Pipe Dream in Property Development?

ilkz

Hi all,

I've been looking for a career change for sometime and like many others want to work for myself so am seeking advice on the opinions of others regarding the feasibility of property development.

This may just be a pipe dream so I would appreciate patience in bearing with how new or amateur I may sound.

A friend and myself were *maybe* looking into going into property development together. We will have around 40-50k cash between us to start this adventure. We both have mortgages on our own properties and I'm in the fortunate position where if needs must my other half could manage our payments quite comfortably.

We have the majority of the knowledge we require to decorate the property ourselves and expect that we could complete a good portion of the work ourselves.

What do you guys think of feasibility considering the amount of startup cash we have? I understand that property development can be cash intensive. I'm not entirely sure where we stand at this point, if we should approach an accountant to discuss numbers, business advisor to seek advice or other? I suppose it would be ideal if people who were / have been in a similar position could provide their input - those who have taken a risk, changed careers and taken on property development.

Any help or advice appreciated as always.

BitterAndTwisted

Even experienced property developers are having a thin time of it at present. This is not a field for the completely inexperienced with only the equivalent of a deposit on a property unless you're in London converting large family homes into flats. And you'd need to buy those for cash.

The real money is made by being able to buy property for less than the true market-value, not updating the kitchen and bathroom, and giving a place a couple of coats of paint.

ilkz

Thanks for your input BitterAndTwister. You may be right but the way we are currently seeing it is that the property market for buyers seems to be picking up.

As an additional bit of information, we're based up in Scotland would likely be looking at property values of 120-160k or lower to develop.

eddddy

It sounds like you're looking for property development finance of £80k+ for your first property.

It might be worth starting by asking finance/loan companies whether they'd consider lending that kind of money to you. (They may be very nervous of 'first time developers').

And with cheap renovation properties, don't forget to budget for the unexpected.e.g. you lift some floor boards and find dry rot...


(...or you end up with no more cash to fix the dry rot. And you have the loan company breathing down your neck. So you have to put the property in the next auction, complete with dry rot. And you lose most of the £40k you started with!!!)

ognum

ilkz wrote: »

Hi all,

I've been looking for a career change for sometime and like many others want to work for myself so am seeking advice on the opinions of others regarding the feasibility of property development.

This may just be a pipe dream so I would appreciate patience in bearing with how new or amateur I may sound.

A friend and myself were *maybe* looking into going into property development together. We will have around 40-50k cash between us to start this adventure. We both have mortgages on our own properties and I'm in the fortunate position where if needs must my other half could manage our payments quite comfortably.

We have the majority of the knowledge we require to decorate the property ourselves and expect that we could complete a good portion of the work ourselves.

What do you guys think of feasibility considering the amount of startup cash we have? I understand that property development can be cash intensive. I'm not entirely sure where we stand at this point, if we should approach an accountant to discuss numbers, business advisor to seek advice or other? I suppose it would be ideal if people who were / have been in a similar position could provide their input - those who have taken a risk, changed careers and taken on property development.

Any help or advice appreciated as always.

OP, there are people out there making money doing this, it is hard work and the returns are sometimes elusive.

Could I suggest you and your friend do this alongside you current employment so evenings and weekends and see how it works out.

ilkz

eddddy - that would be a nightmare scenario indeed but yes something to take into consideration as our cash certainly isn't limitless unfortunately!

ognum - thanks for your input, yes, again, this is something we will have to seriously consider to start off with as property development is so cash intensive. I clearly couldn't leave my job quite just yet...

googler

ilkz wrote: »

we're based up in Scotland would likely be looking at property values of 120-160k or lower to develop.

What part of Scotland, and what style/size of property does that money buy where you are?

Are you prepared to take 6 months over each property? Current mortgage lenders' criteria mean that it's very difficult to sell anything that has been owned for less than 6 months (your buyer won't be able to get a mortgage to buy it, if you've owned it for less than 6 mths)