Renovating property to sell on

Ikozma

I'm considering buying a small property to do up and sell on. Does anyone know the taxes and fees that need to be paid when selling a property, and I presume I'd have to set up as self employed.
I have a small house in mind and would be paying for it myself but just want to know if it's viable to make a profit on it when selling with the taxes and fees that would be taken from any profit
I'm handy at trades and building work but not so much when it comes to taxes and fees
Thank you

brisan

Ikozma wrote: »

I'm considering buying a small property to do up and sell on. Does anyone know the taxes and fees that need to be paid when selling a property, and I presume I'd have to set up as self employed.
I have a small house in mind and would be paying for it myself but just want to know if it's viable to make a profit on it when selling with the taxes and fees that would be taken from any profit
I'm handy at trades and building work but not so much when it comes to taxes and fees
Thank you

Are you going to live in the property while you do it up ?
If its your PPR no tax will be due

https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/principal-private-residence-ppr-relief.aspx

Ikozma

Ikozma wrote: »

................I presume I'd have to set up as self employed.
................

Nope.

Ikozma

brisan wrote: »

Are you going to live in the property while you do it up ?
If its your PPR no tax will be due

https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/principal-private-residence-ppr-relief.aspx

No it won't be my private residance, I'd hope to do it as a business, do up a property, sell and move onto nxt one

JimmyMW

Ikozma wrote: »

No it won't be my private residance, I'd hope to do it as a business, do up a property, sell and move onto nxt one

33% on capital gains, plus buying and selling fees stamp duty etc

wowy

Speak to an accountant. The fact that you're deliberately purchasing the house just to renovate it and sell it on is possibly running a bit close to the wind for CGT; the gain may be taxed as income (so subject to income tax, prsi and USC instead). This is especially relevant if you do it a few times.

On the proposal - imo you'd want to be getting the house at a very good price, or else be confident that the works you do yourself (at nominal nil cost) will add enough value to make it worthwhile. Realistically the best value-adds I see are things like insulation, windows, heat pumps, smart wiring, etc, but they all need to be certified or supplied/installed by 3rd parties, so how much serious value-adding work is there that you can do yourself?

Claw Hammer

JimmyMW wrote: »

33% on capital gains, plus buying and selling fees stamp duty etc

If the o/p is going to make a business of buying houses and selling them on, it would be deemed trading and liable to income tax and possibly VAT.

brisan

Claw Hammer wrote: »

If the o/p is going to make a business of buying houses and selling them on, it would be deemed trading and liable to income tax and possibly VAT.

From experience that's how it works
It all depends what receipts you can furnish to show expenses incurred
Unless as was previously stated you can get the certifiable works done cheap there is little or no profit if you pay tax on profits

JimmyMW

Claw Hammer wrote: »

If the o/p is going to make a business of buying houses and selling them on, it would be deemed trading and liable to income tax and possibly VAT.

True enough, cost of selling and stamp will be due regardless

Ikozma

What percentage of profits are we talking for tax?

brisan

Ikozma wrote: »

What percentage of profits are we talking for tax?

Depends what they look for
CGT 33%
income tax will be at your normal tax rate plus PRSI and USC

Ikozma

There sure is a lot to come off any profit you might make

Do you have a job at the moment?

Ikozma

Augeo wrote: »

Do you have a job at the moment?

Yea, part time at moment though

Well if it's considered your property endeavours are liable to income tax then perhaps you have some scope to be paying at 20% rather then the higher 40% rate.

You'd really need to be sure that there's any profit at all to be made before looking at how that will be taxed. As others have pointed out there might not be scope for this to be a profitable venture.

DubCount

This is a difficult way to make money. Can you really add sufficient value to make a profit? Dont forget a lot of people feel property values are going to fall in 2021 - can your value add exceed any underlying loss from property price deflation ?

If you do go ahead, you should get tax advise from an accountant. Its money well spent. From the discussion so far, its more likely to be deemed liable to CGT in my view as it would not meet the "badges of trade" rules to be deemed trading income, but that needs to be confirmed. Then there are issues around whether you can/should register for VAT.

