Property developer

#1
Next year I'm in two minds what to do sell my rented property come out 120 grand in my pocket start property developing get old house do it up pocket 20 30 grand profit sounds easy does but is it? anybody do this by the way I'm 43 I'd say got a nother 20 years on this job and it be nice to do some money. By the way I'd be taking a buy to let morgatge
 
#3
Next year I'm in two minds what to do sell my rented property come out 120 grand in my pocket start property developing get old house do it up pocket 20 30 grand profit sounds easy does but is it? anybody do this by the way I'm 43 I'd say got a nother 20 years on this job and it be nice to do some money. By the way I'd be taking a buy to let morgatge
Are you taking the tax into account when selling your rental property? I think it's capital gains tax on that, 40% of any profit?
 

imago

Private Member
#5
It can be done, but it's neither as cheap or easy as it at first appears.

Here (Midlands) for example your £120k would be about half of what you'd need to be able to make a pre-tax of £20k. So you'd need to borrow another £120k, but you can't get a BTL mortgage on a property you're doing serious work to so you'd be into bridging loans etc. You then have to pay that back each month along with shelling out for the work and living expenses.

The risks are massive, and potentially disastrous too. If you buy a property to do up, the first part of the work will devalue it and it will stay reduced until you get it finished as a half/partly done property is worth less than an untouched property. So if you become ill or get injured a few weeks/months in you may well loose the lot and still be in debt.
 
#6
Next year I'm in two minds what to do sell my rented property come out 120 grand in my pocket start property developing get old house do it up pocket 20 30 grand profit sounds easy does but is it? anybody do this by the way I'm 43 I'd say got a nother 20 years on this job and it be nice to do some money. By the way I'd be taking a buy to let morgatge
Just remortgage it free a chunk of money, get another cheap free money out of that and so on. Every 4th/5th you get will be what you’ve earnt.
 

lurpak

Well-Known Member
#7
Do work for a few developers and soak up as much information as possible. They all say the same thing.
Borrow as much as you can and put as many deposits down on as many houses as you can.

None seem interested in flipping properties. I am though as can do 85% of the renovation myself. Looking to do first flip next year
 
#8
weird. ive been looking into.this....

but at very early stages...

ive got 50k i can get my hands on. then will be say another 30 to find for doing the works.

but gotta.find.out more on what deposit you need. rates for repayments for bridging loan and like above tax deductions and fees for buying and selling etc
 
#9
Easier plastering by the sounds of it, I have a little building plot for when I get too old to be running about like a nutter, it came with my house so I was hoping build a little place and rent it out or sell, no capital gains as it's part of the garden I hope.
 
#10
Agree with what’s been said really,
It’s such a broad subject and the advice will be applicable to each individual and there circumstances, if it was that easy/ lucrative everyone would do it.
It all changed since the crash of 2008 when the banks etc would throw money at you, since then the criteria is extensive. For instance you’d struggle to get a mortgage on any anything that isn’t intially livable and they’ve tightened up on the taxing of it and since april 2016 they’ve bumped up all the stamp duties for buying another property other than your own home.
First port of call would be to visit a mortgage broker. My route into was buying a building plot with planning permission for cleared funds then I’m borrowing against the land to build, probably next year.
 
#11
weird. ive been looking into.this....

but at very early stages...

ive got 50k i can get my hands on. then will be say another 30 to find for doing the works.

but gotta.find.out more on what deposit you need. rates for repayments for bridging loan and like above tax deductions and fees for buying and selling etc
I’d say north of 100 grand is what you’d realistically need to start with.
 
#12
Do work for a few developers and soak up as much information as possible. They all say the same thing.
Borrow as much as you can and put as many deposits down on as many houses as you can.

None seem interested in flipping properties. I am though as can do 85% of the renovation myself. Looking to do first flip next year
Without being harsh I’d say your dreaming, borrowing money at reasonable rates In the current climate without funds/assets behind you is extremely difficult if nudging none existent.
 
#13
It can be done, but it's neither as cheap or easy as it at first appears.

Here (Midlands) for example your £120k would be about half of what you'd need to be able to make a pre-tax of £20k. So you'd need to borrow another £120k, but you can't get a BTL mortgage on a property you're doing serious work to so you'd be into bridging loans etc. You then have to pay that back each month along with shelling out for the work and living expenses.

The risks are massive, and potentially disastrous too. If you buy a property to do up, the first part of the work will devalue it and it will stay reduced until you get it finished as a half/partly done property is worth less than an untouched property. So if you become ill or get injured a few weeks/months in you may well loose the lot and still be in debt.
As long as you have electric , water and the resemblance of a kitchen you would get a btl mortgage
 
#16
As long as you have electric , water and the resemblance of a kitchen you would get a btl mortgage
True, it depends on what condition the property is in when you buy it, but if it's one that needs work you won't get a LTV of more than 40-50% anyway.

Of course if you do buy one up to mortgage standard and get a BTL on it you can't sell it for six months, and some are now moving to 12.

Overall my point is unless you can fund it yourself, and have access to bargain properties there is no longer much money in flipping houses. It's either straight BTL, demolish and build new, or build on a plot to make property pay.
 
#19
True, it depends on what condition the property is in when you buy it, but if it's one that needs work you won't get a LTV of more than 40-50% anyway.

Of course if you do buy one up to mortgage standard and get a BTL on it you can't sell it for six months, and some are now moving to 12.

