Getting into flips

THE QUESTION

With 10 years in the BTL business I’ve a number of properties bought jointly with my wife.  I now want to get into flipping properties (buying, renovating and selling for profit).  Here are my questions:

1. Is flipping still a good strategy in these times?
2. Is it beneficial to start this under a new company?
3. Most importantly where can I source such run down properties from? Any online source? Any specific agencies?
4. Do we normally get mortgages on such properties?
5. Any specific areas of the country that should be targeted?

THE ANSWER

That's a fair list of questions; let’s have a crack at them -

1. Flipping in a rising market is a much easier than in a falling market - it’s a bit like swimming up or down stream. Your challenge if you decide to flip is which will it be when you come to market your property for sale, rising of falling? Since the end of lockdown 1 in June 2020, the market in most areas has definitively been rising. The end of the stamp duty holiday will have some effect, but part of your job as an investor is to keep a weather eye on the property market and the forecasts.
2. If you don't already have a company and you don't want to add to your current personal income using a limited company as a vehicle for your purchases and profits can be tax-efficient - but it’s a good move to have a chat with a friendly accountant who has experience with property clients who can explain the pros and cons to you.
3. All estate agents have run down properties on their books from time to time. Trawl Rightmove, Zoopla etc. with the specific focus of looking for them. Photos are generally a quick giveaway to scabby properties - look for ones where there are few or no internal images or are listed as ‘refurb project’.
4. Never  - both applying for a mortgage:
1. Properties won’t be in a mortgageable condition 
2. Even if they are, when you tell the lender you intend to flip you will be declined. 

Mortgages are for ready to rent medium to long-term holds, not flips – ‘How to finance flips video on YouTube for a fuller explanation of this. It’s cash or bridging to finance flips.

1. There are scabby properties in every part of the country. Where you choose is going to be greatly influenced by the cash you have to put into a deal. The less of it you have, the greater the number of more affluent areas will be closed off to you

If you decide you need bridging, we have brokered hundreds of these loans and I have been educating investors on the intelligent use of bridging since 2013 - check out my YouTube channel for a lot more educational videos on flipping with bridging.

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