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Thinking about investing in property, any thoughts?

R75MM

Hi Folks,

I found a property on sale for around 100k that's got full planning permission to convert to a 2 bed duplex. I own my own house and have a small mortgage that I've overpaid on with a small bit of savings.

I would love to get the opportunity to invest in this property with a view to selling when complete -no changes to existing planning permission.

With only 35k cash available; and after doing as much due diligence as possible how would one proceed or is something like this out of reach for a novice?

Thanks,

-R7

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Yellow_Fern

I think converting it to a duplex would be expensive? Are you aware of the building regulations required to do this?

R75MM

https://boards.ie/discussion/comment/117626191#Comment_117626191

Hi,

No, I don't, however I would obviously get a architect and pay someone who knows about building regulations if I went sale agreed. I have no idea how much it would cost but imagine say 100k on top of the 100k purchase price.

So, flipping that would then mean me selling this 2 bed duplex in Dublin which I would hope would sell for 230k within 6-12 months.

I guess my question is, if something like that out of my reach given I only have 30k? Where would I raise 200k to finance the above (keeping 30k contingency)?

I do know that the above is very simplistic as I'm ignoring capital gains tax, stamp duty etc. estate agent fees etc etc but even to break even would still be a"win" for a first timer.

You have to start somewhere.

DubCount

OP. This sounds like a terrible idea to me.

You seem to have no idea what work is required to do the conversion. Maybe its 100k, maybe its 80k, maybe is 150k - you simply dont know. Getting an architect involved after going sale agreed is simply too late. You are expecting a 30k profit out of this risky venture (excluding legal fees and tax etc.). When the works start, something could be uncovered which could eat up all your profit, and more (you have no contingency if things dont go to plan). What happens if property prices fall while you are doing this conversion?

For financing, I cant see a bank or anyone else financing this. You have no track record in the property conversion business, and dont seem to be bringing any specific expert knowledge to a venture with narrow profit margin. Maybe you have sufficient equity in your own home, but I cant see any bank allowing you to re-mortgage for this.

I admire anyone trying to take a risk to create some wealth for themselves, but this one looks like its more likely to cost money than make money. "Homes under the Hammer" makes property renovation look like an easy business. In my view its not. My Opinion - stay well away.

JeffKenna

I'd say you would have to be a builder yourself to even consider this.

R75MM

https://boards.ie/discussion/comment/117626944#Comment_117626944

Thanks a million, and that's kind of why I posted here.

1. When you go sale agreed it's too late?

Why? When you go sale agreed - correct me here please - that's when I get structural engineer, QS, architect etc. At this point I do all the due diligence. Right? So, I spend 3k at this point only to find out there's some unknown issue. I then walk away returning my deposit, right?

The most lightly outcome here is what all of the above due diligence highlights a very narrow profit margin and - perhaps too much risk.

Or, it's actually looking good. Protential value and cost are at a comfortable levels.

I fully accept I am not bringing anything to the table only guts and a good sense of keeping track of money and projects.

Open to more comments.

DubCount

To go sale agreed, you need financing in place. The selling estate agent will be looking for proof of funds or proof of mortgage before going sale agreed. To get financing in place, its going to need (at a minimum) a costed business plan on how this venture is going to work.

Put yourself in the shoes of your bank manager. Would you approve a mortgage and let your customer start into this venture with a promise to get some professional advise after they have gone sale agreed.

R75MM

https://boards.ie/discussion/comment/117627348#Comment_117627348

Absolutely hear what your saying, however when I purchased my house I was bidding against someone who needed to sell their house in order to buy the house I was bidding on. They -as I - had enough for the deposit only pending sale of their existing home. I probably got this house as I had mortgage pre-approval so perhaps I was considered a cash buyer. (First time buyer)

In terms of this investment, are you saying that due to the nature of the investment and/or current market conditions I basically need cash in hand (so too speak). I guess your right, it makes sense but just want to clarify.

In the interest of full clarity this is what I was looking at:

https://www.myhome.ie/residential/brochure/2a-chamberlain-court-richmond-avenue-dublin-3-d03-dy93/4510333

Not viewed in person or anything. I was just interested to see if something LIKE THIS would be a safe starter for a newbie.

[Deleted User]

I would assume this will go for way more than asking, to someone who knows exactly what they are doing.

Imo