Property Tycoons.. Where Do They Start From With No Money!!!

TIPPY

I HAVE READ SO MANY DIFFERENT ACCOUNTS OF PROPERTY TYCOONS SAYING THAT THEY STARTED WITH LITTLE OR NO MONEY AND ARE NOW WORTH MILLIONS!!!! DID THEY REALLY DO THIS OR IS IT ALL RUBBISH. IF THEY DID .... HOW.... AND WHERE DID THEY GET THE CAPITAL. AND.... YES I MAY BE A GULLIBLE DUNCE BUT..... MY HUSBAND AND I WANT TO BUY WRECK HOUSES AND REFURBISH THEM MYSELF THEN SELL OR RENT THEM ON. UNFORTUNATLY WE HAVE NO CAPITAL IN OUR HOME BUT WE KNOW WE COULD DO IT... AND DO IT WELL. ANY HELP OR COMMENTS APPRECIATED WHATEVER U MAY SAY!!!!:rolleyes:

Kaminari_2

You may find that a lot of property tycoons that you hear about that say they did it very quickly with no money have very little actual money in their properties and have them mortgaged to the hilt. This could have been done a few years ago by buying discounted new builds. These people will be very vulnerable to interest rate rises or a down turn in the property market.

I started with very little money, I took out a bank loan for the deposit on my investment properties but I knew that the numbers more than stacked up. I researched and researched and researched to make sure I knew what I was doing. I am now paying off the personal loan before I make my next step. I want to build a very strong foundation that will withstand an average downturn in the economy and interest rate rises, I look at property investing as a long term plan and I hope to retire early.

TIPPY

yes, i agree with what you are doing. this wont be a make a quick buck scheme for us either. we want to work hard and succeed at this. research is key i agree. we would also like to retire earlier and have looked at lots of properties but as i said before, we have no capital in our existing home. i dont expect to be a billionaire in my lifetime, but this sort of thing really lights my fire and we were looking to do this before all the tv programmes came out. initially it was going to start with land and a self build but that has turned into this. any advice from somebody who has done it is a good start!!!!

BilboBaggins_3

You could have done this with very little capital a few years back but not now. The economy has changed, house price growth has slowed down, interest rates are rising, repossessions on the up and so on

You can still buy a property in off plan stages with little or no capital BUT the prices look expensive, the return is low, market is saturated, risk is too high etc. The days of making a quick buck with no capital of yr own in property are gone for now.

Gorgeous_George

Some 'property tycoons' may have started with a rising market and an ability to see otherwise unwanted houses as homes for people to rent. Take a house with fire damage and nobody would want to move in so, for many, the house is not feasible. Buy at a good price and put right the damage and suddenly you have a home worth more than its cost. Rent it out and take a BTL mortgage for its new value so you can now buy two or more new delapidated/undesirable houses and repeat the process.

Two becomes four, four becomes eight and suddenly, maybe within a year, you have 17 houses, 17 mortgages and 17 rental incomes. With a rising market, you can keep going and the gross value of your poprtfolio is ££££s. However, try to extract some of those ££££s and the taxman takes 40% in CGT (subject to certain allowances). If you don't extract the ££££s when the market is at a peak, you risk seeing it wiped out by subsequent falls.

Keep an eye on the risks, cover your costs and while you may not have millions in the bank, you may well have a successful business.



GG

TIPPY

thanks gorgeous george for the information, i am quite prepared to start slow with 1 property which needs a lot of work but where do the funds come from???? do i take out a personal loan like kaminari did for the deposit, or do i try and get a mortgage for the whole amount based on what it will be worth etc....

rizla01

Also remember that for every 'Tycoon' that makes it there are twenty that fail, but you never hear about these.

If you have the ability but not the funds then do up property for an investor.
You find the property, probably in auction, forecast your projected costings and final value and 'Sell' the idea to an investor. You should be able to advertise for someone to fund your intentions. You will take a cut and build on that.

Gorgeous_George

TIPPY wrote:

thanks gorgeous george for the information, i am quite prepared to start slow with 1 property which needs a lot of work but where do the funds come from???? do i take out a personal loan like kaminari did for the deposit, or do i try and get a mortgage for the whole amount based on what it will be worth etc....

I'm no tycoon so I can only guess.

Some will have borrowed from wealthy family members or friends. Some will have borrowed from banks, building societies or on credit cards.

It's important to forecast costs correctly. Create a spreadsheet and put months 1 to 12 in Column A. In Column B put the amount of money spent so far and in Column C put the cost of the money, such as 0.5%/1% of the amount spent (to represent a 6% or 12% annual cost of borrowing). You can forecast this for the 12 months and you should soon realise that time is the devil.

Every month that the house is not finished AND let costs you another twelth of the annual cost of borrowing plus electyric/gas/water rates. After 6 months it's likely that the council will want some council tax. Quite simply, this is not for part-timers unless you don't want a life for a few months.

I like rizla01's suggestion. Do it with someone else. Use their money and learn. Save for your own project and practise the planning.



GG

Doozergirl

Property tycoons with no money will have started building their protfolios at the bottom of the market.

Why don't you have any capital in your house? If you were serious and haven't done this before then I'd suggest you start with only one house; that involves selling the one you live in. It provides a buffer if you go over budget (certainly more unexpecteds when you first start) or the market drops.

I could not recommend owning more than one house with absolutely no capital in either.

Doozergirl

I'm not entirely sure where someone who had never developed a property would find a serious investor unless they were related!

rizla01

Doozergirl wrote:

I'm not entirely sure where someone who had never developed a property would find a serious investor unless they were related!

That would depend entirely on your abilities to sell.

You need to put the idea to someone in a way that they are convinced that by investing in you that they will become wealthier but to also reassure them that they cannot lose no matter what happens.

I.e. You need to guarantee a certain return on their investment even if it means giving them securities that you wouldn't want to lose such as shares you own, your car or a charge on your property.

In other words you need to be prepared to put your money where your mouth is or no-one will invest in you. They just need some sort of commitment from you.