Different people do things for different reasons.  Some people become musicians for the fame, some for the groupies and some because they love playing music.  Some people invest in property for security, some for income and some for vanity.  Others do it because they like playing with buildings.  For me, it’s a combination of reasons.  The finances make sense – some of the richest people in the UK are developers and investors.  But there are rich people who do other things and I don’t try to copy them.  In reality, the real motivation I have for investing in property is that I love messing about with buildings.  I’ve always had a liking for physical objects – I studied engineering at university, and as a child I played endlessly with Lego.  Consequently, I’ve always been a rather hands-on investor, taking a keen interest in the design details that make the difference.  Sometimes this focus holds me back – stopping me concentrating on the numbers and making the deal work.  In the long run though, I think it’s of great benefit as it keeps me interested, and keeps me going through thick and thin.  It gives me a passion that’s about so much more than mere money.

As you know, the UK market has changed dramatically over the last few years.  Gone are the days of reliably, countrywide double digit growth. Gone are the days of quick sales at or above market value.  If, like me, you rely on property for your income, this requires a change of strategy.

So what do you do?  The overseas market is strong in Eastern Europe, the Far East and South America.  But that’s slow and cash hungry.  Further, if you’ve got a hands-on approach then you have to spend a hell of a lot of time away from your friends and family, living out of suitcases at high cost.

One thing that’s become increasingly clear to me over the years is that many of the juicy short-term profits in property are made on development and land transactions, not on the resulting property investments.  Property investment is like riding an escalator: not a lot of effort, you just get on at the bottom and glide slowly up to the top.  Property development is more like climbing a ladder: more effort, more risk, but a much quicker route to the next level of wealth.  It’s forced appreciation taken to its logical conclusion.

So, taking my childish fascination with messing about with buildings combined with my need to acquire some ready cash, I have decided to fulfil a dream to become a ‘proper’ property developer.  One who not only tickles buildings in a rather ‘changing rooms’ style, but someone who instigates the whole exciting construction process, complete with pile drivers, JCBs, tele-loaders and other fun boys toys.

I’ve toyed with this approach before.  My strategy was to go around looking for properties with development potential in estate agents windows or in the paper, and then to go and negotiate with the vendor to buy the property with completion conditional on planning permission.  In more detail, the process works as follows:  I made an initial assessment of the property, based on the agent’s details or by doing a drive by.   I would then go round and have a better look, with the agent.  If there was development potential (normally for flat conversion or building a property in the garden),  I would then agree a purchase.  For example, I looked at a small house which was offered for 145. I agreed to buy it for 146, subject to planning – giving the vendor a small incentive to be patient with an unusual sale process.  I then drew up plans and sent them in for the planning officers to comment on.  If they had come back with a favourable indication (e.g. a strong statement indicating planning consent would be granted if applied for) I would have exchanged, with completion subject to the agreed planning consent actually being given.  In practice, I was repeatedly messed about by planners who would never give me a straight answer.  This continued until I pushed and pushed and pushed.  In the end, despite my having complied with all their stated planning policies, they almost always said ‘no’ on vague and incontestable grounds such as ‘over development’.  This caused no end of problems, as it wasted my money on architects and preparing legal papers.  It also kept vendors hanging on waiting for a deal that never came and it infuriated estate agents.  It wasn’t that it was a bad business strategy.  It was a good strategy, ruined by slow, incompetent, unhelpful and often stupid planning officers.  But ultimately, it didn’t work, so I gave up and took the losses generously handed to me by the bureaucrats we all pay dearly to employ.

I wanted to go back, badly.  But I knew things had to be different this time.  I’d been through the mill once, and it hadn’t worked.  I needed to get myself some decent mentors, so I picked two.  One developer, James Christian homes, based in Birmingham, contacted me on the back of an article in PAN.  Another, Mike Bloxam, operates a well-known firm called Land Projects that specialises in grooming associates to spot sites.  The deal was slightly different between these two, and I was open about working with them both.  They both work in a similar way – signing options on sites that are suitable for development and then getting planning.  James Christian homes will sometimes sell the sites on, and sometimes they will develop themselves.  Land Projects always sell on to developers, so they only act as middlemen.  Land Projects (LPUK) charge for membership, but working with developers is free.

