How can we raise money for potential second home/property development business?

LaDiva_2

Okay so the title makes me sound quite dim :rotfl:but after discovering a property going for around 60K which is worth in excess of 100K we are seriously considering looking into ways of funding our purchase. We've wanted to go into property development for a while now, but due to our ages, lack of experience and property price dip we have put it off. Now we're thinking maybe we should look at ways of making the best of the property price dip.

We currently have a mortgage on our home, around 33K. The mortgage was given to us based on my income only, husbands wasn't even included.

Is it possible for us to 'use' our home as a source of security to get a mortgage for an additional property?

The property we've been is in an area where there is demand for rental properties. We've done the majority of the research into the area as I work in it however after reading various property development guides I get the feeling we will need to use our home in some shape or form to get money from the bank for additional purchases of properties (even though we have 33k outstanding on it).

Is there any financial advisors who can advise us?! I'm trying to gain as much knowledge as possible before visiting my bank or a financial advisor as I really don't want to look stupid.

LaDiva

00ec25

either you get an unsecured loan - which no one will give you in the current climate for the amount you need to borrow
or
you remortgage your house on a (new) residential mortage

Bermuda_John

you will need a 25% deposit. you can get a further advacne on your current mrtgage to fund the property. is the properrty you are buying going to give you a profit if the interest rates rise by as little as 2%? Or is it the capital growth which you are going for, which will be minimal on such a property. you say it is worth 100k, why do you think that? Just rying to put some questions into your head that you should be thinking about if you are going to invest. send me a pm if you want a chat about it

LaDiva_2

Bermuda John,

sorry I should have said, the reason I have an idea of the value of the property is a very close friend has purchased the neighbouring property (which is identical to the one we've seen) and has also purchased another 2 properties on the same road within the last 60 days.

Hope that makes sense.

Will send you a PM when other questions come into my head (which they will).

PasturesNew

Well, if it was such a good idea/deal, then your friend - already experienced - would be snapping that one up too I'd have thought.

Therefore, I'd assume that they couldn't make the maths add up ... even though they seem to have some experience of owning houses in that street.

LaDiva_2

PasturesNew wrote: »

Well, if it was such a good idea/deal, then your friend - already experienced - would be snapping that one up too I'd have thought.

Therefore, I'd assume that they couldn't make the maths add up ... even though they seem to have some experience of owning houses in that street.

Indeed she would, however she found out is expecting twins and due to previous medical history wishes to take a back seat and not purchase anything for a while. She is the one who notified me that the property had gone up :T She purchases the properties, handles the development and then uses an agent to either let them/sell them on. So as it stands she is on bedrest and didn't want to see the bargain being missed and as I've wanted to go into this business for a while now she thought it maybe a worthwhile project for me to seriously consider.

Hope that clarifies the situation.

googler

LaDiva wrote: »

Indeed she would, however she found out is expecting twins and due to previous medical history wishes to take a back seat and not purchase anything for a while. She is the one who notified me that the property had gone up :T She purchases the properties, handles the development and then uses an agent to either let them/sell them on. So as it stands she is on bedrest and didn't want to see the bargain being missed and as I've wanted to go into this business for a while now she thought it maybe a worthwhile project for me to seriously consider.

It sounds like you should be asking your bedresting friend all the questions rather than us. Pin her down and quiz her. Sounds like she won't be able to run too far.....

How did she raise the finance for her first purchase?

poppysarah

LaDiva wrote: »

.

We currently have a mortgage on our home, around 33K. The mortgage was given to us based on my income only, husbands wasn't even included.

Why have you a mortgage still then? Just because they don't include your husband's income in calculating it shoudln't mean you don't save like mad or just pay it off quicker....

By taking a mortgage out for more on your own home you're putting your family home at risk.

Save some money and see what happens further with the property dip.

(It's time to buy when no one wants to buy)

ILW

The bit that would worry me is, if the property is for sale on the open market, why is it being sold at 40% less than it is worth?

redlady_1

Good Lord, why do people always think its a piece of cake to renovate a property? Do you have the tradesmen in place? YOUR tradesmen, not your mates who may or may not do the work for you? What time scale are you look at for turnaround. Do you know anything about being a landlord and the costs to do this? I would suggest you get all of the above checked out before you start looking at property.

maninthestreet

As ILW asks, why is a property worth £100,000 on the market for only £60,000??