How much premium for extension potential?

bluedrop

We are viewing a 3bed property in Beckenham later today (Call it property A) It needs complete refurbishment. Its a small 3 bed semi (1050 Sft)with about 15 feet space on the side! That makes it a beautiful wide plot with a potential to extend it into a 2000+ sft 4 bed house ! The only downside is, its about 0.9 mile from the station. That's the only compromise really.

Its priced to match other slightly bigger 3 bed semis in the area that are in excellent condition (with no potential to extend). Infact one of the properties on the market at exactly the same asking price is a 2012 built 3bed semi (1300 sft) finished to a VERY high standard (Property It had zero potential to extend. Not even into the loft.

We currently live in a 3bed house. It has only one bathroom (shower room) and as a busy household with 2 working people and two children, we are stuggling to queue in the mornings! Also, a downstairs toilet would be very convenient. We'd love to have another bedroom and a study. We can do without for now, but in 3-4 years time we will struggle without these. Property-A gives us the opportunity to covert it into what we want - a few years down the line. Property B solves our immediate problems , its a great house for the next 3-4 yrs.

The plan is:

If we buy property A, refurbish it to a decent standard and rent it out for 2-3 yrs until we are ready to take on a massive extension

If we buy property B, rent out our current house and move into it.

How much premium would you attach to this kind of extension potential? Would you rather buy property B?

ReadingTim

Problem is that if the plot's that wide/large, it may be priced with development potential in mind, ie block of 4 x 1 or 2 bed apartments, of pair of modest semis, rather than just an extension on the back. Dunno if your pockets would be deep enough to compete with that. And even if you did, bought the place then created your 4 bed palace, would you risk creating a property that's disproportionately large for the surrounding area?

But back to your original problem, it's really the extent to which you can defer gratification: property A seems like the letter long term option, unless you want it all, right now. So, how well can you control your impulses and exercise self control?!?

Grenage

How much are properties of the projected size in that area? How much would the refurbishment and extension cost?

bluedrop

Grenage wrote: »

How much are properties of the projected size in that area? How much would the refurbishment and extension cost?

Asking price: 565k
Estimate for refurbishment and extension - Appx 150k
Total : 715k

2000 sft properties in the area sell for over 800k. There are plenty of properties on this road that have extended to the side.

bluedrop

ReadingTim wrote: »

Problem is that if the plot's that wide/large, it may be priced with development potential in mind, ie block of 4 x 1 or 2 bed apartments, of pair of modest semis, rather than just an extension on the back. Dunno if your pockets would be deep enough to compete with that. And even if you did, bought the place then created your 4 bed palace, would you risk creating a property that's disproportionately large for the surrounding area?

But back to your original problem, it's really the extent to which you can defer gratification: property A seems like the letter long term option, unless you want it all, right now. So, how well can you control your impulses and exercise self control?!?

Its a semi detached house. The road only has semis - a lot of them have extensions similar to the one I'm hoping to do. There are no flats there.

Grenage

I'd probably go with the house with extension potential. A high standard of decoration is nice, but getting it done yourself will be to your tastes.

Given that you think you'll need more space down the line, it makes even more sense.

AdrianC

15ft of space down the side... Huge... Development potential.

Only in London.

MrJB

The way you'd value it if it were a development appraisal would be to look at the cost of purchasing it in the current condition and compare against the cost of the property as completed development. You then factor in costs (including funding costs) you then knock off an element as there has to be some incentive for a developer to do the work and you're left with a price.

I assume you've done suitable amount of research to ensure that there are no restrictive covenants on the property to prevent development?

ReadingTim

bluedrop wrote: »

Its a semi detached house. The road only has semis - a lot of them have extensions similar to the one I'm hoping to do. There are no flats there.

Ah - missed that word! I'd probably still buy it over the other place - the so-called VERY high standard you claim of property B may prove only to be superficial, or (literally) be painting over the cracks...

bluedrop

ReadingTim wrote: »

the so-called VERY high standard you claim of property B may prove only to be superficial, or (literally) be painting over the cracks...

We have friends living in the development. 4 yrs on, they are still in love with the property. It is really a high standard property, that's the reason I am giving it so much thought.

Hoploz

I always appreciate plots which have space at the side in between houses. There's the possibility of extending, but actually it's the breathing space I like. I hate it when rows of houses all begin to merge into one through side extensions which reach the very edge of the plot. My last house was a corner plot one side with garage the other side, my current house has no neighbours at all. We looked at so many big houses with only a few feet, or in some cases even inches, between them. We would never consider that.

I was also going to say you'd need to ensure you don't over-develop, as if it's in a road of small houses your price when extended will still be lower than the same bouse would be in a road of bigger houses. But if others have done a similar thing then that is covered in this case.