Sell house to fund new career in property development - inspired or insane?

[Psycho Sonny]

Good luck if you do decide to do it but consider even a bit of the following before you jump in.

You sell up and have 100k to start your property business.

You buy at 80k cash - spend 10k doing it up (very conservative), along with your own living expenses during this time (say 3 months at best)

You sell house for 100k - So you've made "profit" of 10k over 3 months. That's £3k a month -same as your earning. (this does not take into account any extra costs/overruns etc)

Another thing to consider - the house you do up - doesn't sell for 3/6 months. You have all your money tied up in the house - what happens then? Where is your earnings? What are you living on even if your at your parents.

Who's doing the renovations on the property? You? Tradesmen?
Are you sole trader, Ltd company?
Tax? Ni? Corporation tax
Stamp duty/ Insurance costs
Electric/gas costs during refurb
Buying/Selling costs - solicitors/surveyors costs
Accountant costs? Book keeping costs?
Freehold/leasehold issues?

Everyone and their dog think they can make money on property - however, it's nowhere as easy as people think it is.

20% ROI is a general rule of thumb - if your not clearing 20% after everything is done - it's really not worth your time unless your doing lots at a time.

standing charges can mount up for low users. so yeah he could be paying £15-£20 a month just to have an electric and gas feed to the house. a lot of people don't think about the small costs which all of them combined over time all add up. home insurance is another one but the main one is council tax.

he would lose i imagine the best part of a grand in council tax over 6 months.

 

[wesley]

why not keep your job and buy a wrecked house and move in? so you live there whilst doing it up and sell in a year or 2, no capital gain tax! more profit!

but i agree with others, its better to sort out your debts before do anything. rely on new project for cash flow to pay off the debts can go wrong. you'll end up with much bigger debt

 

[snappyfish]

Interesting thread.

I currently have 50k savings. Mortgage free April 2021 house is worth around 195-210k

Currently i'm thinking similar things to OP.

 

[koolpc]

Thanks for adding to my points that were ‘plain obvious’ with some further obvious ones of your own. I’m well aware that the purchase of the property is where you make your money, as well as keeping costs down (in terms of not going for an ultra high end finish in a bargain basement 2 bed terraced). Anyone who wouldn’t budget for some kind of contingency when doing this is asking for trouble, but again this is basic stuff that goes without saying.

With regards to your assumptions about my background and financial mismanagement - I went through a break up with my partner while halfway through renovating the house. She left me with the outstanding bills she hadn’t paid during the time we lived together and I was also left to fund the remainder of the renovations on a single wage. I’m not at breaking point, I’ve managed to get through it so far and I’m left with some disposable income at the end of the month, just not as much as I’d like to be totally comfortable. Given around 12-18 months all these debts will be fully repaid and I’ll be fully back on track. Of course if I go ahead with my plan and sell the house then I can pay them all off immediately and still be left with enough to buy and renovate a house without borrowing.

Interestingly I’ve noticed most of the people that have been trying to put me off, telling me it’s hard to make a good profit (not just on here) are property developers themselves. Doesn’t really add up. Everyone starts somewhere, right?

If you feel confident and willing to take some risks then i would say go for it mate!

Obviously you know the housing market in your area. Just do your research well.

All the best

 

[moon man]

yes good look with the choice you make ,you regret things you dont do than things you do.
i had a different aim ,bought a good value 3 bed semi in Yorkshire ,it was scuffy but not run down ,got new windows kitchem central heating ,decked and did garden (i wasnt well paid and on tax credits)
paid of mortgage in 9 years sold for double ,bought here for cash
this one has probably doubled ,again light refreshment and garden transforation
but the aim was to get of that hamster wheel and live life ,i work part time ,bodyboard ,walk and collect sea glass ,what else do i need tbh
there is room in the garden for another property like my neighbours have done ,dunno maybe

 

[koolpc]

yes good look with the choice you make ,you regret things you dont do than things you do.
i had a different aim ,bought a good value 3 bed semi in Yorkshire ,it was scuffy but not run down ,got new windows kitchem central heating ,decked and did garden (i wasnt well paid and on tax credits)
paid of mortgage in 9 years sold for double ,bought here for cash
this one has probably doubled ,again light refreshment and garden transforation
but the aim was to get of that hamster wheel and live life ,i work part time ,bodyboard ,walk and collect sea glass ,what else do i need tbh
there is room in the garden for another property like my neighbours have done ,dunno maybe

Sea glass?

 

[moon man]

Sea glass?

tbh i thought i was in GD so i gave that sort of answer ,yes sea glass collecting is awesomely relaxing and can be made into craft items you can sell
some of mine

 

[Deleted member 77746]

Good luck to all whatever decisions you decide. If you think you can make money from your little pot of money go for it.