Tired of Business, Full Time Property Developing?

[RanchoGrande]

It's easy to get caught up in ideas then reality bites!

Hadn't considered the fact that banks wouldn't be interested in lending against "sub-prime" property.

[The Moose]

RanchoGrande said:

It's easy to get caught up in ideas then reality bites!

Hadn't considered the fact that banks wouldn't be interested in lending against "sub-prime" property.

I'm sure once you build a portfolio you would be able to get a lender on board - even if it's a private investor.

[Jamiecool]

sorry guys still here and reading through all the info...

We have actioned things, We have just about sold the property to free up the capital.

Im hoping around 6-8 weeks Ill be actively in the market for something. My thinking is we buy something to flip around 50k an also another small property at 25k to begin the rental thing.

Running the business along side this is ideal, we have access to wholesalers/manufacturers rates, and we have a workforce already employed who can assist with the renovations. I also have a small office team who could in effect manage the properties.


I think my biggest worry at the moment is the completion, there seems to be a lot of folk in our area trying to do the same. I currently do a lot of work for "Property Developers" who basically do it part time. They still make money it seems, despite holding down full time jobs, and not having half the knowledge or resource I do.

[Rangeroverover]

The problem with "cheap" stuff is your cost per sq/m against value per sq/m

If you spend money creating something worth only £2000 p/sq/m it will not cost you much more in materials/labour to create something in a better area where values may be £3000 per metre when finished. Your initial buy in will be higher but you will be able to create something better and more valuable for about the same cost

[trowelhead]

RJD223 said:

Another thing to consider, on cheaper deals, is that you can't get any competitive BTL mortgage deals on anything cheaper than £50k.

I put in an offer on 2 x £40k flats with a 12% yield a couple of weeks ago expecting a 75% LTV BTL Mortgage to be a piece of cake to get.

3 Brokers, commercial bank manager and private bank manager all on the case and all they could come up with is a boutique BTL mortgage company with ridiculous interest rates or a bank loan (secured on other assets).

The bank wouldn't use the flats as security as they were classed as "low quality assets".

If you've got the cash funds in place and don't want to use it for leverage then sub £50k properties are a fairly safe bet - certainly much better than keeping it in the bank! But to tie up all that cash when you're trying to grow a portfolio is madness.

Shawbrook bank might look at it - but they would want both flats on the same loan - i've done one like this with them at a reasonable rate.

[kurt535]

yes, still cash to be made....issue is waiting for the right thing to come along. and avoid buying flats due to waiting months for management packs, lease covenants and, dont forget the good old lease depreciating issue..........

keep to freehold. HMO's below 5 work well.

[So]

kurt535 said:

yes, still cash to be made....issue is waiting for the right thing to come along. and avoid buying flats due to waiting months for management packs, lease covenants and, dont forget the good old lease depreciating issue..........

keep to freehold. HMO's below 5 work well.

Self contained units in houses also good news. We have sold some recently at circa 10% gross yield. The occupancy rate is better than HMO rooms and management way easier. The only issue being the buyers have needed cash or commercial finance with the rates and deposits that go with it.

[trowelhead]

So said:

Self contained units in houses also good news. We have sold some recently at circa 10% gross yield. The occupancy rate is better than HMO rooms and management way easier. The only issue being the buyers have needed cash or commercial finance with the rates and deposits that go with it.

Can you message me re this type of thing thank you please ;D

[So]

trowelhead said:

So said:

Self contained units in houses also good news. We have sold some recently at circa 10% gross yield. The occupancy rate is better than HMO rooms and management way easier. The only issue being the buyers have needed cash or commercial finance with the rates and deposits that go with it.

Can you message me re this type of thing thank you please ;D

Message sent

[Mortgage_tom]

RJD223 said:

I put in an offer on 2 x £40k flats with a 12% yield a couple of weeks ago expecting a 75% LTV BTL Mortgage to be a piece of cake to get.

.

Where they 2x flats on one freehold? Total £80K?

[Mortgage_tom]

So said:

Self contained units in houses also good news. We have sold some recently at circa 10% gross yield. The occupancy rate is better than HMO rooms and management way easier. The only issue being the buyers have needed cash or commercial finance with the rates and deposits that go with it.

I have a few HMOs but thinking of trying to diversify a bit and and looking at multi unit blocks. There a few more lenders that look at these now without having to go down the full commercial route. So similar rates to larger HMOs

[So]

Mortgage_tom said:

I have a few HMOs but thinking of trying to diversify a bit and and looking at multi unit blocks. There a few more lenders that look at these now without having to go down the full commercial route. So similar rates to larger HMOs

It’s a question of whether those lenders play with a straight bat. The chap who bought a block off us recently went to two BTL lenders who said they would do it. Both then offered deals different from their indicative terms. He is now with a bank.

[ATV]

brrapp said:

If you plan on renting the developed property, cheap property, low rent is better. There is an artificial upper and lower limit on rental incomes which doesn't help renting high value property. I've never seen a property at less that £300 per month rent even if the property is only worth £20K . I've never seen a £200K property with a rent of over £1000. So if you have £200K to spend, you'll get £3000 a month from 10 bottom of market flats, but only £1000 from a single house for the same capital outlay.

Where I am, you can still find sub £20K one bed flats but they are not necessarily the best buy. Two identical flats in a run down area one at £20K the other at £30K , the £20K one needs new windows, a new kitchen , a rewire and decoration, the other doesn't. The £30K one is the best buy to make a profit on. As property values go up, the cost of repairs becomes less relevant.

http://www.rightmove.co.uk/property-for-sale/prope...
http://www.rightmove.co.uk/property-for-sale/prope...
http://www.rightmove.co.uk/property-for-sale/prope...

That's a great return on investment and the properties don't look too bad.

Are you renting to DSS/LHA/Universal Credit (whatever it's called now) tenants?

I wouldn't mind getting involved in buying something like that with a view to building a portfolio of these and living off the rental income. However I've heard it said that the golden rule in property investing it to not buy anything outside a 30 mile radius of your home, otherwise the commuting costs will add additional burden and stress on you if you are doing this part time.

Where I live (West Yorkshire) the closest you're going to get is around £50,000 for a 8% return. The area you highlighted is half the price and double the rent.

What would you suggest? Getting a good agent? Or leaving it all together?

Also, once you had a portfolio of let's say 10 of these, do you think a financial institution would let you borrow against the portfolio and allow you to keep buying?