Buying cheap property to 'do up'

alexlyne

Just a thought...,

We are looking at spending around 140-150K on a house. We can easily get a mortgage for this amount, with 10-15% deposit... i.e. not much spare cash.

If we bought a cheap property (say 90K), that needed 30-40K of development, is this kind of thing possible without stumping all this cash up front? We would want to borrow this money and repay it with the mortgage.

mlz1413

Not possible any more, mortgage lenders are being strict about LTV so if you buy a £90k property at 85% LTV the mortgage will be £76,500 meaning you need cash of: £13,500 to pay for house, all the fees and moving costs plus the doing up money.

You might be able to get a personal loan for the up-dates depending on if you fit the lending criteria.

A word of caution if you buy a really run down property the mortgage lender may not lend the full amount offered until rememdial works are done, so you would need cash to do that.

Are you planning to do this for a home or in the hope that you will make money? If the latter steer clear unless you are an experienced developer.

alexlyne

I would not be doing it to make money. Just looking at houses on the market, and they seem to be either a bit pricey, or a bit cheap. This particular house is very cheap, and empty: i would guess a repo. However not many photos, and what there is show's it's not in a great state (but not that awful either). At a guess, the bathroom needs refurb, and I would want to knock the tiny kitchen into the dining room. There's a chance of plumbing/electricity being iffy, and probably no insulation to speak of.

This is something I wouldn't do myself, but if the other rooms are OK, I can easily do a spruce up.

I haven't seriously considered this method of buying a house before, and if it's a lot of hard work and organisation, would rather leave the gamble to someone else

if you're interested:
http://www.rightmove.co.uk/property-for-sale/property-24971624.html?locationIdentifier=REGION%5E21025&maxPrice=100000&includeSSTC=true&_includeSSTC=on&pageNumber=1&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FsearchType%3DSALE%26locationIdentifier%3DREGION%255E21025%26radius%3D0.0%26displayPropertyType%3D%26minBedrooms%3D%26maxBedrooms%3D%26minPrice%3D%26maxPrice%3D100000%26maxDaysSinceAdded%3D%26retirement%3D%26partBuyPartRent%3Dfalse%26includeSSTC%3Dtrue%26_includeSSTC%3Don%26sortByPriceDescending%3D%26primaryDisplayPropertyType%3D%26secondaryDisplayPropertyType%3D%26oldDisplayPropertyType%3D%26oldPrimaryDisplayPropertyType%3D%26oldSecondaryDisplayPropertyType%3D%26newHome%3D%26auction%3Dfalse%26x%3D61%26y%3D21

mlz1413

well it's got a new roof and plastic doors and windows, I can't quite make out the kitchen walls are they damp patches or really bad decoration?

Electric and GCH need approx £2k each, flooring, kitchens, bathrooms and decoration are all personal taste.

Its probably worth asking a general builder to view with you and give a rough price for the work you want doing - nothing ventured nothing gained!

besonders1

It doesn't look too bad inside mainly cosmetic, not like the one I'm buying which is a probate sale but I suppose if its cheap you'll get a bargain, far cheaper than buying a house thats already done up.

Greenwellies_2

Sorry I may have missed it being mentioned, but have you actually viewed the property?
I've seen loads of bargains on the net, only to find when call to book a viewing that they're under offer.

What ever you decide you need to do to it, e.g. bathroom, electrics, tot it all up, then double it, I'm sure you've seen the old property ladder shows, nothing ever goes to budget, and when ever I done things they too never went to budget either.

Good Luck!

GW

alexlyne

Hi
We have not viewed the property, just the photos. We just lost a bidding war on a house, so am just considering what our other options are, and whether a renovation project is worth it in terms of investment, both financially and emotionally! I think in reality, once the costs are added up, along with the hassle of arranging finance for doing the project.. means we could be a bit out of our depth, especially if we wanted to move in a reasonable amount of time.
Oh yeah, and like so many many people on this forum, we need some money left over for a wedding next year!
Thanks for info and advice though, it was a very useful exercise for me to gauge opinions on this kind of buy. It's a time I wish I knew a builder!

Alex