First Steps into Property Development

[Donpetuchi]

Dear Forum members,
I am a newbie based in the UK thinking of going into Property Developments majoring on one off small schemes for now and would appreciate any advice members who have similar pathways would have please.

 

[Nicholas Wallwork]

Hi Don,

Welcome to the community firstly!

Great you're starting on your property investment journey and we'll do our best to assist!

Can you answer some questions in order for us to help further?

Do you own a home and does it have a mortgage?
Do you own any other property?
Do you have much investment capital yourself?
Are you working full time? (Relevant for mortgage products and how much time you have!)

The first thing to do is to get your education up to speed and learn all you can about property investing. There are lots of networking groups around so look up any local to you. I go regularly and still pick up small tips, just one good tip in a session and it's been worth it for me.

 

[Donpetuchi]

Nicholas
Thank you for the prompt response.
Please find below a summary of my situation.
1. Yes I own a home with a mortgage. Last valuation confirmed a £25k equity
2. Only home at present so no other property
3. Not much investment capital myself other than circa £20k saving.
4. Yes I work as an architect in a local practice (residential and commercial projects) but also have a registered company (part time) providing sustainability service to the construction industry which in addition to my monthly wages gives me an extra annual take home in addition.
I am really keen and appreciate there is a lot to learn but comfortable I can succeed with the right mentorship.
I did think about local networking groups but have not been able to find any during my numerous online searches.

 

[Nicholas Wallwork]

Hi Don,

My gut feeling is that a straight JV partner might be right for you. You are a qualified professional in the property industry and you have no doubt a track record of success and satisfied clients and testimonials. Given the right deal, well put together (end product, numbers, target market, exit strategy, budgets, layouts and floor plans etc) I think you'd have a passive investor very interested in partnering up with you to offer the finance.

You also have enough capital to fund the early stages if needs be and depending on your preferred area (again there needs to be a good investment reason for your choice if you have one?) you may even have enough capital and secondary security for your first deposit (coupled with a full bridge or BTL mortgage on the first charge deal).

Would you consider a JV (Joint Venture) partner?
Do you have a target location in mind yet?

You are already starting the journey by being here so well done for taking this very critical step... Now the more knowledge you have the more you have to offer a potential investor so keep learning...

 

[KGeeson]

Dear Forum members,
I am a newbie based in the UK thinking of going into Property Developments majoring on one off small schemes for now and would appreciate any advice members who have similar pathways would have please.

Welcome to the forum! I hope you find it helpful

Can i ask which part of the UK you live in / are looking to invest in?

 

[Donpetuchi]

Happy New Year to everyone
Nicholas,
Yes I'll definitely be open to a possible JV partner and would appreciate a direction in this regard.

KGeeson,
I live in Leicester which is in the East Midlands and as i am only just starting out would want to focus on opportunities within a reasonable radius from where I live.

 

[Cowell]

I would go with property you can rent out with a focus on the working class. It just seems to me that the region you're in has a large population in that demographic. Hasn't it always been that way there?

 

[Donpetuchi]

Cowell
Thank you for your comment.
The renal market is fairly well established here moreso in Leicester which as you rightly stated has a thriving working class.
I already knew this but could still do with some more knowledge of the ins and outs especially in terms of financing projects.

 

[Ricky Bhurji]

Leicester is a good market - I know it well from my time spent up there at university. However, when it comes to a solid investment with expected strong returns - Investing in Reading for Crossrail is almost a no-brainer. Yes its a more expensive marketplace to operate it - but the returns are much higher. In a few years time Crossrail will appear as a Godsend for property investors. Some will miss it, and will wait for the next big thing - but the grand scale of Crossrail is so impressive - there may not be an opportunity to enter Reading at the current price levels ever again.

 

[Cowell]

Cowell
Thank you for your comment.
The rental market is fairly well established here more so in Leicester which as you rightly stated has a thriving working class.
I already knew this but could still do with some more knowledge of the ins and outs especially in terms of financing projects.

Renovation projects? Or buying a house, doing repairs and upgrades and then re-selling it for profit? In order to get banks to loan you funds for any of these types of projects, you have to be in good financial standing with a proven business background.

 

[Nicholas Wallwork]

Renovation projects? Or buying a house, doing repairs and upgrades and then re-selling it for profit? In order to get banks to loan you funds for any of these types of projects, you have to be in good financial standing with a proven business background.

I'd agree with that but there are several creative financing methods too (JVs, bridge loans with additional security etc) as well as starting out building a track record with other types of deals first (rent to rent, lease options, deal sourcing to name a few "no or little capital required" strategies).

Banks also look mainly at the deal and if it's a strong property and financial deal then the person buying comes second (they still take your financial situation into account and more so since the credit crunch but the deal is all important)...

 

[Cowell]

I have to agree that JV can be a very good way to go. (Gang up on 'em ) My mind was on the banks that are very tight with their lending practices.

I have also heard that if you go into a possible deal with a comprehensive and well-laid out business plan, then certain banks will overlook certain financial shortcomings.