How much do you think you added to the value?

moneyistooshorttomention

A recent post got me wondering. Was feeling rather envious of someone reckoning that a house might need ever so much money spent on it, ie around £15,000 to take from Utter Dump to Normal House category:(

As I reckon I must have spent around £25,000 to date on the Utter Dump I recently bought.

So state of play at beginning was:

Good location and that's what I bought it for (and the decent size garden).

But the house itself:
- 1970s probate house

- reeked when I first moved in (think smell has finally vanished after all the work done on it later)

- garden fence virtually disintegrated

- roof leak

- cheap bodge job kitchen

- tatty old-fashioned garden

- the 1970s bathroom had had the bathroom suite replaced with cheap bodge job suite and other 1970s stuff all still in place

- Rayburn in kitchen that needed to go

- outdated inadequate electrics

- outdated inadequate central heating

- needed replastering throughout (ceilings and all)

- tatty old person style d!cor (not that that made much difference, as it had to go in order to do the replastering anyway)

- partial VERY VERY bodge job replacement of fascia boards (so bad the roof was in danger)

- neighbour who feels they have the right to dictate every "dot and comma" of what happens (even within the house). Now had it made very plain to them it won't be happening any more:)

So, the vast majority of this work has now been done and the rest will follow soon.

Am not planning on selling the house, but am very curious as to what percentage I have added to the value of the place and whether I have made a loss/stood "even stevens"/would make a profit from that.

So, question for those who have taken on a similar Dump and brought it up to scratch, what do you think happened to the value of it, compared to how it was when you bought it?

ognum

I bought a house 4 years ago for £280k, it was dump a complete redo, it was re plastered, retired, new bathroom, extension to kitchen with chimney removed and new kitchen. Walls taken down, stair banisters made, new bathroom, floors stripped completely redecorated (25k) then recently loft conversion two extra bedrooms and a bathroom. (45k)

Total outlay £350k plus sweat and tears, now valued at £550k BUT much of that is house price inflation in this area!

moneyistooshorttomention

I think that counts as a loss:(

BTW, I've not added an extension/loft conversion/etc. Been gutting the existing house, but not added to it.

ACG

I bought my house for £84k.
It was owned by a 92 year old man who had not touched it since the 70s i reckon (looking at the bathroom/kitchen/carpets etc).

I was doing some sums and it will have cost me around £8-9k to bring it up to scratch by the time its finished:
- Rewiring,
- GCH installing (it had storage heaters),
- Bathroom,
- Kitchen,
- Carpet everywhere,
- Decorate everywhere,
- New front/back door.

The house itself has now been brought up to the standard of the rest of the street - around £115-125k.

Admittedly I called in quite a few favours - father in law worked for national grid, step brother is a plumber etc. I also did a Mortgage for a kitchen retailer so managed to get that heavily discounted.

The only job i had to pay full whack for was the rewire. Everything else labour wise was either free or at mates rates.

phill99

It's really academic. You can only increase its value up to the ceiling value for your locality. If you paid £100k spent £25k and the ceiling in your area for similar houses is £130k, then you have added £30k to its value. (And made yourself £5k on paper) If the max is £120k, then you have added £20k in value and made a paper loss if £5k.

shegar

Bought this bungalow 2006, £145,000, , 3 bed , 2 sitting rooms, kitchen diner, and sun room ,the hall is 28 feet long, small wash room for TD and WM, huge windows and most of them are south facing ,drive big enough for 4 cars , it was valued last October at £215,000.......All we done to it was painted it through out , laid wooden floors , and porcelain tiles , water softener , etc , completely re tiled the bathroom and kitchen , cost about £4,000 to do , OH was a builder so all the labour come free, no structural work needed , opened up a fireplace.....

Got a big south facing garden which was just a blank canvass , Ive planted hedges, wildlife pond , bought 8 mature silver birches ,built big hen house and run area, garden looks beautiful now ........Done more work outside than inside.....

Bungalows in this area are very well sought after as there is hardly any come on market , so thats probaly why it is valued pretty high.......This is my forever house no intention of moving .........

lessonlearned

Bought a three bed Victorian Terraced for £93.5K last December. It was in a sorry state but had good bones.

