Buying Off Plan Develoments - UK Based
Discussion
What are your thoughts on purchasing semi detached houses etc off plan that have just been released from well known uk house builders, with a view to selling on once they are complete.
Purchased with a £500 deposit to secure, and 10% within 28 days to complete with this value coming off mortagge which will only start upon completion of the property.
Do people think it is worth while, having a view to advertise prior to completion and hopefuly sell on and cash in on growth in the local market, with the purchase price being lower there should (in theory) be a margin built in, for relatively little work apart from (gulp) the deposit monies?
What are your thoughts?
Cheers
Adam
Purchased with a £500 deposit to secure, and 10% within 28 days to complete with this value coming off mortagge which will only start upon completion of the property.
Do people think it is worth while, having a view to advertise prior to completion and hopefuly sell on and cash in on growth in the local market, with the purchase price being lower there should (in theory) be a margin built in, for relatively little work apart from (gulp) the deposit monies?
What are your thoughts?
Cheers
Adam
Once stamp is covered, and given the current stagnant / stale market, coupled with the x00 other people doing just this on the same development, are you confident you can flip the property quickly, for a profit? and if not.. can you afford to hold it for a month.. 6 months .. a year (whilst paying the mortgage?)
If so, go for it..
If not.. it's not like taking candy from a baby anymore!
If so, go for it..
If not.. it's not like taking candy from a baby anymore!
Adam is this something you've done before?
What is it about this deal that makes you think you can make money? I guess the developers are offering good deals at the moment to get stock off their books? On what basis do you think you'll be able to churn it quickly?
You're either very clever and brave or insane. It's not something I'd do now.
If I had money to invest long term I might look at a BTL over the next 6-12 months - wait until the market looks low, try to scoop something up cheap and ride out the trough, IMO you'd have to be prepared for 3+ year absolute minimum and have a decent deposit.
What is it about this deal that makes you think you can make money? I guess the developers are offering good deals at the moment to get stock off their books? On what basis do you think you'll be able to churn it quickly?
You're either very clever and brave or insane. It's not something I'd do now.
If I had money to invest long term I might look at a BTL over the next 6-12 months - wait until the market looks low, try to scoop something up cheap and ride out the trough, IMO you'd have to be prepared for 3+ year absolute minimum and have a decent deposit.
Adam,
email me and I will send you my mobile number and I will run through with you, how this has worked in the past and is a mugs game at the moment.
See Hobo's thread about trying to unload a development at the moment to a purchaser.
I dont have time to write it all down but..
Key things to look out for when buying in bulk off plan.
Prices stagnant /or rising DOH obvious this one.
Local competition with regards to planning permissions for other properties likely to go up in short to mid term.
Developer in difficulty.
Money in short supply at Development.
If the situation is right you can make a killing...but walk waway if you cant see a good return based upon a reasonable risk.
You have to consider why the developer is willing to cut prices to shift stock.
Then add to that the fact that the developer will compete with you when you try and sell yours.
Its not easy in marginal areas or markets anymore.
email me and I will send you my mobile number and I will run through with you, how this has worked in the past and is a mugs game at the moment.
See Hobo's thread about trying to unload a development at the moment to a purchaser.
I dont have time to write it all down but..
Key things to look out for when buying in bulk off plan.
Prices stagnant /or rising DOH obvious this one.
Local competition with regards to planning permissions for other properties likely to go up in short to mid term.
Developer in difficulty.
Money in short supply at Development.
If the situation is right you can make a killing...but walk waway if you cant see a good return based upon a reasonable risk.
You have to consider why the developer is willing to cut prices to shift stock.
Then add to that the fact that the developer will compete with you when you try and sell yours.
Its not easy in marginal areas or markets anymore.
My only to argument to everyone's negative thoughts on this (at the moment) is; if it's such a bad time to be doing this why are Imagine Homes (Grant Bovey's firm - google it) so active in the market?
He's not stupid. He's clearly buying off a developer and then selling those units on for a profit or he wouldn't be doing it and they are very active right now.
My advice is; there are definitely opportunities right now - just be careful.