I know "Homes under the Hammer" make this look like easy money. IMHO its far from easy.

Claw Hammer

DubCount wrote: »

This is a difficult way to make money. Can you really add sufficient value to make a profit? Dont forget a lot of people feel property values are going to fall in 2021 - can your value add exceed any underlying loss from property price deflation ?

If you do go ahead, you should get tax advise from an accountant. Its money well spent. From the discussion so far, its more likely to be deemed liable to CGT in my view as it would not meet the "badges of trade" rules to be deemed trading income, but that needs to be confirmed. Then there are issues around whether you can/should register for VAT.

I know "Homes under the Hammer" make this look like easy money. IMHO its far from easy.

A one-off will not meet the badges of trade but a series of them within a relatively short time would, particularly if the properties are never rented but sold on when upgraded.

brisan

Have you done all the sums to see if there is a profit to be made on it
From experience you have to get the right property in the right area at the right price
If you factor in work that will need to be done by certified tradesmen there may not be a lot of profit in it
Can you get brickies ,plasterers ,chippies etc at good rates
Can you source materials at trade prices ?
Having cash rich but receipt short tradesmen friends may help out

antiskeptic

Ikozma wrote: »

I'm considering buying a small property to do up and sell on. Does anyone know the taxes and fees that need to be paid when selling a property, and I presume I'd have to set up as self employed.
I have a small house in mind and would be paying for it myself but just want to know if it's viable to make a profit on it when selling with the taxes and fees that would be taken from any profit
I'm handy at trades and building work but not so much when it comes to taxes and fees
Thank you

If it's not your PPR (and beware faking it being your PPR) then 33% on the capital gain, as the man said.

You would also have:

estate agent fees on sale. You can cut these by going DIY with the likes of Moovingo. Certainly worth considering given the typical 1% of sale price + 23% VAT agents charge.

solicitor buy and sell fees. Beware here of going cheap as chips with your solicitor. They can make mistakes and you'll pay.

stamp duty on buy

professional photographer (you'd be mad not to employ one)

survey - unless you're experienced I'd not forgo this as you could end up buying trouble. Trouble is: how to find a pragmatic surveyor who won't just tap the walls and stamp on the floors.

any prof fees/certification for structural works you do (and perhaps, depending on how fussy the to be buyers surveyor, already done)

any certification of extension works (existing or new) re conformance with planning/building regs. If not planning to extend, make sure you have a cert for any existing extensions at the time you buy, these just being passed on to the next buyer

..etc.etc.

..these simply adding to the cost of doing business. The 33% would be on the gain made after all costs going in, including these fees.


Some other things to consider:

If the house you're looking at isn't registered on Land Registry (and many, especially older properties which haven't been sold in recent times, aren't) then you've got to get it registered before you can sell it again. It costs (I think €400??). But mores the point: it can take time to get it registered and you can't really sell until it is. If buying unregistered then

a) get advice on how long it will take and consider whether that fits in with your projected sell date.

b) sit on your solicitor to make sure they get and keep the registering process moving.


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You need a RECI for any electrics, shy of changing light switches and the like

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There are limits to how much you can plough into the property before it's considered a new build. And new build means you have to charge VAT. Murky area that's hard to get hard advice on. If you're tidying up a property: fine. If you're buying a single storey cottage with loads of land and planning on retaining the front wall and knocking all else, finishing with a large 4 bed then beware. Beware too planning: if too substantial the works then it won't be considered a refurb but a new build.

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There's a lot of regs there too. Project Supervisor Construction Stage and paperwork associated with same. Notification to authorities and all that. You can choose to adhere or to duck. But there's risk. And you need insurance. Which means adhering to rules lest it be voided. Again, you've to decide on the risk you run. All risks will cost you some, and then some. Or you can trim insurance to cover total loss and the like - not cheap but less that all risks. Again - something you've to dig into as there isn't a product ready made for you.

Bringing other contractors on site - well that opens up the whole insurance field. Bringing a few uninsured mates on site. Minefield. It's all great, until it goes wrong.



