Property Development

Bakedgoods

Bakedgoods

Bakedgoods

Capodecina
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Afternoon all :)

Ok i've got a few questions about property development. (Buying, renovating or improving and then selling).

If you had the capital to do this, and buy outright. Would you take that approach or take a mortgage?

Can anyone offer any advice on this in general? From what I understand it's about picking the right property, keeping to a strict budget and understanding what to spend on to increase the potential sale value for a quick turn around?
 
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Wardie said:
Afternoon all :)

Ok i've got a few questions about property development. (Buying, renovating or improving and then selling).

If you had the capital to do this, and buy outright. Would you take that approach or take a mortgage?

Can anyone offer any advice on this in general? From what I understand it's about picking the right property, keeping to a strict budget and understanding what to spend on to increase the potential sale value for a quick turn around?
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you doing the classic thing buying now, expect to be broke.
 
Set up a limited liability company and take a mortgage if you can get one. If things go south you leave the mortgage company with most of the problems and your capital is intact.
 
There is absolutely nothing wrong with buying at the moment, just make sure you buy the right properties and as always, research the area thoroughly. Do not go for properties which are going to need to touch the ceiling, ive seen too many friends try and break ceilings with lavish fittings and building work, it never works. Stay basic, B&Q kitchen's/bathrooms, carpet warehouse carpets, clean and tidy, no big spends. Make the house appeal as a clean bargain on the open market, lots of people especially FTB'ers want somewhere which is ready to move into (look at the recent thread about the bloke who bought his first house) - take their money.

Capital is great, as it is a huge bargaining chip and is very useful when buying unusual and/or auction properties which would normally be suspect for a mortgage company.

I have started buying up properties, as has my immediate family, mine being cash purchases then mortgaged when renovated and suitable. The aim though is to sit on them for a while with the lettings market being fairly buoyant and then cash them in when the market suits.

I am actually looking to purchase another property locally at an upcoming auction, just make sure that you set your limits very very low and do not blow it. Having the capital for outright purchases you are in a privileged position and should make full use of that.

I dont know what else to add really, its all fundamentals the same as any other business. Buy cheap, keep the costs low (soft's & renovation) and then sell whilst being competitive with the competition (the ceiling in the street)
 
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Thanks Jez.

That's an interesting point about mortgaging them when complete as you can effectively get your capital back, but I suppose the issue is what if you can't sell above that price. (You have said your sitting on them though).

I think the plan would be to try a local property first. There's a fair few in decent areas but are incredibly dated inside (really old furnishings etc, look like they are from the 80s).

Do you believe that is a sensible start?

Also, do you carry out much work yourself? The intention would be to do whatever is possible to a decent standard (not a greatl deal), but then get in assistance where required.
 
I would say that my biggest mistake was trying to do work myself. I'll now do basic's but its just not worth the time when you can get a labourer for ~£120/day who will do the work you would do in 3, and come with all of the correct tools - and do a perfect job. Its simply not worth the time and hassle, the work i get done while doing labouring works out to about minimum wage - if you want to look at this simply, i would be better off pushing tesco trolleys around a carpark and then having someone to yell at when the work isnt done perfectly, than trying to do it myself.

Selling price should not be a concern if you have bought correctly, but yeah, keep it local. My family has just got some stuff in bristol which is proving to be a royal pita!
 
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Cheers :)

I think it would only be the basics getting be doing and most things out to someone else.

The issue i've got really is, how do you know how much to budget for improvements versus how much value it will add? Are estate agents going to help you with this or will they just pretty much tell you anything to sell you a house?
 
Estate agents on the whole are scum who would kill their own mother for a quicker sale. Do not listen to anything they say. I have been messed around too much by them, the slimy gits.

I dont really understand the question though? Why would you be asking their advice on development? You should know what the property is worth before and after renovation, and therefore budgets for everything, before you even think about putting in any kind of offer...
 
I think when you go to auction there will be a few dozen other people doing the same thing. Hardest part must be costing the jobs and knowing your margins. After all a house can have many hidden secrets, dry rot, damp, subsidance, blocked pipes, blocked drains, blocked chimneys, broken central heating, etc.
 
Try and watch homes under the hammer in the morning to see what other people do. It gives you a good idea of what NOT to do in most cases, will help state the obvious things e.t.c

As has been said before, get labour in to do fittings e.t.c but stuff like painting and skirting boards you can do yourself and save money.

Get a valuer in to have a look at your property and ask how much it would sell done up. Plenty of info on rightmove e.t.c about house prices in the local area.

This is a great time to buy, especially if you have capital. Prices seem to have bottomed out. Although the buying market is lively, the rental market is still a good bet.
 
Jez said:
I dont really understand the question though? Why would you be asking their advice on development? You should know what the property is worth before and after renovation, and therefore budgets for everything, before you even think about putting in any kind of offer...
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What I mean is, without any experience in this area, how do you know what the house will be worth after the improvements to make? Do you initially just base this on similar sized properties that are of the same standard that you have renovated it to?
 
Jez said:
There is absolutely nothing wrong with buying at the moment, just make sure you buy the right properties and as always, research the area thoroughly. Do not go for properties which are going to need to touch the ceiling, ive seen too many friends try and break ceilings with lavish fittings and building work, it never works. Stay basic, B&Q kitchen's/bathrooms, carpet warehouse carpets, clean and tidy, no big spends. Make the house appeal as a clean bargain on the open market, lots of people especially FTB'ers want somewhere which is ready to move into (look at the recent thread about the bloke who bought his first house) - take their money.
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That advice does rather assume the OP will be working at the bottome end of the market, The big money is further up the food chain I'd much rather make 6% profit on a £350000 property than a £50000 one it makes the work so much more worthwhile but obviously in this market a b&q kitchen and some cheap carpets won't cut the mustartd.
 
a1ex2001 said:
That advice does rather assume the OP will be working at the bottome end of the market, The big money is further up the food chain I'd much rather make 6% profit on a £350000 property than a £50000 one it makes the work so much more worthwhile but obviously in this market a b&q kitchen and some cheap carpets won't cut the mustartd.
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I dont agree, the best money IMO is to be made at the extremes, either cheap ~£150k-£200k properties (No idea where £50k came from) or properties into 7 figures.

I would say £350k is still cheapish fittings territory anyway, its hardly very far up. Infact this is the kind of area i will be working in next and i do not plan to change the formula.
 
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