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Thoughts on property flipping

Thoughts on property flipping

Today I’m going to discuss some hints and tips about property flipping that I’ve learnt along the way.
Flipping property can often be dramatised and seem like the ideal way to make money, particularly with more and more TV show’s about the topic appearing everyday. But in this article I intend to ‘reveal’ the secrets behind the curtain of glamour, whilst spilling some of my own best kept tips.

  1.  Property Flipping isn’t a glamorous profession
    The majority of my time is spent, clearing up dust and dirt and generally doing hard physical labour on site. You will find me sawing, plumbing and wiring at all hours of the day or night. But getting a property turned around in a short period of time allows me to do more each year and bring in more cash.
  2. Tradesmen: Trusted friends or Local Cowboys?
    Generally speaking there are two types of tradesmen out there, good ones and bad ones. Unfortunately you only tend to find out which type you have when its already too late. There are lots of useful sites out there where people have reviewed various tradesmen for you to compare them on, but bear in mind that these reviews can be misleading so don’t put all your eggs in one basket. Ask to speak to their last client, if they really don’t want you to then you should be wondering why. The best tradesmen I have on speed dial in my work phone, these are people I’ve used on multiple jobs and do a great job, arrive on time, quote and charge a good rate and are nice people to work with.
    A couple of them were old school friends who went into the trade and are always able to recommend me reliable tradesmen whenever they were unable to do the job.
    I try to do as much of the work myself but there are certain things that should be left to the professionals, often for legal certification reasons if for not for any others.
  3.  Buy Cheaper Houses at Auction
    I will prefix this section by saying if you are of a nervous disposition, property auctions may not be the best way to purchase property for you. If, however, you feel that you can deal with the speed and often stress of an auction environment, you can get some really good bargains on property or land. Derelict or property of the deceased are often sold at auction and these properties are regularly underdeveloped and can be in very good locations. Look online to find your nearest property auction and if you are going alone take a close friend along with you to make sure you stick to your limits. On the case of limits, discuss them with your friend beforehand and do not go over them, unless you are definitely able to afford it. It’s easy to get swept up in the moment and spend more than you have available, which is why I highly advise you to take your trusted friend with you and make (and stick within) your financial limits.

For an up to date list of UK-based property auctions try visiting http://www.auctionhouse.co.uk/

 

Posted by Nova Jones in Blog
Buying a house with your credit card

Buying a house with your credit card

I actually know of somebody who bought their first house using their credit cards. Nowadays you probably could just about afford to put your legal fees ad stamp duty costs onto your card.

It has to be noted that the gentleman in question purchased that property in a run-down area of Wales where the house at the time was priced under 10 thousand pounds.

When you consider that in many areas that are considered as dilapidated, shabby and run down where employment levels are low and crime is high you can still buy houses at around 50 thousand pounds, but do you want to run the risk of being burgled every time you leave your house unattended?

If you have 250 thousand pounds to spend on a portfolio, you could buy a 6 bedroom student HMO property with tidy letting income of 400 pounds per week or you could purchase 4 properties in depressed areas with a rental yield of a similar value.

The drawback could be that you are paying one set of commission to your letting agent if you are using one and 4 sets in the second instance. Similarly, you’re maintaining the upkeep of one property rather than four in the second scenario.

Coming back to the credit card illustration, you’d have to compare the interest rates on a formal mortgage which could be around 4% to 29% on a typical credit card.

We’re not suggesting that purchasing all or part of your property using your cards is a good idea, it’s a terrible idea really but if the cards are interest free for say 9 months and you can flip the property within that time then it’s a risky but excellent way to fund your property development foray as long as you meet the minimum monthly payments.

This could be particularly relevant to people that are considering buying a pre-fabricated house from a kit, such as a timber frame house. You cannot get a mortgage on a kit but you may get finance if the kit is assembled and complete.

Perhaps you only have immediate cash to buy the land and pay your legal costs initially so you may decide to buy your kit home using your cards, pay the construction costs from your working capital (your employment funds) and then seek to get a mortgage or similar funding to extinguish your credit cards debt when the low interest period evaporates.

Similarly, as we’re talking about being in the flipping business we should be thinking of selling it as soon as it has been built maybe advertising the plot and projected home unit as an ‘off plan’ sale once the land has been purchased and planning has been obtained.

Somebody may even be prepared to buy the land and pay a deposit on the house up front which will give you the cash-flow you need to make a good job of completing the house kit build.

The key thing to bear in mind is not to ‘overtrade’. Lots of businesses fall foul of this, even the ones that look like they are super successful and have a great long future.

Overtrading occurs where you simply take more work on than you can actually finance.

