property development

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Elite Baiter Joined: 02 Jul 2006 Posts: 1702

With all the shows on Tv i had a look into the practicality of property development, and found some staggering facts out about it.

You have to have bucketloads of cash to start it - the average cost is around �50,000 so anyone on an income of less than 15,000 per annum cant really get into it.
Theres 3 types of property developer, those who do it and let the property out, those who do it and then sell for a profit or loss, and those who do it and live in the property and upsell, thus moving to bigger and better homes along the way, there are a mixture inbetween who take advantage of renting and rising house prices but thats the 3 main types.

The average UK home can be renovated for about 25,000 that brings the total to 75,000 making a safe income of 22,000 per annum the absolute safe minimal for anyone to buy and renovate.

Banks wont lend anyone who earns under 40,000 money to buy to let. Banks do not ask if you will "live" in the new house.

Property development is a gamble, you cant sell for more than the most expensive house in the street unless your house is the absolute best and by far the best in neighbouring streets too.

Being a jack of all trades will get you nowhere, you have to be a master of all trades to do it - it costs money real money to even sort out a basic home.

The homes seen on TV are not exactly done to budgets shown or finishes shown a big "your work is going to be shown on TV" comes into play here, a mistake can knock thousands off the finished value.

Im gonna drink more of me homemade beer and consider it.

Posted: Fri Jan 18, 2008 7:09 am

Here in the USA, in a lot of markets anyway, you'll have to wait quite a while to see your new house increase in value. Mostly markets here are still falling. UGH. It would be great if I knew I was sticking around (not sure if I'm moving somewhere for a better work postion, still in the start of my career), but I'm not sure how long I'll be where I am now in 5 years. You know, buy low....

I take it the housing markets where you are are doing well?

Posted: Fri Jan 18, 2008 1:45 pm

I did it a while back .I bought a flat, did it up and sold it. I made about �8k profit.
I did all the work myself and I consider myself competent at plumbing, electrics, general building and decorating; my carpentry skills are ok.

You can get a developers mortgage which is interest only and they will usually lend around 75% of the purchase and development costs so if you are looking to but a property for 180k and spend 20k renovating, you will need to find around 50k.

An alternative can be that if you dont already own your own home, then use your borrowing potential to buy a place to develop. in this situation you could probably get a mortgage for 90-95 or even 100% (but you will need to fund the development yourself).

Hello I'm New here! Joined: 16 Jan 2008 Posts: 16

Been investing in property myself, its NOT as easy as they make out Wink

could go into bucket loads of detail but THE most important rule to follow in every purchase is:

"Always buy the worst property on that street you can" - each area has a fixed pricing bracket lets say max �150k now you could buy a house at �140k and spend �20k on improvemants that where needed and would to any other house increase your house price by over 20k but because you've exceeded the bracket you instantly lose �10k.

if possible get as many house prices close by as you can to give you an idea of the area price.

Thats my experiance in the UK anyway, I have a relative in the states that also develops but the market seems to have slowed down loads in the last year. she sued to do 5-6 houses at a time, now its more like 1-2.

Posted: Fri Jan 18, 2008 2:35 pm

digital-one wrote:

Im gonna drink more of me homemade beer and consider it.

No need to go to all that trouble DO, Just ask her out. Very Happy

*** BANNED *** Joined: 30 Dec 2007 Posts: 164

What lovely eyes

Elite Baiter Joined: 02 Jul 2006 Posts: 1702

I think my gf would object to me asking sarah beeny out lol.

in london i could earn 8000 per week with 8 houses, but its only a pipe dream i cant afford 1 atm, and thats with 100% occupancy at full rents.

eamon did you ever do a second property?
The uk market is stagnating, some areas however are still rising, so i was thinking make the best of both worlds, rent em to recover the costs, then develop them to make bigger profits, i reckon 6 years per house, then doubling up after 9, wont make me a millionaire, but i wont need to worry about a pension Wink

*** BANNED *** Joined: 30 Dec 2007 Posts: 164

Thats well cheap get your gaff near Stratford

Posted: Sat Jan 19, 2008 9:24 pm

haven't done another yet. after doing the first we took some time off, had a holiday and then spent some of the profit on doing up our bathroom.
Our current plan is to finish our house off, sell up and maybe do another development.
Another option is to buy a guesthouse and work for ourselves.