Have a look at some of the quoted companies tax years and buy accordingly. I work for one (check my profile) and I know for a fact that if you walk into one of our developments in, say, the last week of June with an approved mortgage (or proof of funds) and be there to do a deal on one or more units they would bite your hand off. there's no impetus to do that now because the key Spring selling season is just about to start but come June plenty of our divisions are effing desperate to shift stock at discounts so that they can hit their unit numbers for the year.
PM me if you want to have a chat (Adam or anyone in fact).
He's not stupid. He's clearly buying off a developer and then selling those units on for a profit or he wouldn't be doing it and they are very active right now.
My advice is; there are definitely opportunities right now - just be careful.
Have a look at some of the quoted companies tax years and buy accordingly. I work for one (check my profile) and I know for a fact that if you walk into one of our developments in, say, the last week of June with an approved mortgage (or proof of funds) and be there to do a deal on one or more units they would bite your hand off. there's no impetus to do that now because the key Spring selling season is just about to start but come June plenty of our divisions are effing desperate to shift stock at discounts so that they can hit their unit numbers for the year.
PM me if you want to have a chat (Adam or anyone in fact).
Oi_Oi_Savaloy said:
My only to argument to everyone's negative thoughts on this (at the moment) is; if it's such a bad time to be doing this why are Imagine Homes (Grant Bovey's firm - google it) so active in the market?
He's not stupid. He's clearly buying off a developer and then selling those units on for a profit or he wouldn't be doing it and they are very active right now.
My advice is; there are definitely opportunities right now - just be careful.
Have a look at some of the quoted companies tax years and buy accordingly. I work for one (check my profile) and I know for a fact that if you walk into one of our developments in, say, the last week of June with an approved mortgage (or proof of funds) and be there to do a deal on one or more units they would bite your hand off. there's no impetus to do that now because the key Spring selling season is just about to start but come June plenty of our divisions are effing desperate to shift stock at discounts so that they can hit their unit numbers for the year.
PM me if you want to have a chat (Adam or anyone in fact).
slight difference to a professional outfit to an individual considering setting up in the market place dont you think?He's not stupid. He's clearly buying off a developer and then selling those units on for a profit or he wouldn't be doing it and they are very active right now.
My advice is; there are definitely opportunities right now - just be careful.
Have a look at some of the quoted companies tax years and buy accordingly. I work for one (check my profile) and I know for a fact that if you walk into one of our developments in, say, the last week of June with an approved mortgage (or proof of funds) and be there to do a deal on one or more units they would bite your hand off. there's no impetus to do that now because the key Spring selling season is just about to start but come June plenty of our divisions are effing desperate to shift stock at discounts so that they can hit their unit numbers for the year.
PM me if you want to have a chat (Adam or anyone in fact).
Adam, the right off plan property in the right location can be like a lottery win
The best potential for profit in my opinion is on properties that are slightly more unique, so that way there is much less competition when it comes to selling. Thats basically the formula that I use for my properties, not one of them has a twin.
The property market will and is recovering, so try not to be overly scared by the doom mongers. Of course we'r not booming at the moment, but there is still to much demand for the supply. Do your own research and follow your instincts (and make sure you can cope with worst case scenario of not selling quickly
)
Good Luck
Matt
The best potential for profit in my opinion is on properties that are slightly more unique, so that way there is much less competition when it comes to selling. Thats basically the formula that I use for my properties, not one of them has a twin.
The property market will and is recovering, so try not to be overly scared by the doom mongers. Of course we'r not booming at the moment, but there is still to much demand for the supply. Do your own research and follow your instincts (and make sure you can cope with worst case scenario of not selling quickly
)Good Luck
Matt
matsmith said:
Adam, the right off plan property in the right location can be like a lottery win
The best potential for profit in my opinion is on properties that are slightly more unique, so that way there is much less competition when it comes to selling. Thats basically the formula that I use for my properties, not one of them has a twin.
The property market will and is recovering, so try not to be overly scared by the doom mongers. Of course we'r not booming at the moment, but there is still to much demand for the supply. Do your own research and follow your instincts (and make sure you can cope with worst case scenario of not selling quickly )
Good Luck
Matt
Matt,The best potential for profit in my opinion is on properties that are slightly more unique, so that way there is much less competition when it comes to selling. Thats basically the formula that I use for my properties, not one of them has a twin.
