Getting the most bang for my buck

penguineater

I have been soaking up as much information as I can over the past few weeks when it comes to buying homes.


I am a single adult looking to buy in 2-3 years with a large deposit - 3 or 4 bedroom with garden, way up North, Newcastle area. Houses with this spec can go for £80k-£150k depending on the area and if it needs work.



To get the most for my money it seems to be a case of:



Auction fixer-upper - These seem to go for £40k-£60k

Council right to buy - 35% discount after 3 years
Housing association right to acquire - £9k discount




First option of Auction fixer-upper is probably the most realistic one - I don't mind living in a construction zone or delaying my move-in date until it's liveable.


Second one, I don't think I could even get a 3 or 4 bedroom council house as a single person unless I got really lucky on a home swapper website. Currently I live in a 1 bedroom maisonette. Bedroom tax would be fine if I managed it.



And again with the housing association, I am currently with one but I don't think they'd let me upgrade to a 3/4 bedroom without having a family.




Does anyone know of a website where I can rent a family for 3 years? :rotfl:



So unless I am missing something, are auction fixer-uppers the way to get the most for my money?


I'm not looking for a shared ownership.


Thanks for reading. :beer:

davidmcn

How much cash do you actually have? Auctions aren't a great place to buy if you need a mortgage.

penguineater

davidmcn wrote: »

How much cash do you actually have? Auctions aren't a great place to buy if you need a mortgage.

When I am ready to buy i'll have £20k-30k cash and maybe £15k including 25% bonus from ISA. So £35k to £45k total.

stator

Forget about right to buy, you obviously won't get that.
I would also forget about auctions, it's too risky. You have to either spend lots of money on surveys and mortgage applications before the auction, or you have to take a massive risk and buy unseen. Once you win an auction you are in a contract to buy that house, even if the mortgage company refuse you a mortgage or the survey shows defects, what are you going to do?



But best value for money is usually former coucnil houses. You get a decent garden and decent sized bedrooms etc. But you won't get a discount, you just have to pay the market rate like everyone else.



If you use help to buy on a new build you get your bonus, but it's still a big risk because new houses can fall in value, the market is untested.

Gwendo40

I also wouldn't bother with auctions, the last couple I've been to I'm convinced many of the lots have actually gone for more than they would have on the open market.

Auctions now just seem to be full of giddy folk who have watched a couple of episodes of HUTH and have convinced themselves that they can be property development entrepreneurs.

dawyldthing

You might struggle to get a 3 bed house at £60k but if you shop around you can get 2 bed houses in many areas for £60k or less, depends where you want to live but if you have a good search they are available

Facknats

Why are you hoping to get a 3+ bed if you are single out of interest? Are you hoping to let a room or two to cover mortgage costs?

What most of my multiple-homeowner-by-40 friends have done is get a 3 bed ex council or victorian, lived as a house share while young/single (so lodgers who are often friends anyway pay the mortgage) and then released equity/used some of that money they saved from not occupying a 3 bed as a singleton all that time to buy a family home. One stayed in the house they had as lodgers gradually moved out, didnt replace the lodgers and through that was in a position to use the cash at auction for a BTL.

Comes with it's own pitfalls and all life plans have to be subject to change but in retrospect they got a lot more bang for their buck.. now if only I'd had that deposit before the family arrived :doh:

penguineater

Facknats wrote: »

Why are you hoping to get a 3+ bed if you are single out of interest? Are you hoping to let a room or two to cover mortgage costs?

What most of my multiple-homeowner-by-40 friends have done is get a 3 bed ex council or victorian, lived as a house share while young/single (so lodgers who are often friends anyway pay the mortgage) and then released equity/used some of that money they saved from not occupying a 3 bed as a singleton all that time to buy a family home. One stayed in the house they had as lodgers gradually moved out, didnt replace the lodgers and through that was in a position to use the cash at auction for a BTL.

Comes with it's own pitfalls and all life plans have to be subject to change but in retrospect they got a lot more bang for their buck.. now if only I'd had that deposit before the family arrived :doh:

I can't be chewed buying a smaller property, spending time money and effort making it into a home and then having to move to a bigger one. I'd rather just get something with a good size and garden as my first home and do all of the work in one go, i.e open plan kitchen/dining, re-doing kitchen if needed etc.


Chances are my tastes and needs will change in 5-10 years and i'll want to move like most people do but for now I like the idea of having a good size property and not a small 1 or 2 bedroom.


I can't see myself having lodgers as I work from home which means I spend a lot of time here, and I love my personal space! :rotfl:Although it does sound pretty amazing earning money while paying off the mortgage.

trailingspouse

Now's the time to save like billy-o, and also to do your homework - decide which areas you would like to live in, and put together a shopping list of what you need from a house (eg 3 bedrooms, garage, good sized garden, close to shops, near the A1, or whatever), what you don't want, and what would be nice to have. Cross check properties that you see online with your shopping list to get a feel for how much they cost, and what areas they're in. This avoids you ending up buying a house just because you can afford it, and then realising that it doesn't actually do what you want it to do.



Some areas will be cheaper than others (Blyth cheaper than Jesmond, for example), but keep an open mind. Does it have to be Newcastle itself? Some of the ex-mining areas in North Tyneside will be cheap, and some areas of Northumberland ditto.

p00hsticks

penguineater wrote: »

I
So unless I am missing something, are auction fixer-uppers the way to get the most for my money?

You don't say if you can do most of the 'fixing-upping' yourself or if you are going to rely on getting tradesmen in to do the work.



My view is that if you're buying in a cheap area as you intend to you're less likely to see a profit when selling if you buy a fixer-upper a any increase in value is unlikely to come anywhere near what you spend - for example, if oyu buy a house for £50k and spend £10k on doing it up that represents 20% of the initial value of the house.

Mr.Generous

p00hsticks wrote: »

You don't say if you can do most of the 'fixing-upping' yourself or if you are going to rely on getting tradesmen in to do the work.



My view is that if you're buying in a cheap area as you intend to you're less likely to see a profit when selling if you buy a fixer-upper a any increase in value is unlikely to come anywhere near what you spend - for example, if oyu buy a house for £50k and spend £10k on doing it up that represents 20% of the initial value of the house.

My experience is that I make a living buying run down cheap property and renovating them, you normally add about £30 - £35k when you renovate a cheap property.

Obviously you look at the price they sell for in top shape v's dilapidated and unless there is a substantial difference don't bother. If the initial purchase price is higher then you add more value. Its the stamp duty that hurts, on a £385k property the stamp duty for a developer is £12k which eats into the margin.

Cost control is crucial but you make your money when you buy at the right price.