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Starting out in developing and need advice.

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  • Starting out in developing and need advice.

    I am currently looking into starting property developing with my cousin. Now we have found a plot which consists of a 3 bed detached house worth 270,000 and detailed planning permission for a 2 bed detached house to be built on the side of it. Now we currently have £20,000 for a deposit, but unsure if we can secure the £300,000 asking price for the plot. Does anybody have any advise on where to go? We would only need the full £300,000 until the 3 bed house sells then we can pay most of it back.

    If any other information is needed i can post that up to.

  • #2
    Re: Starting out in developing and need advice.

    Not sure if I'm understanding this right, from what I can gather you want to borrow £280,000 against a purchase price of £300,000, then sell the existing property for £270,000 (leaving you with a £10,000 debt on a plot of land) which you will then build on.

    Is that correct?

    If so, firstly the initial mortgage requirement of £280,000 on a property value of £300,000 gives a loan to value ratio of 93.33% which may be very difficult if not impossible to obtain.

    Secondly, where is the finance for the build project coming from? After selling the property you will be left with a plot of land upon which you owe £10,000, and if I'm understanding you correctly you will have no additional funds to commence the build with. Financing a self-build project with no funds of your own, and relying solely on borrowed money, is again likely to prove extremely difficult if not impossible.
    Property for sale in Torquay