possible business venture

[davidbrown1987]

hi everybody, i have past experience in the building trades and after recently losing my job i am seriously considering a career change into property development.

I could hopefully utilise my skills i have learned to be able to do the vast majority of home improvements and minor building works myself, what i cant do i could use friends who are full time builders to help me out.

I understand now might not be the best time to attempt this venture however i feel that the current economic climate will spur me on even more to succeed.

Obviously i must research this properly before deciding to go ahead and hope to get some valuable info on this site.

I currently have £50k savings and could generate another £25k either by lending it or going into partnership with a friend. I understand £75k isnt a massive sum in the property market but hopefully this could grow

I was hoping to learn from the property developers on here how you got started and some opinions on how i should go about buying my first property.

look forward to hearing from all of you and will take any information on board with great appreciation.

[davidbrown1987]

anybody willing to give me some initial advice or is this the wrong time to attempt this challenge?

[Kaz]

Hi David
Are you thinking along the lines of buy to let or selling the properties on once refurbished?

[davidbrown1987]

definatly prefer selling but am open to the possibility of buying to let. In your opinion is the amount of money i have available enough to enable me to buy and refirbish a property bearing in mind my location where property is as far as i am aware, the cheapest in the country? thanks in advance and i appreciate you taking an interest.

[Kaz]

Yes, the cash you have available is enough especially, as you say, property is cheap where you live.

You're fortunate, I started with the same amount and, because I live in Kent where property is too expensive for me, I had to go all the way to North Wales to buy.

Whereabouts do you live? You can get a house in somewhere like Burnley for about £20-30k from an auction!

[davidbrown1987]

i live in the newcastle area so houses aroung the 50k mark can be found. i appreciate the info so far Kaz its been superb. when you started what sort of property did you buy and in what state, was it in need of redecoration or much more? i just want to use other peoples experience to make sure i make as fewer mistakes as possible. have you managed to continue buying property and in this current climate are you able to still make a decent return on your investment. hope you dont find the questions intrusive. thanks again Kaz

[Kaz]

The first house I bought on my own was a 3 bed terraced repossession. It was in an auction with a guide of £45k but I put in a pre-auction offer of £55k. I know that I might’ve got it for less at the auction itself but it was the only one I could afford that was half decent and I didn’t want to take the risk and the auction was weeks ahead and I needed to get something quickly.

It was in a relatively good state, it already had double glazing and central heating. The work I had to do was: new kitchen, new bathroom, had some ceilings skimmed that were swirly artex, redecoration throughout, new flooring throughout, new doors, a 2nd downstairs WC, gardens etc. It took me about 7 weeks and I sold it for £86k, before it even went on the market, to a landlord.

The next was a 2 bed EOT bought on the open market. That needed central heating, a total re-wire (which I didn’t realise before I bought it), new kitchen, bathroom, redecoration, flooring etc. Luckily it didn’t need any plastering work. I bought it for £77k (a friend put in the shortfall) and sold it for £100k to first-time buyers.

I’m currently in the process of buying my third which is a 3 bed terraced. I got so fed up with going all over the country by myself that I’ve now taken out a BTL mortgage so this one is in Kent where I live. You don’t necessarily have to rent it out, you can ‘change your mind’ and sell on instead!

The profit I made on the second wasn’t as good as the first mainly because I didn’t buy it from an auction.

You need to make sure you leave yourself enough money to live on to cover the time it’ll take to buy, renovate and sell on. You also need to keep in mind that ‘time is money’!

For various reasons I won’t go into, I’ve only done one house a (financial) year so far but that will change this coming year. I intend to do at least two and hopefully, with a lot of luck and hard work, maybe three. I’m obviously not making huge profits but don’t expect to. I’m happy enough plodding along making enough to live on and I’m sure it’ll improve as I gain more experience. I think there is always a profit to be made if you buy at the right price, do a good standard of refurbishment and price it realistically.

Sorry if I’ve waffled on but I hope this helps.

[davidbrown1987]

no thats a great insight im planning on going to the auctons this week so i will report back and let you know what happens. thanks again kaz!

[Neil Tunnicliffe]

Hi, i have been doing property development for a while now, however unless you can afford a cash purchase, it really isnt worth the gamble. If you try and do it on a shoe string, you will not succeed. Im not saying people dont get lucky, but if you do gamble, you may end up bankrupt. I have heard of so many horror stories, yet on the plus side, if you can make it work, it is a lucrative business which provides a secure long term income, which will rise with inflation.