Has anyone had a new house built in order to sell it on?(9 Posts)
I am about to embark on a new build adventure with my dp. He has experience if this, but I don't. We own the land and have the planning permission, we are working with an architect on the design at the moment.
So MN - any tips, warnings and advice will be gratefully received.
you are making a gamble on price moves. If, say, it costs you £100k and you sell it for £120k, you have made £20k profit. If prices slump, and it sells for less, you haven't
Worse, if the market stagnates and it doesn't shift, you will have the costs of any loans to bear, as well as maintenance and refurbishment prior to remarketing a couple of years later.
In some places, for example Ireland, Spain and USA, investors hoping to make a profit out of a rising market lost a lot when the reverse happened, and there are still part-built uncompleted developments where the owners ran out of money or the builder went bust. Some went at distressed prices or are now worthless.
If you have enough money to spare some on a gamble, and run the risk of a loss, you might do it, especially if you are experienced in building trades and project management.
Having done it some years ago in a rising market does not mean it will work today.
Building a house for yourself is less of a gamble, because at the end of the day you can still live in it yourself and pay the mortgage, until interest rates rise.
I know several people locally who have tried to do this in recent months and failed for the simple reason that they underestimated their costs by about 30% and only realised after having got actual quotes on approved plans.
Materials and labour have increased a lot lately with the boom in demand for home improvements. Be wary of cowboys jumping on the bandwagon.
You should also run your ideas past other developers for honest feedback or the option to get planning then sell (leave the build to someone else).
How many houses has your dp done before? This is also a difficult time economically with prices rising (if not peaking) and rate rises looming for future buyers. Good luck.
We're also looking at building too, but gave to buy the land (it has DPP). We haven 't approached builders yet but gave been using various guides to guesstimate... We've been working on £100ish per sq ft. Has anyone got experience if doing this in the south east and can comment on our estimate based on a pretty big standard finish?
Op, agent reckons developers interested in the site are walking away at 25k ish below asking price for site, so reckon you need to be pretty sure of your margins...
Thanks for your responses. My dp has done six properties previously.
We have done research with other developers and their recent builds in similar areas. Also with estate agents specialising in new builds, who are very positive. Well, they would be, wouldn't they?!
I'm familiar with the Spanish property crash, having visited there for many years before and during. I'm reasonably confident that there won't be price crash on that scale here in the next 18 months, but of course can't be certain.
The miscalculation of costs is interesting. It seems that getting actual quotes and costings is quite a lot farther on in the process than I would have expected. I suppose at that point you could still change plans, or indeed abandon it altogether if it didn't seem viable.
I wonder if anyone, a novice like myself, has tacked such a project? What advice would you give a newbie?
Thanks again for the answers already given.
Be wary of the on line calculators as there appears to be a sharp increase in build costs happening at the moment. 12 months ago build costs were about �1200 per sq meter. One of my contacts told me recently they had quotes back for a development at �2000 per sq m. for a build to start in the next couple of months. Nothing fancy - it is a basic build. Other organisations I work with are reporting cost increase over the same period of around 12%. This is outside London.
Other things to watch out for are, over and aboves adding to the quote cost and shortages of bricks, bricklayers, plasterers and stone masons.
Good luck - it is very hard work.
Wow, that's huge. Not going to happen for us at £2000 per sq m!!!
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