The notion of buying a derelict house, doing it up and selling it on to make a profit sounds like a good idea in theory, but not everyone is successful in doing so. With interest rates continuing to rise and demand falling, it is proving to be a difficult time for first-time buyers and those wanting to move up the property ladder.
But despite the market uncertainty, property experts are proving that there is still good money to be made in the housing market, especially in the Greater Manchester region, if you know what to do and where to look.
Property entrepreneur Jack Smith from Manchester spent years learning about the trade which led him to start investing in properties. The 26-year-old, who is now the director of The Property Network and runs his own estate agency, bought his first house in the region two years ago which he flipped to make an impressive £64,000 profit.
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“I started exploring property and the opportunity of making money when I was around 22," Jack told the Manchester Evening News.
"I spent a year exploring different ways that you can make money in property. I went to a lot of training events and coaching, I spent about £20,000 on education to learn about the sector before I started making any money.
"The way I got started was I bought a property in Birmingham with a friend of mine who had a lot of experience. I bought the house and they paid for the renovation, and then I got to watch that whole process from start to finish.
"We ended up selling the house and making some good profit on it. After seeing the process through, I realised it was actually a lot easier than I thought it was, so then I went on to flip my own properties."
Around two years ago Jack came across a run-down house in Wigan, one of the region's cheapest areas in terms of house prices, and saw the opportunity to make good money.
"I was introduced to the owner of the property by my mother in law. She knew that I was wanting to buy more houses and said she had a friend whose parents had passed away and the house was in a really bad state," Jack explained.
"They didn’t have the money to do it up themselves and they just wanted to get rid of it. So she introduced me to them and I went round and had a look at it before they took it to an estate agency.
"They said if I can offer a good price now they’d take it as they just wanted it gone. I offered £95,000 which they accepted and then we got to work on it."
The property investor said the house was left in a derelict state and needed a full 'back to brick' renovation'.
“It was really run down. It was quite an old house too so it had Artex all over the walls. We just literally gutted it all, took it back to brick then started fresh," Jack said.
"We pulled up all the flooring, took off all the artex, ripped all the kitchen and bathroom out, put all new electrics in, redid all the plumbing and central heating, put in new radiators, a new kitchen and bathroom.
"Then we painted the whole house and put all new flooring down. We did the garden up as well with a new patio, relayed the driveway and put some fence panels in.
"In total we spent around £26,000 renovating it. A lot of people were quite surprised at how we managed to do that on a fairly small budget."
Having had a team in to do the work, the full transforming from start to finish took around nine to 10 weeks. He then put the house up for sale.
"We put it up for sale on the open market. When we bought the property, we thought it would be worth about £160,000 once it was done, but by the time we’d renovated it and put it back on the market, the estate agents told us we should put it on for £175,000," Jack said.
"We put it on for £175,000 and we had loads of interest, and we ended up selling it for £185,000. We made around £64,000 profit."
Whilst continuing to flip homes, Jack also runs an estate agency on behalf of investment buyers.
"A property investor or a group of investors might come to me looking for three-bed semi-detached houses in Manchester that are run down that they can buy, renovate and sell," Jack explained.
"I would then go out and find some and they would pay me a fee for getting those properties agreed and secured that fit their criteria.
"I've also found a few other creative ways to make money in property, like buying house for £100,000 and then selling it onto an investor for £110,000, making £10,000 without even really doing anything."
For those who want to make money buying and selling properties, Jack says his best advice is that the 'profit is in the purchase'.
"The main thing that I tell people is the phrase 'the profit is in the purchase'. A lot of people when they're looking at investing in property or they want to flip a house, they do it with emotion," he said.
"When I’m working my numbers out I always start with the end goal in mind. I'll always work out what it is going to be worth once it's been renovated, how much profit we want to make, how much is it going to cost us to renovate and then that’s what we’re going to offer on the property.
"So if a house is worth £100,000 and you buy it at £80,000, you've got profit locked in there from day one, so the profit actually takes place when you purchase it not when you sell it.
"Whereas a lot of people might buy something for £100,000, spend £20,000 on it and hope that it's worth £140,00 or £150,000. But there's no guarantee, you've got to work backwards."
Giving advice to first-time buyers wanting to get on the property ladder, Jack advised which areas of Greater Manchester to look in.
“I think depending on what area you go for, the property market is very tough to get into especially for first time buyers, I don't think that's a secret," he said.
"If you look at anywhere within a 20/30 mile radius of Manchester, house prices drastically drop, but as soon as you get into Manchester, they go up significantly.
“Wigan is a fantastic area to find a doer-upper and I'm also seeing quite a lot of stock in Moston. There’s also a huge amount of investment going on in Stockport and some areas are still very relatively affordable compared to the rest of Manchester.
"If you are able to get onto the property ladder anywhere in south Manchester, your property's value will significantly increase the longer you hold it."
For those wanting to climb up the ladder, the entrepreneur says that he would recommend flipping houses.
"I think the best way to not just grow wealth but to jump up the ladder to bigger and better properties is by buying, renovating and selling properties," Jack advised.
"There are a lot of incentive to go for new builds and while I see the value in those I also think that if you want to go for a new build, you've got to be prepared to buy it and be in it for a long time.
"Whereas if you’re the kind of person who’s quite ambitious and you want to keep jumping up the ladder and buying bigger, better, more expensive houses, you need to be buying fixer uppers."
Taking on his own advice Jack said: "I’m in the process of doing that now. At the moment I rent where I live, everything that we’ve made in property we’ve reinvested back into the business.
"We’re now in the process of buying our first property to live in in Stretford. The offer of £300,000 has been accepted and the plan is to spend around £25,000 to £30,000 on it. We know it'll be worth about £400,000 once we're done so it’s a great stepping stone before we move onto the next one."
Jack added: "Property is one of the best ways to make money and create wealth for yourself, even without trying that hard.
"If your dream is to live in West Didsbury, but right now you can't afford it, don't just sit on your hands and wait. I would really suggest jumping into the market right now and buying whatever you can - whether it's a slightly tacky apartment that you can spruce up or a derelict two bedroom house , do what you can with what you’ve bought as you’ll be surprised how much you can make on it.
"You can make money quicker than you can save money."
You can visit Jack's Instagram @jackdavidsmith where he shares his tips and tricks as well as his new podcast 'From the ground up'.
Want to feature your home-buying journey and renovations in our Where I Live series? If so, please email your details to phoebe.jobling@reachplc.com.
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