property developing

Mgman1965

I was chatting to my builder a few months ago and asked him why he didn't do refurbs and developments.


His answer was that to many people have jumped on the bandwagon since the HUTH type programmes and think its easy, you cant lose, money which it isn't.


He also told me sellers of run down properties and EA's have cottoned on and price accordingly. Say a terraced house in a street done up is worth £90,000, and the run down one needs £30,000 spending on it, they now put them on the market for say £55,000 firm meaning at most a profit of £5,000, this can go up (more profit) or down (loss) depending what the market does whilst being developed, also hoping no costly surprises.



This he said makes it to risky for the profit (or loss) involved for most developers but is ok for those wanting a home to do up for themselves to live in.

Gwendo40

If similar houses in the area are selling for £90k done up then I very much doubt this one will go for only £20-£25k even at auction, unless there's something seriously wrong with it structurally.

Jeff1965

Hi thanks for the reply, I would like to get into property development and and everyone has to start somewhere correct? I have a lot of equity in my current house what I need is advice on the cheapeast way to borrow for exapmle over a 6-8month period that estimate it would take to renovate the house and put it on the market to sell to repay what I spent with a view to making a profit, anything over £15 would be acceptable for a first project.
I have a mate who is a builder and builds houses and have trades people I can rely on, I want to do a lot of work myself and have done a lot of the work on my current house myself already.
I can do flooring, lay concrete floos, fitted my own kitchen, hack walls off, put up plasterboard ready, do basic electrics hang rads , tiling, laminate, skirtings , painting and decorating and can lay blocks and bricks.
so I can do a lot myself and get plasterers etc in when required.
I saw the house today it is a full gut and renovation project, full central heating, rewire, windows doors, plastered, hack off re render the outside. Roof looks sound stacks recently dropped and capped off, new flat roof on the extension.
A 2bed house 4 door down just sold for £85k, If it went at auction for £30k and I spend £30k on the renovation it still leaves a reasonable profit, and this is a 3 bed.

Gary123456790

Jeff1965 wrote: »

A 2bed house 4 door down just sold for £85k, If it went at auction for £30k and I spend £30k on the renovation it still leaves a reasonable profit, and this is a 3 bed.

Remember to factor in solicitors fees (twice) and estate agent fees for the sale, plus the extra stamp duty you now pay for additional properties - this I believe gets refunded if you sell within 3 years but you need to be able to fund the extra stamp duty to buy it.

You wouldn't want to do all the work and spend a large amount of time and not make much out of it.

Thanks,

Gary.

Gabbs_the_Newt

Gary123456790 wrote: »

Remember to factor in solicitors fees (twice) and estate agent fees for the sale, plus the extra stamp duty you now pay for additional properties - this I believe gets refunded if you sell within 3 years but you need to be able to fund the extra stamp duty to buy it.

You wouldn't want to do all the work and spend a large amount of time and not make much out of it.

Thanks,

Gary.

The stamp duty would not be refunded as this transaction has nothing to do with the OPs primary residence.

AdrianC

And, as this is clearly a business transaction, income tax on the profit made.

Pixie5740

Gary123456790 wrote: »

Remember to factor in solicitors fees (twice) and estate agent fees for the sale, plus the extra stamp duty you now pay for additional properties - this I believe gets refunded if you sell within 3 years but you need to be able to fund the extra stamp duty to buy it.

You wouldn't want to do all the work and spend a large amount of time and not make much out of it.

Thanks,

Gary.

No the higher rate of SDLT will not be refunded in the OP's case.

Guidance Note SDLT: Higher Rate for the Purchase of Additional Residential Properties.

Gabbs_the_Newt

Although if it sells for less than £40k no SDLT will be due at all.

Doozergirl

Gabbs_the_Newt wrote: »

Although if it sells for less than £40k no SDLT will be due at all.

I’d always presumed that the additional 3% was in addition to everything, including nothing, iyswim!

Pixie5740

Doozergirl wrote: »

I’d always presumed that the additional 3% was in addition to everything, including nothing, iyswim!

Nope, the consideration has to be £40k or more. See the guidance note I linked to above.