Flipping instead of renting

beauf

Anyone flipping property instead of renting it.

I suspect it's not possible to flip due to the high cost and lack of stock.

Graham

I think the market is so distorted at the moment that by the time you've had any necessary work done any fixer-uppers actually work out more expensive than their equivalent finished properties.

4ensic15

Graham wrote: »

I think the market is so distorted at the moment that by the time you've had any necessary work done any fixer-uppers actually work out more expensive than their equivalent finished properties.

Flipping usually refers to selling off the contract. Not easily done with the market being slow and finance virtually unavailable.

beauf

I was thinking more that people with money (cash) to invest used to have it rental property rather than sitting in a bank.
If they don't want to get locked into tenancies that can't be ended (if the legislation gets though).

L1011

Irish market has priced in refurb costs for years and meant that the Homes Under The Hammer style setup barely works - where it does it isn't common

godtabh

I know of new builds in Wicklow that closed before Christmas and sold/selling again in Jan (2) and Feb (1) for substantially more than the original price. The time from buying off plans to closing was enough to buildup of equity of between €75-€100k.

Not sure how rare this is.

beauf

It just seems to me it wouldn't need to be that much to better the return from rent.

The argument is usually about passive income Vs earned income. It also has higher risk if the market is peaking. You could end up selling at a loss. I suppose at that point you switch to renting it.

stiofan85

Bought a fixer upper 2 years ago, and finished it to a high standard but now we're selling unexpectedly. My experience is that there's not a lot to be made from "flipping". The high standard bit is probably key though - I don't believe we are getting near 100% of our investment in renovations back, and had we not done anything bar a lick of paint we'd probably have netted out better simply due to the market. I'd say we'll see 60-80% of our renovation investment back, and the rest of our "profit" is just the natural price increase from the market.

We bought with the intention of sticking around, and that's why we did the work to a high standard. Also, I did a huge amount of the work myself - if you're paying for all of the labour then I think there is even less return. I found getting good trades in challenging as they seem to be very busy generally.

Where I feel we have gotten a good return is not paying rent and paid down a bit of our mortgage in those two years, while the market went up, although that gets eaten up by the price of the market on the other end as we have to buy a house that has increased in value in that time frame at roughly the same rate.

Factoring in the solicitors and estate agent fees....I would say flipping is not a great way to make money atm.

JimmyMW

beauf wrote: »

It just seems to me it wouldn't need to be that much to better the return from rent.

The argument is usually about passive income Vs earned income. It also has higher risk if the market is peaking. You could end up selling at a loss. I suppose at that point you switch to renting it.

Taking into account purchasing and selling fees, professional fees and stamp duty etc, id imagine you would need to make a fairly substantial increase in price just to cover the above.

From my experience generally in Ireland people have no hesitation in taking on renovation work or building work despite maybe having no experience of same, generally it is vastly underestimated and in particular by first time buyers. Therefore the difference between the price of a project property and a turn key property are not as far apart as it should be, resulting in flipping being almost non-existent in the Irish market.

Its worth noting thou, when it comes to extensions and the likes, from my experience typically people are more reluctant to take on a property which will need work that falls outside the exempted developments criteria. From my experience generally people seem to be daunted by planning and the planning process but not by renovations or construction.

antiskeptic

beauf wrote: »

Anyone flipping property instead of renting it.

I suspect it's not possible to flip due to the high cost and lack of stock.

I've done a few. It's certainly possible to earn a decent wedge, even today.

- you need to buy well: finding a sale that's somewhat forced or something off market at lower than usual market prices

- you need to renovate well: for example, pick the house which has decent windows, okay plaster, okay heating rather than one which needs all the expensive items done.

- you need to sell well: not needing to sell quick, not necessarily using an estate agent.

You also need to be able to produce a product that is attractive and fits the target markets red lines. There's no point, for example, in painting the whole place magnolia in order to save a few bob on paint - when paint is the cheapest of all the finishes you put into the place, even if it's Farrow & Ball you use.


Mainly you want to avoid/minimize tax. So if you happen to flip your principal private residence you can sell on without capital gains of 33%. But don't expect to string "PPR" flips together without Revenue coming a knocking at some point. You need to understand the tax implications before getting into things seriously


Bog standard 3 bed semi's in estates don't have anything in them: they're too much of a commodity for any big bump to be made. You need something with a bit of hidden potential. And you need, moreso these days, to be able to produce something that people really like - so good taste pretty important.

antiskeptic

An example of a very good 'un (that got away).

Commercial property in a period building, in the centre of a town. About 10 minutes walk to the DART. I wasn't au fait with commercial at the time so overlooked it. It disappeared from the web after an age up and reappeared again when I had become a bit more informed. So I tip on down.

No one interested, previous sale agreed had fallen through through the purchasers inability to finance the buying of it. Old owner retiring and would take any reasonable offer. The place is in pretty good condition fitted out in offices, high ceilings, coving and sound overall. In fact, the thick wall down the middle of the property would easily pass fire regs if the property was divided in two.

A chat with someone I've come to know a bit in the council and they're quite keen on the idea of granting planning for a split into two decent sized townhouses. It fit's their get-folk-back-into-the-centre / using public transport philosophy.

Let's say it cost 320 to buy and another €100K to fit out. The selling price of each of the finished properties would be around €450K. There'd be taxes to pay and the like but still...

Unfortunately, when I rang up (a nanosecond after I'd done my checking-things-out) to offer just under asking, the EA told me the original purchaser had managed to scrape together the money and it had gone sale agreed.

That's once in a blue moon territory, and you probably have to learn the trade a bit to come across them, but for sure they're there. At least, I keep telling myself that..