Resources for property development research.
Discussion
Possibly a little daydreaming and 'grass is always greener' thinking going on here but whilst myself and my partner both enjoy our jobs, we're firm believers that to live the life we want to we need to we'll never achieve it whilst being someone else's employee.
We are fortunate enough to have relatively good incomes, minimal outgoings and access to a 7-figure pot of money, add in the lack of kids and we're thinking now might be the right time to start exploring what we could utilise this money for to move towards that financial independence outside of employment. We're not in a hurry but at some point we need to explore the options.
Historically I'd always thought the decision here would be to buy delapidated houses, fix them up and either hold them as rentals or sell them on for a profit. Between stamp duty on second homes and my expectation of CGT to be squeezed harder soon this just seems like a market where the margins are getting slimmer and slimmer.
I know there are far smarter people than me out there and that there are likely far better ways to use the money we have access to, really I'm just looking for suggestions of places where I can do some detailed research and educate myself on the industry - Whether that's finding out that it would be best to set up as a limited company and keep all funds withint the business or even if that's just to concede to myself that it's a grossly complex and risky form of investment that I should shy away from.
So, any suggestions of where I should be looking for info?
We are fortunate enough to have relatively good incomes, minimal outgoings and access to a 7-figure pot of money, add in the lack of kids and we're thinking now might be the right time to start exploring what we could utilise this money for to move towards that financial independence outside of employment. We're not in a hurry but at some point we need to explore the options.
Historically I'd always thought the decision here would be to buy delapidated houses, fix them up and either hold them as rentals or sell them on for a profit. Between stamp duty on second homes and my expectation of CGT to be squeezed harder soon this just seems like a market where the margins are getting slimmer and slimmer.
I know there are far smarter people than me out there and that there are likely far better ways to use the money we have access to, really I'm just looking for suggestions of places where I can do some detailed research and educate myself on the industry - Whether that's finding out that it would be best to set up as a limited company and keep all funds withint the business or even if that's just to concede to myself that it's a grossly complex and risky form of investment that I should shy away from.
So, any suggestions of where I should be looking for info?
J1990 said:
So, any suggestions of where I should be looking for info?
I think before looking for resources it might be worth making the decision as to whether you are looking for a different job / lifestyle or an investment.It wasn't totally clear to me from your post whether the idea is to leave your current jobs and go into full-time property development, or whether you are just looking to make your capital work harder whilst continuing to accumulate it in employment.
If I wanted to take property / property development risk but didn't want to do it full time, with a mid 7 figure sum I'd be getting in touch with small bridging / development lenders and offering to fund their loan book. Should be able to get high single digit unlevered yields with minimal risk of principal loss and some upside if you create a lending franchise that has value.
NickCQ said:
I think before looking for resources it might be worth making the decision as to whether you are looking for a different job / lifestyle or an investment.
It wasn't totally clear to me from your post whether the idea is to leave your current jobs and go into full-time property development, or whether you are just looking to make your capital work harder whilst continuing to accumulate it in employment.
If I wanted to take property / property development risk but didn't want to do it full time, with a mid 7 figure sum I'd be getting in touch with small bridging / development lenders and offering to fund their loan book. Should be able to get high single digit unlevered yields with minimal risk of principal loss and some upside if you create a lending franchise that has value.
Thanks for the response, that's my fault for not being overly clear.It wasn't totally clear to me from your post whether the idea is to leave your current jobs and go into full-time property development, or whether you are just looking to make your capital work harder whilst continuing to accumulate it in employment.
If I wanted to take property / property development risk but didn't want to do it full time, with a mid 7 figure sum I'd be getting in touch with small bridging / development lenders and offering to fund their loan book. Should be able to get high single digit unlevered yields with minimal risk of principal loss and some upside if you create a lending franchise that has value.
The long term aim would be to leave employment and to be actively involved with the property development, perhaps naive but I'd like to think working as consultants/project managers we'd be able to get to grips with the project mapping andmanagement fairly well, even if it's in an entirely different industry.