The property market will and is recovering, so try not to be overly scared by the doom mongers. Of course we'r not booming at the moment, but there is still to much demand for the supply. Do your own research and follow your instincts (and make sure you can cope with worst case scenario of not selling quickly
)Good Luck
Matt
with all due respect...
Unique properties cannot and will not command a premium anywhere but London or other city centres. And they are difficult to sell elsewhere. Telling a new buyer to invest in this part of the market is only good advice if you are a seller.
And they take a while to sell.
The best investments are those that can be sold quickly which means those that the majority of buyers are searching for.
matsmith said:
Adam, the right off plan property in the right location can be like a lottery win[
If our Sales Director left enough profit in a plot to make it 'like a lottery win', he'd be sacked on the spot. If a housing developer undervalues a property such that there is any profit to be made by immediate resale, then they are failing to exploit the plots full potential. We give discounts for buying off plan because it improves our cashflow compared to having a plot sitting around empty, but if you buy for immediate resale you are simply taking on the risk of those costs yourself.matsmith said:
The property market will and is recovering
Will? Yes, of course it will, eventually. It always does, eventually.Is? I'd be interested to know what your evidence is for that, Matt? I work for one of the biggest housebuilders in the country and see our weekly sales figures, year-on-year comparison, projected sales and intelligence on competitors, and I can say without disclosing any commercially sensitive information that that's not the picture we're seeing at the moment...
Oi_Oi_Savaloy said:
My only to argument to everyone's negative thoughts on this (at the moment) is; if it's such a bad time to be doing this why are Imagine Homes (Grant Bovey's firm - google it) so active in the market?
He's not stupid. He's clearly buying off a developer and then selling those units on for a profit or he wouldn't be doing it and they are very active right now.
My advice is; there are definitely opportunities right now - just be careful.
They sell most of their product to wealthy Arabs - not particularly price sensitive clients. I'm pretty sure their Dubai sales office far out performs the UK office. They've also got big backing from HBOS.He's not stupid. He's clearly buying off a developer and then selling those units on for a profit or he wouldn't be doing it and they are very active right now.
My advice is; there are definitely opportunities right now - just be careful.
I don't know how well they're doing at the moment as they've closed their Asia Pacific sales office.
Hi Rich, my properties are in city centres, and my city apartments are situated on top floors, so there is no other property identical to them but they are still in a great location.
The reason i dont go for, say for example, a 3 bed barrats home, is that when the time comes to sell it I will have to compete against the numerous other investors hoping to make money on the same property as me. Where theres competition theres limited profit and slower sales in my opinion and experience.
Sam68, the best example I can give you is one of my properties that I reserved january last year, on the launch of the building which was due to take over 2 years to complete- it is currently valued at over 50% more than what I have reserved it at. There was a few months where prices were being raised by £5k- £10k per week just to find the top of the market.
The Rightmove report is usually fairly representitive of the reality of the market- and it is showing a drop for the past few months which has been exaggerated by the HIP flood, but in the 2 weeks after new year (if my memory serves me correct) average prices rose by £5k as buyers started buying again.
Further to this, my opinion that the market is recovering is based on what I am seeing, a lot of sold signs. Iv always been told that crashes and booms start in london, and quite recently when I was in london I was astonished by the number of sold signs i was seeing considering we were supposedly on the verge of a housing market crash.
Only time will tell
Matt
The reason i dont go for, say for example, a 3 bed barrats home, is that when the time comes to sell it I will have to compete against the numerous other investors hoping to make money on the same property as me. Where theres competition theres limited profit and slower sales in my opinion and experience.
Sam68, the best example I can give you is one of my properties that I reserved january last year, on the launch of the building which was due to take over 2 years to complete- it is currently valued at over 50% more than what I have reserved it at. There was a few months where prices were being raised by £5k- £10k per week just to find the top of the market.
The Rightmove report is usually fairly representitive of the reality of the market- and it is showing a drop for the past few months which has been exaggerated by the HIP flood, but in the 2 weeks after new year (if my memory serves me correct) average prices rose by £5k as buyers started buying again.
