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stuart888

Russe11-

As for tying my wealth into one asset, possibly because like you I am risk averse. As stated I have approx 10,000 per year disposable income due to living with parents/girlfriend. This is probably the best time of my life to get some cash under my belt. Stocks and bonds can potentially lose all there value whereas property doesn't. Also in terms of a 25 year btl mortgage I can think of no period where propery hasnt gained in value.

As for the people I know doing this some of them have had bad experiences bu mainly due to buying just before thr crash, they all got over it but admitedley Iw wouldn't be working for them had they gone bust would I.

I still disagree that it can't be cashflow positive. My sums seem to say it will be. Mostly due to low rates combined with high deposit requirements being so much lower than rental demand, partly caused by above lack of credit.

Agreed that its wis to avoid rents subsides by benefits and loans as they could. disappear.

Any thoughts?

drummer_666

stuart888 wrote: »

Drummer- thanks for your input, could you elaborate on your project? Cost of purchase, amount borrowed/scope of work ect? Are you planning to live in it or sell or let out?

I bought house in June for £75k. Total renovation costs will be around £19k. Aim to sell £120k. Other sold prices on the street reflect that is achieveable. Can do it up for this cost as buying most materials trade and doing most labour myself.

Had trades in to knock thru wall, do old coal house roof, plaster kitchen, replace kitchen floor, kitchen elecs, boiler, will be getting double glazing put in. Dad was up 6 or 7 weekends to help out and doing the rest myself around my full time job.

More info and photos on my blog below.

https://victorianterracerefurb.wordpress.com/

Been working on it for 5 months, plan to keep going for another 3 months and then having 6 months or so off before finishing it off, to have a life and save some money. Planning on selling spring 2014.

Works well for me, because I was renting with a friend. I'm now letting out a room to him, he's paying less than he was when we were renting before, but he's actually covering the complete mortgage and insurance.

The plan is then to do the same on another house, but this time turn it into a BTL.

I've learnt loads - tiling for example, know how to remove bitumen from floors too, chasing cables and getting elecs sorted for a electrician to finish off, how to fit a kitchen, next time if there were quarry tiles and no dpm I'd dig that up myself too. Now know how to plasterboard a ceiling, ready to be skimmed & how to fit window boards etc.

When doing the upstairs bathroom I'll learn from my dad how to plumb in a sink and bath. My next major task is to teach myself to do a bit of plastering - only 1sqm section, if it was the room i'd get a pro in

Russe11

stuart888 wrote: »

Russe11-

As for tying my wealth into one asset, possibly because like you I am risk averse. As stated I have approx 10,000 per year disposable income due to living with parents/girlfriend. This is probably the best time of my life to get some cash under my belt. Stocks and bonds can potentially lose all there value whereas property doesn't. Also in terms of a 25 year btl mortgage I can think of no period where propery hasnt gained in value.

What mortage offers do you currently have? 25 year repayment your talking about?

If you have £10k and leverage lets say 90k mortaged, a 10% drop in asset value means you have lost all your money, with the potential of further losses with further drops.

stuart888 wrote: »

Russe11-

As for the people I know doing this some of them have had bad experiences bu mainly due to buying just before thr crash, they all got over it but admitedley Iw wouldn't be working for them had they gone bust would I.

so they have actually extracted profits from their portfolio, or is it just all ticking over on borrowed time and money?

stuart888 wrote: »

Russe11-
I still disagree that it can't be cashflow positive. My sums seem to say it will be. Mostly due to low rates combined with high deposit requirements being so much lower than rental demand, partly caused by above lack of credit.

lack of credit, as above do you have the funding in place or offered yet?

high deposit? I thought you only had 20k? where does the money for tools, refurb, expenses, mortage payments etc. come from whilst you are doing the work?

stuart888 wrote: »

Russe11-
Agreed that its wis to avoid rents subsides by benefits and loans as they could. disappear.

Any thoughts?

yep if those dissapear to any serious degree the market will have a serious adjustment due to so many vacant properties to let.