LPUK work in a very formulaic way – they are usually looking for sites made up from a bunch of gardens in suburbia, possibly with a house or two to knock down.  This is called ‘site assembly’. James Christian will take on a wider variety of stuff, including conversions and commercial, so it’s worth keeping them both on board for different types of project.  LPUK have a basic but fairly effective web system for keeping track of projects and corresponding with the head office.  This is bit confusing at first, but after a bit of help from the staff at HQ I found it pretty simple.  My PA and I can share the work on it, but as far as I can tell, only one of us can be logged in at any one time.  James Christian homes don’t have an organised system, so I’m free to catalogue and organise my work in any way I see fit.

I’ve also kept back some sites to do on my own, as a comparison.  It’s not that I mind giving these guys their cut, as I think they do a fair bit for it.  It’s just nice to have a few sites that I can try out my own style on, and form my own view of risks and price levels.

I’ve had two long meetings with the guys from James Christian, and this was very helpful.  I feel that they’re a bit more approachable than LPUK, who I’ve never had the chance to meet.  But the remote help offered by LPUK has been pretty flawless, with letters answered promptly and phone calls dealt with in a professional fashion.  Dealing with a developer directly isn’t as organised, and often you are left chasing for a reply, but they do treat you in a very personal way.

So far I’ve identified about ten different sites in the local area.  I don’t have to drive far – no more than thirty minutes from home.  The sites are pretty easy to find.  I often stumble across suitable properties as I drive about, or when I go looking at deals for non-planning reasons, I sometimes notice a planning angle on the property I’m looking at or its neighbours.  These have varied from single dwellings with large gardens, through run down commercial properties, to larger sites made up of many houses, each with significant gardens.

I continued to work with LPUK and James Christian homes and also under my own name, contacting the owners of houses and also various different organisations like disused petrol stations, car dealerships, etc. When following this method it quickly became apparent that there were advantages and disadvantages to each approach. The system at Land Projects UK was quite well organised. Their web system, while it takes a bit of getting used to, is actually quite effective. It allows you to organise quite a large number of property projects and with a fairly low administrative load, although it does take a long time to write a letter then to all the owners if you are trying to get a large site together. The web system is designed to co-ordinate and organise the responses from vendors as well as to help plan and organise the marketing. Overall, you end up with a fairly good level of organisation of the projects you are undertaking.  This removes the need to have your own independent administrative system. I found going with Land Projects UK was a natural choice for projects where a large number of owners were involved. The property projects with a single large site were done initially using the contact number from the Birmingham developers, but after a while it became apparent that while the Land Projects UK staff were reasonably well set up and organised to take inquiries from members of the public regarding the letters that they sent out. The same was not true with the developers in Birmingham, and people complained about getting recorded messages.  After a while, I decided to use my own name for a smaller single sites – with the potential to sign an option to sell on, or introduce the developers later on. As a result I would be able to be freed up from relying on somebody else’s administrative system, because this system did not seem to be any better than I could organise myself. So I carried on in my own name for all the smaller sites with one or two owners, and used Land Projects UK for the larger sites.

I looked at a couple of locations and on the advice of both the developers and Land Projects UK, was able to identify a small number of sites to pursue.  I’ve been advised to avoid spreading myself too thinly.  The reason for this is that if you attempt to work on too many sites, you do not see any of the projects through to fruition.  Therefore, you do not get any success, and that is what counts. This does not sit well with my natural impatience!  But success is not about getting enquires – it is about seeing the project through to the end.  It can be a long slow process, involving lots of difficult negotiations with a number of vendors. It is very important to have the commitment to follow through each specific site, rather than just the commitment to follow-through the entire system. The key to success is making sure that you take each of the steps, and deliver the project to a profitable conclusion.  When you hit a small snag it is very tempting to leave a site and not make that one extra call or write that one extra letter.  By comparison the ‘next big thing’ seems very tempting.  But that is not how success is built in this game.

