Property Development - is it really worth it?

[Claire B]

I have often been tempted to get involved in property development and fancy buying up houses and revamping them to sell at a profit (aiming at the first time buyer market to begin with)

We all know that most of the developers featured on Property Ladder are complete idiots (that's why they are chosen i suppose - makes for good viewing) but on the whole, is it worth it?

I guess a lot depends on the currant housing market, but i just wondered if anyone on here had experience of this?

[Dave Teece]

Hi Clair

Due to all these property progs. everybody is now a property developer.
finding the right property is the hardest bit. I am after a small house to renovate but these are attracting higher prices now because of the demand.
Good hunting!

Dave

[telemax]

Hi Clair

Check out Burnley, Blackburn, Oldham areas, great value for money, either to buy or rent out. . There is loads of stuff on rightmove.

Jonathan

[mattk]

They also conveniently forget to mention for small issue of tax on these programmes.

Recently I've noticed that Property Ladder talk about "gross" profit, but tax - and the fact that most developers are making money is a rising market - seem to be neatly glossed over in these programmes.

[Pebble Communications]

If I were doing it right now I'd be looking at Folkestone.

Lots of regeneration activity from local authority
Creation of new 'Creative Quarter'
Cheap properties abound
New rail link opens in 2007 cutting commute to London to under one hour.

[Jayne]

Hi Claire,

We renovated a large flat above our bakery, it's much harder work than you think and very stressful. Gas and electric companies are a pain in the bum, especially if you need a new supply.

Then there is the DIY people, plumbers etc. They never turn up when they say and it always costs more than they quote. It's not all nice and fun like on the TV.

I wouldn't do it again! Plus as Matt said, you will be taxed and if you rent it out after it is done, you'll be taxed on that too.

Jayne :D

[Faith28]

But we pay tax for any income. That's a given. Property development is a business just like any other. Though they do not highlight this on the programmes. Could it be because some people buy property as their own resident, develop it, then sell them on!?! :wink:

[mattk]

Could it be because some people buy property as their own resident, develop it, then sell them on!?! :wink:
It could be, but it could also be the fact that TV programmes are more interesting with the people making big profits, rather than small profits after Mr Brown has had his 40%.

[Joyous]

but on the whole, is it worth it?



Now there's a question!

I suppose it depends on whether you've got nerves of steel, a substantial amount of SPARE capital (as until you offload the property you've a big chunk of money tied up), and plenty of time.

The property programs have seduced alot of people into thinking that all you need to do is but a property, wash it from top to bottom in magnolia paint, stick down laminate floors and them sell it at double what you paid for it.

The reality is far from different as you are subject to the foibles of the housing market ( both when buying and selling); potential buyers; various workmen ie plumbers, builders etc; solicitors who move at a snail's pace; as well as the the time you personally have to put into the project.

I know of a person who bought a property and spent 6 months stressing over her dealings with various builders and plumbers who saw her as an easy touch. When she finally sold it she barely made £10k after tax.

In my opinion - definately not worth it.

...but don't let me put you off.

Regards

Joy

[Faith28]

Has anyone thought of building property i.e. buy land with planning permission then build on it. You don't pay any VAT and is always (!) less than its value once built.

I've been looking into it for several years...meaning subscribed to BuildIt :lol:

I guess the capital needed for such a project would be at least £150k unless you can convince a lender to lend you over 80% of it for the land. Then you would need at least another £80k for the build. Don't quote me this is just my ball park figure to reach in the near future. :lol:

[bwglaw]

I recommend buying/developing properties overseas. Profit still to be made. I have spent $52,000 on an overseas property and about to sell for $92,000 or keep it and get $900/month.

Jonathan

[Rob Holmes]

I recommend buying/developing properties overseas. Profit still to be made. I have spent $52,000 on an overseas property and about to sell for $92,000 or keep it and get $900/month.

Jonathan

I guess thats ok if you're good at law - my Mother in law has bought and sold in France and the legal stuff is a nightmare.

Is there any partuicular country you'd recomend Jonathan where the legal side is as easy / cheap as the UK ?

Rob

[Faith28]

I recommend buying/developing properties overseas. Profit still to be made. I have spent $52,000 on an overseas property and about to sell for $92,000 or keep it and get $900/month.

Jonathan

Now this is an idea! Where did you buy your property/ies from. I was thinking of South Africa because my husband has lived there and also we have a nice community we are in touch with in certain areas so knowing the area would be easier than say a place we have no connections with.

[bwglaw]

I was referring to the Republic of Georgia, who are pro-actively seeking to get ready to join the EU at some point in the future.

Bulgaria may be another option. I visited Prague (Czech) and could get a good apartment for around 20k.

I would probably avoid Spain, France and Italy if you want to avoid all the red-tape and any tax obligations!

My legal expertise was not much use when I bought the property here apart from checking the contract with the builders once translated. It is all notary-based here and took me 12 hours to view building, plans, discuss, sign contract, place deposit and hey presto!

With the rent, we are going to buy cheaper properties to rent out to the lower income bracket so all our eggs not in one basket, so to speak. Being a British National I cannot borrow from here so getting another good quality property, particuarly a new one may be very difficult, hence buying older properties to do up and rent out.

I have thought about the UK market, but it will always be expensive with the tax etc. I can make money in Georgia without being taxed since the Govt here do not class ownership and renting of residential properties as a business and liable to tax.

Jonathan

[directmarketingadvice]

on the whole, is it worth it?

If you buy into a rising market, then you should be able to make a decent profit.

But that's true with most investments.

I remember people in 1998 and 1999 telling me how the stock market was going to always go up. However, since then (7 years), the stock market has gone down in real terms.

And I'd bet you the same people have lost money over that period. In fact, it wouldn't surprise me if they sold out most or all of their shares before the market bounced back in the last couple of years.

So, the questoin is: where is the housing market going in the area you're thinking of buying?

Steve

[bwglaw]

Now this is an idea! Where did you buy your property/ies from. I was thinking of South Africa because my husband has lived there and also we have a nice community we are in touch with in certain areas so knowing the area would be easier than say a place we have no connections with.

Would be a good idea for you. You need to have some connection with the country. My wife is Georgian and have a good bunch of relatives here. Language is not a barrier here because some speak English, especially large developers who I buy from.

Buying and developing is one thing but you also need to know the other side of the market in the area which is selling and renting. Is there a demand for renting. Here there is because many young people cannot afford their own property now.

I am going to buy a cheap property for about $20,000 and rent it out for $200. Small return but good rent yield since I have no loan or mortgage on them and $200 is affordable for a professional couple.

Go where people eat crumbs, not a loaf! ;)

Jonathan