First we will start with this:
www.rightmove.co.uk/property/42056428
This property was bought 3 1/2 years by my Mother to downsize and also to move closer for more support. She died a year ago and the property has been on the market since that time. The pictures were taken very quickly by the agents at the time of probate valuation and as you can see it is still full of her possessions. There are no upstairs or side garden pictures. It has now been cleared. It was a distress purchase at the time as there were no others available that fulfilled her requirements. Purchase price was £129K.
It is an early 60's property and has had little done in the way of upgrading and decoration recently and what has been done is not good. It does require a good makeover. However it is a cosy property.
I have and am still responsible for its upkeep and have made improvements in the garden area. I have one brother who lives darn sarff so he is not able to help me with upkeep. He hasn't a clue anyway :)
Anyway only 2 viewings in a year. We pitched it at £139K then reduced to £132K. To be fair the pictures do not particularly draw you in as a potential purchaser but properties can take time to clear out and we have not rushed. We had a lower offer figure of £125K in mind to get shut.
I have spent a vast amount of time recently with stripping the poor decoration from the upstairs bedrooms and have had to replace the cold water tanks. Work is ongoing should we say.
Now someone said, and I have to agree in hindsight, that this type of property would be of interest to someone who did not want to do much or infact any work. In which case any prospective buyer would be looking at a much reduced price as a project, maybe £85K perhaps at auction.
So my thoughts were that if that were the case then I might as well make an offer to my Brother, do the Lions share of work myself and maybe make a bit of profit. I pitched the idea to my Brother and we talked some figures taking into account what I was already owed for ongoing expenses, potential estate agents fees if we sold etc etc. He was agreeable to the idea and I told him I wanted to be in at no more than £110K which would give me a reasonable margin for kitchen, bathroom, re wire and meter move, decoration and a garage makeover. The house would then perhaps be worth maybe mid £130K ish.
So after all that has anyone any experiences / advice? Should I move it on or look at short term rental income? Pitfalls? Yes there is always risk with tenants and there could be Capital Gains issues. Put property in my name? Joint Children's names? Anything?
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Don't know what the full postcode is, but check Zoopla for what properties in that road went for over time, that will give you an idea if its a "doer upper" or not. Generally to make that worthwhile you need to get it cheap, cheap enough that you can get a 15% minimum profit after all upgrade, taxes and selling costs. Do not make it the most expensive property on the road.
My idea? A quick, cheap cosmetic makeover, then stuff it on the rental market. Its a future pension pot for you and bro when the time comes, in the mean time its a money earner for you both.
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Consider if you have emotional issues with the property, or driving financial need pushing you towards short term gain or long term income.
Spend no money on it that does not correspondingly reduce your costs or increase your income. Do not confuse what you like, and what you think is best with what a tenant or buyer will pay for. Its a business.
Property makes the best profits when time is on your side. So long term rental with an open mind as to selling if it becomes appropriate is the most likely success approach.
Rental must always be formal and contracted. Whoever you are renting to. Make no assumptions, rely on no good will.
Price ti the way you would buy/sell a car. There's always a story between a car which is too expensive or too cheap. A house is no difference.
Consider if you have the time/inclination to deal with a long term rental. It's hassle, I do it. However, agents suck your profit.
As a quick answer, I agree with Zero; spend no money, time or effort which does not increase your rental or chances of renting. Rent it, and sell it if and when.
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Thanks Z but he is more interested in realising some fairly instant cash. Difficult to compare as nothing similar has moved recently, only one which went quickly at £148K but was full modernised with new brick garage and bigger upstairs.
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If bro is the driving force, and he wants money now, then the only sure way he will get it now is to auction it. Of course the "I want it now" problem means you get less of it.
if its going to auction, stop spending on it now, you wont get it back.
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Buy him out, do it up and rent it.
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Renting can have its pitfalls. No tenant will ever look after it like you would.
When I met my wife 10 years ago, we rented out her Devon house and she moved in with me in London. Despite going through an agent, the tenants reneged on the deal and ceased making payments after 2 months and didn't look after the place very well. It was a nightmare.
It can be done, but make sure you go in with your eyes open.
IMO there's merit in letting the local housing association have it (the ones that have taken over from the council). They pay a reduced rate, but their workmen put it right when the tenant moves on and you get paid every month whether or not there's anyone in it.
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>>IMO there's merit in letting the local housing association have it
A very good point.
You pretty much need to write off any emotional attachment to anything inside the place, and probably the neighbours as well. But you do always get paid and the place is handed back in a decent state.
In my experience, the rate wasn't reduced. But that may well have changed.
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>> But you do always get paid and the place
>> is handed back in a decent state.
One of my work colleagues in London had 4 houses rented out like that. He gave me some good advice when we started renting my wife's house out.
He reckoned the housing association would take photos when taking the place on and he was satisfied they put it back to that standard when finished.
I think he said they signed up for 3 year contracts.
Although the rental income was only 75% of the market value, it was guaranteed monthly income, because if there was no tenant in place he still got his money.
You have to consider if you rent it at market value, you'd still have to pay about 10% to an agent if you use one and if there's no one in it for 3 months you get nowt..and you have to pay for or do yourself the painting and carpet replacement every time a tenant moves on.
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>> I'm leaning that way.
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>>I have spent a vast amount of time recently with stripping the poor decoration from the upstairs bedrooms and have had to replace the cold water tanks. Work is ongoing should we say.
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Have you asked what the local agents recommend re upgrades/ alterations?
They should have a good idea about the local market, What is wanted and typical buyer etc.
Obviousyl, as you say, it needed a tidy up as the old photos do not look the best.
My son was undertaking Major improvements to his smallish terraced house in a good London location. Te agents told him best to change his plans so to attract more buyers. They had to undo/re-do some of the work but fortunately not too much. They were not doing the work themselves so did cost the a few proper £££s.
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"If bro is the driving force, and he wants money now, then the only sure way..."
...is to cut his brake pipes.
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I would try a multi-prong upgrade.
Clear house, fix up anything that needs fixed urgently (but not cost a lot), paint, tidy garden.
New pictures and see how it goes for sale - a thorough upgrde would cost a lot and might not appeal to the new buyer.
If it then fails to sell it is ready for renting (& possible sale later on)l
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I'd be looking for a public sector tenant, one who has job with a discipline code and doesn't like debtors.
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As someone who over the years has bought, renovated, sold on, been a tenant, been a landlord, inherited property shared with a sibling etc...
Breaking the tie with the brother at the earliest possible stage is wise. Look how the figures stack up to buy him out (any borrowing needed?) do up then rent long term.... but only if you want a rental property anyway?
If not then don't mess about with short term rental just because it hasn't sold... get the price/marketing sorted and move it on.
To be honest if you are thinking of buying him out I'd want more than a £20k margin to do kitchen, bathroom, rewire, full decorate/update plus stand all the selling/legal fees.
If you want rid in one easy step then sort it out to sell quickly now for a shared sale with brother.
If it still has all the furniture in de-clutter and neutral paint any dodgy colours.. like that red in the kitchen. Then get it on with a fresh agent with new pics at a lower price.
If it has half the furniture left remove it all, neutral paint any odd colours, change any odd coloured carpets and steam clean the rest. Then as above new agent, new pics and lower price.
Those not quite a house, not quite a bungalow places exist in fair numbers in this village. They are a little difficult to assess for value due to the downstairs bathrooms/3rd bedroom but priced £15k-£25k below that of a normal 60s semi they always sell.
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Buying 2nd Property Thoughts - Zero
