There's still money in property

[Pale Rider]

Looks like my brother is about to get a nice little tickle on a property refurbishment.

He retired about 18 months ago from a decent job as a senior commercial bank manager, giving him a six-figure lump sum and plenty a month on which to get by.

Observing the lump sum was 'doing nothing' in the bank, he embarked on a simple property refurbishment scheme with a chum who is an independent financial advisor

Long story short, they bought a house, paid for it to be done up, and it looks as if brother's return on the deal will be about £30K, all expenses paid apart from tax.

For that princely sum he concedes he's done little more than pay a few bills - I don't think he's visited the house.

The other guy has done a bit more, which is reflected in his share of the profit, so I think he's looking at about £35K.

Brother's take on it is they have benefited from a rise in the market that couldn't have been foreseen, and clearly the other guy - who picked the house - bought it wisely.

But on t'other hand, brother thinks that even if circumstances had conspired against them, they would still have come out with a few thousand.

Being a naturally cautious ex-bank manager, brother's plan is to do 'about one a year' for the foreseeable future.

Strikes me none of this is rocket science, although not having to borrow any money to do it makes a big difference.

Has anyone else done well - or badly - by buying and selling houses?

 

[MrGrumpy]

Money makes money, simple as that, not many have the financial backing to do what your brother has done without borrowing from the bank etc.

 

[Haitch]

So, "a senior commercial bank manager" and "an independent financial advisor" took £65k out of the property market thanks to "a rise in the market that couldn't have been foreseen". A "nice little tickle" indeed.

 

[Markymark]

Unless you are very good at it the market dictates the return.

People can kid themselves they are great developers but in actual fact they can sometimes have made a greater profit if they buy, do nothing, then sell a year later. Even if that isn't the case, the time they spent means the added value the development gave can be less than employment.

Either way, it's a gamble and you are betting on a rising value which can pay well or badly depending on how well you read the market and luck due to external influences on prices over which you have no control

 

[Pale Rider]

Unless you are very good at it the market dictates the return.

People can kid themselves they are great developers but in actual fact they can sometimes have made a greater profit if they buy, do nothing, then sell a year later. Even if that isn't the case, the time they spent means the added value the development gave can be less than employment.

Either way, it's a gamble and you are betting on a rising value which can pay well or badly depending on how well you read the market and luck due to external influences on prices over which you have no control

Agreed, and I suspect brother would as well.

One of the reasons for going halves was to reduce the risk.

A total loss was vanishingly unlikely, although they could have barely broken even or made so little as to not make it worth the effort.

Ultimately, brother - and probably the other bloke - could have afforded to have lost all the money, or at least still have been solvent afterwards.

 

[Spinney]

Stamp duty will have taken a chunk out of their profit - extra 3% (I think) on top of what you already pay based on house price if it is not your main home.

 

[Globalti]

We'd like to buy our neighbours' house when eventually they shuffle off, refurb it then sell it as a way of being sure we get somebody nice next door. However it's a 4 bed executive house, which needs complete modernisation and some garden work and the cost of that and the loan wouldn't be covered by the increase in value.

 

[Markymark]

Agreed, and I suspect brother would as well.

One of the reasons for going halves was to reduce the risk.

A total loss was vanishingly unlikely, although they could have barely broken even or made so little as to not make it worth the effort.

Ultimately, brother - and probably the other bloke - could have afforded to have lost all the money, or at least still have been solvent afterwards.

A good post-mortem would be to speak to local agents and try and find out the value of the house had they not done the work.

For example, bought it for 500K, spent 50K on it, sold it for 600K - tidy 50K profit. However, had it been worth 560K without the work they would have made £60K by doing nothing. If it was worth £540K they made £10K extra for one year's work - less than minimum wage and better off getting a job and leaving the house as is.

That also doesn't take into account any potential profit they could have made leaving it as is and renting it which tips the balance even further.

 

[Pale Rider]

No doubt they will have a think about how it went, but I know brother rather likes the idea of giving £20K of work to local tradesmen - provided someone else does the project management.

The house is somewhere outside Wolverhampton.

Brother did tell me what they paid for it, can't recall exactly, but it was less than £150K.

Percentage-wise, they do seem to have done well.

 

[Markymark]

Yep, that sounds pretty good.

 

[Drago]

I doubled the money of one house in three years by doing nothing more than live in it. In fact, I didn't even live in it that much as I was still in the green machine when I bought it.

 

[Moodyman]

Type of property and location are key. For example, in many towns traditional 3 or 4 bed houses are in much smaller supply than modern flats, which maintains their high prices.

 

[screenman]

I bought a bungalow with a large garden, I then built my current house in the garden and still done very well when I sold the refurbished bungalow with a much smaller outside area. My house cost £120,000 to build and was valued at £300,000 when finished.

I considered myself extremely lucky, rather than skilled.

I will hopefully build again.

 

[Drago]

I was simply lucky too, the market went sub orbital just after i'd bought. Sold up, repaid the mortgage, had seventy G's in my pocket.

 

[Accy cyclist]

Another willy waving thread.