Offer accepted on house - but don't know if purchase will be worth it.

uberscuba112

Thank you reader in advance if you read the (essay) below and thanks a million times more for any compassionate responses. 

Background on me - 
I have looked at lots and lots of properties. I have a few family members who work in the building trade, therefore while I have not experienced it myself having never owned my own place I do have an appreciation for what property refurb entails and have family to support me. 

I have however, not been looking deliberately for a full refurb house, but nonetheless have ended up with one. On visiting the property it clearly needed updating (cosmetic updates throughout) but what I did not anticipate was the extent of work (and shooting costs of materials/labour) required to fix invisible things wrong with the house. All in all, my surveyor highlighted;

- Damp at ground floor level (suspected cause is quarry tile floor). Based on research online, its quite common with that floor structure and the best solution is to re-install the floor including with a modern DPC. Cost for this work was approx £2k from a local tradesman 

- Chimney rebuild (will be sharing cost with neighbouring property, c. £4k per property). Expected it just required repointing 

- New kitchen (I would not be prepared to pay for a brand new wow-spec kitchen, I will be looking for something second hand and high quality). Budget is therefore £3k

- New bathroom (brand new). Budget £1.5k

- Complete redec throughout. Rough budget approx £2k

- Possible electrical full rewire (at a minimum, fuse board + minimum required safety fixes approx £1.5k). Quote for full require is £3.5k

- Full central heating system upgrade (new boiler, new radiators, fixes to any leaks). Budget is £8k

- 5 new windows (not an urgent fix). Maximum spend would be £7k although at time of replacing I would be considering cheaper alternatives to the ideal replacement windows I got an initial quote for.

- New flooring throughout ground floor (4 rooms, small-medium sized). Already included in general redec costs of £2k above

- textured ceilings in various rooms (Possible artex but not known or disclosed). Since these are in tact I would be plaster boarding / skimming over.

Highlighted in bold are the bits I wasn't expecting to be issues or not as bad an issue as the surveyor has indicated..

Obviously at time of viewing I got to a point where I had my offer accepted, not being aware of all of the above nor the total cost of refurb I am facing (based on above numbers, an approximate budget of £30k). Really I am aiming to spend no more than £25k and consider to £30k to include a contingency. I have this money in savings available to spend on the property, which is a position I am grateful to be in.

I have renegotiated and had £23k knocked off the asking price. In retrospect I wished I had fought harder to get £30k knocked off.

Running the numbers, the property could turn out to be a good investment though, considering resale potential. This is because:
a) property is in desirable area - good local schools nearby
b) lots of curb appeal in terms of roadside, exterior views of property
c) floorplan is well laid out 
d) possible to extend into loft (although this is unlikely something I personally would be able to fund, which I originally was considering using my funds for prior to totting up refurb cost...)
e) my mortgage secured in a cheaper rate than rates i'd now be looking at if starting with my search all over again (at least approximately £250p/m)

But as you can see from the list of works above, my money will be put into the property to put right everything that is currently defective, and this makes me feel very nervous whether that is a wise investment. If the property were to be on the market in good condition, I anticipate it could achieve £330k and that being a guide price due to the nature of the property - there aren't many comparables, it has a lot of perks and unique features to draw a buyer in. If it did achieve that, based on my numbers that isn't a bad investment. Of course, no one has a crystal ball with house prices.

I am concerned about the cost of the work and the sheer amount of effort it will take. Sensibly i wouldn't want to think i'd get the work finished in under 12 months (quite a time commitment when I am desperate to have my own space now).

Outside of money, the house does tick very many of my boxes but the main exception to this is it doesn't have the same convenience factor as other properties I have been interested in (30 minutes walk from shops/bars/restaurants of my local town). I can picture myself in it and enjoying it, but I also worry I may get bored.

The neighbours are also not my generation, and one is a family friend who actually told my relative about my purchase before I had even the chance to break the news myself - which gives off nosy vibes and makes me worried about what other info may get passed around.

As such, it may be that I spend 2-3 years with the property, and after that I'd look to port my mortgage (which I can). I view this property as a way to get me onto something just as special, but also offers me a lot more from a lifestyle perspective (hopefully closet to town with charm, parking of some sort, closer to transport links) . I do not know if sacrificing that on this property will be worth it especially if I spend such money to restore a property and then vacate it within 3 years.

