House Sale Advice!

Paninero

Hello Just wondering if anyone here could offer any advice on something thats abit of dilema for me!

I own a Terraced house in the East Midlands with 0 Equity. I bought the house around 5 years ago.

I Owe around 62,000 on my mortgage, A low estimate of my Home is around 45-50,000 (in its current state) Top Estimate would be 65-70,000 (This is if its done up to a high grade)

These are based on Zoopla and other websites.

Problem is the house is in a terrible state of repair. It needs the roof repairing, Pipes doing, The outside looks awful, Needs a new fence, Gate, Doors and windows need replacing, Everything needs plastering and decorating, it needs a new kitchen, new bathroom, the list is endless.
I need to sell the house as i have just had a Baby with a girl who lives in a different town and we should really move into together. Her moving in is not an option. My brother has moved in for six months so i have six months to work out what to do.

I can get a 9000 loan.

So heres the question should i
A.) Borrow 9000 and do the house up as best i can in the hope i sell it for 70,000 and pay the mortgage and the loan.
B.) Borrow 9000 and pay it off the mortgage and sell the house as is and try get 52,000.
C.) Should i sell as is then borrow the 9000 to cover the shortfall in the mortgage.

Any Avice would be greatly appreciated.

Mickygg

If you have 6 months to work out what to do you could put on the market to sell now to see if you can sell. If there is no success, then you could think about doing the house up.I'd be hesitant on borrowing so much money when in this market it won't guarantee you a sale, or near your high estimate.
Negative equity is a bummer. Could you and your brother do some of the work yourself over the next 6 months? Make the place look much more appealing without shedding out for new kitchen etc.

GDB2222

Congrats on the new baby.

Financially, you're in deep trouble. None of your options is going to work. In particular, you have more than £9k of work to do on the house, and even then it might not sell for top dollar, plus you've ignored the selling costs. Either go bankrupt, or take a second job and save like crazy.

richyuk

Hi there
Why not rent it out to cover your bills and move in with your girlfriend

Fire_Fox

Welcome! Why haven't you done any repairs and maintenance in five years? If the inside is in a habitable/ mortgageable condition you might largely leave that alone, there are buyers or developers who would like to do a place up. You might get kitchen plans drawn up and quotes for that and the bathroom so buyers know what is possible and a ballpark cost.

Concentrate on getting the outside wind and water tight for winter, looking decent for estate agents photos and able to pass a survey - much of the work you and your brother could do between you to save money. The doors and windows might be salvageable with some effort and the right products, are they completely rotten or just the sills? Have a roofer repair the roof and do the pipes (do you mean the guttering?), and a joiner splice in new sills.

Is your brother living there as a lodger or renting the whole house from you? If the latter you need consent to lease from the lender, to inform your buildings insurers and to comply with a raft of landlording legislation.

Paninero

Fire_Fox wrote: »

Welcome! Why haven't you done any repairs and maintenance in five years? If the inside is in a habitable/ mortgageable condition you might largely leave that alone, there are buyers or developers who would like to do a place up. You might get kitchen plans drawn up and quotes for that and the bathroom so buyers know what is possible and a ballpark cost.

Concentrate on getting the outside wind and water tight for winter, looking decent for estate agents photos and able to pass a survey - much of the work you and your brother could do between you to save money. The doors and windows might be salvageable with some effort and the right products, are they completely rotten or just the sills? Have a roofer repair the roof and do the pipes (do you mean the guttering?), and a joiner splice in new sills.

Is your brother living there as a lodger or renting the whole house from you? If the latter you need consent to lease from the lender, to inform your buildings insurers and to comply with a raft of landlording legislation.

Hello, Thanks for the reply.
Firstly the mortgage company is aware of my brother living there and its been given the ok. However i didnt know permission was needed 5 years ago and let the house out from then till now. Gradually Bad tennant after Bad tennant did their fare share of damage to the house untill it eventually became the terrible state it is now. I cant complain too much as i could have been well and truly screwed had something happened!. I must point out at this point i was only 20 years old at the time and had no-one to speak to or get advice from hence the era on my part.
I dont live at the house, i live in a small flat i also own unfortunatley also in negative equity.
I cant let the house out as currently the mortgage is £300 a month but if i swapped my mortgage over the lowest qoute ive been given is £500. No one will rent this house out for that even if it was done to a high spec.
I have £3000 in cash i have hidden for an emergency but am reluctant to use this.
I think perhaps borrowing a small amount of money to do the outside and then in six months time doing all the work on the inside myself will be my only option.
Thankyou for the advice.

