Hi Guys, For years now I have been watching all the programmes about property development, read numerous books on property development in addition to moving house every couple of years following full refurbishment to release the equity/profit gain and put into my next home. I now feel the time is right to go into property development full time and quit my job (I'm 31). My financial situation is as follows and I’d appreciate any advice you might have, is there anyone on the forum who has made the move to this full time, do I have enough equity or are the risks too high: Current house on the market for £495k (realistically I’ll get 480k) Mortgage to pay off 225k That leaves me equity of circa 255 From that I will take 20k for living off for a year (that is a lot bearing in mind I’ll have no mortgage to pay off, but also give me a significant buffer should a property be hard to shift or I run into problems) However, if all goes well that leaves me with 215 to spend on a property (likely to be 2/3 bed terraced or 1 bed flats suitable for turning into 2 beds in Surrey / London) with a 20k refurb budget per property. I’ll aim for a min. 20% profit per property after costs (incl. CGT) which will be circa 29k (I know each property will be different and these are generalised financial assumptions). Being conservative I’ve financially planned to turnaround 4 per annum (however I’ll be aiming to refurb each in 4 weeks so hopefully can do more) I’ve considered living in the properties but don’t think it is realistic (especially as I have a wife and 6 month daughter). We will either live nearby in cheap rented accommodation or stay at my parents (who have already offered). If I wait a few more years I’ll probably have enough equity to buy a place to live and also a second development property, however I’m keen to start now, make the profit and after a year or so be able to buy a second home to live in anyway. I have little building skills however am experienced at Project Managing property renovation, good at DIY, have a good business sense and am not one of the many idiots you see on the TV with no business acumen (or common sense!) to be a successful property developer. Compared to my day job (senior bid manager for a construction company) I’ll be working much harder (probably 7 days a week), realise the stress involved but its something I’m passionate about and know there is money to be made with the right strategy. I understand the current market situation, however there will always be properties out there in the perfect location at the right price to develop and make that 20%. Although they are harder to find these days as competition is high. Your advice and thoughts please before I make this large step in property development.

Have you considered the best way to proceed tax wise. I am also looking to make the leap, but shall be looking to retain as many of the properties i develop as possible as BTL, selling a couple a year to ensure sufficient cash-flow (no parents to assist and two school fee kids) What have you sussed with the ltd company v's partnership idea and VAT? Look forward to your comments and good luck

Hi Steve, If u are confident it will work, go for it. If its your passion I´m sure you´ll do well at it but don´t overwork in the process! I´m more of a novice than u, who is also considering doing something similar. I´m more into buying second-hand and off-plan in good urban locations near transport links and services ,i.e capital cities or second tier ones. I then rent to tenants, and from now on will either re-mortage or sell to move on when no more capital gains are to be had, and then go to next promising location for more capital gains. The big problem i have is with cashflow and expensive mortgages. I will be doing my first re-finance soon and will keep some money to live on and work only part-time but i must be careful that where i buy next will have good capital growth. The renovation part and managing work teams is something i can´t afford now or maybe too much hassle for me but i´m good at handling tenants.The key for me is not to be paying big mortgages like i am here in Madrid now, with interest rate hikes i´m now paying 920€ per month and the price of this property in this part of madrid has stagnated in last year and can´t see it going up in any way in next year or two. I have capital tied up in 2 or 3 properties which are no longer increasing capital-growth-wise so i need to consider re-mortgaging now and moving into CEE markets more. In actual fact I´d probably be better off leaving Spain altogether!! Spanish market isn´t good for me now.The next few years will not be good here i think. Liam Liam

