Buy To Sell (BTS) / Flipping

What is Buy To Sell?Buy To Sell / Flipping

Buy-To-sell, also known as Flipping, is a property investment strategy where a property is purchased to add value through a refurbishment / renovation and then resold quickly to achieve a profit from the increase in the capital value.

To be successful with this strategy, a lot of knowledge of the local property market is required to ensure that you purchase in the right place and crucially at the right price. It is commonly accepted amongst Property Investors that you make money when you buy a property not when you sell, so the risk involved in Buying to Sell / Flipping is mitigated through finding Motivated Sellers and buying the property at Below Market Value (BMV). Following this approach will give you sufficient profit in the property from Day One to provide a suitable cushion to protect against any short term drop in market values.

When developing on a Buy To Sell property, the specification of the refurbishment should invariably be of greater quality than that of a Buy To Let property and equally the presentation is key in order to be able to sell the property quickly. A lot of Property Developers think they can cut corners when refurbishing properties, but inevitably it comes back to bite them in the end.

Please be aware when considering a BTS strategy that income generated from selling a property is classed by HMRC as a capital gain and is taxed as such. Capital Gains Tax (CGT) is currently 18% or 28% depending on your level of income. There is an annual exemption limit, for which you pay no CGT, which is currently £10,600.

How to finance a Buy-To-Sell Investment?

Since this strategy is a short term one, it makes sense to use short term forms of finance to fund the purchase of these properties, such as Bridging Finance, Development Finance and also funding from an investor or Joint Venture (JV) Partner.

It is worth exploring the different finance options with a mortgage broker to establish which form of finance works best for your particular development project and the timescales you plan to achieve, as each option has different fees and charges which may or may not be viable depending on capital growth sums you are aiming for.

BTS Benefits and Risks

The benefits of flipping properties and adopting a buy-to-sell strategy are that all being well, you achieve a great profit return on your investment (ROI) enabling you to quickly move onto the next property to repeat the process and grow your capital further. Additionally, unlike Buy-to-Let investing, you achieve much quicker capital growth and you don’t need to be concerned about furnishing the property, finding tenants and maintaining the property.
The risks of this strategy are that you don’t achieve the profit you expected due to potential overspend on refurbishments, drop in the market prices &/or delays in reselling the property. It is for this reason above all else, that it is essential the property is purchased at a good price upfront to mitigate these risks as much as possible.

BTS Yields

As a rule of thumb, you should be aiming to achieve a minimum of 30% ROI in order to make a BTS project worthwhile. However, as any experienced Property Investor will be aware, not all projects go to plan as a result of factors outside of their control and therefore you should do your calculations on a worst case basis and assume 15% ROI.

Buy to Sell / Flip Leads

We have a network of Property Sourcers / Finders and Estate Agents providing us with a constant stream of qualified Leads for Below Market Value (BMV) properties for sale throughout the UK suitable for BTS / Flipping investments. For areas of the UK where we are not currently actively investing, we are able to sell leads on to potential investors for a reasonable fee. If you are interested in hearing of suitable BTL Leads matching your investment budget and geographical location/s, then please complete the form below:

Powered by 123ContactForm | Report abuse