Buying houses for 40-60k & making 5/10k profit possible?
Discussion
Hi folks,
I am coming to the big 25 shortly, I have done it the wrong way since 18 when I've been able to drive and bought loads of cars and spending a ton on fuel. I've come to realise that I need to slow down and think about my future..
Next year when I sell my car, I should have around 60k to play with. I would like to buy a very cheap house and anywhere in the UK is fine with a budget of around 40/60k. I'm looking at properties that need renovating with a couple grand that needs putting in and once up to scratch list on the market with the view of making a net profit in the region of 5/10k each time.
I was just wondering if those in the know, would it be possible.
I live in the West Midlands and the only area that I see would be possible, to buy in my budget anyway, is Stoke on Trent and few other places in Blackburn and Doncaster.
I am coming to the big 25 shortly, I have done it the wrong way since 18 when I've been able to drive and bought loads of cars and spending a ton on fuel. I've come to realise that I need to slow down and think about my future..
Next year when I sell my car, I should have around 60k to play with. I would like to buy a very cheap house and anywhere in the UK is fine with a budget of around 40/60k. I'm looking at properties that need renovating with a couple grand that needs putting in and once up to scratch list on the market with the view of making a net profit in the region of 5/10k each time.
I was just wondering if those in the know, would it be possible.
I live in the West Midlands and the only area that I see would be possible, to buy in my budget anyway, is Stoke on Trent and few other places in Blackburn and Doncaster.
Who is doing the renovation work? How much work are you doing? A couple of grand doesn't go far.
If it's not you doing the hard graft then it'll eat massively into your potential profits.
If it you then it's hard to do alongside a full time job, especially if it's not located in your town.
Possible but it's a tough gig.
If it's not you doing the hard graft then it'll eat massively into your potential profits.
If it you then it's hard to do alongside a full time job, especially if it's not located in your town.
Possible but it's a tough gig.
Buggles said:
Just out of interest, and I'm not attempting to appear condescending, but what do you envisage doing with a couple of grand?
I've done a few houses up that's all, so may be able to offer some experience with regards to costs.
Max 10 grand each house, up to 15 if a decent profit is to be made..I've done a few houses up that's all, so may be able to offer some experience with regards to costs.
Looking at every house on the market around the figures mentioned above for purchase prices, the whole houses needs guttering as there's no way I'd feel comfortable in any of them.
Ofcourse if you are looking to make a decent profit then you can't become too emotional and the key is to spend as little as possible and to spend smartly.
Personally for every purchase i'd get into, the house would be done up to a high standard.
So new bathroom
Kitchen
All walls stripped back and painted.
Interior/exterior doors replaced with a sleeker modern design
New flooring throughout the property, whether that be laminated flooring in the kitchen and bathroom and, carpet elsewhere in the house.
I would stay clear from housing that needs rewiring, central heating/boiler installation.
Edited by captainhook on Friday 19th October 19:13
DuraAce said:
Who is doing the renovation work? How much work are you doing? A couple of grand doesn't go far.
If it's not you doing the hard graft then it'll eat massively into your potential profits.
If it you then it's hard to do alongside a full time job, especially if it's not located in your town.
Possible but it's a tough gig.
I would look for someone reasonable who is a jack in all trades to do the work.If it's not you doing the hard graft then it'll eat massively into your potential profits.
If it you then it's hard to do alongside a full time job, especially if it's not located in your town.
Possible but it's a tough gig.
I can't:
paint (can but not too a decent standard and I absolutely hate it)
install kitchen units
plaster
install new doors
fit flooring
do any sort of laboring work
So of course outsourcing would eat a lot into the profits. Would I be willing to learn, nope.
Stamp duty, agents fees, mortgage interest (if not cash), tax, solicitor on purchase and sale etc.....
If you do a few then you can’t even use capital gains tax allowances as you become a property trading company. Unless you do one at a time and live in them. Aim for 50k profit so that when you get it wrong you come out with £20k
IMO buying at 60k is only worth it if the rent provides a good yield and you can buy loads of them to keep.
