Doing up houses for a living

aivijo

I'm not talking just a case of making the house look pretty with new wallpaper, I mean structurally sound houses but with visible changes that make them worth more. I know from my own experience of buying in this area that the houses that require no work when moving in sell VERY quickly, whereas there's plenty on the market considerably cheaper that do only require a good eye and hard work. This may include knocking some kitchen walls down to have a larger kitchen diner, new bathrooms, converted integ garages etc and that's the kind of things i'm looking at doing. Not with my own house where half the money was spent on hidden necessities such as a new damp course, ceilings and floor joists. They're the kind of things that are absolutely fine in most houses but replacing them alone does not result in much improvement in the value. You're right, anybody can go into a house and do these kind of jobs...hypothetically. Not all purchasers can be bothered or have the right circumstances to enable them to do it themselves though. If we could have walked straight into a nice house we certainly would have! We had to live with parents for 6 months with our kids whilst we did our house up. I know many people who won't/can't do this though.


Like I've said previously, I know what to expect and how I can make money from it. I've done it before but just not to turn over for profit. It's just the function of mortgage/loans I was certain of.

Doozergirl

aivijo wrote: »

Oh, and I definitely don't want to be living in the properties as we do them up. I've got two small children and we're quite settled now :-)

You want a lot without really putting much in.

It doesn't work like that. Certainly not any more.

Ability to fund is key. If you haven't got a bucket of cash or are prepared to put your home up for your business, then you have no business.

Kitchen diners do not add value either. You'll find as many people seem to hate the things as love them. Square footage adds value, poor condition detracts.

makeitstop

Doozergirl wrote: »

You want a lot without really putting much in.

It doesn't work like that. Certainly not any more.

Ability to fund is key. If you haven't got a bucket of cash or are prepared to put your home up for your business, then you have no business.

Kitchen diners do not add value either. You'll find as many people seem to hate the things as love them. Square footage adds value, poor condition detracts.

Agree 100%.

I don't want to rain on the OP's parade, but, I do feel this may be a bit of a pipe dream for him, at least at this moment in time. A lot of people can (and do) develop a property or two. However, doing it for a "living" is a completely different proposition, and as such, requires a different recipe from the part timer to be successful.

slowpoke_rodriguez

This may give you some ideas on Finance etc.

http://www.buildstore.co.uk/finance/

aivijo

This isn't the area i'm actually looking in but I know others who have done something similar here and it works. No extensions, just doing the right jobs have increased the value:


Go onto rightmove and under 'house prices', look up the following addresses to see the added value in short spaces of time -
2a Ashlar Road, Waterloo, Liverpool, Merseyside L22 4QP
3 Regent Road, Crosby, Liverpool, Merseyside L23 5RL


I'm not asking whether I am capable of doing it. I have some capital behind me but I want to be clever about how I finance the rest. With me already having my own mortgage, is it a second home mortgage I look at (although its not a second home for me as such), Its not a buy to let project....hence why I asked the initial question. This thread has far deviated from what I was asking.

aivijo

Here's an even better example!
6 Oak Avenue, Ormskirk, Lancashire L39 3PA


A relative of mine viewed this house when I was up for £130k and it's not any bigger in size, the space has just been redesigned and modernised.
I live in Manchester and there's plenty of areas here that I can do similar projects with.

Caz3121

Here is the before - it was on for region of £150k
http://www.zoopla.co.uk/property-history/6-oak-avenue/aughton/ormskirk/l39-3pa/32617275
there has obviously been money spent, new windows, kitchen, bathroom, garden etc. I would be surprised if this was not a builder that did this to do the work themselves (reducing contractor costs)
Are you in a position that you can save, sell assets or remortgage your own property to give you the capital you will need for any work plus mortgage deposit as any mortgage you may be able to obtain will be based on your finances and the current value of the property

aivijo

Yes it was on for £150k but sold for £125k. Our own house was in a similar state when we bought it and we got it for £20k less than the asking price, spent £20k on it then had it valued for about £40k more than what we had paid for it only 6 months later.
We do have some ways of raising more capital from remortgaging our own house and we have some savings. I know we can afford to do it but its the structure of the mortgage deal on the project I'm unsure of.

