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Property/DIY

Join our Property forum for renovation, DIY, and house selling advice.

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Original poster

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

44 replies

googlenut · 03/05/2012 22:30

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

OP posts:

noddyholder · 05/05/2012 13:23

I usually buy when there is a slump of some kind. Always offer cash. Know some agents. Be aware of school catchments and up and coming areas. I can 'see' through a 2 up 2 down and what I can do to accommodate a family. I found a bit of a formula I suppose and stuck to it. I am not going to do much more though as want to have a bit of a career change.

Original poster

googlenut · 05/05/2012 17:12

Thank you all for your advice. It looks like there is not much to be made. My husband is due to get a lump sum and we were wondering if this would be a way to invest and increase it. FIL was in the building trade.
There are a lot of property auctions around here now and was wondering about bargains there as well.
What was your average profit per property noddy?

OP posts:

GnomeDePlume · 05/05/2012 17:20

googlenut the condition really doesnt matter if you are stripping back to brick.

Remember with property auctions that when the hammer goes down you have exchanged contracts. You will then only have 2-4 weeks to complete. Read the legal pack in advance. Make sure you have viewed and got your finances in place. There are a lot of things which can go wrong at auction if you dont do the groundwork.

Both times we did renovations (rewire, CH, new basic kitchen, new bathroom, carpets etc etc) we spent about £13,000 including all fees. This was with DH doing all work except gas plumbing.

oreocrumbs · 05/05/2012 17:39

If you are looking to invest and can tie the money up for a long time, then as a PP said, a buy to rent could be profitable. I don't think the time is there just yet but its coming soon as slowly more people have to sell and the prices are plumeting.

Depending on the area you prefer, or quite frankly where you can get a good rental, you may be able to buy a house outright. My house is in Sunderland, (millfield) and its a prime rental area. Other areas we have let houses with high demand are Hendon and Horden not for the feint hearted. A 2 bed in these areas will get around 400/450 nearer the town centre.

You will shortly be able to pick up these houses for 50k or less. So depending on what you have to play with, if you can get away with a small mortgage there is a good return.

But that would be putting that money away for a long time. And even with a good return you will probably won't get a huge profit day to day, its the long term investment (the house covers its own costs via rent and you end up owning outright).

You would probably have to accept HB in these areas so that would have to be factored in to any mortgage you have to get.

Original poster

googlenut · 05/05/2012 19:05

Those rental margins look pretty good. Anyone else know other good rental areas in ne- obviously Jesmond but too expensive to buy there.

OP posts:

oreocrumbs · 06/05/2012 00:44

Washington has a strong rental market, again similar kind of prices, but more expensive than S/land, and a lot of HB.

Lots of good rental pockets in Newcastle. But you are looking for a much higher buying price and I have no experience of that market so would be hazarding a guess at yield.

Low Fell, is quite strong but again your talking more Ncl prices.

Really with the state of play of the economy and housing market the demand for rental property isn't going to drop away any time soon. So if you are interested in this have a look at some websites and see what they are charging for rent in areas you are interested in and then have a look at the property for sale. See whats around. Like I said before its not quite the right time just yet, I'm looking to buy another in 2013/14 I think, subject to change and finances. I think we need to give it time for the effects of the changes to the mortgage market to take effect. And too many people are still holding out for too high a sale price at the moment. Well I'm saying that and I will be dependant on the getting a mortgage so I may well be out of luck too - thats where having a big lump of cash will help you secure a bargain.

oreocrumbs · 06/05/2012 00:47

And given the choice, I would buy two 50k houses rather than one 100k house. So if you have a fair bit of money to play with bear that in mind.

Original poster

googlenut · 06/05/2012 07:45

Many thanks Oreo. Will take all your advise and look more towards rental.

OP posts:

juneybean · 06/05/2012 13:25

Gateshead has high rental, or anything along the metro line.