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Timing. Unless you are getting this property for an off-market song, now probably isn't the right time to be trying to flip a property. Whatever costs you think you'll put in (and I imagine I might have outlined a few not thought of) it's sure-fire too cost you more. I moved a flip property on recently and was feckin' delighted to be shot of it. I'm looking at other flips languishing and price dropping, looking at the in-the-doldrums market and am thanking my lucky stars to be out. Powder dry territory, in my view.

He who dares wins. But probably only if long enough in the flip tooth to be able to assess the risk.

antiskeptic

I know "Homes under the Hammer" make this look like easy money. IMHO its far from easy.

This.

I've done it a few times and have always made well out of it.

But a decent chunk of my doing well out of it had to do with timing (aided by luck). I bought my first mid-2013, which was the absolute low in the market. Property investment was "dirt on your shoe" and I paid buttons to someone needing cash. A good time to buy is bottom of the market

I bought just below a mini boom that ran into 2018 - I put 10K unforeseen costs in (on 80K estimated), but the market added 20K unforeseen onto the price between my buying and selling. Point: a good time to buy is when the market is rising fast.

It was only experience built up which gave me a decent wedge from the last property. I know how to buy well now: that opened up the potential profit. But what would have been a really good outcome got nibbled away at by Brexit-talk and Covid. A bad time to buy is when the market is flat and uncertain but prices haven't dropped.

Like now.


Be generous with your margin for error. If, after doing all your sums, you can see €100K (before CGT) gain for an 8 month turnaround (getting keys to giving keys) then you might be on to a good thing. But if your date-to-market sees you add the finishing touches in October then you've 5 months from that 8 already gobbled up in dead time.

antiskeptic

Ikozma wrote: »

No it won't be my private residance, I'd hope to do it as a business, do up a property, sell and move onto nxt one

Next one = business.

You're out of CGT territory and into setting up a business. That means setting up a company, tax returns, corporation tax (which isn't, unfortunately 12.5% ), payslips, accountants.. and all the rest.

There isn't a hard and fast rule to time periods between one off flipping (liable for CGT) and flipping one after the other (making it a business). And no accountant is going to give you a fixed time - they'll give pointers but leave the risk to you.

One every 3 years? Maybe? Who knows?

brisan

antiskeptic wrote: »

This.

I've done it a few times and have always made well out of it.

But a decent chunk of my doing well out of it had to do with timing (aided by luck). I bought my first mid-2013, which was the absolute low in the market. Property investment was "dirt on your shoe" and I paid buttons to someone needing cash. A good time to buy is bottom of the market

I bought just below a mini boom that ran into 2018 - I put 10K unforeseen costs in (on 80K estimated), but the market added 20K unforeseen onto the price between my buying and selling. Point: a good time to buy is when the market is rising fast.

It was only experience built up which gave me a decent wedge from the last property. I know how to buy well now: that opened up the potential profit. But what would have been a really good outcome got nibbled away at by Brexit-talk and Covid. A bad time to buy is when the market is flat and uncertain but prices haven't dropped.


Be generous with your margin for error. If, after doing all your sums, you can see €100K (before CGT) gain for an 8 month turnaround (getting keys to giving keys) then you might be on to a good thing. But if your date-to-market sees you add the finishing touches in October then you've 5 months from that 8 already gobbled up in dead time.

Keys to keys should be 4-6 months all going well
its possible to turn a house in 8 weeks and have it on the market,
Granted not on your own but time is money unless you bought cash
If you buy in the right areas its possible to have a couple of buyers lined up before you finish work

antiskeptic

brisan wrote: »

Keys to keys should be 4-6 months all going well
its possible to turn a house in 8 weeks and have it on the market,
Granted not on your own but time is money unless you bought cash
If you buy in the right areas its possible to have a couple of buyers lined up before you finish work

Agreed. But unless you're very lucky with your timing you'll have quiet sale times of the year to deal with.

Think the fastest I've ever seen (someonr else do it) is 6 weeks. But that would take a well oiled flip machine. Not someone embarking out in that field.