If you do a few then you can’t even use capital gains tax allowances as you become a property trading company. Unless you do one at a time and live in them. Aim for 50k profit so that when you get it wrong you come out with £20k
IMO buying at 60k is only worth it if the rent provides a good yield and you can buy loads of them to keep.
b
hstewie said:
hstewie said: How will you do all that with a "couple of grand" as per your original post though? 
Max 10k each time for renovation work.I have access to some credit cards with 5/10k limits so that also comes in handy.
I earn 15k a year atm working part time, surely I should also be able to secure a 20/30k mortgage too which will help massively.
captainhook said:
I would look for someone reasonable who is a jack in all trades to do the work.
I can't:
paint (can but not too a decent standard and I absolutely hate it)
install kitchen units
plaster
install new doors
fit flooring
do any sort of laboring work
So of course outsourcing would eat a lot into the profits. Would I be willing to learn, nope.
Believe me, this won't work. There are too many costs you haven't considered, and having recently done up a flat (mostly myself at £0/hour rates and bits at trade prices through friends!), you simply wouldn't believe how much it costs. With labour rates too you'll be WAY over your budget.I can't:
paint (can but not too a decent standard and I absolutely hate it)
install kitchen units
plaster
install new doors
fit flooring
do any sort of laboring work
So of course outsourcing would eat a lot into the profits. Would I be willing to learn, nope.
It's an approach that'll probably work for someone with experience who already has materials/gets them cheap, but you'd need to gain the experience first and be prepared to do that stuff on the list yourself.
Buggles said:
Ah ok, so maybe ten grand as a budget for the works, max at 15. That makes sense.
In my experience, the limiting factor is the ceiling price of the street or area. Then allocate your budget accordingly. There's no point buying for 60, spending 15 to get it to a high standard if the ceiling for the street is going to be 70. Apologies if that's teaching you to suck eggs.
As the lad above says, if you're going to do it on that sort of budget, you need to be handy enough to do it pretty much all yourself.
It is possible to do a house cheaply, but it'll look cheap. In my experience, the best way to do it, is to spend a bit on good quality materials and save by doing the work yourself.
In my experience, the limiting factor is the ceiling price of the street or area. Then allocate your budget accordingly. There's no point buying for 60, spending 15 to get it to a high standard if the ceiling for the street is going to be 70. Apologies if that's teaching you to suck eggs.
As the lad above says, if you're going to do it on that sort of budget, you need to be handy enough to do it pretty much all yourself.
It is possible to do a house cheaply, but it'll look cheap. In my experience, the best way to do it, is to spend a bit on good quality materials and save by doing the work yourself.
bhstewie said:
hstewie said: How will you do all that with a "couple of grand" as per your original post though?
couple grand meaning 10/15k I'd buy a house each time for max 60k and spend renovantion work with a seperate kitty fund and if need be, I also have access to some high limit, low apr credit cards too that I could use.Buggles said:
Ah ok, so maybe ten grand as a budget for the works, max at 15. That makes sense.
In my experience, the limiting factor is the ceiling price of the street or area. Then allocate your budget accordingly. There's no point buying for 60, spending 15 to get it to a high standard if the ceiling for the street is going to be 70. Apologies if that's teaching you to suck eggs.
As the lad above says, if you're going to do it on that sort of budget, you need to be handy enough to do it pretty much all yourself.
It is possible to do a house cheaply, but it'll look cheap. In my experience, the best way to do it, is to spend a bit on good quality materials and save by doing the work yourself.
Ceiling price is the word I was looking to add in my original post but didn't know how to put it across. Yes this was a major concern.In my experience, the limiting factor is the ceiling price of the street or area. Then allocate your budget accordingly. There's no point buying for 60, spending 15 to get it to a high standard if the ceiling for the street is going to be 70. Apologies if that's teaching you to suck eggs.
As the lad above says, if you're going to do it on that sort of budget, you need to be handy enough to do it pretty much all yourself.
It is possible to do a house cheaply, but it'll look cheap. In my experience, the best way to do it, is to spend a bit on good quality materials and save by doing the work yourself.
