Sell or Let - to fund Self Build

SteveSLW

Hello

I require some financial advice as looking to do a self build.

I am 30 yrs of age and own a mortgage free house valued at £140K.

I am letting this out to great tenants for £595pm.

Currently living in rented accomodation with my girlfriend in another part of the country. We are now ready to buy or build a house in this location.
The rent is costing £650pm, plus very expensive running costs as its an old building with bottled gas etc.

We have seen plot of land and want to put an offer in for £100k, with build costs somewhere between £75k & £100k.

The finished product wil be worth at TODAY's value £275k

I have good contacts in the building trade and will project manage myself aswel as getting stuck in during the summer evenings and weekends.

I have considered the following options
1. Sell my house to buy the plot and start the build, then take a small mortgage to complete.

2. Remortgage my house to buy the plot (Amount determined by rent @ £595pm - hopefuly this would cover mortgage repayments)
Then borrow money from parents to build. When house is built take out another mortgage on the new house to repay parents.

If anyone is in a similar position or can offer any advice it would be much appreciated.

Thanks
SW

SteveSLW

Come on guys help me out :-(

marcg

I wouldn't pretend to know how or where you are going to get the finance from, but I would claim to know how to go about building a house.

Plan everything before you sign anything.

This means - design the whole thing, get planning permission (or make the land purchase conditional on PP), get building regs plans approval, get each and every item of work priced in writing.

Then do a cost plan (ie how much and when) as well as a programme of works. Without this you won't have considered who needs to have done what in order that the next guy can start.

Do not buy, start on site, borrow, borrow some more and then find the project drags on for 15 months due to insufficient funds whilst you continue to pay to live in rented accommodation.

I take your comments on pricing, value and your own competence at face value. If you are overstating any of these then you really need to budget in paying for professional fees.

SteveSLW

Thanks for the advice. My dad has built 5 houses and was also a chartered quantity surveyor by trade / director of a large building contractors. He will guide me through the project mangement process. In terms of financing he thinks I should sell my house to fund the project. However. I think there must be a way to keep my house as an investment.

Figures quoted on my thread are based on similar properties within each local area, nothing is for certain. I do have disposable income (about £800pm) and savings. Ideally i'd invest in a static caravan to live in on site, but my girlfriend would go ballistic lol.

marcg wrote: »

I wouldn't pretend to know how or where you are going to get the finance from, but I would claim to know how to go about building a house.

Plan everything before you sign anything.

This means - design the whole thing, get planning permission (or make the land purchase conditional on PP), get building regs plans approval, get each and every item of work priced in writing.

Then do a cost plan (ie how much and when) as well as a programme of works. Without this you won't have considered who needs to have done what in order that the next guy can start.

Do not buy, start on site, borrow, borrow some more and then find the project drags on for 15 months due to insufficient funds whilst you continue to pay to live in rented accommodation.

I take your comments on pricing, value and your own competence at face value. If you are overstating any of these then you really need to budget in paying for professional fees.