[Brighton] Has anyone here bought a wreck of a house to renovate and sell on?

[Ⓩ-Ⓐ-Ⓜ-Ⓞ-Ⓡ-Ⓐ]

I'm looking into the prospect of purchasing a run-down apartment and renovating it myself to sell on and hopefully make a profit, just wondering if anyone on here has done similar?

If so, what is the best way to find these run-down properties? I've looked at a few auction sites but it is slim pickings in the local area to Brighton. Is it best to just trapse round the town and speak to as many estate agents as possible in person? I want to buy something in the city as: 1, I'm going to be working there a lot myself and don't want to spend hours travelling by car, and 2, I know I will be able to sell it on quickly (or rent if need be).

If buying at auction how much above the guide price (or below? ) do properties usually go for?

I'm wary of a lot of additional costs that on top of the renovation costs: Stamp Duty, Auction contract fees, Solictor's fees, Holding fees (council tax, loan/mortgage repayments while working on the property/waiting to sell), Capital gains tax (28%! ). Are there any others to factor in?

Finally, is it best to do this with a limited company set up specifically for this purpose rather than doing it all in my own name? Will it make it harder to get a loan if the company has no trading history?

I'm a trained architect so have experience with the design aspect, and also done plenty of work on site in my youth and more recently renovating my own apartment so I'm quite comfortable with the design side and costing up the refurb costs quite accurately.

I always find the opinion of some random people of NSC's more valuable than some random people of the internet in general! So fire away with your suggestions, anecdotes, gentle abuse and or advice!

Cheers!

 

[Titanic]

Turnaround time is VERY important.... we have had three great projects, and one which over-ran and grew in scale, which is much more stressful and will end up with a lower margin. Definitely try to keep it in the 3-6 months range.

Also depending on how you are financing it... make sure you factor in the lengthy period needed for sale, identification & purchase, planning etc... on the next project.

 

[Billy the Fish]

https://www.bbc.co.uk/programmes/b006v5kb

Dion knows a few things

 

[Stat Brother]

Have done it in the past and am in the process of doing it again.

I'm not entirely sure now is the market to start afresh, the property market is currently confusing agents - which, despite it being easily done, is a bad sign.
With people staying home, trade persons time is of a premium and expensive, well done them.

Have a price and stick to it.
You will lose hope.
You will get outbid.
Prices will go above asking.

If you see THE property but don't get it, there's every chance it will return to the market, that's happened a lot to me over the last few months.

I've been comprehensively outbid, above asking price, only for a month later to be asked if I was still interested in property X.

I'm a lazy arse.
If I stop a job without finishing it's 50/50 as to whether I'll ever return to it.
So my main advise is crack on and keep cracking on before the property becomes a millstone around your neck.

 

[happypig]

Bought a flat in 2007(ish). It was "tired" rather than derelict. I rewired some of it, redecorated, retiled the bathroom, fixed broken kitchen cabinets and fitted new carpets. Was going to rent it out but got it valued and stuck it on the market for a punt; got a buyer in a few days and ended up with about 8k profit. From us viewing it to selling it on was about 9 months.

 

[B-right-on]

I've bought and done up a few properties over the years including at auction.

One of the most important things I was told (for me) was that your 'profit' is made at the PURCHASE of a property. In other words, you need to get it at the 'right' price to make that profit.

Then count on the costs increasing by 50% and time increasing by double. Just my experience. I've just finished one in Lancing which is on the mkt now, it's take far longer and cost far more than I thought and I've done it before. You run into unforseen issues which cost (for me it was lintel problems which only came apparent when the plaster and render came off the internal walls.

 

[Perkino]

I've not done as above but did purchase a project and have designed and negotiated an extension. If you plan to make a living out of such a scheme then prepare to make minimal money on the first house as you discover more of the potential issues you hadn't budgeted for.

Location and design are two big factors in potential profit so plenty of research and stick to your limits. Personally I wouldn't be looking at the centre of Brighton as a starting point and most properties will just have 1 kitchen and 1 bathroom so a bigger property may offer greater returns

 

[Goldstone1976]

Not deliberately, no. By mistake, yep

 

[Harry Wilson's tackle]

I have been told repeatedly over the last 18 months that materials are often unavailable and their costs fluctuate and can be ludicrous. A neighbour's project ran 8 months late simply because materials were too costly to buy for a long period.

Also the pricing of homes is very volatile at the moment, with prices unrealistically high, according to my son who works on the legal side of all that.

But, nothing ventured nothing gained. It is always possible to find sound reasons for not doing something.

Good luck.

 

[Giraffe]

I'm interested in this, can I ask are you doing as a sideline to your main work or is this something you intend to do full time? Also are you a tradesman or just someone that just is good at DIY. No angle, just curious as to what ability and maybe more more importantly time you can commit to this, as the latter has always been what has put me off doing this.

