Financing a property trading business

johnweir123

What is the minimum up front cost for financing a property trading business.  i.e. buying, fixing, selling

BarelySentientAI

The deposit, purchasing costs and refurbishment costs for one property.

Bookworm105

johnweir123 said:

What is the minimum up front cost for financing a property trading business.  i.e. buying, fixing, selling

Don't you think it might be related to the property cost and contractor charges, both of which vary across the UK? 
Or is the answer you want £749,402.51p including VAT

johnweir123

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

BarelySentientAI

johnweir123 said:

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

Yes, which is why I said deposit and purchasing costs rather than purchase price and purchasing costs.

Or are you hoping that someone just gives unsecured loans out to anyone who fancies having a bash at being a developer?

eddddy

johnweir123 said:

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

You can google 'development finance' to find companies that lend for development projects.

But unless you have a good track record with previous development projects, it's unlikely they'll trust you with their money. Plus their loans will be very expensive.


The way many people I come across get into the development business is by finding 'business partners'. For example:

• You have building skills and/or lots of knowledge of the industry - but limited money
• You find a 'business partner' who has a chunk of money - but no building skills and/or no knowledge of the industry

And you agree how you will split the profits (or the losses) - maybe 50/50, maybe 25/75 or whatever.

The more skills / knowledge / experience / money you can 'bring to the party', the better your chances of persuading people to team up with you.

johnweir123

BarelySentientAI said:

johnweir123 said:

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

Yes, which is why I said deposit and purchasing costs rather than purchase price and purchasing costs.

Or are you hoping that someone just gives unsecured loans out to anyone who fancies having a bash at being a developer?

Sorry, misread your 'purchasing costs' bit as the purchase cost for the property. 

So we'd be talking about a typical sort of 10% of the value of the property as a deposit and the rest would be mortgaged? 

BarelySentientAI

johnweir123 said:

BarelySentientAI said:

johnweir123 said:

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

Yes, which is why I said deposit and purchasing costs rather than purchase price and purchasing costs.

Or are you hoping that someone just gives unsecured loans out to anyone who fancies having a bash at being a developer?

Sorry, misread your 'purchasing costs' bit as the purchase cost for the property. 

So we'd be talking about a typical sort of 10% of the value of the property as a deposit and the rest would be mortgaged? 

Probably more like 20-30% deposit.

Sometimes called a development mortgage or a Buy-to-Sell mortgage.

Shorter term, higher interest rate - a bit like a bridging loan.

user1977

johnweir123 said:

BarelySentientAI said:

johnweir123 said:

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

Yes, which is why I said deposit and purchasing costs rather than purchase price and purchasing costs.

Or are you hoping that someone just gives unsecured loans out to anyone who fancies having a bash at being a developer?

So we'd be talking about a typical sort of 10% of the value of the property as a deposit and the rest would be mortgaged? 

No, I'd expect you to have to put in significantly more than 10% for any sort of commercial lending.

theoretica

The mortgage company will be looking at the worst case - what would the property be worth if someone started building work, knocked stuff down, then ran into problems.  That would probably reduce the repossession value by more than 10%  - so they would insist on more than 10% deposit.

Bookworm105

johnweir123 said:

BarelySentientAI said:

The deposit, purchasing costs and refurbishment costs for one property.

Is there no 'financing' or mortgage options people use to get started? 

so you want financing options, not a start up cost 
Development finance enquiry (commercialtrust.co.uk)