I always say that if you can plot down the development and growth of your business on a spreadsheet and the numbers come out right, particularly the cash-flow, then you should be able to make it a success in real-life – as long as you stick to the forecast and don’t overtrade.

Posted by Nova Jones in Blog
Things to look out for when buying a house

Things to look out for when buying a house

Choose your location well

Ask yourself; Is this property really conveniently positioned for my needs? Are you close to your job; your family; your sick parents; a good school catchment area; a decent supermarket; and transport hubs, etc.

We’re all different and we are probably all looking for different considerations when choosing a property but you should have your lifestyle and convenience needs at the forefront when making a choice. Elderly people may need to be near a bus service, hospital, a library or social facilities like a community centre whereas young families may prefer being close to a large supermarket, a leisure centre, multiplex cinema and parks.
More mature families or couples may prefer to be in a rural location to experience frequent walks or to be near to horses.

So decide what your lifestyle is and try to get a property that ticks the boxes as a convenient location to be able to access the things you like or need.

The neighbourhood is important

There are websites like Upmystreet that can give you information about the area you’re contemplating moving into. Stats and figures are available for number of crimes, libraries, police stations, schools and other important facts.

It’s always a good idea to take a walk around the vicinity of your prospective neighbourhood at different times of the day to get a feel for things such as noise, youth on streets presence, dog fouling and general rubbish upkeep.

Have a word with the local Police PCSO and find out whether they think it’s a good area or otherwise.

Property features

If you need a property with space for a workshop, art studio, model railway or similar then buy a property with a basement or cellar or outbuildings that could be converted to facilitate these things. It would be a mistake to buy a new house and say I wish I had more space for…..

If the property doesn’t have the features then consider if you could place a cabin in the garden or convert the loft to give you what you want.

The Kitchen

Kitchens are usually the room where we spend most of our time, especially when it is large and combines with a dining area. They are particularly important if you are a fan of cooking or baking or just like to sit around drinking wine in the evening.

Make sure the kitchen has what you need; space being the main thing. If you don’t like the electric upright cooker because you are used to a 6 ring gas range then make sure that you have the space for one if you were to rip out the old unit. Replacement doors and surfaces for tidy condition carcasses should be relatively inexpensive and most appliances can be replaced with new units very easily. As most connections are already in place it is very easy to replace units.

The bathroom

If you have teenage children and you and your partner, wife or husband have to be ready for work around the same time there’s always quarrels and arguments when fighting for a bathroom spot. If this is the case then maybe you should be looking for a bedroom that has en-suite facilities or a shower room downstairs.

The condition of the property

You should be able to tell from examining the property from outside and in as to what condition it is in. It’s fairly easy to distinguish a property that is well maintained from one that is in need of repair. You are not expected to be a builder or surveyor when you look at the property but do what you can to determine whether you need to ask a good builder to look at the property with you. Newer houses shouldn’t pose so much of a problem but like cars, it is very easy to cover up problems with some filler and new paint.

Minimum size

Ask yourself if the property is big enough for what you need. Will your 4 seater settee fit in that small lounge? Can you fit 4 kids into a 3 bedroom house? Would you prefer a double garage for your 3 cars?

Don’t settle for smaller if you are going to be cramped.

Watch out for the cons and don’t be taken in.

We’re all getting more aware of the tricks that sellers are being advised of to distract a buyer from noticing the cracks and flaws in a property. You can bake some bread, make a pot of coffee and dim the lights so make sure you ask to put the lights up and dont get fooled by the aromas and pretty flowers.

Assess the sweat

Stand outside and survey the grounds and garden area and try to imagine how much work is involved in keeping the place maintained. It could be virtually a part time job for somebody to have to put say 20 hours a week into a garden in the summer which burns up your free time and costs if you have to pay somebody to do it for you.

Sometimes an old property or one that wasn’t built very well in the first place can be like an old van or car. Always needing money and time to keep it in useable condition.

For more detailed information on buying a home visit https://www.citizensadvice.org.uk/housing/moving-and-improving-your-home/buying-a-home/

Posted by Nova Jones in Blog
How to make money flipping houses?

How to make money flipping houses?

Where to start?

Initially you may feel that the whole process is quite daunting, and I would have to tell you that you are not wrong. It is daunting, but there are many reasons for going into house flipping and if any one of your reasons is powerful enough you will overcome this initial fear easily.

I always feel that it’s best to start with simple maths. Don’t worry we’re not talking advanced calculus. If we drastically simplify the selling and buying process and your part within it, we can reach this short equation.

