Home renovation/ investment advice

leodislife

I have recently bought a small back to back. When I bought the house i had a lot of plans for it (making open plan, building larger dormer, converting basement). But upon moving I have discovered that the area is much worse than I thought, i used to live in this area but it has rapidly declined and there is drug dealers everywhere.  I feel ok staying here for now though and I still like the house, but am wondering how much is worth investing in the property. 

Is there any guides out there? 

Because if i decided to move I might want to rent it out, or sell it further down the track , and there is probably a ceiling to how much extra i could get for the house no matter what level of renovations I did.

i want to invest because obviously its my home and i want to enjoy living there, but at the same time I don’t want to poor money down the drain if it doesn’t increase value, as i doubt this will be a forever home.

 

eddddy

In your position, I would ask some local estate agents. They will know what 'quality' of property buyers in that area are looking for, what the price ceiling is, etc.  If you ask a few (maybe 3,4 or 5), you'll start to get a feel for which ones are realistic etc.

Generally, they'll probably be helpful and offer their opinions for free, because they hope you'll eventually instruct them, when you decide to sell the property.

Doozergirl

How much was the house?  Houses in some areas aren't even worth the cost of rebuilding them, so building work is pointless.  As often demonstrated by the general quality of building work in said areas. 

RelievedSheff

What have other similar properties sold for in the area recently? You can get a feel for what the likely maximum value will be from recent sales. That can then help you decide if major building work is really the right choice for this property.

If it isn't you can still do some refurbishment work relatively cheaply and still make it your home.

leodislife

Doozergirl said:

How much was the house?  Houses in some areas aren't even worth the cost of rebuilding them, so building work is pointless.  As often demonstrated by the general quality of building work in said areas. 

The house was 82k for 2 bed back to back. The house doesn’t need structural work, but ideally like i said dormer, openplan kitchen diner, covert basement. Obviously if i converted basement i could sell it as a 3 bed or 2 bed with a studio. 

Its not a bad house, Its near local hospital and town so good for nhs staff etc. But theres just loads of crime and its gotten worse in recent years. 

Doozergirl

leodislife said:

Doozergirl said:

How much was the house?  Houses in some areas aren't even worth the cost of rebuilding them, so building work is pointless.  As often demonstrated by the general quality of building work in said areas. 

The house was 82k for 2 bed back to back. The house doesn’t need structural work, but ideally like i said dormer, openplan kitchen diner, covert basement. Obviously if i converted basement i could sell it as a 3 bed or 2 bed with a studio. 

Its not a bad house, Its near local hospital and town so good for nhs staff etc. But theres just loads of crime and its gotten worse in recent years. 

Do none of it if you want your money back.  Not going to add anything and may open a can of worms in addition.  Old houses always do!  

Maybe making it open plan if it makes it a nicer place for you to live.  

greatcrested

Converting a basement (properly) can be very expensive. See the thread here!

A lot depends whether you decide to

* make this your home. Improve it to how you'd like it. Or

* let it out. Get letting agents round and ask how easy to let out in current state, and what rent, Vs rent achievable if you convert. Then do the maths against the conversion costs.

* sell. Pretty much same conversation as above but with an estate agent not a letting agent!

gwynlas

It might be worth having washing machine/tumble dryer fitted in basement to save space elsewhere but a proper conversion of the cellar would be quite expensive. In determinig how much to spend you should be looking at rental possibilities and percentage return, Out of London most would expect over 8% return to be reasonable but do not forget allowable expenses for BTL have reduced considerably,

leodislife

gwynlas said:

It might be worth having washing machine/tumble dryer fitted in basement to save space elsewhere but a proper conversion of the cellar would be quite expensive. In determinig how much to spend you should be looking at rental possibilities and percentage return, Out of London most would expect over 8% return to be reasonable but do not forget allowable expenses for BTL have reduced considerably,

Your right I don’t think cellar conversation is a priority . 

i think i could get an 8% net annual yield if i rented it. If i did almost nothing to it I coukd probably rent it for about £530pcm and if i renovated to high spec (new kitchen, retile, plaster, possibly make it open plan) i might get £630. Which is a decent percentage more. 

I don’t think its a good time to sell. And really i want to stay for a while because its cheaper than renting and its near work, so I suppose i just need to decide whether it worth renovating with the higher rental potential if i did, or whether i should just live with it. I am inclined to think renovating is a good idea. 

caprikid1

How much are you likely to have to invest to get that extra £100 a month ? £10K ? That's a 10 year pay back. Most improvements in a rental will be very tired after 7-10 years so no longer giving you a premium. One dodgy tenant in a bad area can set you back thousands in rent and damage very quickly. Make it clean and presentable and in line with other houses in the area, often these areas are attractive to investors and they don't like to pay a premium for finish that could be lost / trashed in 2 years.