But its a good indicator of the kind of house to be flipping: something that needs a lick rather than a chew.

brisan

antiskeptic wrote: »

Agreed. But unless you're very lucky with your timing you'll have quiet sale times of the year to deal with.

Think the fastest I've ever seen (someonr else do it) is 6 weeks. But that would take a well oiled flip machine. Not someone embarking out in that field.

But its a good indicator of the kind of house to be flipping: something that needs a lick rather than a chew.

We have flipped quite a few houses in the same settled area.
Once word got out that we were doing it up to sell it (let the neighbours know ) we had interest from locals before we finished the job
We have re wired ,replumbed ,plastered new kitchen new windows ,new bathroom, new internal and external doors and flooring in 8 weeks
Granted it takes experience and a few contacts

beauf

Unless you find an unpolished diamond (very unlikely) in a rising market, in a rising area and/or you can provide cheap or free labour, I can't see there is money in flipping in the current market. You could lose as much as you gain very easily.

There's a lot of very old housing stock in Ireland that is too expensive. By the time you've improved it to a good standard, it will be priced out of its own area.

I think its a bit different in the UK, where its a much bigger market so more stock to choose from, and you can wet your feet in more modest projects and areas. You can't over commit as it can just go bust over night.

beauf

brisan wrote: »

We have flipped quite a few houses in the same settled area.
Once word got out that we were doing it up to sell it (let the neighbours know ) we had interest from locals before we finished the job
We have re wired ,replumbed ,plastered new kitchen new windows ,new bathroom, new internal and external doors and flooring in 8 weeks
Granted it takes experience and a few contacts

I think in the current market, you could build up a decent business doing home improvements, and extensions, big demand for that. Wait for COVID and Brexit to pass by. Once the market has stabilized, then move on to bigger things.

ted1

wowy wrote: »

. Realistically the best value-adds I see are things like insulation, windows, heat pumps, smart wiring, etc, but they all need to be certified or supplied/installed by 3rd parties, so how much serious value-adding work is there that you can do yourself?

i wouldn't agree with you.
Insulation- depends on scale, external wrap will never add more than it cost
heat pumps - no thanks, especially if its a retro fit.
smart wiring- most devices are wireless these days.

A good roof, smooth skimmed walls. good skirting,. nice sockets and switches, good windows, possible sky lights to lighten up dark rooms.

good use of space, good built in wardrobes

antiskeptic

antiskeptic wrote: »

...................... corporation tax (which isn't, unfortunately 12.5% ), ................

Just about this, corporation tax isn't 12.5%?

Geuze

Augeo wrote: »

Just about this, corporation tax isn't 12.5%?

There are other rates.

https://revenue.ie/en/companies-and-charities/corporation-tax-for-companies/corporation-tax/index.aspx


Basis of charge
There are two rates of Corporation Tax (CT):

12.5% for trading income
25% for income from an excepted trade (as defined in part 2 of the Taxes Consolidation Act)
25% for non trading income, for example rental and investment income.

CT is charged on the profits in a company’s accounting period. This period cannot be longer than 12 months. If the tax rate changes in the accounting period, profits will be apportioned on a time basis and taxed accordingly.

beauf

I think on a property you get cheap, its going to need at a minimum windows, doors, kitchen and bathrooms. Then you might have heating, boiler, roof, plumbing and or electrical issues. The more you spend the less profit you get back. So its a balancing act. It will be dictated by what the best houses in the area can command. Because thats the best you will get back out of it.

brisan

beauf wrote: »

Unless you find an unpolished diamond (very unlikely) in a rising market, in a rising area and/or you can provide cheap or free labour, I can't see there is money in flipping in the current market. You could lose as much as you gain very easily.

There's a lot of very old housing stock in Ireland that is too expensive. By the time you've improved it to a good standard, it will be priced out of its own area.

I think its a bit different in the UK, where its a much bigger market so more stock to choose from, and you can wet your feet in more modest projects and areas. You can't over commit as it can just go bust over night.

