator) to hang onto a property and live in the thing for a while, as house prices rise in times of low interest rates. They ain't gonna stay low for ever though!
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Also bear in mind building regs can be a nightmare now, even for just doing up a property.
Insulation can be the killer, it's no longer a simple case of repairing a flat roof, replacing windows, dry lining existing external walls, etc. as when you do jobs like that you have to bring up to current U Value regs.
You may not worry about things like this at the time, but when you come to sell, that's when problems can arise.
Insulation can be the killer, it's no longer a simple case of repairing a flat roof, replacing windows, dry lining existing external walls, etc. as when you do jobs like that you have to bring up to current U Value regs.
You may not worry about things like this at the time, but when you come to sell, that's when problems can arise.
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M
MASSEY
There's a good show in the bbc that shows how you can buy relatively ok properties at auction and tart them up for a quick 10k. Not mega money but when the people buying and selling have a day job too i guess it is a nice top up to their wages. Although they are usually buying places in the region of 100k and not 25-30k...
The main make or break for peoples success is how much they spend on materials. Many people shop in the wrong places, like B&Q, Homebase, Wickes = mega money wasted.
The main make or break for peoples success is how much they spend on materials. Many people shop in the wrong places, like B&Q, Homebase, Wickes = mega money wasted.
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D
Deleted member 226268
.
Some nice low-cost residentials in a very quiet area here >>>>
http://www.telegraph.co.uk/finance/...r-just-one-pound.html?frame=2487430&amgpage=1
Problem is that you would need to be at home all day to prevent the Low-breed unemployed Scallys from nicking your new heating system
.
Some nice low-cost residentials in a very quiet area here >>>>
http://www.telegraph.co.uk/finance/...r-just-one-pound.html?frame=2487430&amgpage=1
Problem is that you would need to be at home all day to prevent the Low-breed unemployed Scallys from nicking your new heating system
.
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The problem with that show and those like it is they make it look far too easy which isn't the reality.
My step-sister started doing this about 10 years ago, maybe a little longer, before everyone watching "homes under the hammer" started jumping on the bandwagon. Much harder now to find suitable properties that will turn a profit but not impossible.
After doing her first property she set up a business. In the early days she would do 2 or 3 a year, sold some if the profit was right and held on to rentals if not. She now owns around 10 houses.
In recent years she found it hard to find properties as like I said everyone seems to be "having a go" and paying over the odds just to get one. She's now set up another totally different business which she runs alongside her rental properties. She has a lot of hassle from tenants though, non-payment, having to deal with eviction orders etc.
There are still opportunities though. She got "lucky" last year and snapped up a decent property at auction, quick turnaround with minimal work and sold for a decent profit.
I would agree with the above about (not)using the likes of B&Q and Wickes. Their mark-up is ridiculous for non-trade customers so you'll really need to get a trade account at a builders merchant if you don't want to pay over the odds for everything
Sent from my iPhone using Tapatalk
My step-sister started doing this about 10 years ago, maybe a little longer, before everyone watching "homes under the hammer" started jumping on the bandwagon. Much harder now to find suitable properties that will turn a profit but not impossible.
After doing her first property she set up a business. In the early days she would do 2 or 3 a year, sold some if the profit was right and held on to rentals if not. She now owns around 10 houses.
In recent years she found it hard to find properties as like I said everyone seems to be "having a go" and paying over the odds just to get one. She's now set up another totally different business which she runs alongside her rental properties. She has a lot of hassle from tenants though, non-payment, having to deal with eviction orders etc.
There are still opportunities though. She got "lucky" last year and snapped up a decent property at auction, quick turnaround with minimal work and sold for a decent profit.
I would agree with the above about (not)using the likes of B&Q and Wickes. Their mark-up is ridiculous for non-trade customers so you'll really need to get a trade account at a builders merchant if you don't want to pay over the odds for everything
Sent from my iPhone using Tapatalk
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T
The Byre
Not always! One needs to keep a sharp eye on where to buy and sometimes Wickes in particular can be selling stuff very cheaply. B&Q is expensive and they have a huge range of everything you don't really need! Builders merchants tend to be expensive sometimes. It pays to have a good relationship with small timber-cutting operations.
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B&Q had a deal on if you bought a boiler and 5 radiators where you got 20% off. I also took my grandad as mentioned and got an extra 10% off - looked online and nobody could compete.