My options if I don't buy the property just seem bleak - 
- find somewhere else and face a more expensive mortgage
- lenders may reduce max borrowings in 6-12 months which may make it more difficult for me to make any purchase
- it feels like a gamble - I am picky with houses/flats and I don't know if something "better" will come up within my budget and when. I could be waiting another 12 months anyway to be in another property
- i could just rent somewhere, but that i'm told is "dead money"

Hence I am really lost as to how to arrive at a decision here, with all the uncertainty going on at the moment, and what is right for me knowing that this property feels so far away from the convenience I dreamed of.

Would you proceed with any doubts like these? I kind of feel like i have to, because I can't see how I will find somewhere in my budget that will make me better off... If you have any advice, it will be very gratefully received...

Domaco16

So you already got a chunk of money off the asking price and realistically that actually covers a lot from your list. 
Things like new bathroom, kitchen, flooring, skimmed ceilings etc... I would say that is your plan for any new house you get so realistically that shouldn't be on your vendors for money off. 
The chimney would be a bit annoying- but again the money you got off the asking price seems to cover this. If you were paying the asking price I would  totally understand your concerns but for me all these 'issues' still bring you to the asking price. 
Also new kitchens/ bathrooms etc.. can be budgeted cheaper if needs be. 
You will always think there may be something better that may come along- however you can't always wait for that to happen. 

If you see this as a stepping stone then I would go for it- renting is dead money (I have always been told that) however renting also works for many people! 
Neighbours not being your generation I don't feel is an issue either- if anything how much interaction do you want with them? You get nosey neighbours where ever you go.

Personally I would go for it- however I am not you so can't make your mind up, but I think the positives out way the negatives xx 

dimbo61

Watching too many " homes under the hammer "
So it will be worth £330,000 and your putting in a £3K kitchen and £1.5K bathroom. 
I hope your joking 
So either buy it and get on with the full refurbishment or walk away now.
PS Full rewire to 18th edition and 4/5 double sockets in each bedroom, dinning room, study and maybe 10 in the kitchen will cost £4000+ including alarm system and smoke alarms, security lights etc

With a huge amount of help from family and friends you might get this done but the stress levels will be high.

sidneyvic

Definitely homes under the hammer.
It is very easy to make money in a rising market and we are not in such a market...
I anticipate you will end up with a very nice house to live in but after taking so long to refurb it you will achieve a significant loss.
So if you are buying a house to live in, fill your boots, but if this is your start as a property tycoon you may well catch a cold.

jonnydeppiwish!

uberscuba112 said:

- Full central heating system upgrade (new boiler, new radiators, fixes to any leaks). Budget is £8k

- 5 new windows (not an urgent fix). Maximum spend would be £7k although at time of replacing I would be considering cheaper alternatives to the ideal replacement windows I got an initial quote for.

- New flooring throughout ground floor (4 rooms, small-medium sized). Already included in general redec costs of £2k above

- textured ceilings in various rooms (Possible artex but not known or disclosed). Since these are in tact I would be plaster boarding / skimming over.

Highlighted in bold are the bits I wasn't expecting to be issues or not as bad an issue as the surveyor has indicated..

But as you can see from the list of works above, my money will be put into the property to put right everything that is currently defective, and this makes me feel very nervous whether that is a wise investment. If the property were to be on the market in good condition, I anticipate it could achieve £330k and that being a guide price due to the nature of the property - there aren't many comparables, it has a lot of perks and unique features to draw a buyer in. If it did achieve that, based on my numbers that isn't a bad investment. Of course, no one has a crystal ball with house prices.

- it feels like a gamble - I am picky with houses/flats and I don't know if something "better" will come up within my budget and when. I could be waiting another 12 months anyway to be in another property
- i could just rent somewhere, but that i'm told is "dead money"

Hence I am really lost as to how to arrive at a decision here, with all the uncertainty going on at the moment, and what is right for me knowing that this property feels so far away from the convenience I dreamed of.

Would you proceed with any doubts like these? I kind of feel like i have to, because I can't see how I will find somewhere in my budget that will make me better off... If you have any advice, it will be very gratefully received...