The sites I chose to start with were centred around a small village in mid Bedfordshire. I marketed in three different names to this village, selecting different ‘brands’ for three streets, each of which had the potential for backland developments. Having driven through the village, I had noticed that there were a number of sites in the local area where people had developed on backland (i.e. put houses behind existing houses). There was one specific site on the main road into the village where a number of houses have been a large executive style homes had been put at the rear of a street of properties with very long thin gardens – someone had beaten me to it! The layout of the development of the village was that on the roads leading up to it, there are ribbon-style developments with very long gardens facing on to open countryside.  In many cases planners don’t like back land developments when the garden to be developed faces open countryside. They prefer to keep the street scene as it is, with the backland kept clear for a view on to the fields. I can see why they do this, and in some ways backland sites do look a little odd.  However, it is a good way of making sure that the village boundary does not spread, whilst still allowing development. However it is often easier to get permission for backland development in a dense urban area, with sites backing on to other gardens or other developments such as schools or roads. The development potential in this village was obviously very high because there was a planning precedent for backland development.  I selected different streets in the village, and marketed to them in each of the 3 company names. I received inquiries from two streets in particular where there was a possibility of some development. The first one was a street of mixed tenure properties and there were number of housing association properties. People who read my articles regularly will understand my deep distaste for anything to do with the public sector and housing associations are no exception. The housing association in this local area is arrogant and they are notoriously difficult to deal with in a number of different ways. I know this from personal experience, as my disabled nan, was not allowed to swap her flat for a ground floor flat in the same building. This was despite the gentleman in the ground floor flat being perfectly willing to swap with my 85-year-old nan.  Sadly the po-faced bureaucrats of the housing association were unwilling to allow my nan to live out her days in the ground floor flat and she spend the last year or so of her life a virtual prisoner in her own home as a result.  Consequently, I didn’t hold out any hope for the housing association being reasonable or sensible when it comes to planning. I wrote to them nevertheless, to try and establish whether or not it was possible to buy some of the backland gardens from their properties.  Needless to say, I have not received a reply.  If a developer came up and offered you several tens of thousand pounds, you would get organised enough to write back – but not so in the public sector.  When they need more money, they can just tax it!  I’ve recently been reading ‘The Ragged-Trousered Philanthropists’ (a classic of socialist literature), and the whole book is based on the premise that the state can organise enterprise more efficiently and fairly than the private sector.  I can only assume that the author never tried to sort anything out with his local council.

So as a result of the necessity to involve the public sector, this street is a rather tricky development.  But that’s not the only complexity.  There are potentially three or four adjacent properties that might make a small development site, although access is a little tricky.  It is going to be difficult to get on to the site and it is not really worth buying a property to pull down to create an access if the site is rather small. The alternative is to try and use a shared drive from on of the existing properties to get access to the backland. Unfortunately the drives are quite narrow and that is controversial with the local residents and with the planners.  On top of this, I couldn’t get easy agreement from all the vendors I needed – so I decided to win the war and not the battle, and I walked away.

On another road in the same village there were larger properties backing on to open fields. Apparently there is a covenant which restricts development.  However, I have been told that it is not something that which should trouble me unduly. It remains to be seen whether this is actually the case! I had an enquiry in response to my letter from a lady on this road.  She was certainly in no desperate hurry to sell, but she had received an offer from another developer and she was interested. Apparently, her neighbours were also interested too, but I never managed to get in touch with them. This site is about150 meters deep and the gardens are perhaps 15 to 20 meters wide. This is an absolutely classic backland site. There is no doubt that they will be profitable to develop if the owners are sensible about the price that they are looking for. Planning permission looks pretty good and overall it is just a matter of assembling this site and making sure that we can get enough owners to make it viable. But at the moment we have only got one person who is definitely interested.  Realistically we need about two to three owners to really make things work, although a slightly less appealing development could be done on one site. It is a long way off at the moment, principally due to the vendor’s lack of urgency and my inability to contact the neighbours.  However from a planning point of view, this is probably the most promising site that I have had the opportunity to deal with. The houses are going to be worth about 400,000 to 500,000 pounds when they are built. The owners have been offered somewhere around 200,000 pounds for their land by the enemy developers, so I would imagine that the sites are going to be available for that kind of money. Viability is all about density of development.  You’ve got to be able to stick enough on a site to make it worth buying in the first place.  Access restrictions make a big difference to this, as they restrict the number of properties you can put on a site.  If you’re looking at more than a handful, you need a proper road going up, and that means knocking down a house to make space – which is clearly expensive.  That can make the difference between this site being viable at the owners’ asking price and it being impossible on the grounds of cost. I am not holding my breath for this one because I do not think there is any urgency on the part of the vendor that approached me originally. This is probably a back-burner project – it might come off in a few years.

