Most suitable easy to finance refurb and resell

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    Most suitable easy to finance refurb and resell

    Hi All.


    I would like to ask for advice here please.


    I am thinking about a proposal to buy properties, do it up and then sell it.

    What would be the most suitable way to finance it?

    #2
    if You are intent on literally buying unmodernised property or raven tired Units , refurb and immediately sell then I would suggest Bridging Finance could well be the answer, whilst not cheap when compared to conventional Buy to Let Funding Rates it does provide funding options where the interest payments can be paid Ona monthly basis or rolled up for the period of the short term loan arrangements, if the latter is effected and the resale takes place earlier than originally planned the interest overpayments are reimbursed.
    Once a lender becomes comfortable with your expertise they can often adjust terms since clearly they are in the business to lend to sound borrowers.
    Another option is to buy such property and have as an exit route a long term mortgage based against the enhanced capital value and then decide whether to hold short, medium or long term, however conventional lenders do not take kindly to lending money on a supposed long term basis including any initial incentive rate only to have the loan repaid after a relatively short period of time

    Comment


      #3
      Thanks for your comprehensive answer, it's more than just a simple refurb. Most of the time it's often works which will take in excess of 6 months, then add another 3-4 months to sell it.

      Is a bridge still the best solution in this case, the rates are astronomical when I researched, when you also consider that I only operate in London, the figures here are huge.

      Comment


        #4
        You might want to consider renting for a period (18-30) months after the improvement.
        There's a considerable difference in the funding options available, because that is (at least arguably) a BTL business not a Property Development business.

        If you buy, improve and sell within 6-12 months, what you're doing is property development.
        Which means the increase in value would be treated as income, not capital gain.
        Which almost certainly means you would need to operate through some kind of company structure (to avoid returning too much of your gain to HMRC) and the finance (and guarantees) required for that are really off putting.

        The overall options are conventionally, start small and cheap and work up, using the income from each development to fund the next larger development, have a lot of money so you can fund all or more of it or be a builder with a good track record.

        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


          #5
          Try goggle search for "bridge loans + refurbishment work "

          Comment


            #6
            If one were to seek a high percentage bridging loan then the annualised rates are indeed expensive and this is without taking account of the associated fees for valuation , legal and mortgage and if focusing on the London market then such a facility might rove too much to contemplate unless the potential and realistic capital enhancements can more than justify the exercise.
            Googling Bridge Loans will invariable produce a multiple list of mortgage brokers offering such facilities , and when speaking with them they will give a spread of funding options and the “average” rate of interest.
            What you are considering warrants speaking to a brokerage who has experience in the BtL sector and the associated funding of acquisition, refurbishment of property.
            Remember once you have established your credentials lenders are often prepared to negotiate on terms but don’t automatically think this will happen overnight.

            Comment

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