UK Landlord Forum / Life

Afternoon all. I've seen quite a few of these 'buy a shed of a house do it up and make 50 grand' TV programmes and i've always wondered does that profit actually end up in the sellers pocket? Surely theres capital gains tax or something to pay that buggers it up for the common man.

Im writing from the point of view of a layman. A layman with very limited knowlege on the subject of buying and selling houses.

Hi There Capin and welcome.
Yes there is tax to pay and other fees, solicitors, agents and of course any mortgage or borrowing that has been done to get the place.  After refurb etc, there is still a profit to be made.  But as mentioned before, and i am sure you will agree, you have to find the property that is going to give you the max at the end.

Lets face it,  You buy a house and with it you get a mortgage, you spend 8 mths doing one on it spending money left right and centre, you aint going to make much,  The key is always a very very quick turn around of property.
Wise word of advice was given to me the other day, * dont always take what they say on tv as gospel*  same as everything in life where money is concerned and a profit is to be made, there will always be a risk bolted onto your investment.
I think expriance is a good key here, you will get better at what you do the more you do it, and you will as does everyone take a kick from time to time. 
In summary.
Yes there is a profit to make after overheads have been taken out, but only if you get the elusive bargin.


Badger

Hey Badger

All this has been brought about by me and the missus were watching UKLiving for most of yesterday Basically we're in a position whereby we can buy another place either to do up or rent. Im angling for a rental, she's set on doing The Full Beeny; buying a shed, putting floating shelves up and selling it for a trillion quid.

If we could get the ever elusive bargain then i can see the virtue of getting in there, doing it up and making a couple of quid but I wonder if renting is a more sound 'investment'

To be honest its an asset no matter what you do with it.  My position was simple really, i need a pention plan and so i brought a house and rented it out, after some mods.  I got the house at 20k below asking so was quids in anyway.
The danger of renting as most find is that rates go up and at some point you maybe paying more mortgage than rent coming in,  Ok if you are asset grabbing not a prob, as for me, the amount over i am paying due to rates is far less than a pention scheme !.  A lot of old timer landlords have hung there key wads up due to this.  Again if the right place comes up go for it.

As for doing a referb, commen sense as always, and the key dont make it personall.  You can make general statements that are to most taists, but simple is the key. Know your market do the home work and budget wisely.

If all goes tits up with the refurb you can rent or sell, if all goes tits up with renting then sell.

Options options options

Badger

hmm indeed. She's got her sights firmly on buying and flogging it. We're actually having an email domestic about it right now

Right. Lets say I bought a house for 80,000, and I flogged it for 90,000. On these TV programmes everybody goes bonkers because theres 10,000 profit. But surely theres not? surely theres like capital gains tax at like 40% giving a profit of 6,000 which aint so good?

If we are talking about one house then would the purchase be in both or just one of your names. as both of you are allowed to have one house thus as far as i know not incuring any tax issues when you sell.  Dont quote me on that.  One of the other peeps will be here in a mo i am sure to give you more advice, V we need you x

Badger

Hey CapnAHAB,

Welcome to the forums.

I completely understand your situation, as I was once in a similar situation. The problem is, TV shows like Property Ladder are way too influencial because they rarely show the pitfalls when it comes to development.

At the end of the day, in my opinion, if you want a longterm investment, definately go with the renting option. However, if you want to make a quick buck, go for a development project.

However, bare in mind, developing a property is pretty much a full-time job. So if you and your missus are in full-time employment, I hope you don't mind the lack of sleep and long days. I personally wouldn't trust anyone else to manage the project, plus, getting a project manager is expensive. So either you or your missus should ideally be on the site as development is under way

What Badger said was right. If you plan on developing a rundown property, the key is to work quickly. It's known as "flipping", and the quicker you flip the property, the more profit you'll walk away with.

A few of the keyfactors when developing are:
- don't cater for your own taste. Keep things neutral.
- plan a budget and stick to it
- manage your time carefully (form a project plan)
- it will take months for all the conveyancing to go through on a  property. During that time, do all your research in regards to finding the best priced tradesman.


Good luck with whatever you decide to do. And definately keep us informed.

Oh, and to answer your question...

There is definately money to be made in developing if you do it right. It's all about getting your research done. Research is definately the most important factor.

The only problem is finding the right property. Properties in need of restoration generally get snapped up extremely quickly because everyone has the property bug these days.

However, due to the increase in interest rates, a lot of homes are getting reposessed by lenders, and then the properties get auctioned off way below face value.