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  • Refurbish/Develop

    Need advice: buying land & building a house

    Hi Developers!

    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.

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    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.

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    Hi Adribadri,

    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.

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