I have a recently acquired a small property portfolio, consisting of three flats, an unused 'office' (which is in fact just a downstairs room, currently in too much of a state to rent out), a lock up warehouse and a small factory premises. They are all rented out with the exception of the office, and there is currently no mortgage on the properties. However, substantial refurbishment is required (which is ongoing - I am ploughing back rental income into making improvements to the flats and warehouse at present, and have already been able to attract better tenants with improved rents). Long term - I would like to expand this portfolio, but (and here's the rub), if possible, need to take care that I don't end up losing what could potentially be quite a nice mortgage-free income which will enable me to work part time whilst looking after my son. It seems I could rest on my laurels and maintain the status quo, or look at several options; one is to refurbish the 'office' and let that out (for which I could charge at least £200 per month rent, although there may be higher than normal voids)- the upside is that the office is near the town centre so is well positioned for fledgling businesses or for use as a beauty room etc. That rental could go towards the purchase of a small additional property (on the basis that if I've never had it I won't miss it). I realise I'll probably have to sacrifice a small amount of my other income to supplement this. There is another main reason I would like to avoid refinancing the existing flats/warehouse to buy another property. The factory (which is the other part of the portfolio I have inherited), stands on a reasonable plot of land close to the city centre. The existing tenant I believe may vacate some time next year or the year after, and the factory is in sore need of refurbishment or demolishment. It is in a residential area close to other new builds, and I have been advised that the planners would look favourably on granting planning permission (have taken advice and we could get maybe four small townhouses or 6 flats on the land). I plan to at least get full planning permission granted on this land when the time is right, and at that point will decide whether or not the maths makes it worthwhile to go on and develop myself (obviously I would have to employ an experienced project manager as I am not naive enough to assume I could manage this myself) or sell up and move on at this point. At very least I will need to make enough money to buy a new property capable of generating enough income to match the rental on the existing factory, with better capital growth. I have not posted this with any specific questions in mind, more because I would like to share my thoughts and various options with experienced developers who are out there. I admit that at present, it is all theory and that my experience is fairly limited. I do however, have a fair track record as a landlord and have learned the hard way how to refurbish dodgy flats - I've been fairly successful at both so far. I am a fairly cautious person and do not want to take too many unnecessary risks, but would like to make informed decisions. It would be great to get to the stage where I could gain sufficient experience to turn this whole opportunity I have been given into a full time venture (whether it be an increased btl portfolio or whether I go down the developing route, or both). My wish would ultimately be to have the means to give up what is a very boring and unfulfilling job and provide a future pension for my old age! PS I'm 41 so hope that I have time to make this a reality. Comments invited - thanks in advance.

Sarah you dont'say how you acquired the properties and that may or may not have a bearing on any future action. You say you enjoy an income from the rental but that will be taxable.If you are able to refinance then all things being equal the rents pay the mortgage and the equity you have withdrawn is tax free. You can either re-invest that money or use it as income. I would recommend the Property Secrets books on BTL and a book called Money for Nothing and Your Property for Free by Andy Shaw. I know its a corny title (Dire Straits song title) but it is a good read, if a little blunt for some people. As regards developing the site then I would urge you to take good quality professional advice before you do anything!! I have been resolving construction disputes for the last 15 years and believe me things can go horribly wrong.

Thanks Barry, Yes - I had originally intended to draw out some cash to put down small deposits on a couple of properties. However, the repayments on this, coupled with the repayments on the new mortgages, despite rental income - on paper anyway - still means I will be approximately £100 per property worse off - based on my calculations, which I have run past my accountant and are correct. This is in the short term of course, realise I will be better off in the long run if I take this route. I inherited the portfolio by the way. They have been in my family for years. However before I can start expanding I need to re-roof/new windows etc., etc... you get the picture. They are not problem free by any means at the moment! Re development - I've read the horror stories and know it may well be unfeasible, but do believe I need to get full planning permission which will increase the value of the site at least, even if I sell at this point and don't develop myself. Am I correct in believing this? Thing is, I know the factory does not have a long term future, therefore I need to pull cash out and buy something that will give future value.... many thanks for your advice.

