Finding a property investment partner

trillion

I'd be interested in your thoughts about the following.

I've lived in my 3 bed council house for 13 years, my partner moved out 4 years ago, leaving me in a horrendous financial mess, which has since been sorted out. I pay around £350 per month in rent.

The house is in the (so called affluent) south east, is probably worth around £175/80k, and if I was able to buy, I'd get the full discount of £40k.
It has a truly enormous garden, as have a lot of the houses on the estate, where a lot of owner/occupiers have recently erected new houses in their garden. Planning permission appears to be easy to get for them, and in fact, my opposite neighbour has permission for a pair of semis in his, and has just sold his 2 bed, with permission, for £235k.

This obviously looks like too good an opportunity to miss, but because of my age, income and bad credit history, I'm (predictably) unable to get a mortgage, even though I have around £75k in cash as a deposit.

I suppose my question is - are there schemes or investors who would be prepared to go 50/50 with me in buying the house, getting the permission and either selling on (though I couldn't sell for 3 years) or funding the new build? And where should I start looking?

I really can't face the prospect of shelling out ever increasing rent until I'm wheeled off into a home for the bewildered.

:eek:

DVardysShadow

Am I mistaken? Your £350 rent is about equivalent to the the interest on the mortgage you would require? Are you able to add to your savings?

theartfullodger

There's at least one major advantage to remaining a tenant...

If, for whatever reason (sick, loss of job, family crisis, wars in Afghanistan & North Africa[oopss.. we've got both], country in a financial mess[oops.. we are ..]) , you are unable to work/unable to earn so much you as tenant may be eligible for HB/LHA (Housing Benefit/Local Housing Allowance..). You remain in your home...

As an owner with a mortgage, tough. Lender forecloses, you are evicted, council find you "intentionally homeless" for failing mortgage, thus they will not help you or rehouse you. Where's the nearest park bench??

Seriously, it's as black 'n white as that. Think on't ...

CloudCuckooLand

"ever increasing rent" - from a tiny figure like £350 a month, so what if it doubles, it'll be cheaper than servicing a mortgage.

With £75k in the bank that'll cover future rent increases. And the council pay for repairs etc.

And as Artful says, no chance of ever being repossesed...

Only people on the tenancy can buy it. So, developer would have to give you the money - which a Lender would baulk at, unless it was truly "given". In which case, no developer would touch it...

Enjoy your cheap, secure tenancy.

trillion

Thanks for your thoughts.

Sadly, I understand all too well about reposession - we lost our home and our business in the recession of the mid 90s, which is why I'm in a council house (which we only got after our private landlord's house was reposessed too!).

The comments regarding a mortgage are academic as I'm not able to get one anyway.

My line of thinking was that.......... because of the money I have I'm (quite rightly) not entitled to any housing benefit or anything.
I'm already in a 'too big' house as I only have one child remaining at home anyway.
I'm paying rent, and will have to do so till the day I die.

The money I have (an inheritance) is a once in a lifetime opportunity for me to be free of rent.
If property prices remain at around this level for the next few years, I would have the £20k (my half of the council discount) plus any extra value that would be added by planning permission for one or two new builds on my plot.
That would enable me to buy a modest 2 bed house outright in three years time, and I'd be £380-400 per month better off.

It makes sensse to me, I just wish I could make it happen.
Maybe I should look for a husband rather than in investor.

:eek:

GDB2222

Hmm, not sure that that is the best basis for a happy marriage. Edit: Anyway, I'm taken, so that's me off the hook.

I suppose you might find an investor to stump up the other £70k or so that you need. It would probably be on the basis of a loan with lots of strings attached and a high interest rate. Are you quite, quite sure that you could not obtain a loan from an ordinary lender - it's only a 50% LTV?

I'm thinking that lots of investors would be put off by the 3 year tie-in, so you would likely have to pay a high rate of interest on the investor's money during the 3 years, probably more than you are paying in rent at the moment. Plus you would be responsible for upkeep. Then when you sell up in 3 years, the investor will probably want half the uplift in value. Are you prepared for those sorts of onerous terms?

property.advert

So what we've got is a prospective 235k-(175k-40k)=100k profit and the potential to buy a similar property for the full 175k and have no mortgage. Ok, this does not include fees and time but there is significant cash in this idea.

On another note, lets look at the neighbour. He got 235k which is 60k over the value due to planning. As the garden would be reduced, lets drop the value by 20k and say the planning and new house land is worth 80k. If that 80k is 35% of the sales price of the new houses, then they will be selling for around 115k each which seems a little on the low side. Maybe around 140k.

So you have income of 155+140+140 minus original costs of 235k which is 200k minus build costs. Surely more than 100k and probably nearer 150k.

So the OP needs to find around 60k on a 60/175 = 35% LTV. That should not be too difficult and then when done, they can sell the land off or even do a deal with a builder to develop the large garden.

If they can sell the land on day one, then perhaps a builder would put up some money ?

GDB2222

Mr Advert, that doesn't work because the OP gets a £40k discount on buying the house but has to pay that back if she sells within 3 years. So, she needs to borrow £70k or so to buy the house, and then she needs to own it for the next 3 years - she may as well continue living there. As I said, that's only a 50% LTV, so it might be possible even with a poor credit record.

It's not expensive to get planning permission, and she can more or less exactly copy her neighbour's application, which will be on the Borough's website. In any case, if she approaches a developer about that in 3 years' time, there'll be a deal to be done. The real issue is what she does over the next 3 years, as most developers are not interested in that sort of timescale.