Buying a run down house to renovate
Discussion
Mr_J said:
Sage advice..."don't be put off by major issues such as subsidence, they are easily fixed"... They can be fixed, with a reasonable amount of money but then you're selling something which will almost certainly be valued less than one which hasn't tried to sink into the ground! I do this as part of my business.
Most amateurs are lucky to break even, that’s even if they can get the properties as with people like me being cash buyers I can usually buy whatever I want before they can.
Money in and out is almost always longer than you’ll expect and you can lose your shirt very very easily when you come across stuff you don’t know about.
Up north I look to usually make about £80k per property-£40k in wages for my time and £40k ROI. You need a decent cash reserve of around £450k up here to make it worthwhile.
Market knowledge is key.
Most amateurs are lucky to break even, that’s even if they can get the properties as with people like me being cash buyers I can usually buy whatever I want before they can.
Money in and out is almost always longer than you’ll expect and you can lose your shirt very very easily when you come across stuff you don’t know about.
Up north I look to usually make about £80k per property-£40k in wages for my time and £40k ROI. You need a decent cash reserve of around £450k up here to make it worthwhile.
Market knowledge is key.
Pflanzgarten said:
I do this as part of my business.
Most amateurs are lucky to break even, that’s even if they can get the properties as with people like me being cash buyers I can usually buy whatever I want before they can.
Money in and out is almost always longer than you’ll expect and you can lose your shirt very very easily when you come across stuff you don’t know about.
Up north I look to usually make about £80k per property-£40k in wages for my time and £40k ROI. You need a decent cash reserve of around £450k up here to make it worthwhile.
Market knowledge is key.
That's a pretty punchy return on that size of deal in today's market. What are you doing exactly?Most amateurs are lucky to break even, that’s even if they can get the properties as with people like me being cash buyers I can usually buy whatever I want before they can.
Money in and out is almost always longer than you’ll expect and you can lose your shirt very very easily when you come across stuff you don’t know about.
Up north I look to usually make about £80k per property-£40k in wages for my time and £40k ROI. You need a decent cash reserve of around £450k up here to make it worthwhile.
Market knowledge is key.
Thanks all.
Just to close off some things...
Those saying work more / harder in my day job. I am retired, ran my own business for many years so I am no stranger to hard work.
As for the Mrs having "good ideas" and not needing to do the work, yeah I get that. Although she is not shy of hard work I doubt she will be manning the table saw.. painting / admin etc more up her street.
We would be buying cash and not living in it.
Cant read the telegraph article, paywall.
Our budget would be for a 2 up 2 down terrace in the local area.
We are away from next month for a while, so I am going to mull it over. Might put some feelers out just in case something comes up.
Then consider it when we get back depending if we are in nuclear war / financial armageddon etc.
Just to close off some things...
Those saying work more / harder in my day job. I am retired, ran my own business for many years so I am no stranger to hard work.
As for the Mrs having "good ideas" and not needing to do the work, yeah I get that. Although she is not shy of hard work I doubt she will be manning the table saw.. painting / admin etc more up her street.
We would be buying cash and not living in it.
Cant read the telegraph article, paywall.
Our budget would be for a 2 up 2 down terrace in the local area.
We are away from next month for a while, so I am going to mull it over. Might put some feelers out just in case something comes up.
Then consider it when we get back depending if we are in nuclear war / financial armageddon etc.
Shelsleyf2 said:
You’d need to have £550,000 burning a hold for at least a year to start with.At 4% that’s £22,000.
£12,000 SDLT?
You’re at £35,000 already.
I can imagine you’d spend £250,000 on materials there before you even start with unknowns like knackered floors or roof etc.
Possible gain, and then 28% scooped off in CGT. 23/24 CGT allowance is basically zero.
I don’t know how people can make this work as a business. They must have lots of cash sitting around.
That probably worked while interest rates were zero and property was strong.
But now cash can earn a decent yield and property is weak?
Not the time to be entering this business?
We’ve done it three times, trick is it being your main property and move in as opposed to a second purchase, buying a tired place in a great area. Needs to be solid properties that are aesthetically tired but still quite expensive, but where buyers wouldn’t have liquidity on top to invest £80-100k in renovating.
2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
There's someone in our area who was buying up old people's detached bungalows that hadn't been touched for 30-40 years.
Getting them for typically £275K, doing a flash looking but not high-end costwise (Howdens kitchen etc) refurb and then selling for £600-£650K.
Haven't seen one he's done for a while though, and those untouched bunglalows are being going for mid-£400's now.
I've seen a few refurbed houses locally being offered at, say, £350K and the previous sold price 12mths ago was £275K. Unless it's being done by a builder on the side and he's nicking materials from other jobs I don't see how these make sense.
Getting them for typically £275K, doing a flash looking but not high-end costwise (Howdens kitchen etc) refurb and then selling for £600-£650K.
Haven't seen one he's done for a while though, and those untouched bunglalows are being going for mid-£400's now.
I've seen a few refurbed houses locally being offered at, say, £350K and the previous sold price 12mths ago was £275K. Unless it's being done by a builder on the side and he's nicking materials from other jobs I don't see how these make sense.
