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could i be a property developer at 21

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adampember | 13:23 Wed 13th Jun 2012 | Career Advice
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Im currently 19 and living with parents, i went to college doing carpentry for 3 years while doing a 2 year apprenticeship and gaining qualifications, my father is an experienced plasterer and general builder he covers plastering, brick laying, painting and decorating and landscaping so me and him could do most of the work ourselves, the only problem is he can't put money together with me to start buy the first property as he has alot of payments to make, i have been in a relationship with a girl for over 3 years and within a year or 2 we intend to get engaged, I've worked out that between me and her we could save up around £15,000 in 2 years, i was made redundant from my carpentry job last year and after being out of work for a year i got myself a full time factory job 4 on 4 off which i would keep doing while working on the property on my 4 days off. i would be looking at starting off with smaller cheaper properties getting for example a 60k mortgage for a house worth around 45k in need of some renovation and working my way up to bigger projects, would you say 15k is a realistic amount to start this off and is my dream realistic or not?

Thanks

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Can you get a mortgage for more than the property is valued at in this economic climate?

If I were you I'd get clarity on that point before progressing.

Actually I'm confused, why are you saving £15k, getting a mortgage for £60k to buy a house for £45k???
The only 'flaw' I see is when you say you can save 15k in 2 years. You are young and you are willing to not have fun at all for 2 years? The only time I have ever saved that much money was when I was earning 60k+
But then again I was a massive party animal.
If you are not so fussy as to area then it's reaistic enough to start with a £15k deposit and a lot of hard work. There are endless areas that houses are available for the sort of figures you are talking about and I myself have a few in the valleys in Wales, which are still pretty cheap even now, but whatever you do you will be hard presed to get anything much higher than a 80-85% mortgage. the days of 110% mortgages are well and truly ove ( at least for a while).
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You can get a house in Burnley for 20k. Why not start there. You would only need a 1k deposit as a first time buyer.
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I would get a 60k mortgage on a 45k property to make sure id have enough for the renovation and id save 10 - 20k to make sure i have enough for any unexpected nasty surprises and to have enough to live off and make sure i avoid going into debt,
So hopefully this is a realistic goal and one day i can run this successfully
But which lenders are giving mortgages OTT of the property value?
That's where your plan falls down you won't get a mortgage for more than the property is worth so on a 45k property you might get 40k so you either need to save more or start lower
I'd think carefully about getting a joint mortgage with your girlfriend too. If you were to split up then you'd have a whole set of other problems.
Isn't it the case just now that lenders are looking for a deposit of at least 20%?
I can tell you now, no mortgage company is going to give you 100% of the value of the property, let alone give you £60,000 for a property worth £45,000 (that is how we get in an economic mess last time).

You will probably need to provide about 30% - 40% of the value of a property yourself and you will then be able to get a mortgage for the rest.

If you buy at auction you need to pay a deposit up front, then the rest in 28 days, so you need the money to hand.

I am afraid without some cash yourself you are going to get nowhere.
I saw one of those "Homes under the Hammer" programs on TV recently.

The guy featured on one program bought his first flat at 19 (with help from his dad). Did it up and sold it, then went off to university.

With the money he got from his flat he bought two more flats and did them both up (while at university) and sold them, bought more flats and so it when on.

The guy was still only 28 and in this program he bought a house in London for £375,000, spent about £125,000 on it (so £500,000 in total).

He split the house into 4 flats and the estate agent valued the 4 flats at about £700,000 in total (£200,000 "profit" !).

So you are never too young to start being a property developer.
Wonderfully to the point VHG!!!

I agree with you and think adam is chasing rainbows.

I was teasing him along in the hope that a spot of research would demonstrate to him that it isn't quite as simple as he thinks.......

I'm not being mean adam, but you would do well to pursue this in a little more depth to realise that it is not as straight forward as you seem to think.
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Ok i see your points, if important going to do this i need to start off with smaller, cheaper properties and perhaps save for abit longer. thanks for the advice
An alternative is to advertise... Young man with skills and loads of energy seeks partner with view to shared property development and then if you find someone work out a way of splitting profits with a fair value placed on your labour relative to their higher financial risk

I know someone who did this basing their percentage on approx half the hourly rate of a local builder over the duration ofthe project
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Im* (predictive text)
Burnley. Town house 20,000 pounds
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Just out of interest have you got a link to somewhere on the internet where that house in burnley for 20k is advertised? Thanks
A house on offer for 20K is likely to be in a 'bad area'. No matter how well it was refurbished there'd be a ceiling on its potential value. It might also be difficult to get tenants to stay there.

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