This is the major concern
You have to remember you are doing it up to sell it ,not live in it
Every area has a maximum people will spend so always remember that when doing costings
If at least 10% of the final sales price is not pure profit I would not bother

antiskeptic

beauf wrote: »

I think on a property you get cheap, its going to need at a minimum windows, doors, kitchen and bathrooms. Then you might have heating, boiler, roof, plumbing and or electrical issues. The more you spend the less profit you get back. So its a balancing act. It will be dictated by what the best houses in the area can command. Because thats the best you will get back out of it.

I've done the range: from total refurb and extend to quick lick. Certainly the latter is where I'd focus now, my last not needing windows, doors, rewiring, roofing. I redoored the kitchen, not even changing to countertop or sink. I used as much as I could of what was there, rolling with it but tranforming it aesthetically such that fuddy duddy became sleek and mod. Far cheaper and quicker to paint slender framed brown alu double glazed in an attractive cream... than rip out and replace with cheap, thick framed plastic. Yeah, you lose a bit on BER but no matter once you can achieve BER target elsewhere


If your model is based on being bang on trend then there is little to do but rip out and replace everything. But you can often refashion into something that is tasty whilst eschewing trend. Its quicker and a darn sight cheaper!

Prevention is better than cure .. so viewing critically with an eye on minimum intervention is a good place to start. You don't (or at least I don't) want to pass off rot as fresh and new and I aim to give someone a house without buried trouble. But at the end of the day people go for packaging rather than contents so avail of that fact.

brisan

ted1 wrote: »

i wouldn't agree with you.
Insulation- depends on scale, external wrap will never add more than it cost
heat pumps - no thanks, especially if its a retro fit.
smart wiring- most devices are wireless these days.

A good roof, smooth skimmed walls. good skirting,. nice sockets and switches, good windows, possible sky lights to lighten up dark rooms.

good use of space, good built in wardrobes

Kerb appeal ,kitchens and bathrooms sell houses
After that once its clean and bright and the new owners can put their own stamp on it
Windows ,heating and good electrics are a given on nearly all flips

antiskeptic

beauf wrote: »

I think in the current market, you could build up a decent business doing home improvements, and extensions, big demand for that. Wait for COVID and Brexit to pass by. Once the market has stabilized, then move on to bigger things.

Trouble is, building extensions is plain piece rate work whereas the whole point of flipping is to make very good money for far less input than is involved in building!

Flipping involves taking a punt and having large amounts of money tied into your investment. That has to give a return. But yeah, there are times not to going flipping and I'd be shy of it at the moment. Too uncertain..

antiskeptic

brisan wrote: »

Kerb appeal ,kitchens and bathrooms sell houses
After that once its clean and bright and the new owners can put their own stamp on it
Windows ,heating and good electrics are a given on nearly all flips

That's one route - but it's a mass market route. Offering the same product that new builds offer. And competing with new builds in the process

There are many folk who hate the idea of living in a mass market box with all the same stuff you see everywhere. Yes, a nice kitchen - but not necessarily the same thing you see in the Panelling Centre.

But there's very little out there that isn't bog standard / see it everyday. I mean, how many flips/new builds have you seen staged with the same blingy furniture and fittings?

There's an alternative to a magnolia blank canvas (or the current version: light grey) which allows the owner to put their own stamp on things. And thats to put your stamp on things, recognizing that most house owners don't have the ability to put the stamp they like onto things - they don't have the aesthetic wherewithal to do that.

And so, you do it for them - giving them plug and play lifestyle that is unique rather than lumber them with the task of figuring out how to get a magazine look. The same magazine look that they see all the time.

Its takes aesthetic ability .. but figuring out an aesthetically pleasing and individual look is a darn sight cheaper than ripping out all and sundry and replacing it with the latest gear.

This isn't a criticism of flipping that way - whatever makes money is good. I'm just suggesting that there is a market outside the standard look. And since its an underserved market, sheer scarcity of product on the market adds to price obtained.

I sold a 2 bed for more than 3 and even 4 beds in comparable societal levels in my area. Top dollar simply because there was nothing like around nor would there likely be.

