Renovating Properties

Hi Chris

You will be pleased to hear that we have a whole section of this website devoted to Property Refurbishment - please see >>> http://www.property118.com/property-refurbishment/

This is also a good article for you to read >>> http://www.property118.com/property-refurbishment-a-guide-for-newbies/31101/

So far as the financing and insurance goes, best you speak to an expert about that. I was once a commercial finance broker but retired in 2009, therefore I'm a bit out of date in terms of which lenders have an appetite for new business. I refer myself to a chap called Howard Reuben these days, the following is a link to his member profile >>> http://www.property118.com/member/?id=314

We also have a page on Property Development finance for readers see http://www.property118.com/property-development-finance-recent-examples/
and a specialist commercial finance broker development enquiry form http://www.property118.com/development-finance-enquiry-form/

Thank you for your generous donations to The GOOD Landlords Campaign and to the running of the forum by the way 🙂

Hi Chris,

BTL lenders are none too keen on being used as cheap bridging loan suppliers so its important to seek advice from a mortgage broker with specialist experience.

There are a few mortgage products that were created for light refurb type projects.

There are also commercial bridging products.

As Mark says, seek advice as to the best way to utilise your £30K.

If you are buying at auction you will most likely need cash though, so not sure how far your £30K will go?

We have a very useful discussion which may help you on your way:

Day job vs. property investor

http://www.propertytribes.com/day-job-vs-property-investor-t-8458.html

Have you thought about JV'ing with people on properties that need work, doing the work for a share of the profit? Might be a more efficient way for you to work?

Hi Chris,

Lots to consider here.

First of all buying at auction can be a great way to get a bargain especially if you are a cash purchaser, but you need to be realistic if you have to finance the purchase.

You will need most likely a Bridging company to finance the purchase because the timescales to auction normally mean you will not get a mortgage company to issue an offer letter fast enough before you put your hand up.

And I would never recommend purchasing at auction before you have the finance sorted as that could be a costly mistake if you can't complete in the 4 week time frame.

You will only get a mortgage if the property is in reasonable habitable working condition and will be your main residence if you are looking for a regulated residential mortgage based on your earned income.

A Buy to Let mortgage will only normally be offered if the property is in immediate rentable condition or in some cases in need of very light refurbishment.

Therefore you would I think be looking at specialist development finance or a Bridging Loan.

The most important basic things a lender will need are:
Planning Permission
Purchase Price of the land/property
Cost of the development work
Gross Development Value (GDV) eg final value when finished
Details of your experience as this will be used to asses the loan for risk and pricing.

A lender will be looking for a healthy profit margin as part of it's risk assessment and normally have a minimum loan amount of 25-30k or though there are smaller loan sizes available but it will cut down your options.

There is obviously still a lot more to it, but if you need any help with Development finance or any other readers do just email me npatterson@property118.com and I can get our commercial finance brokers to look into lenders for you.

Unfortunately unless you work with lenders everyday which I don't you stand no chance of knowing exactly which lenders have money at the time to lend and on what type of projects they want to lend on as it changes constantly.

Reply to the comment left by "Neil Patterson" at "22/08/2013 - 16:30":

Didn't you recently write an article about a bridge to let product Neil?
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Found it, actually there are two articles:-

1) Light Refurb alternative – Bridge to Let >>> http://www.property118.com/light-refurb-alternative-bridge-to-let/42037/

2) Precise Mortgages launch Bridge to Let product >>> http://www.property118.com/precise-mortgages-launch-bridge-to-let-product/40609/
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Reply to the comment left by "Neil Patterson" at "22/08/2013 - 16:30":

thanks mark there`s a lot to think over ,going to book an appointment to see a mortgage broker today ,forgot to mention before that i am mortgage free so will let you know how i get on thanks,chris

Reply to the comment left by "chris gee" at "23/08/2013 - 10:38":

my advice Chris is use a broker who walks the walk and doesn't just talk the talk. If he not a landlord and he's never done a development deal, chances are he will only see the mortgage broker perspective. The wider perspective the broker has of the business the better in my opinion. I can never understand why people use the 19 year old bimbo's often found in estate agencies to advise them on their BTL's. What could they possibly know about the business other than the training they've had to operate their mortgage sourcing systems and the training they've received on staying compliant in the sale of mortgages and life insurance?

Worse still are the DIY quote systems with no back up advice. They are fine to get a feel for what's available but you can't beat professional advice backed by PI insurance from an experienced broker who's also involved in the property business.
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£30K is not nearly enough capital to finance a mortgage and cover the renovation costs; Chris will need to remortgage his house or find some investors. Property renovation and development is a capital-intensive business; any profits from renovation can quickly disappear if you misjudge your market and/or can't find a buyer whilst you still have to service a mortgage.

As regards insurance, I have used http://www.selfbuildzone.com, who were fine and affordable.

Bridging finance, like mezzanine finance for developers, is expensive: think credit card interest rates and hefty setup and close-down fees.

Why not try your bank? They know you and offer good interest rates for short-term loans, though you will almost certainly need a broker for the mortgage side of things.