If enough research was done and it looked like we should have this as our long term aim then we'd be looking at doing it at a lower level early days to gain experience/confidence and working our way towards bigger developments and hopefully bigger incomes. The short term would be alongside full time work.
https://propertylikeapro.com/property-development-...
I used this. It's much better than most of the "omg I made £3m off my first development" s
te out there on offer from shysters. Mike is legit with some big developments behind him and gives the facts - it's not about him selling more courses. The content is very detailed and runs through the actual important stuff like Health & Safety law, tender processes, etc etc, rather than just the basics.
Having said this, it might be more advanced than what you're looking for. If you're just hoping to do vanilla buy-to-let or "BRRRR" then I would suggest the early episodes of The Property Podcast with Rob Bence and Rob Dix is a good place to start.
Good luck!
I used this. It's much better than most of the "omg I made £3m off my first development" s
te out there on offer from shysters. Mike is legit with some big developments behind him and gives the facts - it's not about him selling more courses. The content is very detailed and runs through the actual important stuff like Health & Safety law, tender processes, etc etc, rather than just the basics.Having said this, it might be more advanced than what you're looking for. If you're just hoping to do vanilla buy-to-let or "BRRRR" then I would suggest the early episodes of The Property Podcast with Rob Bence and Rob Dix is a good place to start.
Good luck!
22s said:
https://propertylikeapro.com/property-development-...
I used this. It's much better than most of the "omg I made £3m off my first development" ste out there on offer from shysters. Mike is legit with some big developments behind him and gives the facts - it's not about him selling more courses. The content is very detailed and runs through the actual important stuff like Health & Safety law, tender processes, etc etc, rather than just the basics.
Having said this, it might be more advanced than what you're looking for. If you're just hoping to do vanilla buy-to-let or "BRRRR" then I would suggest the early episodes of The Property Podcast with Rob Bence and Rob Dix is a good place to start.
Good luck!
Thanks for the info, it's much appreciated. I shall take a look/listen to both sources you've mentioned. I'm not expecting to unlocked a 500k/year income overnight, that would be lovely one day but right now the money is sat in low risk, low return investments and I'd much rather use it to at least try and unlock the possibility of not having to be a 'wage slave' for the next four decades.I used this. It's much better than most of the "omg I made £3m off my first development" s
te out there on offer from shysters. Mike is legit with some big developments behind him and gives the facts - it's not about him selling more courses. The content is very detailed and runs through the actual important stuff like Health & Safety law, tender processes, etc etc, rather than just the basics.Having said this, it might be more advanced than what you're looking for. If you're just hoping to do vanilla buy-to-let or "BRRRR" then I would suggest the early episodes of The Property Podcast with Rob Bence and Rob Dix is a good place to start.
Good luck!
I think the real hope is to do conversions from commercial to residential units and/or ground-up residential builds - Far too much to learn for me to even pretend to know what we would actually be comfortable putting our money in to yet.
The reality is that there is very little money to be made in refurbs these days especially if you are paying a main contractor to do the work and are not prepared to get your hands dirty yourself.
An alternative is new build properties if you can find some land, although you can lose a lot of money very quickly with this. I can tell you this from experience
My suggestion would be to invest elsewhere unless you are experienced in the industry.
An alternative is new build properties if you can find some land, although you can lose a lot of money very quickly with this. I can tell you this from experience
My suggestion would be to invest elsewhere unless you are experienced in the industry.
22s said:
My advice would be to start small... Get to grips with the basics... Find some decent tradesmen you can rely on... Learn the ropes...
If I had ~ £5,000,000 and wanted a return and career out of dealing with it, I’d want to dip my toes and experience it and build up.After-all you could be amazing at it, like you might be at your current job, and make lots of money, but you might find it terribly boring.
cholo said:
The reality is that there is very little money to be made in refurbs these days especially if you are paying a main contractor to do the work and are not prepared to get your hands dirty yourself.
I would agree with the above. I think that perhaps 15-20 years go the yields were a lot healthier and you could get professional tradesmen in to do the work, and still make a nice profit. Unfortunately prices for BTL properties have risen so much that the only way to make a profit from them is to do the work yourself. A couple of examplesA 3-bed 1930's stone built semi property goes on sale for OIRO £160k. It's a bit tired and needs a lick of paint to be spruced up. It sells for £170k and is then back on the market 3 months later for £220k (and again sells very quickly). All that has been done is an interior redecoration, and the garden removed and flagged with indian stone.