I also approached a number of smaller sites in the village. In one case I was told that the site had been tried previously by three or four developers, but it had been impossible to get agreement on it from all the vendors.  I dropped that one like a hot potato. One of the potential vendors in that area was interested in selling her house. However she had received a very, very strong offer in the past from a developer with a very ambitious scheme. The advice I’d received was always to look for relatively unambitious schemes with a high chance of success at planning, and the ability to offer a return to vendors. That gives you a fairly high chance of a successful project, and it also means that there is a potential to upgrade the planning permission later on. If the vendor is particularly aware of the potential to upgrade planning permission, they make ask for an additional sum if the upgrade is successful.  However, in this situation I think the vendor had been given too strong an offer in the past, for a project that had a very low chance of success. If the offer comes from a house builder as opposed to a lazy planning parasite such as myself, then obviously there are fewer snouts in the trough.  This can make a marginal project viable.  In this case, the other developer might have a sensible project, but my gut feeling is not.  The end result is a vendor with a very optimistic view of the value of her garden – and this view isn’t going to be changed by my arguments.  A nice site, but I’m pretty sure it won’t be going anywhere.

There were over a couple of other sites in the village that I got some joy from. One was a large bungalow on a large plot.  There had been a lot of development in the neighbouring area.  . The plot had the potential for a plot at the rear.  There was a possibility of rear access from the street behind, and it also had the potential for access around the side of the bungalow as a last resort.  The back garden had space for perhaps a two bedroom bungalow. This would have taken quite a bit of garden off the main house and would have led to a situation where the garden space was being sacrificed for a fairly small development. I spoke to the vendors about this, and they were a little reluctant to consider selling the garden.  This was particularly the case bearing in mind the amount of money involved was necessarily not particularly high, as only one small bungalow was at stake. What was however more appealing was the prospect of buying the whole site, pulling down the bungalow and putting up quite a dense development. Next door to the property was a small 80’s cul-de-sac.  This had probably been built using a knock-down and rebuild strategy.  Obviously planning law and practice changes a fair bit in 20 years, but there was definitely a potential for knock down and rebuild in this area. The key to making this site work was getting the property at the right price. This would perhaps been an ideal property to buy and take a planning risk on, but the property was off market and the vendors were not in any hurry to sell.  They wanted more profit in a longer term plan.  At the end of the day, the site was just simply too much money to make the development viable.

I moved on from the village, and started work in a larger town nearby.  This used to be a separate community, but was now no more than a suburb of the nearby major town.  I started in a long road, built up both sides with a mix of semis, detached houses and commercial units.  Most was late Victorian but with a hodge-podge of later stuff throw in for good measure. You had the things like butchers shops, in-fill properties, small new developments, and the odd backland site. There was clearly been a lot of planning potential in this area, and some of it had been exploited in the past – so I knew I was on to a good thing. There was a great possibility of getting some good sites. The limitation was principally that the gardens were not very deep. Despite this, a number of properties had small backland developments.  There was therefore clearly some potential, so I started writing to the street. It is expensive to post out a large number of letters, and also it is rather impersonal.  If you deliver by hand you get to talk to people and find out things from them. I had quite a few enquires from this street as a result of the letters.  However, it always amazes me how few enquires you do get.  If someone wrote to me and asked me if I was interested in selling my house for a substantial sum over market value, I would certainly write back to them, but in practice the response rate from a letter is still only somewhere around 1% to 5%, which in my view is pretty weak. You can improve this response rate by writing back to people a week or so after the first letter.  Once they have had two or three letters they realise that it is not just a random mail shot and the response rate can go up significantly. Furthermore when you speak to people at their homes after they have enquired, you can also get to speak to their neighbours.  You also meet people on the street, and as a last resort there is nothing wrong with door-knocking.  People can always tell you that they are not interested and they frequently do.