Hi Sarah It looks like you have got the flats and office kind of sorted in your head and you have done some calcs on financing for further investments, I agree with everything Barry's suggests but note that you are rather cautious and might not feel comfortable with the risks of too much finance (even though it is the most efficient way to invest!) However, the development side of it is interesting and seems to be your main concern at the moment. This is what I would do if in your situation:- You don't say how big the Warehouse/factory site is but generally, assuming it is big enough to interest a 'Developer' ie more than a couple of houses, then to a Developer, residential building land with Planning Permission is worth approximately 1/3 of the Selling price of the finished properties to be built on the site (roughly speaking and depends on exceptional things such as contamination of land, demolition costs, infrastructure costs and views, location etc). The land is of course worth alot less without Planning Permission and it is most certainly worth attempting to get this. You can do alot of the work yourself (if not all) towards getting consent and this won't cost much other than your time and patience. Talk to the Planners first to get their views on what's possible on the site and what they want to see, ask if they will accept Outline Planning Permission rather than Full Detailed Planning - take them an Aerial view from one of the Internet Sites eg Google Earth, Multimap etc), talk to the Environment Agency and the Utilities - Water, Drainage, Gas, Electric and get plans from them where the supplies are located on the site and their views about redeveopment of the site, particularly the Environment Agency as the Planners will consult them about Foul Drainage and Storm water disposal/flood etc. Talk to the Council Highways department about roads and access (I'm assuming that warehouse/factory site isn't Listed or area is of Special Scientific or Natural Interest) Get as much of this in writing as you can and then you can either draw up a scheme yourself (Outline Planning is relatively easy - measure the site and draw outline of houses/plots with access and landscaping) or enlist an Architectural Technician to help you, they are much cheaper than Architects and are often the ones that would do the drawings anyway if you employed an Architect - you don't need flashy visions at this stage you just need to get Planning Permission (get a fixed price if employing anyone's help though). Once you have done all this keep talking to the Planners who will tell you if they want any more info or drawings changed etc etc If you then get Planning Permission you can do the development yourself, sell it to a developer or try selling the plots individually to Self Builders (harder to coordinate the demolition and infrastructure on this one unless you clear the site and organise infrastructure yourself first). Regarding finance as a rough guide a bank will lend you around 60-70% of the Total Land Value and 60-70% of the total estimated Build Costs. You can probably get the bank to agree this before you start work and draw on it in stages as you need it, but you will need a good business plan and cash forecast for the project (and as you have already said a good Project Manager). You can try and sell the houses before you complete them ie 'offplan' and this will help finance the build. If you want to sell the site then an agent will tell you what it would be worth as a finished project once you know the size and number of houses. As a rough guide in our area finished houses will fetch around £200 per ft2, so a 1500ft2 house is worth £300k. If a developer bought a site to build 5 of these houses then he would expect to pay around £500k for the land. He would also aim for 1/3 build costs £500k and make £500k profit (this is very broad brush and there are lots of variables). In general a developer would not usually be interested in a site smaller than 3 houses as it is not cost effective but for you it may be a great opportunity! Good luck Sarah, I hope that some of what I have said helps, my experience is limited but there may be others who can contribute to this.

Also forgot to mention that once you know what you want to do with the site and the Planners are comfortable with it then go get some of the local Councillors on your side, ring them to discuss your plans, make friends and then if local Objectors kick in from the neighbourhood you already have friends so winning over the neighbours won't be so difficult. As you already have what sounds like a 'tired' warehouse and factory on the site then I would imagine getting Planning Permission for houses will be welcomed with open arms!

Many thanks for the advice, I've already done some of what you suggested - but did not realise that I can cut out the middle man at this stage and do a lot of the legwork myself, thus saving costs. The site is modest, but large enough for either 6 flats (but only three parking spaces), or 3/4 town houses, so I am hoping I can sell to a developer if I decide it is too much to develop myself. Until I have some more definate plans/facts/figures, I will not make a decision either way. The main thing is to make enough money to reinvest and ensure I continue to get an income from this project. If I make more than this - then that would be even better!

Jo, for someone with "limited experience" you have just about covered everything and your broad brush proportions on land values etc. are what we use and then adjust for all the other factors you mention. A word on planning. Last year a new requirement came into being that requires a Design and Access Statement to accompany any application, even an outline one. Depending upon the authority, this can be quite a comprehensive document that effectively means that even an outline application involves nearly as much detail as a full application. It amy be woth therfore going the whole hog. It's not that expensive to have house plans drawn, especially if they are town houses or apartments which are repeated. Architects can prepare design and access statements as can planning consultants. We nearly always use a planning consultant, particularly if the site is a tricky one from a local politics perspective. They add some cost but increase the win chance on these difficult sites. Sarah, I don't know the area you live in but I know some good professionals whose contact details I can let you have. If I had more details of the site I could do some sums for you. I actually use a spreadsheet that I have adopted from one of the PS spreadsheets. It's almost unrecognisable from the PS original but it retains the basic ingredients for assessing the profitability of a development and if you put in all your costs and realistic selling price then it is pretty accurate. Anyway, hope this helps. Cheers, Peter