Another 3-bed further down the same lane goes on sale for Offers over £180k. It's in a similar condition to the above (but bigger gardens) It sells for a cash buyer for £190k and 3 months later it's back on the market for £250k.
In both cases the sellers were the kids of people who had died or moved into care homes. They wanted a quickish sale. the houses were structurally sound but hadn't been redecorated since the 70's. However my guess is £20k profit for both because the buyers did all the work themselves. had they been chasing around builders/joiners/redecorators/landscape gardeners most of the profit would have been paid to trades.
One of my brothers does it but he concentrates mainly on commercial, he does a lot of the work himself, and he has contacts in various Trades. But he's been doing it gradually for >20 years. It's not something you can just pick up IMHO
Thanks for all the inputs.
Thankfully we have a good array of reliable contractors around the East Coast from a family property portfolio of ~80 houses and a few commercial sites that have had their fair share of renovation and ongoing maintenance. The whole portfolio was purchased over 20 years ago and was used as somewhere to put excess cash by parents, no real intention of them being sold and so unfortunately that means that sitting down and getting advice from parents was somewhat limited, given that there's seemingly no concern about turning a profit on the rental yields as they're happy with the gain in asset value over the last few decades.
With regards to getting contractors in, I'd definitely rather start small and we would both want to be active participants. There is no desire whatsoever here to take a hands-off approach and this is one of the reasons that renovation and/or new builds are somewhere we're looking at (hopefully) making our money work for us.
PS - The above £5M figure would be a little more optimistic, we're looking at a little under £2M in this pot, which is a sort of pre-inheritence gift that we're refusing to use for anything day to day and want to use instead to really set us up for the future. We can't see the logic in p***ing it away on a lifestyle we couldn't maintain longterm.
Thankfully we have a good array of reliable contractors around the East Coast from a family property portfolio of ~80 houses and a few commercial sites that have had their fair share of renovation and ongoing maintenance. The whole portfolio was purchased over 20 years ago and was used as somewhere to put excess cash by parents, no real intention of them being sold and so unfortunately that means that sitting down and getting advice from parents was somewhat limited, given that there's seemingly no concern about turning a profit on the rental yields as they're happy with the gain in asset value over the last few decades.
With regards to getting contractors in, I'd definitely rather start small and we would both want to be active participants. There is no desire whatsoever here to take a hands-off approach and this is one of the reasons that renovation and/or new builds are somewhere we're looking at (hopefully) making our money work for us.
PS - The above £5M figure would be a little more optimistic, we're looking at a little under £2M in this pot, which is a sort of pre-inheritence gift that we're refusing to use for anything day to day and want to use instead to really set us up for the future. We can't see the logic in p***ing it away on a lifestyle we couldn't maintain longterm.
Hey,
You say you don't want to work for someone else, as a wage slave....
You've been given £2M, as a "pre-inheritance" gift... does this mean you're expecting to inherit more than this later ? Either way, congratulations, you've won the sperm lottery, why are you working for someone else already ?
£2M post tax, should be enough for pretty much anyone to retire on in a life of absolute luxury - even if you're only 30. For example you could safely take out 3% of this ( £60k per year ) and have it invested in the stock market and the sum would continue to grow in size.
If you haven't already then it's worth checking out the 'FIRE' movement, and check all the sums and see if it's something you're interested in. If you're really dead set on a £500k/year income, then if you invested your £2M for 20 years in the stock market without touching it then it'll be worth around £10M and you'd be able to take out £500k/year for a very long time, possibly dying with more money than £10M in the pot.
anyway, sorry I can't help with the property stuff, just maybe some food for thoughts on why you'd bother taking on something so risky as property development when you've already won the game
good luck ( and checkout some of the sums using https://www.thecalculatorsite.com/finance/calculat...
You say you don't want to work for someone else, as a wage slave....