Further to this, my opinion that the market is recovering is based on what I am seeing, a lot of sold signs. Iv always been told that crashes and booms start in london, and quite recently when I was in london I was astonished by the number of sold signs i was seeing considering we were supposedly on the verge of a housing market crash.
Only time will tell
Matt
another thing to consider is that at the early stages of a development a developer will offer more as standard , kitchens ,even turf in the garden.as the site becomes more popular these are charged for . so your house which has these fitted as standard is a better buy for someone who wants to live on that estate.
hope that makes sense , had a tough day
hope that makes sense , had a tough day
sold signs don't indicate that a property is sold Gents,
I am back..
This is the type of response I wsa after, and is actually quite balanced after reading...
There are some good points and then there are the serious ones to consider, to answer a few points..
It is a just released development (I contacted the house builder as soon as the groundworker struck soil. They confirmed (as someone stated above) that the prices they could quote me were pre showhomes, and were in essence to assist in sales figures etc (they are planning phase two of the back of this phase one developments)
The houses are not too unique that I could get information on, but there were not more than two or three the same "style" within the site plan - if that makes sense?
I still need to weigh everything up, as I feel it may be "easier" putting the money into bedsits, or another refurb property - I am sure that this could launch a whole tirade of comments/questions/answers/bitching etc
Many Thanks Guys (and Gals..?)
Adam
I am back..
This is the type of response I wsa after, and is actually quite balanced after reading...
There are some good points and then there are the serious ones to consider, to answer a few points..
It is a just released development (I contacted the house builder as soon as the groundworker struck soil. They confirmed (as someone stated above) that the prices they could quote me were pre showhomes, and were in essence to assist in sales figures etc (they are planning phase two of the back of this phase one developments)
The houses are not too unique that I could get information on, but there were not more than two or three the same "style" within the site plan - if that makes sense?
I still need to weigh everything up, as I feel it may be "easier" putting the money into bedsits, or another refurb property - I am sure that this could launch a whole tirade of comments/questions/answers/bitching etc
Many Thanks Guys (and Gals..?)
Adam
Adam T said:
Gents,
I still need to weigh everything up, as I feel it may be "easier" putting the money into bedsits, or another refurb property - I am sure that this could launch a whole tirade of comments/questions/answers/bitching etc
I'm wondering if there's any money to be made at all in the current property market. Surely even the professional developers 'take a break' whilst the market is falling/stagnating.I still need to weigh everything up, as I feel it may be "easier" putting the money into bedsits, or another refurb property - I am sure that this could launch a whole tirade of comments/questions/answers/bitching etc
I was looking at self build projects a few years ago and the figures showed a nice 30% return. I've got the money now to do this sort of project without a mortgage, but the returns don't look anywhere near as healthy. Finding a plot at a reasonable price also seems to be nigh on impossible.
I am in a similar boat.
My analysis of the market is that there are people who are looking to sell but only because they are forced to. Of course, there are not many people buying due to the 'uncertainty' of current times, although the man on the street probably has no idea why they should be uncertain, only that they should!
These two things combined together will produce a mix where desperate sellers take opportunist offers. The rest of the middle ground stays where they are. That said, that must affect the average selling price when the monthly figure come in and the average selling price drops... Which then again breeds 'uncertainty'.
I am also thinking that with interest rates falling, in 12 months time after two more .25% drops, it is not that expensive to buy a property again. People will always want to move on, change area etc, maybe not as many as before, but the market is still there.
My analysis of the market is that there are people who are looking to sell but only because they are forced to. Of course, there are not many people buying due to the 'uncertainty' of current times, although the man on the street probably has no idea why they should be uncertain, only that they should!
These two things combined together will produce a mix where desperate sellers take opportunist offers. The rest of the middle ground stays where they are. That said, that must affect the average selling price when the monthly figure come in and the average selling price drops... Which then again breeds 'uncertainty'.
I am also thinking that with interest rates falling, in 12 months time after two more .25% drops, it is not that expensive to buy a property again. People will always want to move on, change area etc, maybe not as many as before, but the market is still there.
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