Start Property developing with £10,000

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

    Start Property developing with £10,000

    Hi guys, i want to start property developing.

    I have £10,000 of my own funds to put down.

    i want to buy a property for £200,000.

    i want to spend £20,000 on refurbishment.

    what is the correct way to finance this project?

    i was thinking 5% natwest mortgage buys the property.

    then I have £10,000 on overdraft and credit card to use to refurb and save up the rest over the next 6 - 12 months.

    Does any one know better way to finance the project where I can put less deposit down? And a £20K home improvement loan?

    will the bank be ok with me getting a residential mortgage with 5% deposit even though i will be selling quickly for profit?




    #2
    Get more liquid cash and net worth before you start.

    Comment


      #3
      You probably need to rethink this.
      Any plan where you're intending from the outset to use credit cards and overdraft to fund is likely to be a terrible idea in itself.

      If you buy and sell a property for profit, the profit is treated as income (rather than a capital gain), so the tax you will owe when you sell is likely to be very painful.
      Which is why almost all property developers work through a limited company (where they can operate more tax efficiently).

      But that makes the borrowing much more complicated.

      And, if you do it personally, you'll have to commit mortgage fraud, because no one will lend you money on a residential mortgage to buy, do up and sell a property.
      And they'll ask what you intend to do with the property and require you to live in it.
      Both of which you'll have to mislead them about.

      They might not find out, but if you do it more than once, they'll probably notice.

      Again, you can't legitimately use a home improvement loan for this purpose.

      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        JPkeates so what is the correct finance method?

        Comment


          #5
          Originally posted by G56trader View Post
          JPkeates so what is the correct finance method?
          Have a whole shedload of money to start with.
          This kind of business is like starting up a restaurant, horrifyingly risky even if you know what you're doing.

          If you're starting with £10k, how much do you earn and do you own any other property?
          You'll almost certainly need a commercial loan, with a personal guarantee from you - so you'll need to be able to show that you can afford to pay if back from income in a reasonable time frame or by selling something else.

          Funding this kind of project is quite costly and the money usually made available in tranches as key stages are met.
          So your business and project plan needs to be very robust.

          If you have to go into this kind of business, I'd suggest that you need to adjust your expectations, and build up from a much lower start point.

          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Its not horrifyingly risky at all.

            Commercial loan is for purchasing retail units /warehouses etc.

            I have run business's for nearly a decade.

            Typical keyboard warrior response you get on forums scaremongering.

            Comment


              #7
              Originally posted by G56trader View Post
              Typical keyboard warrior response you get on forums scaremongering.
              Abuse, neat.
              I have created, managed and been involved with funding businesses for several decades.

              A couple of years ago, I worked with a builder I know to try and fund a development he wanted to do up and sell on (he already owned it, but it was delapidated).
              It was complex and in the end didn't happen, but it was very informative.

              Its not horrifyingly risky at all.
              Property development is right up there.
              It's profitable, but you need to know what you're doing - otherwise everyone would be rich, wouldn't they?
              It's not something I would ever get involved with, for example.

              Commercial loan is for purchasing retail units /warehouses etc.
              I don't know understand what that means.

              I have run business's for nearly a decade.
              And you suggested using a residential mortgage fraudulantly to fund a development rather than fund it properly and were going to run it personally, not as a business?
              Were you having an off day?
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment

              Latest Activity

              Collapse

              Working...
              X