How much profit does developer look to make on terraced house?

Discussion in 'General Property Investment Discussion' started by Mandy W, Jan 30, 2019.

  1. Mandy W

    Mandy W New Member

    Hello there,

    I'm a bit of newbie so hope I can benefit from some of your collective experience. At auction in London on a 3 bed terraced house which needs doing up, but not structurally, how much profit would a developer need to make once purchase price, stamp duty, refurb etc are factored in, and capital gains? Would anyone do work like that for profit of 40k or less? Or would they be wanting, generally, to make more to cover contingencies like a slow market etc? Any thoughts very much appreciated!!! Thank you.
     
  2. FWL

    FWL Member

    Hi @Mandy W

    Welcome to the forum.

    It is all relative - how much is this property going for and how much is the extra work expected to cost?
     
  3. Mandy W

    Mandy W New Member

    Hello, thanks so much for replying, I really appreciate it. The property guide price is 460 and I would obviously expect it to go for much more than that - in the street 'done' houses go for 690 - well, they did 6 months ago and obviously the market is a bit weird - and I guess, 3 bed house, not massive proportions, structurally sold but needs new kitchen, bathroom, decorating, floors stripped etc, work could be done if keenly priced for 30? So those are the sort of sums I think....
     
  4. diyhelp

    diyhelp Active Member

    I would be surprised if you could do it all in for £30k? However, even if you said £50k that still leaves a potential gross profit of £180k, circa 35% gross profit. Even if the market has softened a little, I still think there is some decent margin at those figures.

    On the flip side of the coin, the guide price may have also softened so your all in cost might be a fair bit lower. Interest!

    How would you redevelop the property - contractors or DIY?
     
  5. I think anywhere in the region of 30% potential profit gives you enough headroom incase of unexpected issues. Anything less and you might struggle to cover yourself.
     
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