Building a house at 25 - a bad idea?

The_Architect

First off my apologies is this isn't quite the right section for this, I think it could fall under a couple -if not then could a moderator please move it to the right one

I've recently moved to Glasgow with the intention of buying a couple of very cheap and high yield properties and a property for me to live in. I'm having a few doubts about the pitfalls of these types of property and feel a little worried I could be about to make a huge mistake, I am still trying to gather more information on this but it's not too easy.

I've now come around to the idea of building a house instead for a whole host of reasons but it is equally if not more daunting than owning a couple of 40% yield shacks that could fall down at any second. I'd really like to hear from anyone that has built their own home early on in life (I am 25) and get some thoughts as to whether it was worth it and anything that could be easily overlooked when doing so.

I have no recognizable labour skills beyond the basics of painting and flat-pack construction so would be employing people to do the vast majority for me. So after a bit of ramble I've got a few questions:

Is the lack of life experience at 25 (have owned and sold one house) likely to catch me out if I go down this route?
For those that have done this before or later in life, was it a worthwhile experience and are you happy with the result?
Is it likely to be a life changing thing to do as opposed to playing it safe and just get a buy to let property as well as my own?

Current circumstances:
£40,000 I can put towards it leaving me with a £10,000 contingency.
Low income currently of £19,000 PA - this could be £25,000 by the time I build.
Good credit history and experience with managing money, planning and negotiating.

Again my apologies if this post lacks sufficient detail or is clearly naive in an area, I will happily provide any answers to questions anyone may have.

Thanks in advance.

marksoton

What is this 40% yield you refer to?

spadoosh

No issues with the lack of life experience your big issue will be lack of industry experience.

You will essentially be asking a developer to build a house for you. The savings here will not be that much greater than buying a built house.

Ill also be impressed if you could also get the required money to do it. I dont know glasgow at all but having £40,000 available doesnt sound like a lot of money when considering buying land and for paying builders, buying materials etc. There is options (normally bridging loans, you wont get a mortgage until the property is finished).

Its certainly doable for a 25 year old to do. I think your lack of building experience (or even current research) will be a problem.

Doozergirl

I was 22 when we started developing. I'm glad we did it but there's no doubt we're an awful lot more experienced after 17 years! You just have to rely on those around you.

That said, £40,000 is not going to build you a house. Nowhere near.

iantojones40

I've not got the time to be any more diplomatic... you're a complete fantasist and you need to get in the real world.

£40K to either buy 2 BTL's AND a place for yourself or to build a place for yourself is completely unachievable, even in today's brave new world of fe ckless, over-leveraged debt junkies.

spadoosh

iantojones40 wrote: »

I've not got the time to be any more diplomatic... you're a complete fantasist and you need to get in the real world.

£40K to either buy 2 BTL's AND a place for yourself or to build a place for yourself is completely unachievable, even in today's brave new world of fe ckless, over-leveraged debt junkies.

And theres a dose of cold hard life experience for ya!

ST1991

Could you get a self-build mortgage? I've seen them, where they release stages of funds at certain times during the build.

The_Architect

marksoton wrote: »

What is this 40% yield you refer to?

Houses in small places outside of Glasgow often go for £10,000-£15,000 and rent for £300 PCM. Some adjustments in math show this to be a lot closer to 20-30% depending on how optimistic you are, sorry I'm not sure why I had that figure in mind.

The_Architect

ST1991 wrote: »

Could you get a self-build mortgage? I've seen them, where they release stages of funds at certain times during the build.

That was the idea as I'm fairly sure £40,000 won't get the job done haha.

AFF8879

I don't think I need to add anything more than what's been said regarding the self-build.

With the option of buying two BTLs and your own place for a sum total of £40k, I have no idea how you would achieve it (unless it's one of those Liverpool-esque schemes of buying delipdated houses for £1 and then doing them up - £3 for the houses, let's say £10k minimum legal fees- no idea if you could get a multibuy discount- which will leave you £8-9k to renovate each house).

Could be possible, but consider the type of tenant you're likely to get in those areas and the very high likelihood you won't be receiving 90% of the rent you're owed, eviction and bailiff costs, etc....

The_Architect

spadoosh wrote: »

And theres a dose of cold hard life experience for ya!

I may have garnered enough experience to learn I can't fly but naturally there's still a little fantasy left in me... all doses of realism are welcomed.

It was an optimistic idea but based on 2 properties purchased for £25,000 total that would leave me comfortable on a deposit for a mortgage myself - I'm not looking at buying anything too great or central. Combined with the rental income from the first two properties I thought this would be possible, perhaps too great a risk and better to scale back to 1 BTL and 1 for me.