Should we sell or build on land with potential?? Please help! Advice wanted..

georgiaandtodd2012

Hey everyone,

So my Nan is wishing to sell her house and land and downsize to a smaller house/bungalow in the same area as well as share some/any profits with my family (mum, dad, brother and I). She has owned the house for at least 40 years(+) and never had a mortgage on it (was bought outright) and there is a large plot of land as well at the back of the house which can be used as development in the area since it’s surrounded by new builds.

My mum has taken ownership of the situation and is wanting to build on the land ourselves and sell them as profit, however, we don’t have any cash (Disposable income) or assets ourselves to use as collateral to pay for builders etc.

My mum has suggested that we should remortgage my Nan’s house and use the money from that to pay for the buildings, however, the house is work around 240k on its own which (I’m assuming) will not cover the amount to build the 3 x 3 bedroom house and 5 x apartments that could potentially be put on the land (according to a developer we spoke to). My mum has also suggested that my brother and I get a self build mortgage on the land to build the houses ourselves, however, my brother only works part time and my fiancée and I are looking to buy our own house and the beginning of next year so I would not be able to have a mortgage already in place to do so.

My question is: Would we be better off selling the house and land to a developer, or would we be better off trying to fund any builds ourselves and sell them privately and if so, is there any suggestions people could give us on how to fund such a project.

Any support or info would be greatly appreciated.

youth_leader

My friend has a large house with land at the back.  She went onto the market four years ago.  After two years with no offers the estate agent suggested she sell the land separately, with planning permission for 4 new builds.  She spent £5K or more doing this.  Four years on, many withdrawn offers later, she is still trying to sell.  I think if you can fund and sell the builds yourselves you may have a better outcome.

The_Earl_of_Streatham

Only your Nan can remortgage her house. This looks like one of those schemes where the everyone rallies around to make money from a family member with assets, exposes them to risk that they might not want and dresses it up as doing them a favour. Nan's house, Nan's money, Nan's future. Perhaps if she's downsizing her house she might want to be downsizing her exposure to risk as well.

snowcat75

Have you outline planning on the plot?
If you have and as a self builder I would just sell the lot, Funding as a self builder isn't easy, and I essentially had to lie when I did my first re-mortgage the tiny bungalow  we were living, telling the bank the money was for home improvements and then take it from there, 2 builds latter and 25 years on we hope to finally be mortgage a debt free by selling our first asset, none of its been for the faint hearted and iv spent plenty of evenings juggling one overdraft to another or been working to midnight on a build.... 

Your situation is far more complex, you not just risking your money but others, and sounds ripe for a family fude.


 

ProDave

Most of the "profit" is in getting planning permission.  So if planning is not in place, get that first, at least outline planning.

There is not actually much money to be gained from building, and a whole lot of hassle and time.

If there is potential for several houses, I would get the planning, put in the infrastructure to divide the plots e.g road access and drainage, and sell them as individual plots to self builders.  There is always a demand for plots from self builders.

theoretica

Both selling and building would start by getting planning permission.  I would say get planning permission, try to sell the land as one batch to a developer and think about doing more if it doesn't sell.  As inexperienced developers on your first project I suspect you won't make as much profit on each further step of building as a professional developer would, and you really don't want to take out large loans and be left with unsold newbuild properties - so better to take your profit early and pass the risk on.

Doozergirl

Get the planning permission and sell. 

You need equity to borrow, a self build mortgage is not going to cover a miniature housing estate.   You'd need commercial finance which you'd be lucky to get with no track record.   You'll be building for years in a mountain of debt and yet you have zero experience of building and so most of your 'profit' of the actual build stage will go to the builder and the bank in interest.  

The main chunk of money is in getting planning permission. 

The rest of the money is in having the experience, skill and directly employed labour to build an estate.    That's an actual business, not a hobby.