Buy to sell (buy2sell)
What is Buy to Sell (buy2sell)? A buy to sell property is one that is purchased below market value and then sold on at market value, the difference between sale price and (purchase price + stamp duty + expenses) = profit. There may be many reasons the property is available below market value. The property may be in poor condition, perhaps fire damaged. Perhaps there is a structural problem. No bathroom or kitchen makes it impossible to obtain a conventional residential mortgage. Maybe it is old and needs a complete refurbishment – rewiring, new plumbing, kitchen bathroom and decoration.
Buy to sell is both something we do ourselves and for other investors. Cash availability make this type of deal more profitable since it alleviates mortgage arrangement, admin and interest costs. This can present challenges in terms of mortgage finance since the sale may be within 6 months of purchase which is prohibited by some lenders, However, there are specialist mortgage products for Buy to Sell projects.
You need to do your research before committing to a buy to sell project. It’s important to know the property will sell readily when it is finished so needs to be in a popular area. Careful financial planning – work out the market value of the property by comparing sold for prices of other similar properties. Deduct costs for refurbishment, finance (interest for 9 months, admin fees, valuation fees), legal costs for purchase and sale, stamp duty, marketing (estate agent), council tax, gas water and electricity, contingency, what profit you want to make (developers will look at 20% of GDV or gross development value – final value of property). This will arrive at the £figure that you can afford to pay for the property. Avoid the mistake of buying (say) 15% BMV (below market value) only to then discover all the actual costs.
Buy to sell can be lucrative if done right.
If this interests you call us now on 01752 712 136 or fill in our contact form.