 

[Shropshire Seagull]

Apologies in advance for the negativity in this response [which may or may not be relevant to your circumstances]

Apart from the obvious trade skills - the more you can do yourself, the greater the return.

The biggest issue is likely to be finance - if you need to use a mortgage to purchase I think you'll struggle. Auctions are all cash buyers so no mortgage required.
The issue is mortgage lenders demand surveys and searches to ensure their loan is "safe". Surveys take time to arrange and the surveyor will put a value on the property, giving full consideration for its condition and searches sometimes raise lender concerns. Only after successful survey & searches will the lender then release funds for your mortgage loan, which can all take weeks.

The property renovation market is highly saturated [loads of interest/players] and if you can't complete [purchase] within a few days of your offer acceptance the seller [or auctioneers] will always opt to find a buyer who has liquid funds [cash].

In essence, without cash funds to purchase, and thus move to complete in days, not weeks, I think you will struggle to get what you're looking for.

Cash is king in the property developer marketplace.

If you will be a cash buyer, ignore the above ....

 

[Lyndhurst 14]

As an architect you should really be in an ideal position to take on such a project. Being on the cost side of things I'd be looking at the unforeseen risks, what you might find when you start ripping the place apart, and trying to make sure I'd got enough money in reserve to cover them. Again, you are well placed to do that due diligence side of things - asbestos or any other nasties, defective work or services that you may uncover, any structural issues you may encounter if you are remodeling the place etc. etc.

I've known a few QSs who have successfully and profitably renovated properties, and one who caught a big cold despite him being the consummate professional and was just very unlucky. After the experience he said he wished he had watched The Money Pit with Tom Hanks first !

 

[Comrade Sam]

Bought a wreck 10 years ago for £250,000, did it up to raise a family in, now worth £900,000. The current value is irrelevant as I plan to die here.

 

[Rogero]

There could be tax to pay on profits .

 

[Mr Putdown]

I bought for £30k what was little more than a 14C timber framed barn attached to a farmhouse on a village high street. The front of the property had been used by an undertaker whilst the rear had been the farms milking parlour and upstairs had been the village telephone exchange. It took me about three years to turn it into a 4 bed semi which I sold to buy a dilapidated, rambling Georgian pile which took twice as long to restore.

The former sold last year for £1.15m.

 

[mikeyjh]

I've not done as above but did purchase a project and have designed and negotiated an extension. If you plan to make a living out of such a scheme then prepare to make minimal money on the first house as you discover more of the potential issues you hadn't budgeted for.

Location and design are two big factors in potential profit so plenty of research and stick to your limits. Personally I wouldn't be looking at the centre of Brighton as a starting point and most properties will just have 1 kitchen and 1 bathroom so a bigger property may offer greater returns

Quite - I've not done any up to sell but have a few rentals that have been in various states of disrepair. Don't believe what you see on Homes under the Hammer etc etc where Dave the postie has come in to a bit of money, done a house up and made £50k just like that, it's not realistic. I'm sure many people lose money doing this, they just don't tend to publicise it obv.

A bit of a segue but much as I enjoy a bit of Homes under the hammer, makes my blood boil seeing people doing absolute bodge jobs, normally at the bottom of the market so some wet behind the ears first time buyer finds all sorts of crap under the surface. I would never ever buy a house that someone else has done up....

 

[zefarelly]

Not deliberately, no. By mistake, yep

This, I was brought up like it, Victorian, 2nd WW housboats, Edwardian, lead pipes, round pin sockets etc

lookin ground locally it more fashionable to detonate than renovate now.


We did exactly the same as Comrade Sam, 17 years ago, and plan the same going forward . . .

 

[JamesAndTheGiantHead]

Buy low, sell high

 

[Westdene Seagull]

As an ex-property developer, yes, I've brought run down places and developed them. The crash in 2008 killed me though.

Number of points to think about :

1. Getting loans from the bank is all well and good ( you'll need a good business plan though ) but consider how much it's going to cost you if a property takes an age to sell - or in my case there is a financial crash meaning buyers can't borrow ( Covid may well have something to play here ).

2. Make sure you have a good relationship with your tradespeople - many under quote to get a job and then up the price because they've "found problems". Get a fixed price and grade the payment schedule based on hitting an agreed date. EG - if you're a week past the date agreed then the bill goes down 5%.

3. Recognise there WILL be issues.

4. Don't go too out there on making it look modern. Bland sells - modern ages.

5. To find appropriate properties speak to funeral directors or look in the local paper for people that have died. You can make an offer to most executors directly by dropping a note through the door - most will snap your hand off just to get rid of a property and they avoid any estate agency fees. Three of the properties I did were brought after a tip off from the local funeral directors.

6. NEVER offer above the price you've budgeted for. If a property goes to a bidding war .... walk away.

Good luck - it's a hard game but can prove profitable. Just remember it will take much more of your time than you think.

 

[Hendrax]

Networking and greasing the palms of Estate agents.

You can then get places before they even going on the market.