You've been given £2M, as a "pre-inheritance" gift... does this mean you're expecting to inherit more than this later ? Either way, congratulations, you've won the sperm lottery, why are you working for someone else already ?
£2M post tax, should be enough for pretty much anyone to retire on in a life of absolute luxury - even if you're only 30. For example you could safely take out 3% of this ( £60k per year ) and have it invested in the stock market and the sum would continue to grow in size.
If you haven't already then it's worth checking out the 'FIRE' movement, and check all the sums and see if it's something you're interested in. If you're really dead set on a £500k/year income, then if you invested your £2M for 20 years in the stock market without touching it then it'll be worth around £10M and you'd be able to take out £500k/year for a very long time, possibly dying with more money than £10M in the pot.
anyway, sorry I can't help with the property stuff, just maybe some food for thoughts on why you'd bother taking on something so risky as property development when you've already won the game
good luck ( and checkout some of the sums using https://www.thecalculatorsite.com/finance/calculat...J1990 said:
Thankfully we have a good array of reliable contractors around the East Coast from a family property portfolio of ~80 houses and a few commercial sites that have had their fair share of renovation and ongoing maintenance. The whole portfolio was purchased over 20 years ago and was used as somewhere to put excess cash by parents, no real intention of them being sold and so unfortunately that means that sitting down and getting advice from parents was somewhat limited, given that there's seemingly no concern about turning a profit on the rental yields as they're happy with the gain in asset value over the last few decades.
With regards to getting contractors in, I'd definitely rather start small and we would both want to be active participants. There is no desire whatsoever here to take a hands-off approach and this is one of the reasons that renovation and/or new builds are somewhere we're looking at (hopefully) making our money work for us.
If your family already have a portfolio of 80 properties and you have access to decent tradesmen you're probably way ahead of others tbh, I'm not sure what additional research or information you would need to access given that level of experience.With regards to getting contractors in, I'd definitely rather start small and we would both want to be active participants. There is no desire whatsoever here to take a hands-off approach and this is one of the reasons that renovation and/or new builds are somewhere we're looking at (hopefully) making our money work for us.
Renovations I'd definitely go for - as I mentioned above it seems like work that you can do yourself without years of training and that's where the profits come from. With regards to new builds one of my clients is a house developer - buying land at a reasonable price is extremely diffiuclt and then you have to go through the hassle of planning. Fortunately you have access to good tradesmen so that part shouldn't be a problem.
Just to give you a rough idea my client is building townhouses for a social housing client for £120k. the only reason they work from a financial point of view is because the RSH provider gets a grant subsidy.
J1990 said:
Thanks for all the inputs.
Thankfully we have a good array of reliable contractors around the East Coast from a family property portfolio of ~80 houses and a few commercial sites that have had their fair share of renovation and ongoing maintenance. The whole portfolio was purchased over 20 years ago and was used as somewhere to put excess cash by parents, no real intention of them being sold and so unfortunately that means that sitting down and getting advice from parents was somewhat limited, given that there's seemingly no concern about turning a profit on the rental yields as they're happy with the gain in asset value over the last few decades.
With regards to getting contractors in, I'd definitely rather start small and we would both want to be active participants. There is no desire whatsoever here to take a hands-off approach and this is one of the reasons that renovation and/or new builds are somewhere we're looking at (hopefully) making our money wo rk for us.
PS - The above £5M figure would be a little more optimistic, we're looking at a little under £2M in this pot, which is a sort of pre-inheritence gift that we're refusing to use for anything day to day and want to use instead to really set us up for the future. We can't see the logic in p***ing it away on a lifestyle we couldn't maintain longterm.
Leverage up and start buying the family portfolio..Thankfully we have a good array of reliable contractors around the East Coast from a family property portfolio of ~80 houses and a few commercial sites that have had their fair share of renovation and ongoing maintenance. The whole portfolio was purchased over 20 years ago and was used as somewhere to put excess cash by parents, no real intention of them being sold and so unfortunately that means that sitting down and getting advice from parents was somewhat limited, given that there's seemingly no concern about turning a profit on the rental yields as they're happy with the gain in asset value over the last few decades.