GnomeDePlume · 06/05/2012 13:47

I would second oreo's comment about buying two cheaper rather than one more expensive:

it will always be easier to let at the lower end of the rental market
smaller property will give you flexibility (eg different types of tenant)
you tend to get greater turnover at the lower end

At the lower end you will quite probably be looking at getting people in who are in receipt of HB. This is a good thing. They are getting money for housing, you win!

thomasbodley · 06/05/2012 18:51

Interesting what you're saying, Gnome about housing benefit. I've long been convinced it inflates market rents because it provides an artificial floor. That said, the HB market is, I'm told, very stressful for landlords.

I made a few mistakes in the early days but now target almost exclusively junior doctors. It may be an urban myth (I've never had one actually miss their rental payment) but apparently they can be reported to the GMC for dishonourable behaviour if they fall into arrears , and they're never at home so there's minimal wear and tear .

oreocrumbs · 06/05/2012 19:09

The market in the NE is different with HB, thomas. The standard market rent is lower than the HB threshold, so no inflated rates! My last HB tenant was paying 400 pcm and her HB was 422 pcm (the average rate she was entitled to for a 2 bed house).

I'm on the fence with the HB issue, have had quite a few, invariably they get behind and I have to spend time chasing it with the benefit office, last one was a nightmare in the extreme. On the flip side, that is what the majority of the bottom end of the market is where I let, so I can't really come over all anti HB, its a minefield whichever way you do it. The last non HB tenant I had let his druggie son live there after he moved out , that was a lovely day spent cleaning up the needles and used sanitary towels from among the fag ends in the lounge, but on the flip side they paid their rent!

Out of intrest how do you target junior doctors? The house I have just finished is literally 5 mins walk from the hospital! Should I be pouncing on poor unsuspecting jr docs as they leave targeting them? Can I advertise in the hospital? Or should I use an agent and tell them I'm looking for them?

Hmm the prospect of not chasing rent and actually having money going into my bank account appeals .

thomasbodley · 06/05/2012 20:29

I'm very lucky in that several members of my immediate and extended family are doctors and in the past they have put notices up in the mess rooms for me.

I have also put an ad in the BMJ, but this was for a family house and long term rental, so worth the expense.

There is a letting agency that specialises in relocating doctors; never used them but I may in future. Will try and find their details.

Once you get into the swing of it, you don't need to market the properties at all - junior doctors are moved around every August, so the ones moving out usually put me in touch with their friends wanting accommodation.

oreocrumbs · 06/05/2012 20:33

Ooh excellent tip - I shall investigate. Thanks

thomasbodley · 06/05/2012 20:41

Medics on the Move is the letting agency. Never used them, as I say, but perhaps worth a look.

thomasbodley · 06/05/2012 20:48

Oh and, in terms of appealing to them - appliances! Full size, even in a one or two bed flat. In smaller flats or lower price ranges, most landlords don't bother with dishwashers or separate washers and dryers, but medics prioritise these, I guess because they're short of time.

If you're renting to sharers, two washing machines and two tumble dryers. A tip from a friend which has been amazingly useful - apparently they all come in off a shift and put their clothes in the wash immediately because they're terrified of MRSA

oreocrumbs · 06/05/2012 20:55

Thanks I will look them up. Tomorrow is agent trawling day . Mine is only a 2 bed, but I can put whatever appliances are needed in. Have an uncle with a used white goods shop around the corner - keeps the good stuff for me .

LalaLeona · 16/05/2012 22:39

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Mosman · 16/05/2012 22:47

We were pipped to the post by two developers who bought big 5 bedroomed houses that would have been perfect for us, close to our children's schools. £250k but needed lots doing to them to make them nice family homes.
Well we have piddled ourselves laughing because they've spent far too much on these properties - different people btw - designers guild wallpaper etc etc.
They have now been on the market at £500k in an area where the average wage is £30,000 tops and if you earnt £35,000 you'd go a mile down the road to the better end of town.
6 years they've been up for, not reduced by a penny, I often drive by wondering if they have to wash the for sale sign or if it's replaced every few months/years lol

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