The days of flipping properties could be over due to ‘unrealistic’ selling prices and the soaring costs of supplies, experts have suggested.
Building materials have been steadily rising in price for years, and 2023 is to be no exception due to inflation still wreaking havoc on the economy.
Meanwhile, demands for housing and other buildings continue to increase, making the cost of construction and hiring workers more expensive.
It means the work of a so-called ‘flipper’ – who buys and renovates homes before selling for a profit – has likely never been more difficult.
To put this to the test, we asked two property experts – Jamie York of Aspire Property and Jen Harrison of Jen Harrison Construction – to cost-up renovating an £850,000 home in London.
The doer-upper: This property on Cherington Road in Ealing, west London, was put on the market for £850,000 and needed ‘a full refurbishment’
New plastering in the doer-upper home would cost at least £9,600, property experts predicted
The task was simple: price up what it would cost to get the house into an ‘excellent condition’ so that it could sell at a decent profit.
The property in question is on Cherington Road in Ealing, west London.
It is a four-bedroom semi-detached home in need of complete refurbishment, described by estate agents as a ‘blank canvas.’ Its price was set at £850,000.
The experts were told to use a nearby five-bedroom home on the same street that had just sold for £975,000 as the goal when it came to interiors and fittings.
However Ms Harrison told MailOnline that she suspects flipping the home would not bring a great deal of profit – if any – due to a refurb costing more than £126,000.
Ms Harrison estimated that a new kitchen that was in keeping with the property and in excellent condition, much like its neighbour’s, would cost £18,000.
She costed two new bathroom suites at £13,680 and a whole new set of windows at £21,300.
Meanwhile, new electrics, wiring and lightbulbs would set the flipper back £12,000, and new heating and plumbing would cost £16,000.
Throw in £3,980 for decoration and £4,000 for a new garden and you’re getting close to £100,000.
The cost of re-turfing the garden (pictured) would come in at at least £4,000
A new kitchen (shell of current one pictured) at an excellent standard would set the homeowner back by at least £18,000
Each new bathroom suite (current state of one bathroom in the doer upper) would cost around £7,000
Re-decorating the home (bedroom or living room pictured) would set the buyer back by at least £4,000, experts say
Bringing it over the £100k mark would be fixing exterior walls at a cost of £18,000.
And that is before added costs like skirtings and labour, coming in at £5,280 and plastering at around £9,600.
Ms Harrison said: ‘I feel it it is not going to work if bought for the Rightmove price as it stands and is being bought for a flip.
‘Not many flippers or developers would go to Right Move to buy, and most would end up knocking the price down to make it work.
‘It would work if renovating to rent out long term which would be an investment, or as a forever home.’
She said there are also other prices to consider, such as £350 per skip used and the cost of putting up scaffolding if necessary.
It means for the home to be resold at profit, it would need to be put on the market at well above £976,000 – quite the feat considering a five-bedroom home on the same street is currently on the market at £975,000.
The back garden (pictured) would cost thousands alone to sort out, experts said
It would likely cost the new owner around £13,680 to install two new bathroom suites, flipper experts said
New heating and plumbing in the home (bathroom pictured) would set the buyer back at least £16,000
New electrical wiring in the doer-upper home (interior pictured) would come to at least £12,000, one expert predicted
The enormity of the task is also backed up by analysis by Jamie York.
A similar property just a quarter of a mile away – a 4-bed end of terrace in good to excellent condition – sold for just £830,000 last May.
Meanwhile another 4 bed semi-detached in good to excellent condition is currently for sale at £900,000, also within a quarter of a mile.
Mr York agreed with Ms Harrison that it would unlikely be very profitable to do up the property and sell.
Mr York said: ‘The postcode of this property is in an area made up of people who are in full time employment and in the 30 – 44 age bracket.
‘There are a range of transport links, schools and job opportunities in the area so you start to get an understanding of the property market.
‘Because of the above, the property might be worth doing up and holding to rent, as there is a strong rental demand in the area.
‘This would also potentially work if you converted the terrace to a couple of flats and then rented the properties out.’
He added: ‘From a brief look at the properties in the local area you would want to be going in with a lower offer because of the level of work needed.’
For Ms Harrison the answer is simple: ‘If the selling price was £100,000 less it would work.’
This stunning home on the same street – with an extra bedroom than the doer-upper – recently sold for £975k
The excellent conditions inside (pictured) would need to be reached by the doer-upper home if it wants to come anywhere near to scoring a profit after a refurb
The experts were told to use a nearby five-bedroom home on the same street that had just sold for £975,000 as the goal when it came to interiors and fittings
Charles Eddlestone, the co-founder and COO of property platform Agreed, told MailOnline: ‘Flipping houses has been presented as a glamorous get-rich-quick scheme for years – think Homes Under the Hammer, Renovate Don’t Relocate and the countless shows now on TV documenting celebs like Amanda Holden and Charlotte Church buying dilapidated chateaus or gorgeous mansions in the country.
‘Flipping is in, but unless you have deep pockets and can buy a home in an area that is guaranteed to sell for a pretty penny (think anywhere in London) right now it’s not worth it.’
He added: ‘With the cost of living crisis and inflation seeing building materials skyrocket in price (by about 10.6% from this time last year) unless you’ve got the skills to do everything yourself and can get an amazingly good deal on materials, it’s really not worth flipping unless you know you can get a decent profit.’