Point is: if going flipping, first consider your market and your product. You don't necessarily have to plough the mainline furrow.

antiskeptic

beauf wrote: »

I think on a property you get cheap, its going to need at a minimum windows, doors, kitchen and bathrooms. Then you might have heating, boiler, roof, plumbing and or electrical issues. The more you spend the less profit you get back. So its a balancing act. It will be dictated by what the best houses in the area can command. Because thats the best you will get back out of it.

True if you are say, taking an estate house which can be directly.compared on every metric. But if you get something a bit one off and there is nothing to compare it to then you are freed from at least that monkey on your back.

There are, as I say, plenty of folk who don't want standard issue. And they are very poorly served.

That's a market to be tapped into.

brisan

antiskeptic wrote: »

That's one route - but it's a mass market route. Offering the same product that new builds offer. And competing with new builds in the process

There are many folk who hate the idea of living in a mass market box with all the same stuff you see everywhere. Yes, a nice kitchen - but not necessarily the same thing you see in the Panelling Centre.

But there's very little out there that isn't bog standard / see it everyday. I mean, how many flips/new builds have you seen staged with the same blingy furniture and fittings?

There's an alternative to a magnolia blank canvas (or the current version: light grey) which allows the owner to put their own stamp on things. And thats to put your stamp on things, recognizing that most house owners don't have the ability to put the stamp they like onto things - they don't have the aesthetic wherewithal to do that.

And so, you do it for them - giving them plug and play lifestyle that is unique rather than lumber them with the task of figuring out how to get a magazine look. The same magazine look that they see all the time.

Its takes aesthetic ability .. but figuring out an aesthetically pleasing and individual look is a darn sight cheaper than ripping out all and sundry and replacing it with the latest gear.

This isn't a criticism of flipping that way - whatever makes money is good. I'm just suggesting that there is a market outside the standard look. And since its an underserved market, sheer scarcity of product on the market adds to price obtained.

I sold a 2 bed for more than 3 and even 4 beds in comparable societal levels in my area. Top dollar simply because there was nothing like around nor would there likely be.

Point is: if going flipping, first consider your market and your product. You don't necessarily have to plough the mainline furrow.

We have flipped over 30 properties
The fact that we are sparks ,plumber ,carpenter-cabinet maker helps
All ex corporation houses with lots to do
Lino on the floor ,carpet in the bathroom .flowery wallpaper everywhere is music to our ears.
We have had interest in a lot of them from couples raised in the area before they were even finished .
WE knew the market and knew what they wanted
They had not got the money to do it themselves so were prepared to pay through a mortgage to get it done .
Knowing the market and who the buyers are is important.
A lot of people will not buy in certain council estates .
Couples born and raised in them will as they are near to friends ,family ,work etc

ELM327

Interestingly the tax rate on rental income via a company is also not 12.5 corporation tax, rather 40%!

https://liamburnsandco.ie/buy-to-let-taxation/

Tax on rental Profit is Corporation Tax at 25%…plus 15% on undistributed profits (i.e. if not drawn as salary)

antiskeptic

brisan wrote: »

We have flipped over 30 properties
The fact that we are sparks ,plumber ,carpenter-cabinet maker helps
All ex corporation houses with lots to do
Lino on the floor ,carpet in the bathroom .flowery wallpaper everywhere is music to our ears.
We have had interest in a lot of them from couples raised in the area before they were even finished .
WE knew the market and knew what they wanted
They had not got the money to do it themselves so were prepared to pay through a mortgage to get it done .
Knowing the market and who the buyers are is important.
A lot of people will not buy in certain council estates .
Couples born and raised in them will as they are near to friends ,family ,work etc

You've obviously got a successful working model. And more power to you - every builder I've ever employed hates the work (the piece rate element of it) and would love to flip. They just haven't got the starting capital.

I don't mean it as a willy waving piece but by way of example. House purchase cost €245k. All input (incl legal, sell, cert costs) was €45k. Turnaround in three months and a quick sale at €385K.