Price House is Sold for – (Price House was bought for + Cost to Do it up + Fees) = Take home Profit

Why are we looking at this? I hear you ask. It’s quite simple, if you want to make this your profession you’re going to need to make money from each sale. In order to make money and increase the amount you can earn you need to increase the price you can sell the house for or decrease the cost, fees or price you buy the property for in the first place. So let’s break each of these down

  • Increase Selling Price of Property

    I am sure this one comes as no surprise to you, if you increase the price you sell something for you can make more money. The million dollar question is how to increase the value of the property.

    Yes the more you ask the more profit you can make, although it also usually also means the more commission you will have to pay your estate agent.

  • Decrease Price Property Cost to Buy

    If you’ve already bought the property then you won’t be able to decrease this cost. If however you’re currently looking to buy you may be able to bargain and get a price lower than the asking price or at least lower than the current value of the property.

  • Decrease Cost Required to Do it Up

    This is a big one, and probably the one that you have the best control over. If you can reduce your renovation costs your profit can increase quite significantly. The best way is to get handy with some DIY, and buy any furnishings and fittings secondhand.

  • Decrease the Cost of Fees

    This is another way to increase your profit, the easiest way to decrease your fees is to use online comparison sites. With a quick Google search you will find plenty of sites that offer various different comparisons and are likely to provide cheaper quotes than your local solicitor or estate agent.

Lets Not Forget About Tax

In the UK we have to pay Capital Gains Tax. We don’t pay it on properties that are designated as our own residence – of which you can only nominate one property, so if you are thinking of making flipping into a business you need to know whether your activities will be subject to CGT or not.

If we’re talking of flipping as a means to better your own residence in order to climb up the property ladder or as a hedge against inflation for your old age then we’re talking about singular property acquisitions.
More information regarding tax and other fees in the UK visit this site.

Do As Much Of The Improvement Work You Can Yourself

Why pay somebody to do a job you can already do yourself, like tidying the garden or painting. Anyone can paint. You just need to apply a good standard to your work to obtain a decent finish. If you don’t know how to do a job you could learn by watching a YouTube video or by obtaining a book on the topic or by going to night-school to learn a skill or trade. Most good general builders and handymen learnt by learning one job first then when they became adequate at one trade or skill they learned another.

Alternatively, you may be able to reduce the costs of hiring a proper builder or tradesman by offering to be his ‘mate’ or labourer on the job. Bricklayers need somebody to mix the cement for them and pass them loads of bricks.

Keep Your Ear To The Ground

Let all your local estate agents know that you are in the market for a quick purchase. If you are a cash buyer, your finances are in place and your solicitor is hot to trot you should be able to beat others to the finishing line especially if they have the burden of engaging a solicitor, and selling their house first and if the seller wants a quick sale you are in with a good chance.

Every property has the right purchaser for the sale. It could just be you.

Watch the Market

Sell high when prices are high and property is in demand. Be prepared to sell lower if you’ve made a decent profit and property is moving slowly anyway, especially if you’ve got to sell to finance your next buy.

Remember it’s all relative. If you’ve dropped your house by 5k to buy a property that has been reduced by 20k so how much have you actually lost out on?

Posted by Nova Jones in Blog
Tips To Get You Started On Flipping Your First House

Tips To Get You Started On Flipping Your First House

You’ve probably been hearing a lot of buzz about house-flipping going and it’s for good reason! If you have the time, patience and money to invest, then this is something that may be worth your while to look into.

Flipping a house is when you make a purchase of a run-down property that is below market-price. Your job is to change that by increasing the value of it’s worth and then to sell it quickly for a profit. If you know what you’re doing and play your cards right, you can expect to make upwards to fifty thousand or more for each flip. Here are a few tips to help get you started.

CHECK YOUR CASH FLOW

If you are thinking about flipping a house or houses then you are definitely going to need some money. That money can come from a number of sources including yourself, a bank or someone else. You might already have your own money that you are able to invest and if you do then you’re already ahead of the game. Now if you don’t have the money, that’s alright too. Most private investors would appreciate a new flipper to have a little something to put forward and borrowing money from other sources will help you to get started.

BUILD YOUR TEAM

You will need a good team by your side on this project. Flipping a house cannot be done alone as there is just too much involved for you to know and understand everything. The team you build will have to be made up of individuals that are specialists in their own right and people you can trust and rely on.

Some of these members should include a few real estate agents, a CPA, a real estate attorney, a general contractor, a designer or an architect, an insurance agent, a wholesaler, and a private money or hard money lender

This might seem like a lot but this is what you will need to be successful at your project. Your team will be there to assist you when ever needed. They will help you with all the fine details of finding, fixing and then finally selling the property. Those people on your team will work together to help you shorten your own personal learning experience while helping you to earn profits more quickly and efficiently than you ever would on your own.

Posted by Nova Jones in Blog