buying a house to sell to make profit

ManAtHome

welshguy_456 wrote: »

But about buying it as an investment to live in, its not in an area where we want to live

That will limit the resale value (number of punters who could get a large enough mortgage) - you may end up living there longer than you'd like... Scene 1 - "just seen this brilliant house" - "great, hope it's still on the market when we sell this one" - don't underestimate the potential for teeth-gnashing and recrimination.

I'd seriously weigh the potential gains against looking round for somewhere you'd be happy living for more than a year or so.

hcb42

Is £70K asking price £20K below the market price for a similar/identical property in the same location?

You could have the nicest house on the road, but it wont add that much more value if anyone can do up another one for £8k - it wont add £20K value in this market place, unless it is awful to start with.

Kynthia

As others have mentioned:

1. Will the work actually add the value you think. Do estate agents believe the changes will add value and not just make it more sellable?

2. Are you including all of the costs of buying and selling in your profit calculations, such as estate agent fees, solicitor fees, mortgage arrangement fees, etc.

3. Have other properties in the street have sold for that much? There may be a street ceiling price that will cap how much people will pay for the house.

4. Can you actually do the work for the price you think? Have you had multiple quotes and does it include all of the finishing work? Unfinished or poorly finished work won't help the sale price.

botchjob

This is all a bit "you hold the racket at the thin end, love"

welshguy_456

Thanks again for the replies, what I have picked up is yes, doing the work may just make the house more 'sell able' but not really add value as even the nicest ones in the area are around the 80-90k and probably aren't even fetching that much.

We definitely wouldn't want to get stuck but as I mentioned it was just an idea and I'm glad now I've asked, hopefully as we are 24 and 23 when we do buy it will be at the bottom of the market and when things finally change we will have equity in the house as it rises with value over the years, we should count ourselves lucky we have some form of deposit that we can use when the time is right

Thanks everyone,
Chris

ManAtHome

welshguy_456 wrote: »

hopefully as we are 24 and 23 when we do buy it will be at the bottom of the market and when things finally change we will have equity in the house as it rises with value over the years, we should count ourselves lucky we have some form of deposit that we can use when the time is right

Don't forget that when the market rises, it makes the next step bigger - eg £100k house now, next step £140k (£30k to shell out), after HPI of 10% your place is worth £110k, next step is £154k (£44k to shell out)...

You're not in a bad position now as FTBs with a deposit and a mortgage offer - have a good look round before you jump in.

AlexMac

If profit is the objective, timing and location is everything- but is 2012 the time, and is mom n pop's location ideal?

As the 1-liner above, with the amusing cartoon implies, lots of us got lucky and did this in the '90's an early 'noughties, when a bit of sweat equity and galloping house-price inflation once earned me more I earned in wages over a 3-year period between purchase and sale on an auction wreck. But since the 2007 crash, property prices fell then flatlined (or continue to fall in some areas) so there's only the sweat.

It's a great idea to mortgage to the max, buy, improve, live in it and enjoy a better life, and hopefully, enjoy some price uplift. The trick is to buy the cheapest unimproved house in the best street you can afford, rather than one you happen to be in. And do you really want to negotiate hard and chisel the price down when you're facing your in laws? The relatively low property price in your street means that your margins are low and the risk consequently high.

If it's such a good idea, why not separate family politics from the property ladder? Buy somewhere else that fits the bill? After all, its a great idea to get on the ladder and work yr asp off- just watch for snakes- good luck

chewmylegoff

Do you actually know anything about renovating property, and will you be able to do all the work yourself?

Also, buying off her parents leaves you in a weak position as you aren't going to be able to play hardball on the price. How long has it been on the market at £70k? Any offers?

missile

I would avoid buying a house from friends and relatives.

I would suggest you are very unlikely to make a profit after buying and selling costs unless you buy at under market value. I am guessing you would not want to rip off your in laws?

LEJC

welshguy_456 wrote: »

Thanks for the replies so far. As for the questions

The house is of course not derelict at all but I think serious improvements could be made, ie a new bathroom, kitchen, knocking 2 downstairs small rooms in to 1 large living room, changing a downstairs shower room into a utility room to make more use of the kitchen, re- carpeting and laminate flooring and re-decorating each room eg new wallpaper/paint/scurting boards etc



Please keep any other suggestions coming,
thanks.

Have you really costed this out ?
only ask as I am midway through a renovation and have done all that plus central heating,new windows and doors and an electrical rewiire....my total is running very close to £40k and its not been a particularly lavish project

New bathroom £3000
New kitchen £5000
Conversion of old bathroom to utility room to create a bigger kitchen area £4000
New carpeting in all rooms £1200
Painting and decorating materials only as we did it ourselves but its been time consuming £500
the painting and decorating has only been with magnolia and white paint and has probably only been achievable because every ceiling and wall has been re skimmed by a plasterer at a cost of £1650

I'd like to hope you will do your renovations for your calculated cost but in practice I think your budget is tight and your expectation of a return too high.