Should I buy it?

Life_Tasted_Sweet

Hi all

I have seen this house on RM. It's ex local authority but has 4 bedrooms and is larger than most houses.

The estate has about 300 houses but a bad name locally. There are plans to spend £22 million putting it right! Most of this is to demolish the houses at the top of the estate (some HA and some private) and build new town houses with three floors (but smaller rooms I bet). This one is at the bottom of the estate and will probably be getting a garden at the back (the tarmac area in the picture). The plans have not been finalised AFAIK.

£87K is well affordable but the market is falling and I'd hate to lose money. Obviously, I'd offer £80K first - cash sale and all that!

I'd be letting it initially and rents are around the £450 - £500 mark. Not a great return but potential for some appreciation with the work that is in the pipe line.

What do you guys (and gals) think?


Life tasted Sweet

jonewer

I think I'd rather live in Belmarsh than that place.

Never take for granted what the council say they might do sometime in the future.

Given that property prices are almost certain to stagnate and will probably drop - and drop quite considerably in the north east - why not just put your money into a nice warm savings account instead?

A lot less hassle, stress and hair-pulling and a guaranteed return far in excess of rental yields.

iamstacie

Very similar to this house we were looking at in Wythenshawe http://www.rightmove.co.uk/viewdetails-4993863.rsp?pa_n=false&tr_t=buy , ex-council, rough area (council promises to 're-generate'), but a lot of house for the money.

We're going with the 'buy the worst house in the best area, rather than the best house in the worst area' advice we're been getting, if you ever planning to live in the house you buy its probably worth doing the same. Hopefully it'll make it easier to sell if there is a price slump, I keep hearing ex-council properties lose value first.

lynzpower

Iamstacie,

that part of wythenshawe is OK, I had family there with no problems

Actually, I think wythenshawe has a much worse name than it is.

What I dont understand OP is that you are talking about neg eq, but also that you are a cash purchaser, are you paying 80k cash do you mean - oie no mortgage?

Life_Tasted_Sweet

Thank you for your reply. Like I said, I would let it initially, maybe forever.

ISA's are good but not very exciting. I'd need either an income from the investment in just over 10 years. As rents are likely to rise by 30% in that time, £650 per month would supplement my pension quite nicely.

If a BTL how much is it worth for a 5% return?

Life tasted Sweet

lynzpower

Also to say, I would be VERY suprised if you will get a new garden on that, privately sold houses never get much with estate refurbs. I dont think youll get anything TBH.

dolce_vita

Life_Tasted_Sweet wrote: »

£87K is well affordable but the market is falling and I'd hate to lose money. Obviously, I'd offer £80K first - cash sale and all that!

What do you guys (and gals) think?

Not the most attractive place I've seen, put it that way

Life_Tasted_Sweet

I'd pay cash lynzpower. I didn't mention NE, just said I don't want to lose money IYSWIM.

Life tasted Sweet

Life_Tasted_Sweet

I can see it with a garden at the back and a porch where the back door is.

That part of the country is stunning. Close to Whitby and the North Yorks Moors (Heartbeat Country).

Here's a link to the local newspaper story.

Life tasted Sweet

PasturesNew

Life_Tasted_Sweet wrote: »

... There are plans to spend £22 million putting it right! ...

It might not happen. What then?

Life_Tasted_Sweet wrote: »

Most of this is to demolish the houses at the top of the estate (some HA and some private) and build new town houses with three floors (but smaller rooms I bet).

At the top and you are at the bottom.

Life_Tasted_Sweet wrote: »

This one is at the bottom of the estate and will probably be getting a garden at the back (the tarmac area in the picture).

That would be for council/HA tenants. They won't be giving free gardens to private owners.
You'd end up with the grottiest looking house in the area and be forced to upgrade it at your own expense to keep up.

Life_Tasted_Sweet wrote: »

£87K is well affordable but the market is falling and I'd hate to lose money.

Which you most likely will do, so why risk it?

Life_Tasted_Sweet wrote: »

I'd be letting it initially and rents are around the £450 - £500 mark. Not a great return but potential for some appreciation with the work that is in the pipe line.

IF that work happens and IF that work changes the area like you think it will.
If it is in a bad area, think of the quality of tenants that you might be stuck with in the meantime. So that's risk/cost to you.

Life_Tasted_Sweet wrote: »

I would let it initially, maybe forever.

Even if you lose your job? Move from the area? Become disabled/ill? Even if you have the tenants from hell? And massive voids?

Life_Tasted_Sweet wrote: »

ISA's are good but not very exciting.

Money isn't supposed to be exciting. If you want exciting buy a fast powerboat with it.

Life_Tasted_Sweet wrote: »

I'd need either an income from the investment in just over 10 years.

Not sure how you define that, but it's unlikely to change THAT much from today over that period imho

Life_Tasted_Sweet wrote: »

As rents are likely to rise by 30% in that time,

Where do you get that from? In the last 10 years most salaries haven't increased much, if at all. People don't over-stretch themselves for renting.

Life_Tasted_Sweet

PasturesNew wrote: »

It might not happen. What then?

At the top and you are at the bottom.

That would be for council/HA tenants. They won't be giving free gardens to private owners.
You'd end up with the grottiest looking house in the area and be forced to upgrade it at your own expense to keep up.

Which you most likely will do, so why risk it?

IF that work happens and IF that work changes the area like you think it will.
If it is in a bad area, think of the quality of tenants that you might be stuck with in the meantime. So that's risk/cost to you.

Even if you lose your job? Move from the area? Become disabled/ill? Even if you have the tenants from hell? And massive voids?

Money isn't supposed to be exciting. If you want exciting buy a fast powerboat with it.

Not sure how you define that, but it's unlikely to change THAT much from today over that period imho

Where do you get that from? In the last 10 years most salaries haven't increased much, if at all. People don't over-stretch themselves for renting.

The bottom is better than the top and doesn't need to be demolished. The new houses will be smaller.

The HA will treat the small number of private houses the same as their own with regard to gardens. I believe the land is free and they will be fencing it in. Some may need to buy their own door but this one already has one.

Work has started. A number of private owners at the top have been offered a price for their homes (around £90K I think). Some of the houses that will be demolished at the bottom (phase one) have been cleared. I'm fairly confident that the work will go ahead.

I like the negative responses as it makes me think. Any positive views would be welcome!

Maybe a 25% increase would be closer over 10 years. An initial 7.5% yield seems reasonable.

I am aware of the risks but I am confident that my 'communication skills' would mean that any tenants wouldn't miss payments.

Like tasted Sweet