How does your garden grow?

Buying a property with ample space to build on could provide a future cash crop. Christopher Browne investigates

Mark Garner was a winner on the sports-car circuit, a successful commodities trader and is the current owner of 47 buy-to-let properties. But despite such an impressive track record, the young entrepreneur admits he doesn't always get it right. "I've seen bargain properties just waiting to be snapped up and failed to act on them," he says.

Mark Garner was a winner on the sports-car circuit, a successful commodities trader and is the current owner of 47 buy-to-let properties. But despite such an impressive track record, the young entrepreneur admits he doesn't always get it right. "I've seen bargain properties just waiting to be snapped up and failed to act on them," he says.

Garner gave a peerless performance, however, when he bought two lots at a property auction in Maidstone, Kent. One was a row of three shops with two overhead flats; the other an end-of-terrace, six-bedroom house with a sizeable garden. Not only did he pay well below market price for the pair, but used one to finance the other.

The house, which was expected to fetch £180,000 from the highest bidder, he bought for £150,000, while the shops and flats went for £140,000. "Apart from my two 10 per cent deposits and a short period of refurbishment on the house, the two lots cost me nothing as I used the monthly rental income from the shops to finance my mortgage borrowings," he says.

Within a few months Garner had converted the house, which is near Kent Institute of Art & Design, into an HMO (house in multiple occupation) and let it out to eight art students. Then he had another investment idea. "Behind the house was a large expanse of grass and flower-beds that had obviously not been tended for several years. I suddenly realised it was an ideal place to build."

The former racing driver, who retired from the circuit after a near-fatal crash, asked an architect to design two semi-detached, chalet-style bungalows, each with an extra storey and a dormer window, to be built behind the house. "I consulted the neighbours and they were perfectly happy with the idea, particularly as the close had been neglected for a few years and they realised any new-build would smarten it up and increase the value," he says.

Garner then sought planning permission from his local authority, Maidstone borough council. After considering the scheme, the council gave him the go-ahead. So he recruited a recommended firm of local builders to start work on the dream project. Once again, it was self-financing as hefunded the loan for the building work with rent from his HMO.

"Property investors should always try to use their own assets for gearing as it increases their cash-flow, is easier than approaching a new lender and means you'll invariably get a lower interest rate on your loan. And sometimes it's a good idea to buy more than one property at a time, so one project can finance another," says Garner.

"Buying a house with a plot to build on is one of the best things an investor can do at the moment, particularly as local councils have been relaxing the rules about building projects after the Government's latest regional development plans," says the entrepreneur, whose properties are neatly clustered around the key stations of Kent's high-speed Channel Tunnel link.

A spokesman for the Office of the Deputy Prime Minister, which encourages affordable new-build projects in areas of high demand, says: "Developers should always look at brownfield sites first when they build, though putting up houses or bungalows in gardens can also work very well if they fit in with the local authority's development plans."

Now Mark is on the look-out for some more garden plots, though he is currently holding rather than adding to his portfolio of buy-to-lets. "The property market's so hot at the moment that it's not worth paying thehigh market price of a straightforward buy-to-let that may not yield morethan four per cent. Investors need to find unique angles such as buying in asecondary location with good growth potential," says the investor who runsLettingzone.com, a website for landlords seeking tenants.

Now that his two bungalows are nearly finished, Mark aims to sell them as a pair for £430,000, "not bad considering the building plot was valued at £160,000 before I started the development work," he says. This time however he's putting pleasure before business, using the profits of the sale to buy himself a 1930s five-bedroom detached house - with a large garden, of course.