Had to get an extra couple of radiators but still miles cheaper than anywhere else.
B&Q can be good but its not often they discount what you want when you want.
Just do you research as and when you need things.
Had to get an extra couple of radiators but still miles cheaper than anywhere else.
B&Q can be good but its not often they discount what you want when you want.
Just do you research as and when you need things.
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You can not buy 2-3 bedroom house for £25-£30k. You will be very luckey if this amount is enough as a deposit. You can use this amount as a deposit to buy to let. You have no problem to get mortgage to buy to let.
Why not let me have your deposit to buy a property in London for let. Click bellow:
http://london-property-gold-mine.co.uk/
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The problem with this strategy is that despite spending £10k on the property you may still end up with a house that is only worth £25-30k.
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Of course you can! Depends entirely on the area as vanman says, will probably need modernisation but its still do-able.
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In the end property development is just like any other business
If you pay too high a price buying a property or too much doing it up, then there's no profit
No different to a car dealer doing the same
Or a shop keeper buying a product that is too expensive for him to sell
You need to be confident with the resale value, confident with your refurb budget, and only then can you make an informed decision on how much to pay for the property
One bit of advice, don't listen to Swisaw ;-)
If you pay too high a price buying a property or too much doing it up, then there's no profit
No different to a car dealer doing the same
Or a shop keeper buying a product that is too expensive for him to sell
You need to be confident with the resale value, confident with your refurb budget, and only then can you make an informed decision on how much to pay for the property
One bit of advice, don't listen to Swisaw ;-)
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have you thought about going in with another person? you may want to mortgage some of it but you have a fair size deposit especially if you team up with another investor and split the costs. If you dont have any diy skills as such you could always do some of the labouring to cut cost's stripping wallaper for skimming ripping out kitchens and bathrooms once water and electrics have been switched off and putting together the carcus's for the units its all saving day rate time for tradesmen. there are actually propertys for sale in wales for around 40k which rent for about 500 a month so not too bad a return as long as the tenents are okay. or if you cant find any gems to do up that are already near enough at ceiling price you could try converting to flats and make maybe 5-10k or even more on each flat.I think if your do your research you should be able to do something with it.I.ve been trying to save for years to get a place to do the same thing with but 30k if a lot to save,you've gpt the hardest bit done in my opinion just research well before you buy.
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S
silvermusic
The problem is not so much finding a property at the right price and doing it up, but those who rent the property. Get a bad tenant who doesn't pay for months and trashes the place You could easily be out several grand over a year. Exactly that happened to a friend of mine, they bought a 2 bed terrace as an investment with the idea that their daughter could have it in a few years time when she turned 18 as a starter home. Unfortunately things didn't work out that way. The tenant wouldn't pay the rent after a few months and it took many more months to evict them. I've seen the pictures of the place, you wouldn't believe someone could live like that, as for the physical damage, you name it, it was broken or trashed. On top of the initial 10k they used to do the place up they had to spend that amount and probably another 5K on top to put everything right. They were heart-broken and will probably just sell it on now.
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Whilst things like that do happen and I've seen them, I never had it happen to me. By the same maxim there are probably equal numbers of superb tenants. I've seen a multi million pound penthouse trashed by a family because daddies firm are paying and I've seen terrace houses with DSS tenants that were spotless and pristine. To tar all tenants with the same brush is a bit off putting to first timers but none the less it's worth being aware.
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S
silvermusic
Hence I didn't mention this tenants employment status or anything else to lead people to the wrong conclusion.
I must admit in maybe the next 5-10 years I've considered downsizing to a small 2 bed bungalow and doing something with the extra money left over. However, I think after a lot of looking into it I've ruled out buy to let as an option. Too many if's, but's and potential problems, there's far easier and safer ways of making money out of money.
I must admit in maybe the next 5-10 years I've considered downsizing to a small 2 bed bungalow and doing something with the extra money left over. However, I think after a lot of looking into it I've ruled out buy to let as an option. Too many if's, but's and potential problems, there's far easier and safer ways of making money out of money.
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Really? Just go on Rightmove, select the whole of England (or the whole of the UK if you want), max price 50k, up to 3 bedrooms and see the thousands (yes thousands) of properties which come up for 30k or under.
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