A lot of people these days call us looking for the ‘doer upper’ stating they are ‘not afraid of a bit of work if needed’. These people are looking to purchase a property usually for one of two reasons either for investment to rent or to flip. So what is flipping and what’s involved these days for a doer upper?
The market has changed massively over the past 3 years. Due to lack of supply and the growing housing need, there are no ‘deals’ as such anymore. House prices are on the increase and that is across the board. The key things to look into when searching for that project are the following
1. Has the property been rented previously? This now has a massive bearing for investors due to the RPZs (Rent Pressure Zones). This means that if the property was previously rented then that rent remains the same and stays with the property, not the tenant. You are entitled to increase this rent should you carry out substantial works but that leads to our next point
2. Cost of works. Global pandemics, shortage of materials, lack of staff and huge demand for trades all mean one thing. Huge Build costs. We are now double the cost of what was being charged in the Boom. A 40 sq/m extension out the back of a house could send you hurtling towards €100,000 and that is without updating the property to today’s standards.
3. CGT. Capital Gains Tax. If you purchase a property for €100,000 and decide to sell it at a later date for €200,000 without occupying it as your primary property for at least 12 months, then you are liable to 33% of any profit made.
Obviously there are ways to reduce the costs and headaches of above. You may be a builder or an accountant which will help somewhat but in today’s property world it has become abundantly clear that unless you are someway involved in the trade, then its best you stick to Flipping pancakes!