Thank you Peter - I have only recently joined this site and am finding it invaluable! The site I am referring to is in Derby. I have spoken to one architect, but in your opinion, should I speak to a planning consultant as a first step instead? I need to get my timing right, as the site is currently tenanted, although I have reason to believe that the tenant will vacate either this year or at the latest, the following year, and planning consents can take some time to progress. I don't want to leave myself in a situation where I have no rental coming in, but no end in site for gaining planning consent! However, if I put the wheels in motion too soon - then I may find myself in a situation where I have planning consent on a site that is tenanted and I will have to give the tenant notice. (I do not want to have to do this, it is not about me being too soft, but this person is a good long standing tenant, pays on the nail and is fast approaching retirement - I am happy to concentrate on refurbishment of the other part of my portfolio until the day comes that he wishes to vacate). Also, I am led to believe I would have to find him alternative accommodation or pay him compensation if I give him notice. Anyway, I digress... I would be grateful for the names of experts in this field. Please note that there is a brook close by, and there is a development next door but one of eighteen flats - I understand they had to build a 'defence wall' as part of the conditions of their build - but I don't think (but am not certain) that the brook will affect my land. The land in question is not huge - I don't recall the exact square footage but have the information at home (I am at work currently). However I can get that detail if you would be kind enough to put a few figures into your spreadsheet. It would be good to know at this stage whether the maths stack up. The other point is that I feel that Derby is becoming flooded out with flats and apartments, and six apartments as suggested, three without parking may not be such a great project, either to develop or for a potential purchaser - I am erring more towards 2/3 storey townhouses, ie. 3 or 4 of these on the site. The other thing I was wondering about is 1 bed affordable studios without parking, if the planners would allow (it is a residential, first time buyer area close to bus links and town). All food for thought.

Hi Sarah, well you seem to have got a grip of it all quite well so far and in my view are on the right track. As Peter has pointed out, Planning rules are changing all the time and I am getting a bit stale on this, I do try and keep up with the latest guidance but until you actually 'do' the job you don't take it all on board. You have picked up on Two VERY relevant points:- 1) There seem to be just too many flats out there - a favourite Hobby Horse of mine. 2) Parking is likely to be an issue with the Planners, they require off road parking for new units and there will be specific rules on this which is worth looking into before you start. eg I think you need a minimum of 2 spaces for a 2 or 3 bed house and 3 spaces for a 4 bed (I think). If you are building town houses and they are 3 storey then these are great as you can build a garage underneith and parking in front which doesn't take up much space. I have one of these (4 Bed)and it has so much space inside on a relatively small footprint - I think these are an excellent way forward for this country personally. Peter will be a good source of info as he has lots of recent hands on experience, I have taken time out recently and getting stale. Good luck,I am sure you will enjoy your journey with this project.

Sarah, I live in Nottingham and used to live in Derby. I know both areas inside out so that is fortuitous I guess. Now, PS won't allow us to post names, phone numbers, contact details of ourselves or companies so that's not allowed. If we do the post will be very quickly moderated. They have very good reasons for this that I support but it can get a bit frustrating at times. You may want to call their customer services and ask if they will give you my e-mail address so I can send these details to you. They can call me if they want my consent. As for Derby, yes, it is catching up with Nottingham when it comes to new flats and I share your views on this. I have posted several times my views on saturation of apartments in city centres. Of course if they are still selling then that is not your concern but the concern of the buyers but I have seen quite a few apartments in Nottingham coming through the auction houses and selling for well below the original purchase prices. Town houses, particularly affordable ones, will always sell well so that would be my bet. Planning targets are for local authorities to determine an application within 8 weeks of acceptance of an application. I say from acceptance of your application because that is when they start the clock ticking. They sometimes have a habit of asking for further info as a means of setting the clock a little later to give them time to meet their targets. They need to hit a 90% determination within this 8 week period so it's no guarantee but in my experience they are there or therabouts unless the scheme is complicated. If you are refused permission then the next step is to either submit an alternative scheme addressing the reasons for dismissal or to appeal. Appeals can take up to a year although I had a recent appeal determined in about 4 months which was almost a record. So, lots to think about and it seems to me that you have thought properly about your options. Certainly you should be in no hurry to lose a good tenant just for the sake of trying to get things moving earlier and afterall, the property prices may rise between now and then thus increasing your returns on the land and the property. So, hope that you cna get my details from PS. Try Karen. Cheers, Peter