With regards to getting contractors in, I'd definitely rather start small and we would both want to be active participants. There is no desire whatsoever here to take a hands-off approach and this is one of the reasons that renovation and/or new builds are somewhere we're looking at (hopefully) making our money wo rk for us.
PS - The above £5M figure would be a little more optimistic, we're looking at a little under £2M in this pot, which is a sort of pre-inheritence gift that we're refusing to use for anything day to day and want to use instead to really set us up for the future. We can't see the logic in p***ing it away on a lifestyle we couldn't maintain longterm.
Tom-M said:
Hey,
You say you don't want to work for someone else, as a wage slave....
You've been given £2M, as a "pre-inheritance" gift... does this mean you're expecting to inherit more than this later ? Either way, congratulations, you've won the sperm lottery, why are you working for someone else already ?
£2M post tax, should be enough for pretty much anyone to retire on in a life of absolute luxury - even if you're only 30. For example you could safely take out 3% of this ( £60k per year ) and have it invested in the stock market and the sum would continue to grow in size.
If you haven't already then it's worth checking out the 'FIRE' movement, and check all the sums and see if it's something you're interested in. If you're really dead set on a £500k/year income, then if you invested your £2M for 20 years in the stock market without touching it then it'll be worth around £10M and you'd be able to take out £500k/year for a very long time, possibly dying with more money than £10M in the pot.
anyway, sorry I can't help with the property stuff, just maybe some food for thoughts on why you'd bother taking on something so risky as property development when you've already won the game good luck ( and checkout some of the sums using https://www.thecalculatorsite.com/finance/calculat...
Hi and thank you for your input. I appreciate that I'm in a very fortunate position and yes there is a larger amount to be inherited, though hopefully at a much later date. I'm aware that the two of us could likely live a nice lifestyle without working but I simply don't believe the income would be anywhere near significant enough to fund the lifestyle we would likely want to live if we suddenly found ourselves with zero work commitments. I'm also aware that we could drawn down harder on it knowing more inheritance should come out way... But what if our parents go broke? What if they live past 100 and our money runs out? It also just feels very lazy to just pack it in and live off of the fat of the family's hard work.You say you don't want to work for someone else, as a wage slave....
You've been given £2M, as a "pre-inheritance" gift... does this mean you're expecting to inherit more than this later ? Either way, congratulations, you've won the sperm lottery, why are you working for someone else already ?
£2M post tax, should be enough for pretty much anyone to retire on in a life of absolute luxury - even if you're only 30. For example you could safely take out 3% of this ( £60k per year ) and have it invested in the stock market and the sum would continue to grow in size.
If you haven't already then it's worth checking out the 'FIRE' movement, and check all the sums and see if it's something you're interested in. If you're really dead set on a £500k/year income, then if you invested your £2M for 20 years in the stock market without touching it then it'll be worth around £10M and you'd be able to take out £500k/year for a very long time, possibly dying with more money than £10M in the pot.
anyway, sorry I can't help with the property stuff, just maybe some food for thoughts on why you'd bother taking on something so risky as property development when you've already won the game
good luck ( and checkout some of the sums using https://www.thecalculatorsite.com/finance/calculat...I'll definitely be taking a look at the FIRE community to see what advice is around, property feels like the natural choice but I know the last decade has seen massive changes.
Countdown said:
If your family already have a portfolio of 80 properties and you have access to decent tradesmen you're probably way ahead of others tbh, I'm not sure what additional research or information you would need to access given that level of experience.
Renovations I'd definitely go for - as I mentioned above it seems like work that you can do yourself without years of training and that's where the profits come from. With regards to new builds one of my clients is a house developer - buying land at a reasonable price is extremely diffiuclt and then you have to go through the hassle of planning. Fortunately you have access to good tradesmen so that part shouldn't be a problem.
Just to give you a rough idea my client is building townhouses for a social housing client for £120k. the only reason they work from a financial point of view is because the RSH provider gets a grant subsidy.