This quick-lick model (and you'll appreciate how little lick that € input buys) is what I ended up with, having previously involved myself in windows, rewire, replumbing, heating system, BER B territory.

I'd gotten those kind of PBT's before, but for much more effort and time. There's a lot to be said for the less effort model!

Call it the style over substance model - the former costing far less than the latter!

Point is, for someone entering the game, is to consider your model very carefully before putting your toe in. It took a lot of time for me to realise there are various ways - and some are less painful and risky than others.

brisan

antiskeptic wrote: »

You've obviously got a successful working model. And more power to you - every builder I've ever employed hates the work (the piece rate element of it) and would love to flip. They just haven't got the starting capital.

I don't mean it as a willy waving piece but by way of example. House purchase cost €245k. All input (incl legal, sell, cert costs) was €45k. Turnaround in three months and a quick sale at €385K.

This quick-lick model (and you'll appreciate how little lick that € input buys) is what I ended up with, having previously involved myself in windows, rewire, replumbing, heating system, BER B territory.

I'd gotten those kind of PBT's before, but for much more effort and time. There's a lot to be said for the less effort model!

Point is, for someone entering the game, is to consider your model very carefully before putting your toe in. It took a lot of time for me to realise there are various ways - and some are less painful and risky than others.

The bit in bold is the main point
Experience teaches you a lot on what will work and what wont
We rarely if ever extended a property, as you say no profit in it ,unless its to put a bathroom upstairs which meant extending downstairs

ELM327

It could be argued that REIT investment is a much easier way to invest in property.

ELM327

brisan wrote: »

[/B]
The bit in bold is the main point
Experience teaches you a lot on what will work and what wont
We rarely if ever extended a property, as you say no profit in it ,unless its to put a bathroom upstairs which meant extending downstairs

+1


The main money is in buying something from probate with 1970's interior and redoing everything in a modern clear look. Perhaps having to do some plastering and flooring too, along with check of the wiring.


Any more and you're into big money and less profit. Very easy to be margin negative very quickly on a property build.

antiskeptic

brisan wrote: »

[/B]
The bit in bold is the main point
Experience teaches you a lot on what will work and what wont
We rarely if ever extended a property, as you say no profit in it ,unless its to put a bathroom upstairs which meant extending downstairs

Levelling a just poured floor slab in the freezing cold and pissing rain by the light of two mobile phones put paid to my extension days.

Painful experience teaches you..

beauf

That kinda flip would be impressive even in Celtic Tiger. I've seen no houses recently I could buy for 140k under the going rate and add 140k of value to it for 45k and in 3 months, for what is essentially is a cosmetic quick lick. Any houses I've looked at from 80s~00s really need 30~40k min to make them habitable and attractive to a buyer and arguably 100k+ to make them compete with new builds in the same area.

I have seen houses in hindsight I could have flipped for 20~40k for a quick lick, but thats because of supply shortages and prices rising, and unexpected sales for over asking price and even bidding wars on the right property. I would not be adding any value. It would have been high risk as well as when COVID hit we could have had a complete collapse. Could have gone either way this year. Looking less risky for next year.

I think its interesting how in one thread a some predict price collapse of both house prices and rents. But in another the exact opposite in terms of flipping.

The OP asked about flipping. He was pretty much warned off it. Thread now seemed to have turned 180 to say its entirely viable.

antiskeptic

ELM327 wrote: »

+1


The main money is in buying something from probate with 1970's interior and redoing everything in a modern clear look. Perhaps having to do some plastering and flooring too, along with check of the wiring.


Any more and you're into big money and less profit. Very easy to be margin negative very quickly on a property build.

If not margin negative then certainly less than expected margin. I'd imagine there are lots of disillusioned one time flippers out there.

beauf

That said its an interesting thread. Regardless.

listermint

wowy wrote: »

Speak to an accountant. The fact that you're deliberately purchasing the house just to renovate it and sell it on is possibly running a bit close to the wind for CGT; the gain may be taxed as income (so subject to income tax, prsi and USC instead). This is especially relevant if you do it a few times.

