# Any property developers around?



## Gary-360 (Apr 26, 2008)

I'm after a little advice from existing developers or links to a few good sites with what to look out for etc.

Thanks, Gary


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## mattsbmw (Jul 20, 2008)

What advice you looking for Gary?

Done a couple of properties with my dad.


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## Gary-360 (Apr 26, 2008)

Well, I have a bit of cash stuck away and was planning to buy a repo, do it up, flog it (as simple as that  ).

Do you have to declare this as a business or is it something you can do on the side (obviously still pay tax on profits etc)?

Is it best to get a property manager on board, or do it yourself?

Just a couple to start with


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## organgrinder (Jan 20, 2008)

My wife is a property developer and I have a few who are clients.

The profit is made when you buy a property and not when you sell it! You need to be absolutely certain what work requires to be done on it and if possible should get a surveyor to look at it first. If you want to make a profit you need to manage it yourself and keep a very tight rein on the guys you have doing the work. You must know exactly how you want it to look like and also make sure that the tradesmen know what they have to do and how well they have to do it. Some shortcuts can be hidden but others just stand out and make the property difficult to sell. Do the work in the right order also because mistakes are very expensive to sort.

Be smart with your materials and get trade accounts set up at quality bathroom and kitchen outlets. Don't be afraid to use tiles on special discount from B&Q for example because they way they are fitted and the colours you use can make them look as though they cost 4 or 5 times as much. Even trade, tiles are expensive so buy carefully and spend your money on a good tiler.

In the current market, you should only buy in the best areas and the quality of your finish has to be very high. Repos are not doing too well at the moment for developers because there are few people wanting to buy and in general, repos are not in the best locations.

I have a few clients who are buying repos and doing them up to rent but none who are trying to sell on. The only properties making any kind of premium at the moment are those in absolute walk in condition in good areas - these types of property are still being fought over by a few buyers.

As for tax, if you buy the property with the intention of doing it up to sell it, you are classed as trading and should register with HMRC as self employed. You have to tell HMRC within 3 months of starting otherwise you will face a £100 fine.


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## Gary-360 (Apr 26, 2008)

Thanks for the info, especially on the tax issue.

Gary


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## mattsbmw (Jul 20, 2008)

As has already been said, planning is the key and not everything has to be really expensive, just make sure it id finished well.

If you are looking at a repo i would plan on renting it out.


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## Gary-360 (Apr 26, 2008)

I'm just back from viewing a recently "fumigated" repo, how the other half live eh....

It looks quite promising but there were about 12 people there at a block viewing.

Good area on a main town outskirts, needing around 20k spent, but the average area price would net a substantial profit. I'm seriously considering submitting and offer for this one


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## lofty (Jun 19, 2007)

You would probably get away without registering as a Business if it was a one off project,although you will still have to pay capital gains on any profit over 10K.Make sure you factor in all the solictors costs for buying and selling and also estate agents cost.Do lots of homework on house prices in that area and get some quotes for the work that needs doing if you are unable to cost it yourself.If the figures stack up then go for it,it can be a good way to make money if you get your sums right.I'm in the process of doing the same thing myself and have done a few in the past.


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## a15cro (May 13, 2008)

I have done a couple of properties a few years ago and did not register as a business; however I am now at Ltd company specialising in Property management & maintenance and I can see the benefits of putting it through the books.

My projects allowed my to buy my current house at a really good deal, rip it to bits and make it our own.

Good luck mate, I got a real buzz from taking a wreck and turning it round.


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## Gary-360 (Apr 26, 2008)

I'm going to sleep on it and make a decision tomorrow. It's an "offers over" price so I'm just not sure how high to go with my own offer to secure it, knowing there is a lot of interest in the property.


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## a15cro (May 13, 2008)

We looked at one that went to sealed bids, loads of interest and viewers. You put your bid in and take a chance. We stuck to our budget and lost out.

remember, when one door closes another opens.


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## Gary-360 (Apr 26, 2008)

Can I ask what profit margin you guys aim for? This would give me a bidding guide.


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## organgrinder (Jan 20, 2008)

lofty said:


> You would probably get away without registering as a Business if it was a one off project,although you will still have to pay capital gains on any profit over 10K.


I can only say it as the law sees it: If the intention is to do it up and sell it, you are trading. If the intention is to do it up, rent it out and treat it as an investment but then you decide to sell, it could be treated under capital gains tax if you have a good reason.

If you do two or more properties and treat them as capital gains tax disposals you will almost certainly be challenged and under the new enquiry rules are unlikely to get a penalty of less than 40% if HMRC consider you to be trading. Remember that if you sell the property you have to do a tax return and put the sale in the capital gains tax pages, even if the gain is less than £10k, so the whole thing becomes visible. If you conceal it and don't do a tax return, the penalty could be up to 100% of the tax due.

I don't want to scare monger but decide what your intention is and do it right.

As for profit, I would be looking for 15% and wouldn't touch it if it looked less than 10%: there are just too many things that can and do go wrong that eat into your budgeted profit. Don't forget to budget for all your legal, estate agent and advertising costs plus the hidden costs such as Stamp Duty and Council Tax.


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