Paninero

GDB2222 wrote: »

Congrats on the new baby.

Financially, you're in deep trouble. None of your options is going to work. In particular, you have more than £9k of work to do on the house, and even then it might not sell for top dollar, plus you've ignored the selling costs. Either go bankrupt, or take a second job and save like crazy.

Thanks but im not sure going bankrupt is the best idea.

Fire_Fox

Paninero wrote: »

Hello, Thanks for the reply.
Firstly the mortgage company is aware of my brother living there and its been given the ok. However i didnt know permission was needed 5 years ago and let the house out from then till now. Gradually Bad tennant after Bad tennant did their fare share of damage to the house untill it eventually became the terrible state it is now. I cant complain too much as i could have been well and truly screwed had something happened!. I must point out at this point i was only 20 years old at the time and had no-one to speak to or get advice from hence the era on my part.
I dont live at the house, i live in a small flat i also own unfortunatley also in negative equity.
I cant let the house out as currently the mortgage is £300 a month but if i swapped my mortgage over the lowest qoute ive been given is £500. No one will rent this house out for that even if it was done to a high spec.
I have £3000 in cash i have hidden for an emergency but am reluctant to use this.
I think perhaps borrowing a small amount of money to do the outside and then in six months time doing all the work on the inside myself will be my only option.
Thankyou for the advice.

Bad tenants don't make windows or doors rot, so presumably they are salvageable with stripping, filling and repainting? That is not particularly expensive just time consuming. Nor do tenants generally cause the roof to need repairing? Information about tenants and letting would have been in your mortgage terms and conditions.

GDB2222

Paninero wrote: »

Thanks but im not sure going bankrupt is the best idea.

Indeed, bankruptcy is a terrible idea. However, at the moment, you have a negative net worth, ie you owe much more on both your properties than they are worth, and you have no viable plans to dig yourself out. So, by going bankrupt, you go from negative net worth to nil net worth, which is an improvement of several tens of thousands of Pounds. It seems a more viable suggestion for digging yourself out of this hole than any of the ones you made. I already suggested getting a second job and working your way out of the problem, but you did not respond to that.

phoebe1989seb

I, like Fire Fox was wondering why you hadn't done anything to the property during your five years of ownership and whilst I appreciate that bad tenants can leave a place in a terrible state, I cannot see how they woud contribute to the state of roof or windows........

We once bought a Victorian house that had been divided into four flats in the 1920s. It had had a series of owners (landlords) that hadn't bothered to take care of the fabric of the building and when we took possession it was in a deplorable state, including needing rewiring, new plumbing, new roof and some new windows as well as removal of four kitchens/bathrooms and replacement of same. The tenants had totally trashed the interiors - one previously yellow bathroom suite was actually almost entirely brown - but they weren't responsible for maintenance of the exterior fabric of the building so couldn't be blamed for that.

Again as already stated by Fire Fox, if the work required to bring the windows (for example) back to tip top condition is merely a repair job, more expensive replacement should not be necessary. How tenants can damage a roof is beyond me.....

Although at 3500 sq ft ours was most likely a much larger house than that owned by the OP, it cost us in the region of £60-70k to bring it back to habitable family use over a period of several years (doing much of the work ourselves), although when we sold ten years later we got our money back (and some ) but that was before the recession hit. Nevertheless, I struggle to see how spending £9k will a) restore the property if indeed it is in as bad a condition as described by the OP and b) will result in the house suddenly increasing in value to £70k.

If you and your brother could do some of the work yourselves (assuming you are competant at DIY and won't make matters worse!) this might be a way forward and as previously suggested I would also be looking to take on another job to help pay down the mortgage.....

thelem

Paninero wrote: »

Gradually Bad tennant after Bad tennant did their fare share of damage to the house untill it eventually became the terrible state it is now.

Sorry, I know it's not the main point of the thread, but I feel I need to stick up for the tenants here. If you've got a good property and you're being a responsible landlord, then you'd be very unlucky to get a string of bad tenants. That leads me to believe that it's likely that either your standards are too high (any tenant will cause wear and tear to the house, such as chipped paintwork) or you weren't being careful enough in choosing your tenants.

As has already been pointed out, most external repairs (roof, windows etc) can't usually be blamed on the tenant, although you may have been putting off the better tenants if you let the property fall in to disrepair.