Total spend £20k, aching backs, blood sweat and tears. :rotfl:.

Wiring, plastering, upgrading insulation, some joist/timber repairs, mid price kitchen but with integrated appliances so will look ultra streamlined and spacious, mid priced bathroom, fully tiled to all walls and floors. "Designer" radiators to kitchen and bathroom. Opening up fireplaces, re-instating period features such as Minton Tiled floor, deep skirtings boards and architraves, coving. New bannisters etc - the others wouldn't have passed building regs..

The garden was a rather sad dismal yard - it's now on it's way to becoming a lush urban oasis.

Ceiling price for street currently £125K. We will hit that with ease.

The really good news is that the area is definitely "Up and Coming". The place is awash with skips and scaffolding and "alive with the sound of hammers and drills".

Similar houses a few streets away which are at a further stage of gentrification are already fetching £145-£150K. That ripple is now a Tsunami.

lessonlearned

moneyistooshorttomention wrote: »

I think that counts as a loss:(

BTW, I've not added an extension/loft conversion/etc. Been gutting the existing house, but not added to it.

I think that Ognum meant a total of £350K spend (i.e. including purchase price). In which case, even allowing for £150K for HPI although that seems excessive for 4 years unless it's London, there must be at least £50K profit there (minus fees etc).

The big problem with that £550K figure though is that you are in a twilight zone for Stamp Duty, with the £500K being a bit of a stumbling block. Once you are over £600K SD becomes less of an issue until the next cut off point.

Gutting a house will give you a profit if it is done properly, not skimped and not personalised. However, you will usually make more profit if you can add square footage.

However, the real secret to making a profit is to buy low. Then make sure you do a first class job.

A professional developer will need to buy a property at least 20% below market value to stand a chance of making a decent profit. Unless of course it is an exceptional house and the developer knows their onions.

It's not just the renovation costs, you also need to factor in professional fees, finance costs, tax on profits and of course the developer has to eat occasionally.

If a commercial loan is required (as opposed to a residential mortgage) then the banks will be looking at a 25% margin before they will deign to lend.

Making a profit on property is not as easy as it might first appear.

Lily-Rose_3

I have found that when a house is a do-er upper, unless you are lucky enough to be related to people who are builders, you are not likely to make anything from it. Repairs and maintenance costs a BOMB, and you often lose out.

Buying is more trouble than it's worth IMO. I was never happy buying: every house we bought needed MUCH more spending on it than we first thought, there were LOADS of hidden horrors, (dodgy electrics, poor central heating system, crap windows that needed replacing etc,) and multiple 1000s more need spending than we first thought.

Very lucky to be in cosy detached bungalow in a very rural area owned by housing association now. They will have to take me out of here in a wooden box. I will never ever leave.

moneyistooshorttomention

phill99 wrote: »

It's really academic. You can only increase its value up to the ceiling value for your locality. If you paid £100k spent £25k and the ceiling in your area for similar houses is £130k, then you have added £30k to its value. (And made yourself £5k on paper) If the max is £120k, then you have added £20k in value and made a paper loss if £5k.

That "ceiling value" thought hadn't really occurred to me, but will certainly be relevant for many. I think my house may be the only one of its size and type in the immediate vicinity and the ceiling value for the vicinity is quite a bit higher than I paid for mine, but then other houses in immediate vicinity are bigger. Hence, in my own mind, I know I paid a similar price to similar size/condition houses a couple of streets away. But I have to bear in mind the dearer street I live in and I'm blowed if I can work out what the proper value of it is (in a done-up state).

It was dead easy with my last house (ie a typical 2 bedroom Victorian terrace house). In the location as a whole there was a certain price that houses like that had as a "base level" price and then you added or subtracted according to whether it was in better or worse condition or normal on the one hand. Also according to whether it was in the area widely regarded as "best" (add £20,000-£70,000 depending on exactly which street) or "those areas" (subtract at least £20,000).

mummyroysof3

We bought our house for 54k and now it's worth almost double that. Inside there is barely anything that was here before... Just a few door frames and radiators that haven't been replaced