Hello everyone. I have about 40k to invest and make me a millionaire in 5 years. My idea is to develop properties and rent them taking the increased value as collateral for the next build and rental as the mortgage payments. Has this been done before and in your opinions is it a quick and successful way to developing a portfolio of properties and reaching my goal of multimillionaire? Thanks for the input guys Paul

Paul Funny post! In theory your idea could work but it has a few flaws I'm afraid... - 40K doesn't buy you much in terms of a development budget. - Redeveloping properties is a pretty skilled job. It requires skill and experience to spot a property with potential in the first place, the same to avoid the pitfalls that crop up when developing it, not to mention keeping it on budget. - Your strategy relies largely on the properties you develop increasing in value substantially, and in today's market, you'll in many cases find that a property that's had 40K spent on it, is simply worth 40K more than when you bought it, or maybe less if you make the wrong development decisions - Your strategy relies heavily on mortgage lenders, at a time when they're tightening their belts and borrowing is becoming more difficult. - Capital investment required today is so high that in many cases your rental won't cover your mortgage costs, and certainly not if you're looking to remortgage to release more funds. - It would take many many years for this strategy to make you rich. Er shall i go on... Good luck anyway D

Hi Paul, Thanks for your post. If you have £40k to invest that is enough to buy 3 properties in CEE. The £40k should cover 10% deposits and fee's for purchases in Romania, Czech or Bulgaria, you would cover the rest with a mortgage. This will put you at the cheaper end of the market but there are huge gains to be made. Sorry if I’m butting into your post but I just wanted to offer my assistance. Please feel free to call me if you wish to discuss this. Kind regards, Martin Grainger Head of Portfolio Development 01270 539576 purchasesupport@propertysecrets.net

Hi Paul, I personally don't think anyone could turn £40k into £1M in five years in the UK at present. The likelihood of large enough growth is slim in order to achieve your aim. I't may be possible in CEE where growth is much higher but without local knowledge and a supply of good workers it may be hard. Buying off plan properties in CEE could do this but you would be limited interms of having to cash flow them.

Hi Paul, Just a thought: To turn 40k into over a million in five years you would be looking at a return on your capital invested of 100% every year. Lets just say that you only do buy to let and invest 40k with 80% leverage, you would need the property market to rise 25% in the first year alone. I'm quite bullish on the UK market but even I cant see those figures happening at the current time. Maybe you need to adjust your goals and look at making your millions over a longer time period, say 8-10 years or look to make a smaller return of £0.5 million over five years. However It's not to say it's impossible, the market in Chelsea & Mayfair increased 50% in the first 6 months of 2007. All the best.

Hi, Thanks for your input, there is something else you may not be aware of, I am currently on a salary of 40k. Well lets see about the 1 mill. If I self build and sell I should be able to achieve that return but appriciate that 5 years may be ambitious. I would not like to put my money out of the country just at this time tho. Thanks

Hi Martin, Do you really think it is so easy to make a lot of money by putting down three 10% deposits on CEE flats and just waiting...? I guess it all depends on your profile, because in many cases you just won´t be able to get a mortgage either in Poland or Romania for example, if you do you´ll be bombarded with fees, commissions and rentals are low. All this investment talk seems very simple and rosy on paper but in the end anything can happen. It take a lot of time, research, knowledge and experience as well as money of course. For example if you are self-employed you will have difficulties in getting any mortgage, and one never knows whether flats are going to be completed on time etc. If you are rich and can cash-flow properties easily then its probably easier. All this talk about high leverage of 80% can be nonsense and very risky at times. For investors on tight budgets you need to be very careful, because with all legal fees, high mortgages etc you just won´t be able to cash-flow them. Any other views? Liam