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Also, what area of the country?
Andy
Andy
This is where most of the landlords go wrong.
They think they're saving money by managing the projects themselves but...
1. Usually they don't have access to trade prices for quality material
2. They don't have people they can trust to attend cock ups at short notice
3. They don't have the experience to spot problems early
4. They haven't seen enough bodged jobs to know what a piece of plasterboard can hide
5. Ultimately they end up with spending more money to rectify a bodged job
However, in your business of refurbishing and selling properties it's a completely different game.
You buy a wreck, hide all faults and splash some fresh paint here and there.
A cheap kitchen and bathroom with some biscuit tiles and the property is ready to make you money.
Stick to it.
I was approached many times by property developers to fit kitchens, floors and doors.
They asked for the cheapest material, the cheapest labour and speed of light.
Their punchline was "as long as it looks clean and fresh".
My answer: "sorry mate, can't fit 20 doors, frames and architraves in a day for £100. Call someone else and never contact me again"
A cheeky bugger asked me to fit 120m2 of laminate and skirting in a property he was converting into bedsits.
When I saw what he was doing i politely priced myself out of the job.
He had the guts to call me next day and offer £50 day if I did it in 3 days. £150 total.
I politely told him to f@ck off.
P
pongoman
It's usual to have one side put in the money and the other put in skills and labour
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pongoman
The idea would be to have a main source of income from refurbishing houses and selling them
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pongoman
I plan to do about 10 - 20 per year.
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pongoman
I do have all my own building trade accounts/trade prices
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pongoman
I've not been doing it long enough to call myself experienced.
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10 to 20 is a pretty vague plan. Sounds like you’ve only done one this year and have tied up some of your capital in it
P
pongoman
Just depends how quickly they can be sold
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Obviously you've looked closely at how much you expect to turn over in a year, and how much profit you expect to make (after you've paid yourself a wage, and used some of the income to put down as a deposit on the next, more profitable property, etc etc)
So it depends on how much is left to pay an employee, and obviously how much that will save you going forward (how much do you currently spend in a year on tradesmen, and how much will that reduce?) Have you done projections of that nature?
Many successful developers start like you and sometimes build up massive businesses. I've worked for a developer myself who started with nothing and now employs five hundred people. I'd join you tomorrow if I had the money!
One thing I would say is that the amount you spend must depend on the area of the country, the type of property and the ceiling price for the street. No point spending more than necessary on a cheap house on a cheap street in a cheap area, but obviously developing prime property in an expensive area higher a level of finish would be expected (and would probably pay for itself).
So it depends on how much is left to pay an employee, and obviously how much that will save you going forward (how much do you currently spend in a year on tradesmen, and how much will that reduce?) Have you done projections of that nature?
Many successful developers start like you and sometimes build up massive businesses. I've worked for a developer myself who started with nothing and now employs five hundred people. I'd join you tomorrow if I had the money!
One thing I would say is that the amount you spend must depend on the area of the country, the type of property and the ceiling price for the street. No point spending more than necessary on a cheap house on a cheap street in a cheap area, but obviously developing prime property in an expensive area higher a level of finish would be expected (and would probably pay for itself).
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pongoman
The focus is to do as much of the building work myself as possible
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In theory it's easy, in practice not so much
Unless you are very experienced in building works + you have a team of great subbies......you aren't going to project manage well.
All you need is to have all 3 of these available at the same time:
Information
Materials
Labour
Delays are always when one of those is missing
All of this applies to builders, but you're a property developer.
I have done it myself a few times, buy a wreck at a discounted price, splash of paint, cheap kitchen, cheap bathroom and best of all, brand new combi boiler.
Sold in 2 months to the first viewer.
Now, if you had to fit a £20k kitchen, or even an average £10k, you won't be making money on it, what you spend will not increase the property value by double your expense.
Same for extensions and any work to a high standard.
To make money you need to make the property livable, not a luxury.
Many times I advised customers against building an extension with the view of selling soon after.
They lost money or remained in the property.
Example: you have a £200k property in decent conditions.
Build an extension, call it £40k at the cheap.
You will not sell the property for £280k, not even £240k, so you will lose money.
Property prices are set for the area and change slightly accordingly to condition.
So in an area where a 3 bedroom semi is £250k average, you will not sell for £350k whatever you've done to it.
Be wise.
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