That old chesnut of the FTB house

Thrugelmir

silvercar wrote: »

Imagine a property on at 180k with 20k work needed. after refurb worth 220k say.

When credit was easy someone could get a 100% mortgage for 180k and spend their 20k doing it up. Result property worth 220k.

That was part of the illusion in the boom years. Most of the money invested in renovating property didn't actually make any more money than buying a property and just reselling it some months later.

IveSeenTheLight

Thrugelmir wrote: »

That was part of the illusion in the boom years. Most of the money invested in renovating property didn't actually make any more money than buying a property and just reselling it some months later.

The illusion is that it cannot be done.
Hasn't property ladder this season shown ample people who have increased the value of the properties even in the declining period of 2008?

lostinrates

silvercar wrote: »

Imagine a property on at 180k with 20k work needed. after refurb worth 220k say.

When credit was easy someone could get a 100% mortgage for 180k and spend their 20k doing it up. Result property worth 220k.

Now the 20k for work would need to be spent on the deposit. So 18k deposit mortgage of 162k and only 2k left to do the work. It no longer balances, hence the lack of interest in refurb properties for the ordinary buyer.

But for something to stay in, to do up to turn into a home not a resale, only the most serious work needs to be done first.

ETA:anyway, I just got back from this fixer upper in the SW. Its delicious, I really like it and I wouldn't be in too much of a rush, however, very, very sadly the location is unsuitable for us. The agent suggests it would be worth double the guide price when ''done'' so perhaps would be fun to do as a project in a more predictable market. Our mortgage on it (for arguement sake at guide price) would be £200k (for good mortgage rate), putting down a hefty deposit and keeping some back for works.

Its a toss up really: its not for us at all, but if it made as little as 20% more on the value with some comparitively minor professional work and some comparatively reasonanble DIY perhaps we should. The condition is better than I would hope to buy to stay in, prsonally, but not too scary to do up......decisions, decisions.....

I'd share details, only I'm scared of some of you.

ETA: I didn't make clear I think the supposition the house would be worth double when ''done'' is...dubious. IMO the value of the house is somewhat limited by its location its telling that I who never want to move again see it as ''temporary''.

mewbie_2

IveSeenTheLight wrote: »

The illusion is that it cannot be done.
Hasn't property ladder this season shown ample people who have increased the value of the properties even in the declining period of 2008?

What's telling these days is the number of ready to reno properties that are available - they used to be like gold dust. Plus a fair few that have had some stuff done but the renovator has clearly run out of cash... and hope.

I agree with LIR that as a personal project to get house of dreams cheaply and convert to desired specification then fine. But for people hoping to whip in and out again with a quick profit - well the unsold properties tell their own tale of sad broken dreams and disappointment.