Difficult question to answer. It would really depend on the property you are considering buying. Cost of mortgage, repairs, upgrades, insurance, carrying cost etc. Impossible to say what the cost of any of those would be without having seen the property.
Well that s a bit like asking how long is a piece of string!!! It depends on what type of property you want to start with and how much it will cost in your area. Think about what you need . For example:Property purchase price = ��100,000 with an estimated cost of renovation at ��15,000 - so you need ��115,000. You also need ��5,000 to cover fees, surveys, insurance, planning applications etc and a contingency fund of ��10,000. So that brings it to ��130,000. You then need money to live off until the house is sold or let. You also need to sell the property at a profit, or rent in out at a figure that takes into account loan interest or loss of interest on any capital you have personally laid out.The property market is still not stable, you obviously have no experience and you want the business to provide a profit for 4 people. Having 4 people involved is 3 too many! A venture like this that starts out with just one property is really a venture for one person in order to maximise profit. It is going to be a very small profit when split 4 ways! The only way you will get a property at a low cost is to go to auction - beware, because they aren t always the bargain that they seem. And there are experienced developers out there who are having a tough time of it in today s market. To be honest, I think you are going to struggle to make this venture profitable due to lack of funding and lack of experience.
As a rough guide, you need at least a 25% deposit on the property you re interested in buying. That just covers the mortgage part. On top of that you need funds for renovating and, as Cala says, for planning fees etc. Always include at least a 10% contingency in case of unforeseen problems.If you go to auction, make sure you ve checked the property you re bidding on before the auction. It s too late to discover serious structural problems after you ve bought it. When the hammer comes down, you re in a legally binding contract.Draw up a legally binding agreement between the 4 of you. In any business, there are always disputes between partners and more often than not they re about money. Having an agreement in place can take the heat out of many disputes.The actual amounts that you need will depend on what part of the country you re in and what kind of property you want. A 2 up, 2 down will be a lot cheaper than a bungalow. They re always expensive because of the plot they re on. The experienced developers snap them up quickly.Beware, too, of property investment companies that promise to help get your property business started. Some ask you to pay funds to them and there s a recent case of one where both the partners are facing bankruptcy and investors have lost their money.Draw up a plan for your business so that you all agree on what you re going to do and you think about all aspects of it. Property development is a business, even if you think it s something you ll do in your spare time. Speak to your local Business Link, if you re in the UK. They re very good on helping with plans and also have a lot of knowledge about who to approach for finance and how to do it.Good luck!
