Picking the wrong property #tip1
Flipping a tired, unloved property into a fresh and desirable home can be a rewarding experience both emotionally and financially. But refurbishment projects always come with complexities and challenges. Trust me, I’ve not completed one that’s been plain sailing yet.
In reality, it’s all too easy to make innocent faux pas and find yourself in the dreaded bottomless money-pit situation, stuck in procrastination, run over schedule or bogged down in disputes.
I’m sharing lots of my renovation tips with you in my blog so that you can avoid them.
First off Picking the Wrong Property
No matter how organised or experienced you are, renovating is a stressful and time consuming process, so unless a project is guaranteed to give you either your dream home, or make you some money, you are taking on the wrong property.
Do your homework wisely, check and check again. A good starting point for me is total common sense.
A property is listed for £100,00 it looks cheap for the street as average prices are £150,000. You inspect it and it turns out it requires £30,000 worth of works.
You’ve calculated you can make £20,000 on this deal on the headline numbers.
Seems great if it’s your forever home and you want to personalise the house. But when it’s an investment you have to look at other factors, legal costs, surveys and selling costs later down the line. Then you build in a 10-15% contingency on works and hey presto it still looks ok ish’. But in reality, you could have saved time and hassle re looking at your strategy with this property.
When you don’t factor in other costs including your time and effort, you can end up focusing on the lump sum. Say with this deal example above you walk away with £15,000 profit. But if you factored in the 7 months it took you to refurb at weekends, the 30 hours a week you worked hands on ripping it out, the council tax bills, the time it sat empty taking viewings, the time it took to get from offer to completion… wouldn’t you just buy one ready to rent in great condition on the street for £140,000 and take the monthly cashflow instead?
There are lot of reasons people look to flip rather than buy to let but for me I come back to this common sense approach time and time again.
Most property I view as a long term thing, owning the right £140,00 house for 10 years can pay you double the flip income if you focus on cashflow and capital appreciation.
For me I look a refinancing and re using a rental property over my lifetime, cashflow for now, release equity later, cashflow again, release equity again later, cashflow again and so its pay-out or opportunity to generate money is endless. If it’s the right property
I have my handy renovation calculator available in the downloads section