Property development

[Hamish]

Is there still money to be made in property development?

As in buying fixer-uppers at auction, redecorating, fitting a new kitchen, bathroom and anything else that needs doing, then putting it back on the market a few months later?

I'd love to do this as a full time job but the only people I really hear doing it are people in the trades with all the contacts and knowledge.

Is there money to be made for someone with DIY level knowledge?

And how do people finance this? Can they get short term loans, or remortgage their existing homes, or are they all cash buyers?

 

[Maccapacca]

You'd struggle unless you were a cash buyer to make a decent return.

If you're mortgaging then speed is essential so really doesn't sit well with DIY if it's going to take 3 times as long and pay all that interest.

 

[Haircut]

My Dad is a builder and does this himself.
He makes decent money from it as he gets everything trade price and as you say he's in the trade so has the contacts and knowledge.

I think he worked out that on his last place if he'd have spent the same amount on it as he would have charged a customer than he would have only made a few grand for quite a few months work.
It's worth it to him as he can make a bit more that he would normally get and he prefers the work (no customers to deal with!) but I think you'd struggle to make it worth your while if you're not in the industry.

In terms of how they started doing it, they took out another mortgage on their home (they'd already paid their previous mortgage off) and added some savings to buy the house to do up cash.

 

[HangTime]

My gut feeling about this is that the market has likely got too competitive these days for 'amateurs' i.e. people without the contacts or trade experience. 6-10 years ago was a different story but I think there were less people doing it then, plus the way house prices were rising you were reasonably 'safe' in that even if a house took 6 months to turn around it would have risen in base value anyway.

That said, mortgages are very cheap these so you probably don't need to seek out such a big return in cases where you are borrowing to finance it.

The thing that would concern me is you probably only have to 'get it wrong' on one property to wipe out a fair chunk of your profits on other properties. By which I mean you overpay for a property misjudging it's value/appeal, or something goes wrong with the development. Even on those TV shops like Property Ladder or whatever, you see people who take on a project, it takes much longer than they anticipated, they then start running out of cash and have to spend a fortune getting tradesmen in to finish the job so they can get it sold. The impression I got on some of the longer projects was that they were basically riding the property wave as much as anything and the actual value added themselves relative to the amount of time spent on it wasn't anything to write home about (e.g. making a £20k profit on a project that took over 6 months of fulltime work).

 

[Maccapacca]

It's all about conversions, old one bed victorian flats to two beds and add ensuites. Or three bed houses to three two bed flats with a small extension.

Helped a guy out in south London with a few and he seemed to make a pretty penny without picking a hammer up himself.

Buy replace kitchen and paint won't see any decent return

 

[FISHGUTS]

As others have said I think you would struggle with cheap bread and butter auction properties.
There's money to be made for a cash buyer in more qwerky stuff, especially if your prepared to play the planning system lottery on change of use,etc.
Still a good profit to be made in quality small development new builds.
The main problem to property nowadays is finance, the opportunities are still there.