On the proposal - imo you'd want to be getting the house at a very good price, or else be confident that the works you do yourself (at nominal nil cost) will add enough value to make it worthwhile. Realistically the best value-adds I see are things like insulation, windows, heat pumps, smart wiring, etc, but they all need to be certified or supplied/installed by 3rd parties, so how much serious value-adding work is there that you can do yourself?

insulation, windows and heat pumps need to be certified ?

antiskeptic

beauf wrote: »

That kinda flip would be impressive even in Celtic Tiger. I've seen no houses recently I could buy for 140k under the going rate and add 140k of value to it for 45k and in 3 months, for what is essentially is a cosmetic quick lick. Any houses I've looked at from 80s~00s really need 30~40k min to make them habitable and attractive to a buyer and arguably 100k+ to make them compete with new builds in the same area.

Which is why I don't compete with new builds. New builds are a commodity item and if you compete directly you have to approach a flip on commodity terms.

There are lots of downsides to new builda: identikit living, usually high density, usually crap layouts (2 beds with ensuites, a visitors bathroom landings and halls!) tonnes of kids about the place, token greenery?

Offer a distinctly different product. If there are people out there who hate the bog standard Irish product (and there are) and if they can afford to pay for it (some who hate bog standard can) then you detach yourself from commodity pricing.

I have seen houses in hindsight I could have flipped for 20~40k for a quick lick, but thats because of supply shortages and prices rising, and unexpected sales for over asking price and even bidding wars on the right property. I would not be adding any value.

My first accidental flip was in 2013, the absolute bottom of the Tiger market and the start of the new. €120K PBT on a sale price of €315k. Partly due to a bidding war. Bidding war in 2013..

That experience led me to conclude that I need to be able to 'see' €100k out before I start. Sometimes its been more, sometimes less - there is variability as you say. I couldn't start out thinking there was 50k in it only to see an overrun here or a bit of market shift there knocking that in half. Too gutting.

For me, the core lies in the right product - something which is rare and for which there is a demand. That way there's detachment from commodity pricing. Doesn't mean you can name your price but it does allow you to be sticky, knowing there isn't much place for the punter to go.

It remains to be seem whether this latest quick lick approach will always be successful - it produces much the same.kind of product. But more than that I've no interest in - big input is too much hard work!

It would have been high risk as well as when COVID hit we could have had a complete collapse. Could have gone either way this year. Looking less risky for next year.

I wouldn't share your view. I don't think we know what impact Covid will bring. Heck, Brexit dampened things down end last year and that was a local issue...which hasn't actually gone away yet. We're well overdue a recession outside of all that. Me, I'll wait and see.

And it's not as if €100k out houses come up every day of the week around where I live anyway.

I think its interesting how in one thread a some predict price collapse of both house prices and rents. But in another the exact opposite in terms of flipping.

The OP asked about flipping. He was pretty much warned off it. Thread now seemed to have turned 180 to say its entirely viable.

Viable if you have experience ( and I'm steering clear at the moment). Probably better to get in at the start of a solid rise if only starting out. Assuming you can foretell when that will be. If I knew then how little I knew then I'd probably never have started out.

antiskeptic

By the way flippers, what do you call yourselves by way of profession. 'Property flipper' goes down well at parties - folk find it interesting. But its a bit grubby as a title

antiskeptic

listermint wrote: »

insulation, windows and heat pumps need to be certified ?

Dunno about heat pumps (I suspect not though). Not insulation or windows - unless its an extension, in which case the whole extension needs to be certified as conforming to building regs.

Aren't there some new regs out regarding renovations? Haven't delved in myself but it may be that they impact - probably once you go beyond a certain level of renovation.


Another reason to consider the quick lick?

listermint

antiskeptic wrote: »

Dunno about heat pumps (I suspect not though). Not insulation or windows - unless its an extension, in which case the whole extension needs to be certified as conforming to building regs.

Aren't there some new regs out regarding renovations? Haven't delved in myself but it may be that they impact - probably once you go beyond a certain level of renovation.


Another reason to consider the quick lick?

Who certifies an extensions insulation and windows are up to building regs ? Specifically