building to sell

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alexandre163

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hi im a young guy looking to get into property, i am currently looking at a site with full PP. im going to get the house built then sell it off making a few pound in the process. i know the market has been slowing down of late but according to calculations i should still make a nice profit. can someone on here who does this kind of thing give me any advice or do u think its a bad time to be doing this. i estimate it will be built for 250k and sell for 300k. i will be doing this with a friend and business partner and we are confident this will work and we can go on and do more. ideally we should of done this five yrs ago but it wasnt possible for us then. do u still think theres money to be made this way.

any advice wud be appreciated.
 
Have you factored in the legal costs on the purchase, sale, auctioneering costs, stamp duty on the site, capital gains tax and allowed a contingency in relation to the build cost and are still coming out with a profit which is a real profit given the time and effort to be put in? If so you may be on to something. But be very realistic about the figures first before you commit.
 
thanks vanilla i have looked at those things but need to get exact figures before we do commit.
 
Where is your site, Councils do not allow this any more. In Louth for example it is 7 years before you can sell and more than likely not get PP again !
 
From having friends and family in the building trade, most will tell you that buying and renovating is actually a better way to make money than building from scratch.

Most properties that are in need of renovation require a lot less of an initial investment and most if the right sort (small town houses etc) are usually in big demand from investors/first time buyers who want a hassle free property in turn key condition.

I know of one example where a small 2 bed single storey mid terraced house bought a while back. The house belonged to an elderly woman who was living in the house for years and nothing was really done with it. Her family put it on the market after she died and it was bought for €168k (not in Dublin mind you!!) and the buyer spent just under €35k on the house doing it up:

Here is what he done:

Replastered, reskimmed and repainted walls
Re insulated the attic
Replaced all broken roof tiles and replaced damaged guttering
Converted central heating from oil to gas
Converted the attic to a 3rd bedroom
Retiled bathroom and put in an electric shower
Built a small extension to the back
Put in a new kitchen
Put in Double glazing all around
Modernised the back garden.
Painted the outside of the house

Over all he did a lot of the work himself, did a great job on the house and ended up selling the house for €265k. Take away legal fees etc and he was able to make close to €45k.

Over all the complete work took about 7 months in total and he had it sold within a further 6 weeks. Bought by an investor who was renting it out.

Might be worth thinking about seeing as you're only starting in the property development game.

I.C
 
thanks for all the advice. i might look into a renovating project. to the person from louth im looking to build in cork where there is a five yr rule but apparently it does not apply to this site. that is what the auctioneer has told us anyway. im not to well informed on that subject but apparently when applying for planning they put this clause in some sites and not others. maybe someone more educated on that part could inform us.
 
alexandre163, just a question on the tax you will pay on your profit.

Will you pay PAYE or CGT?

I have been told by an accountant that Revenue now treat all profits from such projects as PAYE even if this is not your full-time occuaption. Therefore you could end up paying 42% on any profit.
 
alexandre163 said:
hi im a young guy looking to get into property, i am currently looking at a site with full PP. im going to get the house built then sell it off making a few pound in the process. i know the market has been slowing down of late but according to calculations i should still make a nice profit. can someone on here who does this kind of thing give me any advice or do u think its a bad time to be doing this. i estimate it will be built for 250k and sell for 300k. i will be doing this with a friend and business partner and we are confident this will work and we can go on and do more. ideally we should of done this five yrs ago but it wasnt possible for us then. do u still think theres money to be made this way.

any advice wud be appreciated.
Click to expand...

You're treading on dodgy territory here - speculating that property prices might rise or fall. That type of stuff is precluded on this forum. Best wishes with your endeavour.
 
I friend of my has been building houses (1 to 4 houses per site) for afew years now. He was telling me that the margins are getting very tight on building on purchased land. He is more interested in renovation projects now.

If a professional/experienced builder like himself sees tight margins, I can't see how an amateur builder can make any money. Of course if someone gives up 7+ months of their time to do as much work as possible themselves then they may make some money but is it work the risk/hassle/stress?
 
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