Property development - upsides/downsides?

[Ticklemeharder]

Anyone here got into property development? I’m in a fortunate position that I don’t have to work (as my kids are 2 and under) and my DH owns a building company. We’ve successfully done up and sold two homes and are currently renovating our third. I absolutely love it and it’s become a passion of mine. Just wondering how people then take it to the next level? I’d like to stay in this property a few years as our home but I want to continue renovating properties in the meantime if we can afford it. Currently assuming we’d have to take equity out our current property to purchase a second plus renovation costs? Could take out finance but I’m not sure it would fall under a buy to let (as would be selling rather than letting). Any advice from people who have done it would be gratefully received.

Hiya this sounds great I'd love to do this too!
Your need to buy a second home which means you get a higher (c. Double) stamp duty charge but then when you sell it you get the additional stamp duty refunded so that you've only paid a single stamp duty charge.
Otherwise just buy as normal with a mortgage I guess ☺️

DH take out a business loan? This would be a business would it not? Or you can extend your mortgage to release cash. Or you save up! Much better to do it through the business you already have.

Hi @Ticklemeharder I have a property development company. I can’t help with with questions on raising finance as we own everything outright, ( I probably could make my money work harder if i did), but I don’t see the value in doing so at the moment. It is most efficient in terms of CGT to buy through a company - but you need to speak to a finance expert to see if your business would get credit. Buying personally would obviously mean paying greater tax on the profit depending upon your personal tax situation. Regardless of whether or not you buy personally or as a corporation you will have to pay additional SDLT. You also need to factor in the cost of running an empty property during the renovation - council tax, utility standing charges, and the insurance cost of an empty property.

In order to decide if a property is worth investing in, I have a spreadsheet which works out the likely profit on future sale price vs purchase price then taking into account all of the costs in between. You need to choose properties that you can add value to that larger developers possibly won’t see enough profit in. These are properties you probably wouldn’t choose yourself or in an areas you might not want to live in either. I normally choose unmortgageable properties because I don’t need finance. I avoid leasehold properties- getting permissions can be frustrating. Develop the property to a specific market. The one I am currently doing has been refurbished to a young professional couple standard - beautiful kitchen, bathroom, low maintenance garden etc. It is very near to the rail station etc. Sometimes it is first time buyer standard, sometimes family homes. I always stage the properties so that buyers get a sense of furniture placement, and for those who don’t know where to start creating ‘a look’ it can be helpful. Sometimes I sell the entire contents of the house and garden in the sale. I would stress that I don’t design anything to my own taste, it is about maximum appeal to the widest likely purchasing demographic. I run renovations as the project manager to save costs and schedule in the trades myself.

Always get a full survey done and always get a roofing expert to check the roof before you put in an offer. Other tips - don’t buy obviously cheap fixtures and fittings and spend money getting tiles and flooring laid properly. And whilst you should definitely shop around, don’t believe ‘Homes under the hammer’ prices. You cannot renovate a 3 bed house to include a rewire, new boiler and CH system, a new kitchen and bathroom for £10k 😂

Hope that helps!