joint project, flip my own home

snickpan

user1977 said:

snickpan said:

the only benefit to me really, would be that I'd get the asking price, and not have to drop £30k when someone views it and makes an offer.

No, the current valuation is what you'd actually sell it for, it isn't an asking price which you don't expect to achieve.

We agree what price the house would be marketed at before any work, that would be what I get.  I'm sure we could agree that I get what would be considered a good price (remember that bit about not having to drop £30K.  After that, work would be carried out, house re-valued, other chap gets what he has increased the value by

RAS

Why? Doesn't make the slightest sense for either of you.

snickpan

RAS said:

Why? Doesn't make the slightest sense for either of you.

fair enough

Mildreds_Earrings

Hello @snickpan the only pitfall I can see is that your haven't mentioned getting the agreement in writing.

If you decide to proceed, get the agreement written up, so each party is clear of their responsibilities and obligations. You might wish to include an anticipated completion date for the renovation works too. Then each party signs and dates the agreement and both signatures are witnessed by an independent person. That way, each party is somewhat protected.

All the best. 

eddddy

snickpan said:

We agree what price the house would be marketed at before any work, that would be what I get.  I'm sure we could agree that I get what would be considered a good price (remember that bit about not having to drop £30K.  After that, work would be carried out, house re-valued, other chap gets what he has increased the value by

That seems like a very strange way of valuing a property. It sounds like you're saying:

• Ask an estate agent what they would market your property at.
• Assume (or hope) that's £30k more than the property would sell for.
• That assumed (or hoped for) £30k over-valuation becomes your profit

How can you be sure that the estate agent will over-value the property? What if you ask 3 estate agents what they would market it at, and one says £675k, another says £650k and another says "offers over £620k"? Where would you go from there?


If you and "the developer" completely trust each other, a scheme could be viable. (e.g. the fee you pay for the building work is 75% of whatever the house sells for above £650k). But business arrangements like this could end up going very wrong.

diystarter7

snickpan said:

the only benefit to me really, would be that I'd get the asking price, and not have to drop £30k when someone views it and makes an offer.
The other main issue from replies is stamp duty...!

Dear OP
No matter what you to a property some buyers are just nasty and not fair and just before the exchange of contracts they drop the price. Then there is a real risk markets may crash. Doing it up is not risk-free. However, ig you have the worse houe on the road and there is potential to add value Eg, enlarge a small kitchen or turn into a kitchen diner, add a second toilet, make a room in a garge etc, do your research re pice/profits and go for it

Some improvements actually make it harder to sell a place EG adding a conservator that eats up most of your garden. Ot removing a bath and just installing a shower as many people may not want a bath or have the time for it but they want one, lol.

To add value - if parking is difficult around your way, consider OSP and or make the house open plan if relatively small and paint white.

Good luck

snickpan

Mildreds_Earrings said:

Hello @snickpan the only pitfall I can see is that your haven't mentioned getting the agreement in writing.

If you decide to proceed, get the agreement written up, so each party is clear of their responsibilities and obligations. You might wish to include an anticipated completion date for the renovation works too. Then each party signs and dates the agreement and both signatures are witnessed by an independent person. That way, each party is somewhat protected.

All the best. 

early days yet, there's a ton of 'i' dotting and 't' crossing I haven't mentioned in a 6 line forum post. 

snickpan

eddddy said:

snickpan said:

We agree what price the house would be marketed at before any work, that would be what I get.  I'm sure we could agree that I get what would be considered a good price (remember that bit about not having to drop £30K.  After that, work would be carried out, house re-valued, other chap gets what he has increased the value by

That seems like a very strange way of valuing a property. It sounds like you're saying:

• Ask an estate agent what they would market your property at.
• Assume (or hope) that's £30k more than the property would sell for.
• That assumed (or hoped for) £30k over-valuation becomes your profit

How can you be sure that the estate agent will over-value the property? What if you ask 3 estate agents what they would market it at, and one says £675k, another says £650k and another says "offers over £620k"? Where would you go from there?


If you and "the developer" completely trust each other, a scheme could be viable. (e.g. the fee you pay for the building work is 75% of whatever the house sells for above £650k). But business arrangements like this could end up going very wrong.

My mortgage is £181K on a tatty and tired house, so I'm already in profit.  If the developer and I agree on a 'tatty value' sale, that's what I get, roughly £650K.  If he spends £50K on it, and it sells for a new and improved £730K, he pockets £30K, and we fight over who pays the bricklayer

london21

The mentioned arrangement can get messy.

You are better off selling it as it is or doing the renovation and selling. 

eddddy

snickpan said:

My mortgage is £181K on a tatty and tired house, so I'm already in profit.  If the developer and I agree on a 'tatty value' sale, that's what I get, roughly £650K.  If he spends £50K on it, and it sells for a new and improved £730K, he pockets £30K, and we fight over who pays the bricklayer

I'm sure you're just being flippant - but the point of a detailed agreement at the outset, is to stop fights over who pays the bricklayer.

I've got involved in vaguely similar agreements.  The agreements were drawn up by solicitors, and charges were put on the property (to stop the owner selling the property and keeping all the cash).

One project was expected to take 3 months, but it took over a year. But the agreement had clauses to deal with that. It also had clauses to deal with things like - the owner refuses to sell, the builder doesn't finish the job, etc.

FWIW, in that case, due to a series of problems, the builder ended up making a loss on the project.