Buying a property that you can completely renovate to meet your living requirements and personal preferences might appeal greatly.
In a perfect world you’d buy a cheaper property in the ideal location that has not been modernised for many years. You might extend out, extend up, move walls, insert new windows, redecorate, add bathrooms, dressing rooms, lifts, gyms, saunas or dig a basement – essentially creating your perfect home.
Whilst the prospect might seem exciting, do you know where to find a distressed property and what to do when you find one you like?
How much work are you willing to do?
This is something you need to be sure of before you start looking for a property. Are you willing to buy a house that needs everything doing, from rewiring to damp proofing? Or would you prefer to buy something that you can simply repaint and maybe rip out the old kitchen and replace it with a new one?
The term ‘doer upper’ means different things to different people so be clear on what it is you’d be happy doing to avoid wasting time viewing properties that would simply be too much for you to take on or not enough for you to get stuck into.
The reality of refurbishments
Always do your homework, everything can come unstuck if you have grand plans for extensions only to find that you’re buying in a conservation area when your solicitor reports back to you, meaning you’ve wasted time and money pursuing a property that you’re unlikely to purchase.
Information about local conservation areas and planning consents that have been granted locally can often be found online. Also be wary of buying a listed property as there will likely be rules when doing any work.
The theory goes that what you save in the purchase price you can spend on improving the property.
This isn’t always the case, if you’re planning on doing a lot of work its important you seek advice from professionals. We often work with reputable design and build companies, architects and builders before a property is purchased.
Get a second opinion
It’s common for a second viewing to be with someone who can give you a quote or estimate when considering a property to renovate. If you’re planning to spend considerable amounts with them to renovate the property it’s in their interest to come along if and when you are seriously considering an opportunity.
Some might be able to provide a ballpark just from seeing the property details and you telling them what you’d like to do.
Basing your financial decisions on only what you think it should cost without any input from a building professional could be a costly mistake.
Be wary of paying a premium
We find this to be the case in many desirable areas; when a distressed property comes to the market it can often be exceptionally popular and generate competition. It might even be that there is a sealed bid scenario.
When you’re putting your best offer forward ensure you have factored in the renovation costs, budgeting is immensely important on refurbishment projects.
Financing your property purchase
Is your purchase dependent on a mortgage? If yes make sure you’ve discussed the type of property you’d like to purchase with your broker or lender.
You might find that the mortgage you’ve got an agreement in principle for will not allow for you purchasing a property that needs complete renovation. Always check with your financial advisor.
Hidden costs in a renovation project
When you’re planning to do a full gut and re-do you’ll likely have factored in rewiring, new plumbing, perhaps even a new boiler along with everything else.
If you’re only looking to really give a place a lick of paint and install a new kitchen and bathroom you’d be wise to check the age of the boiler and the condition of the wiring. It’s unlikely you’d know exactly what to look out for which is why we always recommend our clients instruct a surveyor.
If the surveyor recommends that a structural engineer inspects the property, take the advice and get an expert in – understanding what you’ll need to do to make the property structurally sound will allow you to plan accordingly, factor it in to expenditure and it might even be necessary to renegotiate the price to reflect the work that’ll need to be carried out.
It might be that the prospect of having to undertake major structural works is overwhelming and much more than you bargained for when you agreed to buy the property, by having specialists inspect the property before the purchase has completed you are able to walk away having only spent a fraction of what it would have cost you if you’d only found out about problems further down the line.
The business of property development
If you’re purchasing a property to renovate as a way to make money then the margins are particularly important, understanding the extent of the work you’ll need to carry out before purchasing the property is paramount.
Aside from employing the services of experts it’s also important that you know what’s going on in the local property market. If you’re buying a house in a primarily family orientated area to renovate then you’d be sensible to make sure the house suits family living.
If you’re buying an apartment that you’re planning to do up and keep to rent instead of sell, make sure the property would appeal to your target market. For example, when you’re buying a property that you’d hope to rent to two professional sharers, make sure it has two double bedrooms and adequate living space.
When you’re buying a property purely as a business investment then you need to be objective and put your personal preferences to one side.
Finding distressed property in the UK
Distressed property often becomes available as part of a probate or repossession, there can be specific rules as to how the property is advertised, for how long and how any bids should be received. These type of properties can also be found at auctions and of course they sometimes appear on the open market.
Finding a renovation project often means leaving no stone unturned, you’d be unlikely to find one by simply setting up email notifications via a property portal.
Our team are experienced in finding distressed property to buy, often sourcing unique opportunities for our clients. Whether you’re seeking a barn to convert, a characterful cottage that hasn’t been touched for years, a Victorian terraced house with high ceilings and original fireplaces or simply a property that you can make your own our property finders would be delighted to assist.
For a no obligation discussion about your plans to purchase a property for refurbishment contact us.