Property development - how do i?

**SandyDown** · 5 February 2007, 09:36

I nearly bought a similar property (only the seller backed out at the last minute) my mortgage adviser told me that there are renovation mortgages that can be taken these are for work like this and for property that other lenders may refuse to give mortgages for (because the property may be in a bad state)

**sasguru** · 5 February 2007, 09:39

Without knowing all the details, my considered opinion is that you should be able to make a tidy profit provided the renovation is done quickly (next 6 months). Go for the 4 flats options.
You can expect the housing crash around 2009.

**Swiss Tony** · 5 February 2007, 09:43

The issue with loans for improvement of a property is that there is no real guarantee that what you will do will add the value of the loan to the house. Hence if at default the company cannot sell the house and reclaim their loan.

Normally you would re-mortgage and take a hit believing that what you will do will add value to the property. You can get a loan from almost anyone though you need to make sure that you do not incur any silly rates. You can get 125% mortgages but I would stay away from these as far as possible!!

Please keep in mind what ever you do it will take time to get tenants in. It is not as fast as it appears. The house needs to be ready and then let out, I always factor in 2 -3 months of no rent before you get tenants. It may be a lot better but this is what I have come across the most.

(another interesting thing to keep in mind is that there are a shortage of large flats now days, hence turning it into 4 smaller ones may not be the best move, have a look around and see what a large flat will get in your area and what 4 flats will get.)

Hope it all works out for you.

**milanbenes** · 5 February 2007, 10:03

if you have not done this before tread very carefully

vast fortunes can be made and lost in property

Milan.

**rootsnall** · 5 February 2007, 10:32

Originally posted by kramer

I have the opportunity to buy large property which is in some disrepair for a good price (250000).
I have 2 plans...either gut and tidy, making it ready for further developmant by someone else or I can take a bit more money and time and develop into 4 flats and make a similar monthly return over a longer period...its probably gonna work out at about 8 thousand a month.

This isn't something i have done before but i'm keen to have a go... unfortunately i don't have the capital to go into it so looking to borrow 100% of the project costs...
It appears 75% is as far as most residentail development lenders will go.. anyone have any experience of these loans etc...

Are you buying it on the open market, if you are then I very much doubt there will be an easy profit to be made at the price you are being quoted. Local builders will have looked at it and done their figures already and it would of been sold by now. If its being sold to you by family at genuine knockdown price then you may be talking !?

A 4 flat conversion sounds a bit ambitious if you have no experience and you are having to borrow to fund the work. Before you buy you will need to get a good idea in advance of planning permission and building regulations issues and a decent idea of how much the work will cost. You can do things cheaper than you think if you manage it yourself but that is quite a task and not easy to do in conjunction with a fulltime job.

**kramer** · 5 February 2007, 10:35

Originally posted by rootsnall

Are you buying it on the open market, if you are then I very much doubt there will be an easy profit to be made at the price you are being quoted. Local builders will have looked at it and done their figures already and it would of been sold by now. If its being sold to you by family at genuine knockdown price then you may be talking !?

A 4 flat conversion sounds a bit ambitious if you have no experience and you are having to borrow to fund the work. Before you buy you will need to get a good idea in advance of planning permission and building regulations issues and a decent idea of how much the work will cost. You can do things cheaper than you think if you manage it yourself but that is quite a task and not easy to do in conjunction with a fulltime job.

It is a family member... the wifes old man... and he is keeping it off the market for a week for us although a neighbour has been enquiring.
Its not a knock down price but reflects the poor state its in.

A house converted into 4 flats of low satndard is going for 355000 on the same road... we are off to view this week....

We might not go for the 4 falt option but may just blitz it and get it ready for someone else to make a go at it...

Its all pie in the sky right now but there is definitely a margin in it for someone

**DimPrawn** · 5 February 2007, 10:38

One option (if the place is truly in an appalling state) is to bulldoze the existing building and build a brand new house/flats on the existing plot (subject to planning permission).

**kramer** · 5 February 2007, 10:48

Originally posted by DimPrawn

One option (if the place is truly in an appalling state) is to bulldoze the existing building and build a brand new house/flats on the existing plot (subject to planning permission).

thats some blue sky thinking but a bit ambitious for me

just spoke to a lender and they are quoting 1800/month interest on a 300000 loan...

a bit more than expected but thats a 100% loan....

this looks all too easy....

**milanbenes** · 5 February 2007, 10:52

'this looks all too easy....'

omg !

Milan.

Property development - how do i?