Overall my point is unless you can fund it yourself, and have access to bargain properties there is no longer much money in flipping houses. It's either straight BTL, demolish and build new, or build on a plot to make property pay.
I’ve done it , housecwas a shithole and I mean shithole and I got a btl mortgage
 
#20
I’ve done it , housecwas a shithole and I mean shithole and I got a btl mortgage
So how did the LTV work out when it was valued for the mortgage? Like I said, if you have a big chunk you can do it. As long as you don't want to sell in six months and you have enough money to pay for 50% of the purchase and fund the refurb.

I've done it too, the last time was finished 2 years ago. Looked at it since and the numbers don't stack up on purchase + cost to do vs sale price.
 
#21
True, it depends on what condition the property is in when you buy it, but if it's one that needs work you won't get a LTV of more than 40-50% anyway.

Of course if you do buy one up to mortgage standard and get a BTL on it you can't sell it for six months, and some are now moving to 12.

Overall my point is unless you can fund it yourself, and have access to bargain properties there is no longer much money in flipping houses. It's either straight BTL, demolish and build new, or build on a plot to make property pay.
Your spot on with that, not only that but there hard to find now as perversely some sell quicker thAt require work as individuals can put there own Mark in it, may be due to so many property shows etc now on tv.
 
#22
So how did the LTV work out when it was valued for the mortgage? Like I said, if you have a big chunk you can do it. As long as you don't want to sell in six months and you have enough money to pay for 50% of the purchase and fund the refurb.

I've done it too, the last time was finished 2 years ago. Looked at it since and the numbers don't stack up on purchase + cost to do vs sale price.
I put enough down so the LTV stacked up, I don’t flip , I rent em
 
#23
Your spot on with that, not only that but there hard to find now as perversely some sell quicker thAt require work as individuals can put there own Mark in it, may be due to so many property shows etc now on tv.
Around the midlands (presumably other places too) rough/cheap properties are selling for way more than they're worth to do up. Investors are buying them for long term gain, and renting them out to students etc in the mean time.
 
#24
I put enough down so the LTV stacked up, I don’t flip , I rent em
Ah right, that makes perfect sense then. If you're renting them out there's still nice money to be made along with medium to long term capital growth.

The bit I was cautioning against was the idea of buy, do up, sell (flipping) as those opportunities are few and far between now. Certainly not enough of them to make a living at.
 
#25
So how did the LTV work out when it was valued for the mortgage? Like I said, if you have a big chunk you can do it. As long as you don't want to sell in six months and you have enough money to pay for 50% of the purchase and fund the refurb.

I've done it too, the last time was finished 2 years ago. Looked at it since and the numbers don't stack up on purchase + cost to do vs sale price.
I have also done it, in 2009, I got lucky I bought it from auction for £140,000 with 30 grand deposit borrowed the rest spent around around 30 grand on it, let it for 8 years until I sold it, it was in a good area etc with a rising market,I sold it last year for £290 000, that has given my just over a £100 000 to buy a plot outright, and pay my mortgage off on my works unit,but I couldn’t have done it now those days are over.
 
#26
Ah right, that makes perfect sense then. If you're renting them out there's still nice money to be made along with medium to long term capital growth.

The bit I was cautioning against was the idea of buy, do up, sell (flipping) as those opportunities are few and far between now. Certainly not enough of them to make a living at.
Yes I agree with that, to much homes under the hammer now, everybody thinks they are properly developers now
 
#27
Around the midlands (presumably other places too) rough/cheap properties are selling for way more than they're worth to do up. Investors are buying them for long term gain, and renting them out to students etc in the mean time.
Yes multipull occupancy is the new thing converting large houses into student digs are flats etc. I’m in the harrogate district, it’s one of the most expensive areas in the north now.
 
#28
Yes I agree with that, to much homes under the hammer now, everybody thinks they are properly developers now
A mate was telling me that a lot of the two or three bed houses that come up for sale in Coventry are being bought by Chinese companies that have set up offices in the UK specifically to buy properties in university towns/cities.
 
#29
Yes multipull occupancy is the new thing converting large houses into student digs are flats etc. I’m in the harrogate district, it’s one of the most expensive areas in the north now.
Which is what annoys me when the media say that property is stagnating or dropping slightly in the UK. What they really mean is in London and the home counties, everywhere else I know is going up. It's rocketing in some parts of Birmingham now.
 
#30
Which is what annoys me when the media say that property is stagnating or dropping slightly in the UK. What they really mean is in London and the home counties, everywhere else I know is going up. It's rocketing in some parts of Birmingham now.
Indeed but if the London market slows down, it’s often the pebble in the pond, and the ripples move out.
It’s not stagnating here either, houses on my street are going up 20 grand a year, tax free if I sell up, but it’s only paper money I guess until I ever did.
 
#31
A mate was telling me that a lot of the two or three bed houses that come up for sale in Coventry are being bought by Chinese companies that have set up offices in the UK specifically to buy properties in university towns/cities.[/QUOTE

Really?, I can understand london, because of the capital returns, maybe I need to look into Coventry then, if the tiddlies are
 
#32
I think commercial is a good way to go, even buying shops , I said 20 years ago , shops were the way forward, there won’t be a high street soon , those shops with flats above will become residential
 
#34
Coventry and Birmingham, if you have a Google of the property papers and reviews they're doing very well. Birmingham makes a bit more sense because when HS2 is up and running the centre of Birmingham will be Zone 4 on the tube map. :)