Property Trading – Financing for the first timeMake Text Bigger
There are a couple of old threads (a few years old) on this already but welcome people views / ideas / help as things in the world have changed since then!
I am pretty new to the property world and currently I have one BTL property with an okay return at 7.1%. I have got the bug and would really like to venture into Buy to Sell alongside my current BTL. I have made a declaration of trust (using recommendation from this site) with my wife so the tax side on the BTL is in hand.
1) Remortgage own property and release £25k for conversion of property (have over £175k equity currently – unfortunately not enough equity in BTL). I have an eye on a property at auction which already has PP to convert a building to a 2 bedroom house (detached). I have a number of good contacts with a variety of trades so sorted on that front.
2) Bridging loan for remainder, sell for a profit (reckoning £40k, obviously depending on what it sells at auction for and contingencny fund)
1) Remortgage own property and release £100k for conversion of property (to reduce amount borrowed on bridging loan).
2) Bridging loan for remainder. Sell for profit!
Option 2 appeals a little more as the costs of bridging will be less = more profit. However, it worries me slightly by increasing the mortgage on own property and would I be able to pay back the monies once I’ve sold the converted property (unlimited overpayments on mortgage) or will the bank be a bit miffed and potentially blacklist me for future borrowing?
Do I form a company or not for my first one?
I’ve got to the point I really want to do this, have wanted to do this for almost 20 years and more importantly have the full backing of my wife. I need to just bite the bullet; I know there are a lot of very successful traders / developers out there and I would really welcome any advice about potential pitfalls, opinions and recommendations before I take the plunge.
Thanks for taking your own time to read this and hopefully give me some tips to start my journey!
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