Sheepshanks said:
There's someone in our area who was buying up old people's detached bungalows that hadn't been touched for 30-40 years.
Getting them for typically £275K, doing a flash looking but not high-end costwise (Howdens kitchen etc) refurb and then selling for £600-£650K.
Haven't seen one he's done for a while though, and those untouched bunglalows are being going for mid-£400's now.
I've seen a few refurbed houses locally being offered at, say, £350K and the previous sold price 12mths ago was £275K. Unless it's being done by a builder on the side and he's nicking materials from other jobs I don't see how these make sense.
Depends if it’s paint and carpets and a cheap bathroom and kitchen.Getting them for typically £275K, doing a flash looking but not high-end costwise (Howdens kitchen etc) refurb and then selling for £600-£650K.
Haven't seen one he's done for a while though, and those untouched bunglalows are being going for mid-£400's now.
I've seen a few refurbed houses locally being offered at, say, £350K and the previous sold price 12mths ago was £275K. Unless it's being done by a builder on the side and he's nicking materials from other jobs I don't see how these make sense.
Or if it’s mains pressure water refit, full rewire, high quality refit, replacement doors - big difference in pricing.
I have bought a few do-uppers but lived in them, doing 99% of the work myself. What I made on each house I just ploughed into the next one.
Then in 2017 after a lot of searching we bought a quite small old persons 3 bed bungalow in Dorset, planning to have a weekend retreat. We bought carefully in a very nice road in a popular location. Set ourselves a £45k budget and worked on it at weekends until I semi retired and then spending 4 days a week on it. We went fairly high end - Schuco Aluminium front door, fully porcelain tiled bathroom and en-suite, walk in shower, aluminium bi-folds, herringbone oak flooring, etc etc. As my labour was free our budget was splashed on the touchy freely stuff bought extremely carefully.
Then Covid hit and we decided to move in down there so I could tackle a couple of extra jobs outside our budget (block paved drive).
Then my dad died and we decided to flog the lot and buy somewhere finished…
Bought for £360k sold for £567,500.
We did pay the higher SDLT when we bought it. Because we changed main residence and sold the bungalow last this counted towards reduction in CGT. No CGT on our main house.
Then in 2017 after a lot of searching we bought a quite small old persons 3 bed bungalow in Dorset, planning to have a weekend retreat. We bought carefully in a very nice road in a popular location. Set ourselves a £45k budget and worked on it at weekends until I semi retired and then spending 4 days a week on it. We went fairly high end - Schuco Aluminium front door, fully porcelain tiled bathroom and en-suite, walk in shower, aluminium bi-folds, herringbone oak flooring, etc etc. As my labour was free our budget was splashed on the touchy freely stuff bought extremely carefully.
Then Covid hit and we decided to move in down there so I could tackle a couple of extra jobs outside our budget (block paved drive).
Then my dad died and we decided to flog the lot and buy somewhere finished…
Bought for £360k sold for £567,500.
We did pay the higher SDLT when we bought it. Because we changed main residence and sold the bungalow last this counted towards reduction in CGT. No CGT on our main house.
bennno said:
We’ve done it three times, trick is it being your main property and move in as opposed to a second purchase, buying a tired place in a great area. Needs to be solid properties that are aesthetically tired but still quite expensive, but where buyers wouldn’t have liquidity on top to invest £80-100k in renovating.
2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
Not a criticism, but what timeframes were they over? How much did house prices generally increase by in that time?2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
I bought a house of someone who'd bought a house, DIY'ed an extension and tarted it up a bit and flipped it after a couple of years for £40k profit.
But house price inflation over that timespan was something like £25k. So really they only made £15k with all the work they did - and I doubt there was any money doing in that at all.
My experience says beware of a falling market. We bought a house in 2008 (at the peak of the market) for £x where we outbid 22 others (Scotland so sealed bids) and then sent 10 years doing it up, largely ourselves. Spent 'real' money on collapsed outbuildings, fencing and drainage - all the rest was me in spare time. I fitted kitchens and bathrooms including everything bar plastering and 15 years later we are still down in real cash terms. If I'd included the cost of my own time, tractors, cherrypickers, chainsawing, making bespoke joinery for inside, outside, garden, fields etc etc we would have been down a fortune. It's a house we don't intend to leave and we're glad we did it. Would we do it again? At the age we were, yes. At the age we are now, no.
House is now worth £x + 10% in real terms when we've spent about £x + 20%.. And we're not accounting for inflation. It's a dream house so it doesn't matter to us but it was wrecked when we bought it. If we'd done it using trades we'd have spent about £x + 40%.
Compare this to a rising market - we bought a house in 1999 for £y, spent 20% of £y on improvements and sold for 2.5 x £y in 2008. Easy money. Rising markets and lack of supply is where it's at. If we hadn't done that we couldn't have afforded this house. Our last house appeared briefly on Location Location Location when Phil and Kirsty were at their peak (and we were still living in it).
I would wait until markets have crashed a bit more then you might strike it lucky. Otherwise it's a big fat no from me!