With a lot of hard work and a lot of time spent going to see different sites, I eventually got to a situation where I had a few viable sites. The first one was a pair of semi-detached properties, which were up for sale. To the rear of the adjacent property was a car park which served a number of flats and an access road into this potential development site was possible. The disadvantage would be that the two properties would have to be purchased together, and the resulting development plot would be rather small. That meant that a large amount of cash would have to go into the deal in order to get a small development site.  This is not the right way round! However, the site was reasonable contained and there was a significant chance of planning permission, so I persevered. One of the houses was on the open market. One of the houses was not up for sale but the owner was interested in selling. There is a lot of history behind the site, because one of the vendors had imposed a noise-abatement order on the other.  The neighbouring teenagers were the original ASBO kids (allegedly!) and there was lot of bad blood in the situation. The guy had basically been driven out of his house by antisocial behaviour so it was not a situation you really would want to get involved in. You would need to get rid of the neighbours as part of the deal, which meant buying the whole house and not just the land.  A further complication was that access to the site was possible only through the car park of a neighbouring block of flats.  The owner of the block was a solicitor, who knew he had a ransom and wasn’t going to give it up easily. The site is currently on hold because the one of the pair of semis that was on the open market has been sold.  I am waiting for the new owners to get settled in before I approach them.

On this same street I had an enquiry from an Asian man who is looking to sell his property.  This had a large double garage to the side of the house, occupying a site that was clearly left as a house-sized gap when the street was built. This chap had already had an enquiry from a builder who wanted to buy the site to develop. I thought planning permission was a dead cert, and there was additionally a possibility of getting some land to the rear of the property which would be accessed through an archway between the existing house and the new one.  This would have allowed the construction of a bungalow or garage in the existing back garden. But again the negotiations in this particular case broke down because the vendor just simply wanted too much money for the plot. I ran through the numbers with him and I tried to come down to a reasonable price – but if you are competing with a builder who is going to do the development himself, you’re going to lose.  The other guy can cut his margins a lot finer than you can afford to, so you really cannot compete on price.

The final site that I discovered down this road was a chain of three properties with a rear access across a fourth person’s land.  The access property was located on a side street. A bungalow on the gardens of the three properties should be a fairly reliable planning prospect.  However, that is a lot of people to deal with for a bungalow.  As an alternative, there is a chance of a slightly more intensive development. It just depends on how things go at planning. One of the potential vendors has the house on the market but they are looking for good money. The house is decorated in a very particular style and it is unlikely to be quick property to sell. This is the middle plot.  It would therefore make a good buy at the right price, and there’s unlikely to be much competition.  The lady to the right of him is potentially interested in selling her house at the right price but she would not sell the garden on its own.  The gentleman to the left of him has a long garden which he is not interested in maintaining, so he’s very keen. Good news!  Finally, the rear assess is controlled from a property on another street. Currently, it is one of the only detached properties in the street.  They were interested in doing business but they are not up for sharing the drive – so they would have to either sell the drive to me or sell the house outright.  If they did sell the whole house, there would be a significant possibility of converting the house to a semi, as well as doing the bungalow. This would clearly be more attractive.  I am waiting to see how the negotiations with the owners progress as regards price, so that I can see if the development is likely to be viable. I am fairly confident of planning permission for this and I am particularly hopeful for doing the detached to-semi conversion.  I do not think that would be controversial at all.

