Financing a Property Development

zoe_h2004

Sorry for my lack of knowledge here soplease bear with me. My partner currently has a £76,000 mortgage on his house,we are looking to buy a property together and when we do this I will buy halfof his house by paying half of his original deposit and paying half of the current mortgage (I understand thatthis doesn’t equate to exactly half as he will have made more payments than mebut we are ok with this).

We have had a mortgage in approval for £250,000 but we have recently found aproject that we would like to do.

It is two bungalows, a 5 car garage, and 2.4 acres of land. One of thebungalows is currently lived in but is extremely dated and needs a lot of work!The entire land is ruined and all needs re-doing, there’s no drive-way etc. Thesecond bungalow has not been lived in for a number of years, half of the roofis missing and the floor has started to fall through in places.

I’m unsure what we could get the property for as there asking for offersover £235,000. Working on the worst case scenario that we played £250,000 forit, I’m not sure that the bank would give us a mortgage for this. Therefore am Ilikely to get funding, and if so what funding? We are both very young, and I’ma first time buyer whereas my partner isn’t, but we both have decent wages.Currently I we only have £30,000 deposit.

Any advice would be greatly appreciated.

maninthestreet

What is your intention to do with the wrecked bungalow if you manage to buy this/these property/properties?

zoe_h2004

Phase 1 would be to renovate the first property and provide a driveway and allocateapprox. half the land to it. Ideally we would want to keep this and rent it. Ifwe had to sell to finance the rest of the project then so be it.

Second Phase would be to get planning to convert the garage into a twobedroom property. Same again we would ideally like to keep and rent.

Final phase would either to be re-build the third property in a newlocation and much bigger (subject to planning and finance), or renovate (onlything we could keep is the walls) and then rent or sell.

zoe_h2004

Alternatively my parents have said they would happily buy the project into the project with us. Say we bought the properties for 250k and we split it so that we owned one bungalow and all the land for 150k and they owned the other bungalow for 100k. But how would we do this in mortgage terms and would we be able to do it when one of the properties is in such bad condition?

libf

You need professional advice not an Internet forum.

Senior_Paper_Monitor

100% correct libf.

These 'once in a lifetime' dream home for live, renovation, development projects rarely end up with the amateurs - along comes a cash/prefunded builder/developer and 12 months later its whatever number of boxes they get permission to build.