inherited house mortgage advice

shortchanged_2

twelvegoldbars wrote: »

the house as it stands is totally in livable condition,just needs modernising/updating.

In that case why do you think you will turn in £40K profit in the current climate?

twelvegoldbars

shortchanged wrote: »

In that case why do you think you will turn in £40K profit in the current climate?

the house next door has recently in last couple of months sold for 210k after being modernised, and is slightly smaller than ours and dosent have a garage,ours has a garage,we took out a house valuation from estate agent to get our house insurance,and value as it stands is 145k (ish),when work completed,210k (ish)

getmore4less

Would it not make sense for one or more of you to live in the place?

The rent you save on where you live now will fund some of the work.

You have to look at the tax implications of running this renovation as a business
at best you might get away with some CGT more likely income tax on the profits.

Living in the place doing it up and selling much later will get much less scrutiny from the tax man

deedee71

I hope you don't take this the wrong way OP but it sounds to me like you will end up doing all of the hard work and your brothers will get 1/3 each of the profits.

To my mind, I think you should sell as it is. Say you get £45k each, you have no debts and could think about going it alone with another property.

Emotions, family ties, bad feeling re debts, it's not a good footing to start a business on.

twelvegoldbars

getmore4less wrote: »

Would it not make sense for one or more of you to live in the place?

The rent you save on where you live now will fund some of the work.

You have to look at the tax implications of running this renovation as a business
at best you might get away with some CGT more likely income tax on the profits.

Living in the place doing it up and selling much later will get much less scrutiny from the tax man

yes it will only be CGT on the profits split 3 ways ,20% each to pay,it is a good situation to make a decent future and become our "own bosses" and make a future,it would be too hard emotionally for any of us to move in,yes your right it would help to get the house done up,but we feel we can turn this around and make it all good

DVardysShadow

deedee71 wrote: »

I hope you don't take this the wrong way OP but it sounds to me like you will end up doing all of the hard work and your brothers will get 1/3 each of the profits.

To my mind, I think you should sell as it is. Say you get £45k each, you have no debts and could think about going it alone with another property.

Emotions, family ties, bad feeling re debts, it's not a good footing to start a business on.

It is a valid thought, but assuming the estimations are right, this is actually throwing away the opportunity for £40,000. If the 3 of them seriously want to go into business doing this sort of thing, then this project is lower risk than liquidating this asset and buying another one to do up.

twelvegoldbars

deedee71 wrote: »

I hope you don't take this the wrong way OP but it sounds to me like you will end up doing all of the hard work and your brothers will get 1/3 each of the profits.

To my mind, I think you should sell as it is. Say you get £45k each, you have no debts and could think about going it alone with another property.

Emotions, family ties, bad feeling re debts, it's not a good footing to start a business on.

this to me is a small price to pay to build a future,and make this work,other 2 brothers will be supplying me good hard work,and these guys work hard believe me!,i would be supplying the trade skills and knowhow,discounts on building matirials,i do this work every day,and have done for the last nearly 22 years ,and also on a massivly bigger scale,we are following guidance as to what our mum would have done and how she would have dealt with this,will be back on after 5 if there is more to answer,thanks again for this help:)

Burridge60

This house will have a price "as is" and a done up price relative to similar property locally. Carefully examine whether you are likely to make any money above the cost of the labour and materials if you chose to sell it now rather than done up. Beware the six months ownerhsip comments on the other thread to.

If major works are required it is unlikely to fit the criteria of most BTL lenders as this will require it to be rented or actively marketed for rent within three months of funds release.

Potentially a BTL mortgage could be "mis use of facility" as the OP's stated intention is not to rent it out but to do up and turn the property back to the market. ie property development.

twelvegoldbars

DVardysShadow wrote: »

It is a valid thought, but assuming the estimations are right, this is actually throwing away the opportunity for £40,000. If the 3 of them seriously want to go into business doing this sort of thing, then this project is lower risk than liquidating this asset and buying another one to do up.

exactlly! if i had to get outside trades in to do the work then it wouldnt be worth doing,the house would be sold as is,but i got the trade behind me ,the labour is free in a sense,if i were to price this job it would be around 55k to 60k ,all we need is matirial money

deedee71

DVardysShadow wrote: »

It is a valid thought, but assuming the estimations are right, this is actually throwing away the opportunity for £40,000. If the 3 of them seriously want to go into business doing this sort of thing, then this project is lower risk than liquidating this asset and buying another one to do up.

I can see what you're saying but these are three grown men earning on average £18k per year who can't raise the relatively small sum of £25k between them. (I'm sorry if that sounds harsh ).

This could be their one opportunity to get some money behind them to start a business with some capital - not starting off by borrowing and then the whole thing could go pear-shaped.