Taking the plunge: My latest no money down new build project
For some time now, I’ve been getting itchy feet. I keep contemplating taking the plunge back into new build residential projects, but like many others out there I’ve been reluctant to jump too soon.
Whilst development funding is available – I’ve managed to find a source of 100% funding deals – it isn’t as cheap as it was a couple of years ago and I certainly don’t want to be left holding a load of unsold houses at a silly rate of interest.
However, we recently agreed to purchase a site for just two houses not far from my home in Bolton. I’m confident it will be turn out to be a nice little earner. If all goes well we should walk away with around £70,000 - £80,000.
I’ve secured funding at 100% but need to sell the houses as soon as they’re complete to avoid suffering expensive interest costs. My intention therefore is to price the houses very keenly and complete them in time for spring next year.
I wasn’t happy with the existing planning consent as the internal layout of the houses didn’t really work (Sarah Beeny eat your heart out!). I’ve just applied to amend the planning which should improve the saleability no end. Unfortunately, because I want to add an extra dormer window into the roof, the planners will insist on a resubmission rather than a working amendment but I’m confident it’s worth the extra cost and hassle.
My method of new build development involves very little work by me – no more than 2 or 3 hours per month from start to finish. So the return on my time from a small project like this is significant.
I intend to run a diary of the deal as soon as it’s under contract and funding terms have been agreed.
Watch this space!
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Hi Lyndon,
This sounds a very interesting project and I for one will look forward to reading your diary. I think you are taking a big risk though, as there is no guarantee that you will sell the houses at the end of the project. The market may have dived further, interest rates might have gone up etc.
You may well get some BMV chancer coming along and offering you 35% BMV!!
Have you considered keeping one and renting the other one out?
Can you add any USP to the houses to make them stand out from the crowd?
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Lyndon Reply:
July 10th, 2009 at 11:37 am
Hi Vanessa, Good point and did consider this before taking the plunge. I intend to delay construction so that houses are ready for spring next year – giving time for market improvement. I also have a buyer lined up for one of the properties – at a small discount. If the other doesn’t sell by completion I will refinance and rent in the short term. However, I’m confident that with a the right incentive package I would attract a first time buyer rather than the BMV invester! Nothing ventured – nothing gained! As for a USP, I always try to much more value than the larger developers. Quality kitchens including all white goods (branded), fully tiled bathrooms, floor coverings throughout etc. I can even add a decent furniture package for 2-3k but much higher perceived value. So again will help to ensure good chance of sales. I’ll keep you informed… Lyndon
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Well done Lyndon. It sounds like you have all bases covered! Great that you already have a buyer for one of the houses – that takes a lot of risk out of the project.
I like the fact that you are going for a high spec finish. I think that is so important in this competitive market we find ourselves in.
I admire your positive attitude and I think it takes courage to do what you are doing. Good luck and please feel free to post blogs/pictures on Property Tribes too!
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Hi Lyndon
Just want to say thanks, for a very informative web site, I really enjoy seeing what your up to and value learning from you experience.
Pleae keep it up.
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Lyndon Forshaw Reply:
October 29th, 2009 at 9:21 pm
Hi,
I’m glad you like the blog,
cheers
Lyndon
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