House is now worth £x + 10% in real terms when we've spent about £x + 20%.. And we're not accounting for inflation. It's a dream house so it doesn't matter to us but it was wrecked when we bought it. If we'd done it using trades we'd have spent about £x + 40%.
Compare this to a rising market - we bought a house in 1999 for £y, spent 20% of £y on improvements and sold for 2.5 x £y in 2008. Easy money. Rising markets and lack of supply is where it's at. If we hadn't done that we couldn't have afforded this house. Our last house appeared briefly on Location Location Location when Phil and Kirsty were at their peak (and we were still living in it).
I would wait until markets have crashed a bit more then you might strike it lucky. Otherwise it's a big fat no from me!
Jakg said:
bennno said:
We’ve done it three times, trick is it being your main property and move in as opposed to a second purchase, buying a tired place in a great area. Needs to be solid properties that are aesthetically tired but still quite expensive, but where buyers wouldn’t have liquidity on top to invest £80-100k in renovating.
2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
Not a criticism, but what timeframes were they over? How much did house prices generally increase by in that time?2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
I bought a house of someone who'd bought a house, DIY'ed an extension and tarted it up a bit and flipped it after a couple of years for £40k profit.
But house price inflation over that timespan was something like £25k. So really they only made £15k with all the work they did - and I doubt there was any money doing in that at all.
bennno said:
Jakg said:
bennno said:
We’ve done it three times, trick is it being your main property and move in as opposed to a second purchase, buying a tired place in a great area. Needs to be solid properties that are aesthetically tired but still quite expensive, but where buyers wouldn’t have liquidity on top to invest £80-100k in renovating.
2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
Not a criticism, but what timeframes were they over? How much did house prices generally increase by in that time?2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
I bought a house of someone who'd bought a house, DIY'ed an extension and tarted it up a bit and flipped it after a couple of years for £40k profit.
But house price inflation over that timespan was something like £25k. So really they only made £15k with all the work they did - and I doubt there was any money doing in that at all.
Doing this as a business needs you to be a wolf really. The fun and enjoyment factor probably take a back seat to just spray painting everything whitey magnolia, with a grey kitchen for max resale etc.
Doing it on primary residence makes you enjoy it as your home, and if you decide to stay put you've got a nicer house to live in.
Mr Whippy said:
bennno said:
Jakg said:
bennno said:
We’ve done it three times, trick is it being your main property and move in as opposed to a second purchase, buying a tired place in a great area. Needs to be solid properties that are aesthetically tired but still quite expensive, but where buyers wouldn’t have liquidity on top to invest £80-100k in renovating.
2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
Not a criticism, but what timeframes were they over? How much did house prices generally increase by in that time?2 bed bungalow - turned to 4 bed via division of his and hers huge bedrooms, full high end refurb @£80k - bought £475 sold £730k
4 bed 17th century barn, untouched since conversion in 1988. 90k high end refurb. Bought £501k sold £680k
5 bed Welsh individual large plot detached. Hugh end refurb and quad garage extension. Bought £425, worth £650k (not selling)
I bought a house of someone who'd bought a house, DIY'ed an extension and tarted it up a bit and flipped it after a couple of years for £40k profit.
But house price inflation over that timespan was something like £25k. So really they only made £15k with all the work they did - and I doubt there was any money doing in that at all.
Doing this as a business needs you to be a wolf really. The fun and enjoyment factor probably take a back seat to just spray painting everything whitey magnolia, with a grey kitchen for max resale etc.
Doing it on primary residence makes you enjoy it as your home, and if you decide to stay put you've got a nicer house to live in.
All about buying the right houses that need a bit of TLC, by comparison there were £450-£500k houses for sale in the same areas 6 years ago that are still worth similar - im always wary of smaller new builds finished to a high standard and price point, as once the shine has worn off you will probably be upside down from years 2-7 irrespective of how well you maintain it.
Not an expert but some thoughts……
If you’re doing this as a bit of a hobby that might net you some extra cash then it might be doable.
If you’re doing it only as a money making venture there are better and less stressful ways to do so IMO. I would imagine a lot of would be developers have ‘got away with it’ in recent years due to a rising market. It sounds like you can self-finance which is a great advantage but you see it time again on the TV shows where an amateur developer buys a fixer upper and it take twice as long and cost ten times as much as they figured where they don’t figure in mortgage and interest payments, and only turn a profit due to a rise in the market. Some netting a few thousand for a load of agro along the way just doesn’t seem worth it.
If you’re doing this as a bit of a hobby that might net you some extra cash then it might be doable.
If you’re doing it only as a money making venture there are better and less stressful ways to do so IMO. I would imagine a lot of would be developers have ‘got away with it’ in recent years due to a rising market. It sounds like you can self-finance which is a great advantage but you see it time again on the TV shows where an amateur developer buys a fixer upper and it take twice as long and cost ten times as much as they figured where they don’t figure in mortgage and interest payments, and only turn a profit due to a rise in the market. Some netting a few thousand for a load of agro along the way just doesn’t seem worth it.
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