DaftyDuck

aivijo wrote: »

Yes it was on for £150k but sold for £125k. Our own house was in a similar state when we bought it and we got it for £20k less than the asking price, spent £20k on it then had it valued for about £40k more than what we had paid for it only 6 months later.
We do have some ways of raising more capital from remortgaging our own house and we have some savings. I know we can afford to do it but its the structure of the mortgage deal on the project I'm unsure of.

So, this illustrates the huge potential hole in what you want to do perfectly. Your sums just don't give you any real profit.

I don't know the actual sums for your house above, but you say:

"Got it for £20k less than asking" ... So:

Advertised @£150,000, bought for £130,000.

Spend £20,000, valued now @ £160,000.

Your buyer will be after a bargain, just as you were, so selling price, he'll want £20,000 off the price as well....

Selling price £140,000, capital loss to you £10,000, plus your time.


Oh, and you are doing this with a mortgage.... so you've got those costs to pay off... from your negative equity! Where do you go from here?


The sums here are just so far from what you would need if it were your main income. Firstly, there's really no way you can make an add-on sum for a decent salary unless the capital sum invested is hugely higher. Making a 20% increase in a £150,000 house brings in £30,000 before costs are subtracted from that, and even paint costs.... Do the same on a £500,000 house, and you are looking around £100,000. Even if costs scaled proportionate to house price )and they don't), if costs are 50%, that's only an income of £15,000 in the first instance, but £50,000 in the second. It's more likely £65k in the latter.

Buyers in the higher price category are much more likely to splash out on the extra features you can add, and it's those that turn a profit. Hunt down a "unique" property, one with, say, a view of King's College Chapel in Cambridge, or a Medieval timber ex-pub just off Lavenham Market, or a house right in an excellent (grammar) school catchment area, sell using a local agent with a London office and, (with luck... I do stress the luck!), you'll have someone craving your property or, better still, two or more. Then there's money to be had.

You set yourself a huge disadvantage being unable or unwilling at the start to live in the same property as you do up... it's obviously a huge pool of "dead" money having two properties. Why not buy something larger, one mortgage, do it up whilst living in it?

Neither of those Liverpool houses show what I'd call a huge rise in a short time. Take out three factors... i) natural house price rise during that time ii) cost of material and time in doing it up and iii) the variation that some houses exceed asking, others fail to get there... what are you left with? maybe a few hundred quid for a year's work. Maybe a loss... (in fact, do a bit more research on one of those: someone made a loss, by your methods.)...

I don't want to put you off having a go at this: if you love houses and gardening, enjoy hands-on (it makes a 100% change from my academic day-job, sitting in front of computers, doing sums, staring at a wall and thinking, occasionally talking to a group of five or ten, then sit still again for the next three hours), are willing to spend hours and hours and hours and hours slaving away, and can risk the capital when you fail, then it's a great fun way to spend some time. Sure, if you are a full-time builder, with friends owing you trading favours, large stockpiles of resources you can rely on, all the equipment already paid for.... then it might be an easy cash-cow... might!

But, it certainly isn't always profitable. Like any business, it has its ups as well as downs. If you don't have the financial resources to smooth those out (and I don't believe a second mortgage comes close...), it will probably cost you more than you'll make. It's certainly not going to be profitable if you emulate what those houses you show did; I'd have given up, if that's all I had to show for my work.
... (working, so editing as I go)

aivijo

No, my calculations are correct. If you saw what that bungalow had sold for on rightmove you would see that (as per a previous post).


The house referred to was on the market for £150k initially but sold for £125k to the developer. Who then after completing the work sold it on for £185k. That's £60k less the cost of the works - i'm sure he didn't spend even half that amount.


The housing market has stayed pretty stable over the last 12 months so natural house price inflation is a moot point.


My own house which I referred to again was purchased for £188k (it was on the market for £205k when we bought it, a year to that it was on the market for £250k so has been reduced dramatically). We spent less than £20k doing a refurb, bringng the total cost to circa £208,000 - but after the works it was revalued at £230,000....profit of £22,000. Not bad for 6 months work around our normal full time jobs. Some jobs were still outstanding at the time of the revaluation too and spent a lot personalising the property. if we had done it for an actual profit to sell on the property, we would have spent about £5k less.