A lucky situation developing...

[Luckylad]

Hi everyone,

I am lucky lad and have recently come into some capital and would like to get opinions on my plan going forward.

For a few years i have kept a close eye on property in London in the hope of one day being able to get involved but that day has come sooner that i had expected.

I have never developed a property, but having worked very hard in other professions for many years i see it (maybe naively) as a way to get more quality time to myself and family. I am very interested in the development process and i am starting a home learning course in property development to learn the basics.

HAHA! i hear you say...if only it was that easy...well i guess that's why i am asking for thoughts.

I have 450k in capital before even approaching a bank. This sum is entirely dedicated to starting a small property development company, run by me. My plan is to start small and buy a 2 / 3 bedroom freehold house at auction with prospects for development. Add a bedroom and bathroom, decorate and then sell it on. (i can just imagine everyone tutting at this and saying..."you and the whole world mate!") The work will of course depend on finding a great team, but i fully plan on getting stuck in on all the projects too. I plan on doing 3 of these a year...and i'd look to make 40-60 k profit overall from all three projects.

Outskirts of london will no doubt be my buying area...as yet i have still to embark on more detailed research but fully intend on giving this lots of time. I am in no rush.

I won't be solely relying on this income, so my main aim is to not overstretch myself financially, gain more time to spend with family and make a modest profit.

The question...

If you had 450k to get into this business what would you do? Get more money off a bank and buy a better project in a better area? Do you think my plan, although very general at the moment, is feasible? What would your advice be for somone in my position.

Thanks for all responses,

Luckylad

[brian]

It's not so much a case of the equity you can use - that simply gives you a broader scope to play with.

It's more the case that:

1. If you're doing this yourself, it's still a full-time job. People who run their own small businesses usually work more than employed people
2. Don't imagine you're going to have more family time. Instead, you'll find yourself unable to plan anything, because there's always something that comes up and needs your urgent attention. Read again: things don't always run as planned. A burst pipe, a late plumber, discovered rot, need more supplies from the building yard - these will always keep you late for tea.
3. Building a team comes with experience, but you really need the experience of being able to tell a cowboy from a real tradesman, and in property development, without being able to know the difference, it could be a costly experience indeed.

Really, all the best with it - but as anyone else running a small business will tell you, you will work longer hours and there is always a crush on family time. Doing so in an area you have limited experience with is also going to bring with it a host of challenges.

[Luckylad]

Thanks for the reply,

i will take heed of all that you said. I guess i do feel in a naive position about it all and changing this will only come with experience. I have started a diploma course in property development just to gain the basic procedures and begin researching in the right way. I think it's best to try and see and go from there.

best,

Luckylad