I have £40K in bank..if I want to build 6 houses on a piece of land?

Question

how do I go about doing it. I want to turn my £40k into £100K profit.

I don't know how to find land, find out if I can build on it, how to purchase it, how to project all the costs for building six houses, how to market..and most importantly how to persuade my bank once done all the costs that I need the money to do the project.

I am dooing all this on the assumption that the homes get brought and I can pay the bank back and make a net return of at least £100k from my £40K

Is this possible?

I have no idea at all about construction ..or costings

What do I need to do?

I am in the U.K

I have no mortagage

I have no home

All I have is £40K

I work as a pharmacist ..self employed

Answer 1

Can I interest you in some magic beans?

But seriously, have you watched TV shows like property ladder? Thats about all you need to know to get started judging by some of the chavs on there.

Just find a property that would benefit from a refurb, and get it bought.

Answer 2

Homebuilding on speculation is usually a 15% business. For your 40 K you will probably be able to borrow another another 120 K to go with it. Your original money would usually be used to purchase a lot, or lots. You are mobililzing 160 K. You can build your properties and after you pay your costs and expenses you are likely to earn about 15%, or 24 K. That would be a very acceptable return.
If you do not sell the property the construction loans will epire and you will have to pay a mortgage, like everyone else. You will lose all of your earnings if you do not sell the property in a timely way. The holding costs on such a property are usually 1% of the value. In this case about 1.6 K per month. It is very possible to go broke holding new unsold properties.
That is the simplest possible explanation of the model.

You really don't have enough to start. You can buy cattle with your money instead. There's an idea.

Answer 3

Not meaning to be harsh but r u joking?!
For a start u would be lucky to buy a piece of building land for 40K. If u just buy a normal plot of land u have to get planning permission, then go through all the legal stuff and then u would prob have enough money to put a small wooden shed up!
I would use u're 40k to put down as a deposit on a mortgage

Answer 4

See a commercial estate agent, tell him/her what you have and what you want to do.
If they think its a goer, and they give pretty good advise usualy, as they may end up making money when they sell your houses.
Then do some research find out where you want to invest what type of housing is in demand in that vicinity, how much building costs are, architects fees, legal fees (see a financial advisor), and most important of all find out if you have a good chance of full planning permision being granted.
Its extreamly unlikely you will find a possible development without some sort of planning already on it and not for 40k.
You will have to go into partnership with a developer i think or find out how much money the bank will lend you to have a go at developing yourself.
40 k isnt realy enough, maybee up north it might be !
Production costs for building say 2/3 bedroom houses is about 60/70 k each.
Theres a lot to check out, but if its what you want to do, then you can make it happen.
It requires work though, not as easy as the tv programs make it out to be.

ps: you can get a rolling loan, so you borrow, build one house sell it then you will get lent more money and so on, it is achievable i think but you will need to work it a lot & do lots of research and never take no for an answer.

Answer 5

good luck. £40K won't even pay for you legal, estate agency fees and Architects fees. A decent plot to build 6 houses on will cost more like at least £400K, so you £40k is not even enough for a 10% deposit. Then you have the competition of the other builders and investers in the area. then you have to get a loan, while you are paying for the loan you will have upto 6 months of planning to resolve. £40K won't cut the mustard. For 6 decent houses the build cost may be upto about £450k. I suggest buying a couple of buy to lets.

Answer 6

You have no chance. The land at best, with planning permision would cost £250,000 to £500,000. A bank will lend 80% of the cost of building the houses - say £0.5M - £1.0M???

Think about a commercial property investment bond or if you will tollerate more risk a Real Estate Investment Trust

Buying and owning properties like this is RISKY. Do your research - get a book on the subject and watch the TV.

Answer 7

I'd sit on it for now if I were you, land is at a premium and the prices are sky high, you will end up in a lot of debt if the properties and land are far higher than your profit, maybe buy a cheap house at auction and do that up and move on from there for the time being, then in a few years when you have more money in the bank and land has hopefully come down in price you might be more experienced and have more money to make that huge profit for yourself, good luck.

Answer 8

You would need a lot more than 40k to build 6 houses may be you should build 6 sheds or maybe 6 dog kennels.

Answer 9

40K won't buy much. Why not start off with one property, live in it for a while, fix it up, sell it and then buy one slightly more expensive than the first.....and start the process over again.

House flipping is becoming quite 'the thing' here in the states....although very few people seem to have the slightest idea of what they are doing.

Good luck but don't get in over your head.

Answer 10

construction loans are riskier, so as that they convey about a some distance better pastime cost until the home is carried out and flow-in waiting. then you definitely refinance to a decrease pastime cost. yet lenders could extremely not lend to self-proclaimed builders. you may desire to be your person contractor, yet you will likely might desire to hire some experts to do a good number of the artwork. $160k @ 4% for 30 years = 763/month not alongside with taxes and coverage. Your lender supply you a extra suited 10 element answer than i will. communicate to your lender to be certain in case you have sufficient fairness interior the valuables. The extra fairness you have interior the valuables, the less probably you will walk away out of your investment. lenders like that.