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Iron sharpens Iron: so go hard on me i can take it
So this part of real estate is completely new to me, I am based in London where my next door neighbors owns two houses where the space between them is completely vacant, its more than enough to build a large terraced house.
They are essentially wealth rich but cash poor. I really want to purchase this land off them, i was considering an owner finance deal. Essentially i could pay them the rent that the house makes for the next 10 to 15 years = £360,000 for the plot
I would also be able to borrow against the rental income with the bank as it forms part of my own income.
I also know an investor who has alot of spare cash but no where to put it, i want to set up a deal where he pays to have the house built but he keeps 50% of the value of the house. but i retain the future rents?
The value of the house as of todays date would be circa £1,000,000 of course this will go down significantly in a future crash.
Can you guys tell me if this is a good way of structuring things. I am not sure what the cost to build a house would be I have about £200,000 in my own money i can draw on but i do have other investments i have my eye on.
If there is a better way of doing this please tell me, i know you guys are the experts.
Honestly this deal has all the ingredients to be a massive c**k up that you and your family could potentially never recover from.
But it won’t get to that stage because you have 2 massive obstacles;
Why would your neighbour give you the land for nothing, for the promise of future rent from a house the build of which someone else finances?
Why would your cash rich investor lend you the money for the build with 0 experience and not even owning the land. Rich people tend to be clever.
Honestly start small with the money that you have, do some 1-2 bed flats and build from there. And don’t wait for a global economic collapse where you and only you can pick up properties for nothing.
Just to update you my neighbour is open to selling the land, and owner financing it on monthly/yearly installments. Total cost 240k is on offer value of the house when built is at least 850k. Cost to build approximately 200-300k.
Also the investor I was talking about visited me yesterday offering to build the house on the land using a main contractor for a share in the house. I will most likely look to get a development loan and use my own contractor to do the work.
Well done. Good luck with it.