Is there any money still to be made in property development?

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Not mega bucks but wondered if there was still a small profit to be made in renovating? We are in the north east.

I doubt it. You'd have to add enough value to recover not just the costs of the renovation, but also the amount the house had lost in value in the time you'd been doing it.

I think if you have the technical skills to do all the work yourself then there is still a small profit to be made but it's a risk

the moment you start paying out someone else to do any of the work then you have got no hope

where in the north-east are prices going up Warren?

I'm in the north east too. I havn't seen anything worth doing up for profit.

If you are a builder/skilled trade then there are rare bargains and if you can do the work you should be able to turn a small profit but theres not much.

If you, like me would need to pay trades then there really isn't much. I've just renovated a house I own that was trashed by a tenant and has been practically re built. I'm finding the trades very hit and miss. Some are so desperate for work they are willing to work for peanuts - (but they are desperate for work because their work is skethcy), others are so desperate for work they are charging way over the top to try and make their money up from one job. I've got a few contacts from previous works so for the most part I've managed alright - but getting new people in has been a massive headache and very time consuming.

The bottom will fall out of the market up here though. Prices are already crashing . So if you can afford to keep a hold of a property for the long haul you will be able to pick up a bargain, but a quick turn around isn't going to pay.

Also the cheapies are being snapped up by big scale developers, with cash to make long term investments.

Its quite bad here Warren. I bought my house in 2008 for 195. Same house behind me just sold for 125 . And these are 4/5 bedroom family houses in a nice area with an excellent primary that would have people drawing blood to get into in London. Its frightening.

yeah Oreocrumbs I often see people on Mumsnet saying 'a good family house near a good school will always sell'. It's not true at all in much of the north. The market is just very divided.

Dh brought our house 2yrs ago and done it up himself bar electrics and boiler stuff, was a repo, in the north west. Not the best area as can be hit n miss but a stepping stone for us.
3 bed semi for 72, spent 25 renovating from brick had it valued 4 mnths ago at 130, but have to weight up his 12 mnths loss of wage for doing it.
Some 3 beds round here at auction are 45-70k, even if you just spent 10 on it doing the basics you should make something, but could be on the market for sometime, sometimes its worth going a little over the top to get a quick sell.
As we are living in ours for a few years we spent money on underfloor heating, bathroom and kitchen.
If was selling would have saved a few quid on these.

Annalouise also presumably paying out mortgage over the period?

In the south and we recently bought a property that had been bought, renovated and sold on. The increase in value for the previous owner was less than the stamp duty!

In the last couple of years we have bought, renovated and sold two bungalows. Made a profit both times (enough to interest the tax man).

BUT

We were able to buy both at very low prices
DH is an electrician and does all the work himself bar the gas work

Both bungalows needed a complete refit (rewire, major CH rework, total replumb). The price we paid reflected this. Unfortunately a lot of sellers are asking unrealistic money for property which needs 15-20k spending on it.

I would say yes if you have a skill in design and project management. Otherwise no. I think you may have trouble with margins in the north east.

Herhonesty -yes, but mortgage wasnt that high on that amount when we had a good deposit.
If we was doing it for re-sale we would have turned it around quicker.

I am sooo glad we sold our house in the NE and relocated.

I think it would be hard to make any profit, although it would depend on where and how much you were looking at.

Annalouiseh - that seems like a very small profit margin to me, particularly when you take your time and all the associated costs of buying/selling into account (even more so if it wasn't your main home). Granted you may have been able to turn it around quicker and/or spend less on it but this would be reflected in the valuation. And remember too that the valuation is only that - no profit is realised until it is sold, at whatever price that may be.

I think in the current climate, development is only for those with a lot of experience and an appetite for risk. And this goes for hotspots in the SE/London too, which are looking very 'bubbly' at the moment.

Its not bad considering where we are.
houses don't have the mark up in the north like the south, yet all the materials to renovate the house up cost the same all over the country.
Houses up north are cheap, so 20k + on a little house on an estate is good for us.

I think if you can buy a bargain and arent in a rush to sell then the thing to look at is buying a rental machine. If the capital price is low then the yield is good. At the low end of the market then HB is your marker. Talk to local letting agents to find out what typical rents are. Where we are you can be looking at yields of around 6% which is obviously a lot better than a bank will offer.

IMO now is not the time to be buying to sell quickly.

All property developers make their money when they buy, not when they sell.

The cost of borrowing has made BTL mortgages almost impossible, but if you can get together with family or friends to buy for cash, there is still money to be made.

You will need to research your area and target audience very thoroughly, but provided you can buy cheap, as Gnome says, your rental yield can be very respectable, at least versus money in the bank. Buy location first, then somewhere dated but habitable that needs only a good clean, a lick of paint and a decent letting agent. People buy wrecks because they think they'll "add value" with the renovation, not realising the tax and VAT implications, or that fees and trades will wipe out profit.

Auctions are not your friend since everyone and his dog started watching Homes Under the Hammer.

As Noddy says, it's very difficult to "add value" to a property unless you have a practical skill or particularly good contacts. You don't necessarily need a trade though - being familiar with financial instruments or demographic analysis is probably just as useful and cost-saving as, say, plumbing.

When I say "all property developers", I'm obviously not thinking of the likes of Finchatton or Octagon or Candy & Candy.

They're in a different league that totally defies logic as far as I can make out

I have never seen anyone make more than a couple of thousand out of a beige re model of a house. You need to do many of these to have a career I would think. The more you spend the more you make. You don,t need practical skills but knowledge of them helps as I have often found myself doing bits of plumbing etc in an emergency. The only way to really know is to do one and see how people respond. My main pieces of advice are know your Market and don,t cut corners.

Noddy sorry, wasn't making myself clear - "beige remodel" (love that phrase!) is the rental property reno route.

If you were re-selling you'd need to do more, although obviously that depends on the area. I know someone who specialised in "beige remodel+planning permission turnaround". He's a lawyer and his wife is an architect.

Agree that you need big spends to make big money. Adding space in Dinky areas where property costs more than £700 per sqft can make a lot of sense as in this price bracket you're normally dealing with couples where both parents are working and don't have the time or inclination to supervise builders.

Know your market.

We did bungalows because we were more comfortable aiming at a slightly older market who would want the security of knowing that the work had been done properly with building regs certificates etc.

We wouldnt be comfortable doing upmarket renovations because it isnt a market we know and I think it is very easy to spend shed loads of money on high end designer touches which just miss the mark.

There is always a ceiling price for any type of property. Our aim with our renovations was to be 'better than new' within that price. That meant neutral painted walls etc with no feature wallpaper. We put curtains, blinds and light fittings in and neutral but not too pale carpet. This was on top of a full rewire, replumb, central heating installation or renovation. In the second bungalow we also had to replace all the floorboards because of previous problems with woodworm and damp.

What we wanted was someone to view and think 'I could move in right now'.

Knowing your market really does work. I always do victorian terraces in teh catchment of good schools with good family living/entertaining space and storage and a bit of 'style' No feature walls or patterns of any description. Have never taken more than 2-3 days to sell. Schools adds £££££££

Noddy How do you buy these cheaply enough to make a turn profitable? I've always been outbid on these kinds of houses - I always find they're snapped up at asking price, condition immaterial.