New build or Renovation?

mongmoney

Morning All,
My EA has put my mind in overdrive. I looked at a house that needs a complete renovation but is in the most sought after location in my city. I know I can make a tidy profit and will always be able to sell it. The problem is that all of my £ is tied up in my current house which is on the market for 235,000. I am thinking of offering 180,000 for the renovation house but I would have to borrow more from the bank to complete the works.
Alternatively I have a new build waiting for me, also at 180,000.
I love renovating but is it really a good idea to indebt myself in this market? Even for just a couple of years.
My heart is saying do it, but my head is not. Feels like a gamble.
Any thoughts appreciated.
Mongy

justjohn

how about you offer 160 or 150.......would it then be such a dilema....What price would you not walk away at????(the cheaper you get it the less risk/gamble)

poppysarah

Sell your house first and then make a decision.

BitterAndTwisted

If you can't raise the funds for the renovations then you can't afford this house right now. It's possible that a lender could put a retention on the mortgage and not forward the balance of the funds for the purchase until they are completed.

Please bear in mind that a new-build could drop in value by up to 20% the moment you put your key in the door. Second-hand properties never achieve the same price as a brand-new one. All of this may not be an issue for you if you're planning to be in the property long-term.

mongmoney

justjohn wrote: »

how about you offer 160 or 150.......would it then be such a dilema....What price would you not walk away at????(the cheaper you get it the less risk/gamble)

The renovation house is on at 250,000 so I feel that I'm being cheeky already with this possible offer. The benefit is that the location is ideal. I don't really want to lose out on it as the potential is definitely there.
Is my choice really about living in the number one area and eating beans, or living in a new build in the number 3 area having cash to live a bit? Live on beans for a couple of years then sell up and down size then?
HELP!!!!!!
Mongy

Doozergirl

The risk is in buying a house before selling the one you have.

Once you've sold your house, if the renovation is worth what it's being marketed at, then surely there's a profit before you've done any work? Profit comes from the price you buy at, not what you do to it, unless you're adding square footage.

New builds are boring. Can't see how they even compare.

pmlindyloo

Have you had a survey done on the renovation property? Have you done all the 'sums'?

We went after a renovation property and after having a full structual survey done there was much more work involved than we thought. Also useful for negotiating on price if you're still keen.

Also, you will be around the stamp duty mark - this may make it more difficult to sell.

Lots to think about in the current market.

Pupnik

Just how much renovating needs to be done? Is it a shell or will you be able to live in it and do it up a room at a time? Work out the costs and plan how long you think it would take you to do the renovations, how long you would ideally live there and think about whether you could be living on site while you are doing it (either sell or possibly rent out your current house). I would personally say that in the long run an older property that is in good condition will be better than a new build, especially in a good location. People will always want a well built house with character but there are cookie cutter new builds going up all over the place and many of them are not built to last, and with such a new property is there really any work you can do to increase the value? Unless there is something really special about this new build (location for example) I would be inclined to go for the renovation job if you are able to afford it.

mongmoney

Pupnik wrote: »

Just how much renovating needs to be done? Is it a shell or will you be able to live in it and do it up a room at a time? Work out the costs and plan how long you think it would take you to do the renovations, how long you would ideally live there and think about whether you could be living on site while you are doing it (either sell or possibly rent out your current house). I would personally say that in the long run an older property that is in good condition will be better than a new build, especially in a good location. People will always want a well built house with character but there are cookie cutter new builds going up all over the place and many of them are not built to last, and with such a new property is there really any work you can do to increase the value? Unless there is something really special about this new build (location for example) I would be inclined to go for the renovation job if you are able to afford it.

Thanks for your input. I could live in it and do a room at a time. I have emailed the EA and asked her opinion. The potential in the renovation is huge. I have done a few sums and I would need to borrow a bit but the location is prime so I think that I will gain from it. I only plan to live in it until it's complete then sell and move. The new build is not that special- it feels like an estate really. The location of the renov has houses that sell for between £300,000 and up to £1M. I think the space to the side is enough to add two more bedrooms which will make it a 5 bed house. An exciting opportunity I'm coming to think.
Mongy

BitterAndTwisted

If it's that good a prospect as a renovation project expect to have plenty of competition bidding against you. If it's never going to be your forever home and you'll just be doing it to try and make a profit in the short-term I'd say forget it.

Doozergirl

mongmoney wrote: »

Thanks for your input. I could live in it and do a room at a time. I have emailed the EA and asked her opinion. The potential in the renovation is huge. I have done a few sums and I would need to borrow a bit but the location is prime so I think that I will gain from it. I only plan to live in it until it's complete then sell and move. The new build is not that special- it feels like an estate really. The location of the renov has houses that sell for between £300,000 and up to £1M. I think the space to the side is enough to add two more bedrooms which will make it a 5 bed house. An exciting opportunity I'm coming to think.
Mongy

If it's that good, then why are you even asking? you get 30% off the asking price, it's perfectly liveable, has a load of space on the side for extension and no one has bought it yet. Has the EA suggested that you can get it for £180k? If that house was for sale anywhere I know, it simply wouldn't be on the market anymore.