I think the additional research is predominantly a case of wanting to find out, in detail, about the process of acquiring land, success of finding planning permission on average, the pro's and con's of drafting up paperwork for right to buy if PP is granted etc.Renovations I'd definitely go for - as I mentioned above it seems like work that you can do yourself without years of training and that's where the profits come from. With regards to new builds one of my clients is a house developer - buying land at a reasonable price is extremely diffiuclt and then you have to go through the hassle of planning. Fortunately you have access to good tradesmen so that part shouldn't be a problem.
Just to give you a rough idea my client is building townhouses for a social housing client for £120k. the only reason they work from a financial point of view is because the RSH provider gets a grant subsidy.
Deesee said:
Leverage up and start buying the family portfolio..
Unfortunately this just isn't an option at the moment. There are a few siblings and the others aren't currently interested in investing their money, nor would they be supportive of us buying from the family portfolio. When it comes to family/sibling politics I would rather stay well clear, especially if they saw us buy off 10 properties and then making a nice profit off of them.OP you asked for resources.
https://www.amazon.co.uk/Property-Development-Gavi...
This is a book on property development law. Expensive but will save you fortunes in legal fees as you’ll know the right questions.
The planning game also a good book.
https://www.amazon.co.uk/Property-Development-Gavi...
This is a book on property development law. Expensive but will save you fortunes in legal fees as you’ll know the right questions.
The planning game also a good book.
Learn planning, learn how to value development sites. Next phase would be build which is not something I can help you with, but first two for a starter below. Be wary of courses, there are alot of people who use other peoples success to sell courses or get lucky with one site and and then sell courses of back of this. RICS publish alot of guidance for free (additional guidance below on development management etc. It’s worth learning RICS method of valuations (residual, investment or income approach and comps as minimum), rather than some hokey cokey method by some property guru. This is the standard majority of land buyers, development managers etc train and work to for professional developers.
As you’ll be playing with £millions, i’d definitely be looking at partnering with an established developer by maybe funding a site initially and then building there if you have no exp. Is there any asset management potential on your existing commercial stock such as re-development? Alot of people are focussing on commercial to resi due to extensive PD-right (makes requirement for planning skill and knowledge less so a lot of these property gurus do these). Big money is made in buying greenfield sites without planning which requires skill and knowledge.
Also go for it! I’m about to embark on my first development but have benefit of having worked as a land buyer and in the property industry for number of years and Real Estate undergrad.
https://www.rics.org/globalassets/valuation-of-dev...
https://www.rics.org/globalassets/rics-website/med...
https://www.gov.uk/government/publications/plain-e...
https://www.gov.uk/government/publications/nationa...
https://pacedm.co.uk/wp-content/uploads/2018/07/De...
https://www.rics.org/globalassets/rics-website/med...
https://www.rics.org/globalassets/rics-website/med...
https://www.architecture.com/-/media/GatherContent...
Development appraisal kit below to play around with (but build your own eventually or use a software like Aprao or Argus developer). Other software you can use to help identify sites is Nimbus maps and others, pretty much same.
https://www.gov.uk/government/collections/developm...
As you’ll be playing with £millions, i’d definitely be looking at partnering with an established developer by maybe funding a site initially and then building there if you have no exp. Is there any asset management potential on your existing commercial stock such as re-development? Alot of people are focussing on commercial to resi due to extensive PD-right (makes requirement for planning skill and knowledge less so a lot of these property gurus do these). Big money is made in buying greenfield sites without planning which requires skill and knowledge.
Also go for it! I’m about to embark on my first development but have benefit of having worked as a land buyer and in the property industry for number of years and Real Estate undergrad.
https://www.rics.org/globalassets/valuation-of-dev...
https://www.rics.org/globalassets/rics-website/med...
https://www.gov.uk/government/publications/plain-e...
https://www.gov.uk/government/publications/nationa...
https://pacedm.co.uk/wp-content/uploads/2018/07/De...
https://www.rics.org/globalassets/rics-website/med...
https://www.rics.org/globalassets/rics-website/med...
https://www.architecture.com/-/media/GatherContent...
Development appraisal kit below to play around with (but build your own eventually or use a software like Aprao or Argus developer). Other software you can use to help identify sites is Nimbus maps and others, pretty much same.
https://www.gov.uk/government/collections/developm...
Edited by Freshprince on Thursday 17th June 18:19
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