Hi Steve, Good to read your post. I have stayed in work, as cash flow is king, and your financial credibility with banks stronger. If you have around £220K to spend; my advice is to go to the bank before you give up your day job. With your £220K you can gear against this nicely, and you could realise 3-4 times that. So in fact, you could be do the following: 1. Find a property and put down your 20% deposit ie. £50K from your equity. Borrowing rates are around 6.5%, and you can look for no redemption penalties. 2. Borrow 80% ie £200K + you will need your development money You can then repeat this a good 3 times, based on your equity. I think your 4 weeks refurbishment, and 20% profit is on the optimistic side for a simple refurb. Personally, I think you can add greater value looking for properties that you can change from say 1 bed's to 2 bed's; or coverting 3 beds houses, to 2, 1 bed flats. You need to obviously check with local planning at the Council. Planning can take 8 weeks, and I would allow another 8 weeks building work, and then another 12-16 weeks before you get your cash back, which just eats into your profits. You have to be aware of the tax issue, as you are trading. Just my thoughts.... Chris.

Hi Steve, You seem well balanced with relevanyt experience. What exactly was your role 'Senior bid manager'. and how will this help you in your development. Robin Swailes Developer and letting agency owner

If you are looking for a partner I am mvery interested in entering into the London and Southern market . I have a sustantial portfolio in the North West with properties in St Annes , Blackpool , Burnley . Nelson , Accrington , Manchester plus I have just taken up two development properties in St Annes which we are hoping to turn around very quickly . I have been involved in a multitutde of refurbishments on properties which i have bought as buy to lets and three development properties which have already completed --- one of which has already been sold and two which we decided to rent out for three years and then to sell on and both of these are slated for sales next year --- one before end of March and one within the following financial year I have bought 7 buy to let porperties within the last 3 months and there are now 21 properties in my personal portfolio plus 5 which are in a company which was set up as a pertnership with a builder and another investor I also have set up a lettings agency --- Windmill Lettings " which will service prtoperties in the North West amd we would consider opeening a branch in the London area mayber as a franchise we already manage a substantial portfolio for a London investor --- all of his properties are located in Blackpool I was originally employed by the BBC init`s heyday -- I went freelance for 10 years and then got fed up with all of the weekly travelling from St Annes ( we moved here 7 years ago ) to London based studio`s and went into property --- and the rest is history I am totally honest and I am a very good partner --- for example --- when we set up the partnership there was a property at auction which I could have bought for my own portfolio --- the partnership funds were not in place and so I took a punt and bought prior to auction and lent the partnership the deposit money -- the idea being that it helped kickstart the business ----- I wouldn`t do a deal like that again because it was aone off at the time --- but it helps to illustrate the kind of person that I am !!!! I can be found on skype under my name . Not allowed to give phone numbers on this site which is a bit annoying because when I signed up originally I did so because I thought that it would be a good way of networking best regards Paul Woods would be happy to speak with you and give you the benefit of my learning curve which is ongoing

Hi - I'd love to advise but that is the next step in my research. You are one of many who asks the limited, partership, sole trader, etc tax advantage question. From my initial readings there is no clear cut answer and it depemds on your personal situation. I think you will find that most people will end up advising you to consult with your accountant, which every serious investor needs (in addition to a broker of course). Two things I am in the process of sorting out now.

Hi Chris, Thank you for taking the time to reply, you give some sound advice. Since writing my first post I have learnt a lot re. refinancing. I still think when I am set up in a few months time I'll pack in my job as will want to focus full time on this. Also there are so many mortgages these days there are many that dont require proof of income. All I need is to have a substantial capital buffer to make the payments for the first year before my profits (big or small!) start to come in. Yes 4 weeks and 20% could arguably be seen as optimistic, don't forget though my figures are also on the conservative side as have accounted for just 4 refurbs working on them full time per year. In terms of your other comment re converting 3 bed to 2 1 bed flats etc, that is also a good strategy. Is this something you personally practice and how profitable / successful have you found it? Also how have you found the balance between working still in your job as well as this? Nice to hear from you.

Hi Robin - my role is a construction project manager to be exact, managing people and resources to time and budget, nothing to do with housing projects but obviously the skill set in my job has set me in good stead to be a developer.

Hi Paul - Nice to hear from you and networking is the game in our business. Will try and find you on Skype as would be interested in a chat. Many thanks, Steve.