Property purchase for profit is always a gamble - there is no guarantee that you will make money or even break even.

A few issues with your pricing -

Full heating renew won’t be more that £4-£5k as long as you don’t use BG.

Textured ceilings - how on earth did you miss that on viewing? are you sure you don’t mean possible asbestos? Get them skimmed once the electrics are redone and the chasing has finished.

5 windows at £7k? But you’re only planning to spend £1.5k on the bathroom!

Now on to the more pertinent point. Profit. You’re absolutely right, no one has a crystal ball so you need to view the house as possible longer term option if you don’t realise the sort of profit you’re after.

As stated before, the market is changing due to interest rates, inflationary issues and general feelings about the impending recession. That might benefit you in terms of building work as you may get more competitive rates that currently given by trades people and their workload potentially declines in the next 18 months.

Out of interest, do you work full time? If so, this is a fair bit of work to be project managing, dealing with all the rubbish that goes with it.

If you decide to go for it, get the 3 messiest parts done first - electrics, heating and plastering (and any walls you’d may like to remove/reposition). 

TripleH

Re your neighbours being of a different generation,

1. Morbidly, if they are old they may well move on and the area could change over time. You find in some areas people do come in, live and move on as a group.

2. Having a mixed age area is no bad thing, you are likely to have people around all day and nosey neighbours are good for watching out for ne'r do wells.

Having an area full of people your own age can get stale. You find cliques can form and it becomes obvious if you are excluded.

Where we were living during covid, we were part of a group that ranged from early 20's to early 60's in age and we worked as a group, organising varied fun events. It's the people not the ages that matter.

babyblade41

I think you have negotiated a pretty good deal already.. Do the major "must do", messy jobs first.

The rest can be done over time . Bathroom can wait , get local independent to do windows not the large companies you see on tv.

Bendy_House

Hi Uber.

The one thing you haven't mentioned - unless I missed it - is how much this place cost you to buy.

You reckon it'd be worth around £330k in the current market if in good order, and you got £23k knocked off the asking price, and you also estimate a refurb cost of £30k.

So, in the current market, if you paid 323k for this, you are in 'break-even' territory, but that's after at least a year's hard slog, and a med-to-low quality kitchen and bathroom. Please tell me you got this for under £300k at least?

Who knows what the market is going to do, but if it falls, then it would fall for your house and all the other similar ones, so that's largely moot. Ie - if you ARE going to buy a house NOW, then what will be will be. (Edit - you HAVE bought it, so fait accompli?)

Your ballpark figures seem to be reasonable, although the windows one poss a bit high? Unless - as you hint - you are looking at fancy ones? Sash? Go reputable-local-co if you can.

£8k for a new boiler & rads seems a bit high? What kind of boiler, and is it being repositioned? Do you understand the future of domestic heating? If you are fitting new rads now, then look in to oversizing them to provide the required heat output when running on a 40oC flow temp. That should future-proof your system, making it suitable for being supplied ASHPs, etc., but will also make your new gas boiler work as efficiently as it can.

And, since a huge cosmetic refurb is needed, examine closely how to best add insulation to your external walls (on the inside), floors and ceilings. THAT'S going to be the biggie moving forward, and will make your house more desirable than others.

Sarah1Mitty2

sidneyvic said:

Definitely homes under the hammer.
It is very easy to make money in a rising market and we are not in such a market...
I anticipate you will end up with a very nice house to live in but after taking so long to refurb it you will achieve a significant loss.
So if you are buying a house to live in, fill your boots, but if this is your start as a property tycoon you may well catch a cold.

Yes, I think most of the HUTH shows are re-runs, it isn`t relevant to today`s market.

DE_612183

You can also pick up kitchens and bathrooms cheap on gumtree - look at these...

Complete kitchen with oven, hob, sink & extractor included | in Willenhall, West Midlands | Gumtree

theartfullodger

Buying property is like getting married.  You usually won't know until  2 or 3 years if it was good idea or not.

Under Thatcher's iron fist in November 1979 bank of England base rate hit 17%. I had a for then large mortgage.  Was lucky, building society only wanted 15%.

Artful: Now on 3rd successful marriage.....