Is now a good time... Building Your Own House

[Deleted User]

I've always wanted to build my own home... the idea would be to build 1 or 2 moderate, decent homes in reach of a attractive area/tow/city with the view to making around 20% profit on each... and using the funds to offset the next build of similar properties or maybe a notch up in quality with again the aim to sell on and make a further 20% or there abouts profit on each... the idea being by the time I get to the 3rd stage build I will be able to be as close to mortgage free as possible and have a home I have designed and wanted... is now the best time to kick start these plans and how difficult would it be to get the initial mortgage (I do believe there;s still self build mortgages paying upto 90%)

If I'm in the wrong section please let me know and I'll move the thread.

Really2

I would say it was a good time to buy land and you should be able to get builders cheap.

Can't argue against the idea really.

Even any falls should be offset against savings you make on land and labour.

But not sure on the profit side of thing's build on for yourself by all means but building to sell will open up risk.

[Deleted User]

Well if it doesn't sell we have only built within our means... so we will just be stuck living in one of them till they do sell... so the risk is minimal in a certain sense.

I have the added benefit of using my dad as the primary builder as he's a time served bricklayer... so that will bring the costs down and hopefully smooth any issues (may create some to lol)

Thrugelmir

You need to find the land first.

You would have to pay cash for the land plot. As this provides the lender with a degree of security over the build while in progress.

Conrad

I'd say it's the perfect time - long term it's times like these that always prove to be the best.

Financing could be tricky. Believe me you will face a wall of challenges you can't yet imagine. No way you will get 90% - it's hard enough getting 90% for a straight forward purchase and the rates are high.

You'll likely need cash to buy the land - you will be up against plenty of competetion that will have cash, so no seller will want to wait around whilst you try and get finance, afterall that would be difficult anyway and involve an unnecesarry additional workload for the seller (documents showing all manner of easements / utility connections etc etc). A cash buyer can 'take a view' on these things, whereas a lender would want everything documented up front.

donglemouse

just my 2'peth certainly in northern ireland experienced professional developers would generally be happy with a 15% profit from a development - and these are experienced skilled builders who have learnt from already doing what you plan to a dozen times over

so in a general context i would say your 20% looks ambitious - but it would really depend on the site specifics as to the profit % you might expect and the skill your family builder brings

[Deleted User]

Conrad wrote: »

I'd say it's the perfect time - long term it's times like these that always prove to be the best.

Financing could be tricky. Believe me you will face a wall of challenges you can't yet imagine. No way you will get 90% - it's hard enough getting 90% for a straight forward purchase and the rates are high.

You'll likely need cash to buy the land - you will be up against plenty of competetion that will have cash, so no seller will want to wait around whilst you try and get finance, afterall that would be difficult anyway and involve an unnecesarry additional workload for the seller (documents showing all manner of easements / utility connections etc etc). A cash buyer can 'take a view' on these things, whereas a lender would want everything documented up front.

90% is still available... http://www.money.co.uk/mortgages/self-build-mortgages.htm
The money for land is almost all there from a previous house sale of my own and my partner receives a further chunk in the next couple months.

Finding the plot is the biggest hurdle of all... I'm really looking for re-assurance that now is the best time to start pressing ahead or if waiting would be better and if so why.

Thrugelmir

[Deleted User] wrote:

90% is still available... http://www.money.co.uk/mortgages/self-build-mortgages.htm
The money for land is almost all there from a previous house sale of my own and my partner receives a further chunk in the next couple months.

Finding the plot is the biggest hurdle of all... I'm really looking for re-assurance that now is the best time to start pressing ahead or if waiting would be better and if so why.

You need to cost the project. To see if its viable. There are too many variables to comment upon.

Graham_Devon

Boom, why do you need the assurance? What's making you hold back?

Personally, for me, I'm pessamistic, and this wouldn't be a gamble I personally would be willing to take, as you are going to have to build and sell a few properties to then go on further to build another, that one being your home.

One hiccup could be a problem. Two hiccups could be the end of your dream home and a big wedge of your money, and the economy isn't a background I would want to be gambling against personally.

BUT, having said that, as you know it is a gamble, and now is the time that it also could pay off very well. Shortage of homes, house prices rising etc.

My main problem would be ongoing building when you are enterting a new era of politics.

If this was a business plan, my thoughts may be slightly different, but sounds like your gambling your home / built up savings, unless I have the wrong end of the stick here.

Ultimately, only you can decide whether you fancy this risk. It's very easy for people to say "yes" or "no" when it's not their money. For me, it's certainly a higher risk than it has ever been in the past decade.

lostinrates

Plots come up on my property portal searches, and there are some comparitively good oppertunities IMO, ATM. As well as some of the sort of refurbs that have not been affordable for a while, seem more sensible now, especially if you have some of the skills already and can minimise outgoings on that front.

However, some professional builders are strugglining, so if building with a view to sell I'd be wondering what type of property the area I was looking at was short of.

HAMISH_MCTAVISH

[Deleted User] wrote:

I'm really looking for re-assurance that now is the best time to start pressing ahead or if waiting would be better and if so why.

It's a pretty simple situation.

Fact: Land is cheaper now than before.

Fact: Builders and tradesmen are cheaper and more available now than before.

Fact: The price of houses has risen by a national average of £14,000 in the last 7 months.

So whilst it is possible you may get a better deal if prices fall back again, it is also possible that prices keep on rising and you're back to peak without having taken advantage.

If you can afford to do it, then you should do it.

The bigger risk for most people is not being temporarily in Negative Equity, but rather waiting too long and being priced out of the market for what they want.

I would be VERY careful about what you build, where, and who you expect to sell it to though. There is a bit of a glut of newbuilds in many parts, and flogging them can be difficult.