property developing

Jeff1965

If there was no money to be made then nobody would ever do it and I have to staart somewhere, the renovation side is not the issue I would like advice on the best place to borrow eg £80k to buy and renovate then sell and repay the loan borrowed against my current home within 6months.

Mutton_Geoff

Will your present income cover a remortgage of your own property to pay off existing mortgage and provide you with the capital? Interest rates are currently a little over 1% which means if you can borrow £80k, the cost will be £73 a month for the loan.


What will you do after your first project is sold? There may be no need to pay off your loan within 6 months but use it as working capital to move onto the next project. Who knows, in 2 years, you may have profited enough to pay off the whole debt on your house.


Be very careful with your expenditure if this is your first project. It is very easy to spend another £2k on groundworks/structural etc at the front end of a project with £40k sat in the bank. It's harder at the end when you need to buy a decent bathroom suite and your money has run out and you end up fitting out on the cheap which sticks out like a sore thumb when you come to sell.

eddddy

Jeff1965 wrote: »

I would like advice on the best place to borrow eg £80k to buy and renovate then sell and repay the loan borrowed against my current home within 6months.

If you google 'development finance', you will find many lenders/brokers. But it's expensive - and having no 'track-record' in property development could be a problem.

A normal re-mortgage of your own home might be another option - but probably not if you say it's for property development. And if you want to repay after 6 months, arrangement fees and early repayment fees might be prohibitive.


Also bear in mind...

A buyer will have problems getting a mortgage if you try to resell within 6 months.

And I think a mortgage valuer will be very dubious about valuing a property at £85k that sold 6 months earlier for £30k (even if it's been fully refurbed).

Doozergirl

Jeff1965 wrote: »

If there was no money to be made then nobody would ever do it and I have to staart somewhere, the renovation side is not the issue I would like advice on the best place to borrow eg £80k to buy and renovate then sell and repay the loan borrowed against my current home within 6months.

I can't fault your optimism.

Remortgage the house is always the cheapest way to borrow on your own house. See how much you are allowed to pay back each year in a lump sum. Otherwise you need to mortgage the new one or convince a bank to give you a business loan with your home as security - expensive and unlikely to happen with no track record.

Turning it round in six months is optimistic to say the least. I know property, I know how to make money from property and I know who buys those houses and it isn't owner occupiers. They are houses for landlords who want a bargain. Anyone who can get a mortgage can almost always afford more than £90k and so they don't buy those houses.

Those houses are generally bought in a state, "renovated" at minimal cost to the standard that some/most landlords think tenants deserve and then let. It's the cheap ones that get snapped up and the done ones that languish on the market. Even if you find an owner occupier, lenders don't generally lend again on houses that have been flipped within six months.

It's not cost effective to renovate cheap houses to a decent standard. And it certainly doesn't sit well with me to paint over the cracks, which seems to be what most of the people on HUTH do. I'm sure it frequently unravels for them (or their unfortunate tenants).

Buy a better house.

teddysmum

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.

Looking up house sales by auction, produced a typical auction company's charges : £840 admin ; buyer's premium of 5%+VAT but a minimum of £6k (which would apply in this case);3% +VAT non-refundable deposit paid at fall of hammer (£3K minimum will apply here)


The premium and admin fee do not contribute to the sale, but the £3k does and completion must be done within 28 days.


Some, to save money , as they are not guaranteed to be the buyer, go without a survey(or have a very basic one) and this is where the people on the tv shows fall foul of hidden or well underestimated tasks.


Even some of the 'experienced' renovators spend more on works, than they planned to, some finding unexpected horrors which would not be noticed on a survey and lie hidden until layers are peeled away at what should have been the beginning of a job.

Doozergirl

We ALWAYS spend more on work than we plan to

eddddy

teddysmum wrote: »

produced a typical auction company's charges : £840 admin ; buyer's premium of 5%+VAT but a minimum of £6k (which would apply in this case);3% +VAT non-refundable deposit paid at fall of hammer (£3K minimum will apply here)


The premium and admin fee do not contribute to the sale, but the £3k does and completion must be done within 28 days.

I think you're muddling two different types of auction.

The £6k minimum is a reservation fee charged by a specific auction house (that partners with lots of EAs) and does conditional auctions - they also call it the "Modern Method of Auction". Contractually, you don't have to complete within 28 days.

Other auction houses (that I know of) don't have a £6k minimum buyer's premium, but they are unconditional auctions and, contractually, you do have to complete within 28 days.