Jump to content

Recommended Posts

Hello,

 

Would hugely appreciate any points for a beginner from anyone with experience or plans similar to mine.

 

Currently looking at purchasing a property (hopefully) BMV in Middlesbrough, the property is a 2-bed semi-detached listed at offer over £37,000 but stated he expects £40,000 minimum (Poker face?) Situated in a rough area but an area where I grew up, so doesn’t put me off too much. The shell of the house is fine, the guttering and windows are fairly modern, it has a solid garage, running water. The seller stated a new boiler is required and the kitchen units need replacing, the bathroom would ideally be updated but is functioning. no signs of damp or major damage although I would use a surveyor to confirm this.

 

The rooms and garden are full of clutter and overgrown as the original owner is in a home, I don’t mind the hard work regarding the rubbish disposal and basic

maintenance/improvements however my main area of concern is while the house itself has no real signs of vandalism the house next door has one of its front upper, rear upper and side windows smashed.

 

The property has been listed for around 6 months, the owner’s family stated silly offers of £33,000 have been laughed at. Houses on same street have sold for £42,000 in 2013 and zoopla valuations put some same street properties at £46,000-59,000 with rent in between £375-450. Although it is the only property on this street with a solid brick garage.

 

I’ve tried to do as much research into the process and the pitfalls as possible with books and websites, podcasts and recently Rob Dix property investment for beginners and 100 property investment ideas alongside my addiction to homes under the hammer.

 

 

ive ran various sums for rental income, potential valuations and refurbishment budgets and the net yield varies from 7-11%

 

 I would ideally like multiple possibilities... live in option, rent (only with BTL Mortgage) or the option to sell for profit once renovated.

 

How much would the (Likely) empty house affect your eagerness to invest? how would you approach the negotiation? anybody had problems with similar ideas in the past? do i attempt to highlight the work needed and state of next door to increase my negotiating position?

 

All replies would be gratefully appreciated.

 

Thanks,

 

Liam

Link to post
  • 2 weeks later...

Hi Liam

 

Some thoughts and points to consider:

 

1. Empty next door neighbour: Is this representative of the area (many empty houses) or coincidence? What does that mean for your rental demand?

2. Empty next door neighbour: This is a possible negotiation point.

3. Empty next door neighbour: How long has next door been empty?  Does that house have any issues (e.g. damp) that could affect the one you're interested in?  What is the situation of that property (e.g. absent landlord, owner in care, in probate etc.), and how would you contact the owner/manager of the property if there were issues? Perhaps challenge the estate agent or owners to help resolve these points if they're keen to make a sale.

4. Rental demand: Have you determined what the rental demand is for the area and this property?

5. Re-sale demand: Have you determined the re-sale demand for the property?  Given no-one else has bought it in 6 months, who are your target buyers when renovated?  e.g. first time buyers vs landlords vs existing home owners?  How much will they pay?  And what condition will they want the property to be in?

6. Issues & Negotiation: Yes, use all the negative factors you can to explain how you're valuing the house. Just make sure they're valid and suitably costed.

7. Valuation: 2013 is 4 years ago.  As well as that street, I would be looking within 1/4, then within 1/2 mile and 1 mile of the property for similar properties' sold prices as comparables.  Given your local knowledge, bear in mind how representative other streets are of the street you're looking at.

8. Price & Mortgage: There are very few mortgage lenders who'll lend below £40k. So, unless you are a cash buyer, check out your lending position.  If you believe your renovation will add value to over £40k, then cash or a bridging loan or other short-term funding option might allow you to purchase and then mortgage afterwards.  But do your due diligence and be sure of your predicted valuation if your exit strategy depends on this. Perhaps consult a local surveyor.

9. Price: Remember a house is only worth what someone will pay for it. If they've waited 6 months and not got £40k then perhaps they're coming round to the idea it's not going to fetch that. And just because they are asking over £37k it doesn't mean you have to offer that.  If you make an offer, offer what it's worth to you.

 

Above all, be realistic. Don't look at it through rose-tinted glasses.

 

I hope that helps.

Andre-Simm.jpg

image.png

Link to post

Hi Liam 

To me this sounds like it could be a lot of effort for little reward. High yielding 'deprived' areas look good on paper but when voids are factored in can work out less profitable than a lower yielding property with low voids. That said with your local knowledge do you know anyone who would rent/buy the property from you once complete? If so you may be able to make a success of it.

Do your sums carefully and make sure you have a contingency fund factored into your figures. You'll be amazed at what nasties lurk behind piles of junk, wallpaper and especially wood panelling.

Good luck

Paul 

 

Link to post
  • 1 month later...

Thanks Andre and Paul for the

reply.

 

Apologies for the Late reply I was regularly checking for updates then I had some issues finding the thread and wrongly thought admin had for some reason deleted it.

 

The property was recently taken off the market because valuation was not met, the independent estate agent informed me people were close but he was stubbornly Insisitng on 40k. I felt like I had missed an opportunity and judging by how I felt I knew if I got another chance I would have taken it.

 

so after few calls I verbally agreed to buy the property on condition of a happy second viewing and a  survey.

Currently found a lender who has issued me a DIP for £40,000 with 15% deposit.

 
i also felt we had a rapport as he and his father and his son were all forces or ex -forces and he remembered me when the estate agent asked him to put it back on the market.

 

i understand some of the risks and considerations raised by you both but I believe I'm in a fairly unique position of having 4 family members, 2 close friends living 100m through to 500m away.

 

 

My plans when I leave the forces (18-36 months ) is to go self employed meaning a  Mortgage will be unatainable for me for 12-24 months and i would Struggle to get on the ladder.

 

with regards to the next door neighbour, I've used the land registry and Facebook to contact the owners who rent it out through an agency and they seem fairly relaxed but state the tennants have had a few problems but always pay and are reliable. He's planning to call me to discuss this further.

 

 

I don't believe the property has huge resale value mainly because people don't tend to buy in areas like that, as they can't afford it or choose to move out of the area. Although after renovations equity could be created after a valuation further down the line.

The property Could potentially be a good safety option for myself or rental asset. 

 

Similar local houses go for £450-550 although the solid brick garage is somewhat of a USP in the immediate local area.

 

thanks again,

 

liam 

Link to post

Hi Liam 

Glad you got this sorted. If i were you i would agree that the total price will be 40k but that you will pay separately for an item such as a fridge, cooker, table etc.. a sum of say £50. That way your property purchase price will be below 40k and i believe not incur the additional 3% stamp duty. Your solicitor will be able to confirm this. You would save £1200 in the process so well worth doing.

Link to post

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...