Yes I wouldn't like to do a house up cheaply nor would I like overly spend when I'm not going to make a net profit after expenses and legal fees etc my goal is to do each house up to a high standard that will blow other properties in the same area for sale for those on the hunt but it will be tricky with the ceiling price and not being able to do majority of the work yourself.
I watch homes under the hammer regularly and I learn a lot from it.
Though I think it would completely pointless even going to auction for the price bracket i'm mentioning anyway, you are competing against property developers, those with big budgets and a wealth of experience in buying materials and getting the work done by themselves for the most part.
Caddyshack said:
Stamp duty, agents fees, mortgage interest (if not cash), tax, solicitor on purchase and sale etc.....
If you do a few then you can’t even use capital gains tax allowances as you become a property trading company. Unless you do one at a time and live in them. Aim for 50k profit so that when you get it wrong you come out with £20k
IMO buying at 60k is only worth it if the rent provides a good yield and you can buy loads of them to keep.
Some very eye opening points, I knew about stamp duty, agent fees, tax, solicitor and conveyance fees and so on but didn't really take all of this into account when buying a house in this price bracket when the ceiling prices in the area i'm going into will basically fruit no profit after fixing up the house along with all of the added fees above..If you do a few then you can’t even use capital gains tax allowances as you become a property trading company. Unless you do one at a time and live in them. Aim for 50k profit so that when you get it wrong you come out with £20k
IMO buying at 60k is only worth it if the rent provides a good yield and you can buy loads of them to keep.
It would be one property at a time but looking at the bigger picture this probably would be better in the sense of buying in area with decent commuter routes and is attractive to students and renting out long term even though that is not my goal.
Buggles said:
Well in that case, you've got no chance. Sorry mate
You've got more than 10k worth of material in a new kitchen, bathroom, flooring throughout, plaster, architrave, doors and paint. Paying someone to fit it is going to destroy your chance of making any profit.
I've just finished doing a house up, it cost me about 10k in materials and that was with keeping the original carcasses in the kitchen, painting the cupboard doors and installing new worktops. New bathroom, flooring etc too
You've got more than 10k worth of material in a new kitchen, bathroom, flooring throughout, plaster, architrave, doors and paint. Paying someone to fit it is going to destroy your chance of making any profit.
I've just finished doing a house up, it cost me about 10k in materials and that was with keeping the original carcasses in the kitchen, painting the cupboard doors and installing new worktops. New bathroom, flooring etc too
Edited by Buggles on Friday 19th October 19:16
Jimmy Recard said:
Believe me, this won't work. There are too many costs you haven't considered, and having recently done up a flat (mostly myself at £0/hour rates and bits at trade prices through friends!), you simply wouldn't believe how much it costs. With labour rates too you'll be WAY over your budget.
It's an approach that'll probably work for someone with experience who already has materials/gets them cheap, but you'd need to gain the experience first and be prepared to do that stuff on the list yourself.
Glad I have posted now as I sometimes don't take advice on board and just end up doing things anyway believing it will work!It's an approach that'll probably work for someone with experience who already has materials/gets them cheap, but you'd need to gain the experience first and be prepared to do that stuff on the list yourself.
Yes I've had my eyes opened wide and the model will not work as I can't do the work which will give me most of profits. I can obviously learn but It's not something I want to do.
Perhaps buying in the right area in my budget, fixing up to a decent standard that could give me a good rental yield for a number of years would probably be best.
Edited by captainhook on Friday 19th October 20:04
You would need an income to buy a house with 150k mortgage, the deposit does not allow the mortgage company to lend without proving affordability. He would need to get an income of over £30k to borrow 150k assuming no other loans or credit cards.
Even £1m deposit won’t let a normal lender loan without proven affordability.
Even £1m deposit won’t let a normal lender loan without proven affordability.
captainhook said:
I would look for someone reasonable who is a jack in all trades to do the work.
I can't:
paint (can but not too a decent standard and I absolutely hate it)
install kitchen units
plaster
install new doors
fit flooring
do any sort of laboring work
So of course outsourcing would eat a lot into the profits. Would I be willing to learn, nope.