Just to look again at the differences between the two schemes I took part in.  With Land Projects UK, the scheme seems to be relatively effective, quite easy to follow and anybody with a basic knowledge of property can start making progress on this scheme relatively quickly. It does require a bit of effort and the sundry costs are not inconsiderable – for example you have to print a lot of letters and do quite a few miles going back and fourth visiting owners. So you need to be prepared to put some money aside every month to run these projects. However the gains are very low risk and there is the potential to make tens of thousands of pounds or possibly even hundreds of thousands of pounds on the individual deals. So the rewards are there, with very high levels of profit available for those who pursue the system diligently.  People need to negotiate good deals and ultimately end up in a situation where they control attractive development sites with fairly simple planning. I think that if you are the kind of property investor or trader or developer who would like to have a portion of projects which are cheap to run but potentially very profitable in the pipeline kit the LPUK system this is a great scheme for you to use. Although I am at a relatively early stage, I can see the merits of working with the system. The cut they take from successful development sites is really quite small. Their involvement time wise is quite low and they are therefore not risking very much in each individual site, so it makes sense from their point of view.  They leave a lot in the pot for you, taking only 20% cut.  It is something I will be continuing to follow for quite some time. It is not a system in which you can expect to work with a minimal time investment. It does take commitment. It does take quite a long time to see success, and you should expect a learning curve.  It’s not a get-rich quick scheme, and you must expect to have many setbacks before you get a project that goes through and the costs swell are not something you could ignore. You are not talking about the equivalent of a deposit on a house, but you are talking about 100 or so pounds a month in general expenses. Overall if you are the kind of person who wants to make some pretty impressive profit and you are prepared to spend a little bit of money with the risk getting nothing back in return and you are prepared to put some graft in, then Land Projects UK is a great system in almost all areas of the country. I thoroughly recommend joining the scheme and I hope that people who do so have great success

Working with a developer directly is a different kettle of fish.  You can’t expect them to be as organised or systematised, and you should expect to run your own administration and customer contact.  However, on the plus side, they probably won’t be dealing with many sourcing agents, so they may be willing to give you face-to-face assistance and visit sites on a regular basis.  This can be invaluable, especially when you’re starting out.  On the flip side, a developer is going to be looking to cut you down on price.  If you trust them, you can introduce them to sites and wait for a fee.  However, with this much money at stake I think you’re far better signing up the option in your own name and then selling it on.  You should still be able to develop a good business relationship, but you’re less likely to get shafted.  The downside is that you have to bear your own legal fees and you may be asked to find a little option money, too.  There’s also the chance to take things a stage further and apply for planning permission yourself.  But that’s another story!

Looking at the social side of this (in case you care): in my opinion this is exactly the kind of development that the UK needs.  These little infill projects are a better way to house the nation that sprawl built on green fields by massive housebuilders. These small scale developments fit in well with communities and allow people to use existing facilities like schools and shops. In many cases they really add to the neighbourhood.  I’m well aware that some individual sites might be a little controversial, but in the grand scheme of things, I think there is a strong social benefit to this kind of work.  I think investors that follow this system will not only be lining their own pocket but also be making a contribution to the nation. I always like to be proud of what I do – and I think the people who follow this approach will be very proud of their work.

Overall, you need to take a look at yourself and your business needs before starting on this kind of project.  It really is softly-softly catchy monkey.  You have to be patient and persistent at working through the problems on individual projects.  It doesn’t matter if you’re the world’s best deal closer, you’ve got to be patient whilst you bring everyone on board.  Some of the sellers may be hard to contact, some of them may not speak English, and others will frequently be plain stupid or extremely rude.  Once you’ve dealt with the awkward vendors, you’ve then got the even more awkward planners to deal with.  At this point I really start to lose my patience.  I’ve got strong and well thought out views about how housing should be delivered, and I am enraged by planners who publicly state the case for sustainable, low-cost housing, but then in private refuse every such application they possibly can.  You’ve got to be able to cope with their two-faced demands, along with their vagueness, torturously slow administration and complete inability to be pragmatic.  If you can’t cope with useless bureaucrats, you’ll struggle with this business model.

The bottom line for me is that I simply don’t have the patience for this kind of work.  It’s great stuff, interesting and lucrative.  But I’m far to flighty to cope with gently teasing a site-assembly job through to conclusion.  I’m still going to look out for planning projects, and I might do the odd one if they really jump out at me.  But in the main, I intend to wait until I buy properties into my ordinary portfolio, and then look for a planning angle with a cool head when I’ve got all the time in the world.

For others, especially those with more patience than me (which is just about everyone), this approach is well worth considering.  And one day, I swear, I’ll eventually get a house built, no matter how much the planners kick and squeal and try to stop me from building homes for people.

Check out Land Projects at http://www.landprojectsuk.net/ or call them on 01903 770076.

James Christian Homes can be reached on 0121 384 6622.