Being already down to room rates for single under 35s, universal credit is the next phase, not sure what happens after that...

keystone

stuart888 wrote: »

Keystone- are you saying I don't have the ability to undertake the physical work?

Nope. Didn't say that at all.

Cheers

Leif

I bought a house last spring, and I'd never done anything, not even decorate. I have had so much trouble with trades (only some, many were good) that I ended up doing things myself. So I patched walls, hung doors, tiled a small floor, put up a small ceiling, put up coving in three rooms, and painted the entire house. What I have learned is that I can do most things if I do the research, but it does take time. In fact time is the main problem. I chose to resign from my last job, and the 4 week 'holiday' allowed me to completely redo the porch. But normally time is scarce, and you end up knackered after spending every evening and weekend doing work in the house. I know I can do a better job than many trades, but it takes time, so sometimes it is best to find someone you can trust.

What was said before by others is in my opinion true. When I was looking for a house, I saw quite a few that had been renovated with cheap carpets and a cheap kitchen. And my view was "I will have to have the carpets and kitchen replaced" so that was factored in to my offer. I know what they sold for, and they went for modest prices. I saw nicely done up houses, and they achieved prices that I thought were silly, and the sellers did well. So if you intend to sell the house, don't put in cheap kit, you'll regret it. A nice kitchen will help it sell, but it has to be good enough that people think "Mmm, nice". Some people do want a house ready and waiting for them without decorating. But you have to chose a nice house in the first place, and the kitchen must fit. So don't put a four star kitchen in a cheap house in a not so nice area.

If you intend to rent it out, then don't waste money on nice kit. One colleague had a nicely decorated house trashed by a nut job tenant, he lost tens of thousands of pound. Charity shops are a good source of furniture, some is actually quite nice, but most is usable but no more than that. I would say you want the house to be clean and nicely decorated.

And there is nothing wrong with Ikea kitchens. I know plenty of people who say they are good, and who fitted one themselves. But they have white insides, which will not match wood doors. But almost all kitchens are basically the same chipboard carcasses with doors.

stuart888

Russe11

No mortgage offers atm as I'm still researching my whole idea. Looking at interest only with 25 year maturity dates upon wich the capital must be repaid.

Looking at a 25% deposit so my 20k on an 80k terrace. So high deposit in percentage terms. Factor in the improvements e perty. I see the work insurance. Assuming a 10k gross profit on renovations leaves me open to a loss of 10k in value before I lose any of my money. I'll have just lost a lot of my time! However should prices remain the same or rise ( wich I belive they almost certainly will in the long run ) then the profit made during renovation makes remortgaging easier.

The people I know have sold to reinvest yes. 2 of them working together spent from early 2007 to early 2009 renovating an apartment building. It was worth the same when finished as when they started despite all there work! They didn't lose money however and cut there losses and have made a couple of profitable moves since. My point being the worst lossesappen to those who buy when "everybody" is doing it, but even so your own work can compensate for this.

I have most the tools I need already due to work and picking up special offers. I could probably buy the remainder with a months wages as I'm only really missing the things I asked about in my original post plus a couple of other bits.

Renovation costs can be paid for with interest free credit card wich will be paid off with a final stage payment from a light refurbishment mortgage. As the refurb costs are wrapped into the mortgage ill only need a quarter of the cost so about 2-3k.

I can pay an interest only mortgage from my salary several times over plus running costs like electric ect.

stuart888

Keystone- so what did you mean when you said "your posts don't install confidence that you have the knowledge or experience to undertake the work yourself" considering the response I gave?

keystone

Exactly that - It's nothing whatsoever to do with physical capability.

Cheers

stuart888

Drummer_666- thanks for the info, had a good look at your blog and it looks great!
Can you give some advice on sourcing cheap materials? Good look with your bit of plastering and the whole project. 1m square is a good practice area and I've seen ameteurs acheive good finished providing they don't bite of more than they can chew and follow proper Methods.

stuart888

Do you mean I lack the skills and knowledge then? As I've said I'm not doing it alone either.