I can't:
paint (can but not too a decent standard and I absolutely hate it)
install kitchen units
plaster
install new doors
fit flooring
do any sort of laboring work
So of course outsourcing would eat a lot into the profits. Would I be willing to learn, nope.
PH Delivers.captainhook said:
Max 10k each time for renovation work.
I have access to some credit cards with 5/10k limits so that also comes in handy.
I earn 15k a year atm working part time, surely I should also be able to secure a 20/30k mortgage too which will help massively.
You're out of your mind. You'll be bankrupt in next to no time. I have access to some credit cards with 5/10k limits so that also comes in handy.
I earn 15k a year atm working part time, surely I should also be able to secure a 20/30k mortgage too which will help massively.
You'll never make the numbers add up.
Knuckle down at your day job, get your wages up and revisit the idea in a couple of years (use that time to learn DIY skills as builders/trades are not remotely cheap, not forgetting they can be very unreliable as well!)
This has fail written all over it.
You wont make a penny on those figures unless you are doing the work yourself and have decent trade accounts in place.
To maximise the profit you have to buy the shytey stuff that needs major work not just the ones that need a little tarting up. I personally dont bother unless its a back to brick and start fresh type of place, as long as it has no structural issues.
You can get it very wrong with flipping and btl quite easily through inexperience.
I puchased a house last december off the back of someone who had lost a good sum of money by being one of these who thinks homes under the hammer make it look easy.
He had bought a decent enough 2 bed in Leeds for 75k. Think deceased estate type of place, stuck in the 70s style wise and he planned to refurb the lot. He got 3 weeks in, after everything had been ripped out and a few walls knocked about, all the artex and woodchip removed, couple of skips filled. He had got as far as a new central heating system in and first fix electrics done before he ran out of money. 6k, no contingency and entirely reliant on contractors who rinsed him.
first time i met him i was vieiwng it on open market, but he was trying his hardest to recoup his losses and my cheeky offer was rejected. In hindsight he should have taken 65k and ran at that point.
3 months later this pops up at auction so this time i put a slightly lower bid in to sell prior sensing his desperation. He rejects 62k.
Auction day it falls flat on its arse interest wise and i pick it up for 59k, meaning he easily lost
30k+ on that house. Infact even if he had a healthy budget and saw the project through to the end he would have made sod all because his potential profit would have been lost paying trades and getting his materials from B&Poo, coupled with paying over the odds for it in the first place.
You wont make a penny on those figures unless you are doing the work yourself and have decent trade accounts in place.
To maximise the profit you have to buy the shytey stuff that needs major work not just the ones that need a little tarting up. I personally dont bother unless its a back to brick and start fresh type of place, as long as it has no structural issues.
You can get it very wrong with flipping and btl quite easily through inexperience.
I puchased a house last december off the back of someone who had lost a good sum of money by being one of these who thinks homes under the hammer make it look easy.
He had bought a decent enough 2 bed in Leeds for 75k. Think deceased estate type of place, stuck in the 70s style wise and he planned to refurb the lot. He got 3 weeks in, after everything had been ripped out and a few walls knocked about, all the artex and woodchip removed, couple of skips filled. He had got as far as a new central heating system in and first fix electrics done before he ran out of money. 6k, no contingency and entirely reliant on contractors who rinsed him.
first time i met him i was vieiwng it on open market, but he was trying his hardest to recoup his losses and my cheeky offer was rejected. In hindsight he should have taken 65k and ran at that point.
3 months later this pops up at auction so this time i put a slightly lower bid in to sell prior sensing his desperation. He rejects 62k.
Auction day it falls flat on its arse interest wise and i pick it up for 59k, meaning he easily lost
30k+ on that house. Infact even if he had a healthy budget and saw the project through to the end he would have made sod all because his potential profit would have been lost paying trades and getting his materials from B&Poo, coupled with paying over the odds for it in the first place.
Edited by dazwalsh on Friday 19th October 22:12
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