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How To Find Houses That Need Renovation

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When looking to make an investment in housing, a common choice is to look for a property that could do with a bit of a facelift. There is equal amounts of excitement and trepidation involved in this kind of scheme, as the risks can be quite high, however the rewards can be extremely lucrative. But how does one recognise a property that is viable for doing so? There are trick and methods for best ways to recognise a flippable house, houses to do up and let, or ones to fix up and keep for yourself. After deciding whether you have the gall to take on such a project, you first need to know where to look.

Have you got what it takes?

As mentioned, there are significant risks involved in procuring a property in need of serious work. One risk, if attempting to flip a house, is that once you have done up the property, it struggles to sell. You need to assess the risk factors thoroughly before investing and be willing to accept the potentiality of losing money on an investment. Nerves of steel are required, and you will need to have the determination to persevere through the more stressful aspects of home renovation.

Does location matter?

One of the first things to consider is location. Location is crucial to a house’s ability to sell. You can turn a pile of bricks into a beautiful abode, but if it is in the wrong area, it can be worth about as much as those bricks once you have already invested major bank into the project. The turn of phrase ‘buy the worst house on the best street’ comes in handy here. If the area is desirable, your beaten up old house will soon be too.

Budget

Working out your budget is understandably essential to your success, and it is important to account for everything. Giving yourself a bit of flex on your budget is crucial, as many unforeseen costs are likely to rear their head. You will save in some areas, such as stamp duty tax, on a less expensive property, but it is in the renovations that you may see your budget take sharp turns unexpectedly. It is therefore good to give yourself a 20% safety net for any additional fees you may incur that you were not anticipating. Some of the more common costs are pricier than one might expect, such as:

  • Damp
  • Roof Tiling/Roofing
  • Plumbing
  • Window Frames

Where do I find a property?

As with any property purchase, a good place to start is directly with estate agents. They will have the best idea of which of the houses on the market are ones in disrepair that need a little (or a lot) of TLC. Oftentimes properties like this will not be featured prominently on their websites often being placed on their pages with limited images or information, or not at all to avoid spoiling their aesthetic appeal. Alternatively, estate agents may point you in the direction of a probate property. Solicitors and asset managers will be in control of such properties, and in contacting them you may be able to locate properties that are in poor shape, or generally unmodernised, at reduced prices.

Look for key terms of estate agent jargon such as ‘in need of modernisation’ or ‘potential to update’. These are their polite way of saying “this property needs a major makeover!”

Auctions

Auctions are a go to place to find rundown properties at discount prices. Ahead of time these auctions will create catalogues so you can go in knowing which properties pique your interest. You will most likely be able to view these properties before the auction is held to get a better idea if it is suitable to your needs.

Specialists

Whilst estate agents and solicitors are a good way to go, there are websites that specialise in listing these kinds of properties. These include PropertyToRenovate.co.uk, PropertyRenovate.com & RenovateMe.co.uk. They list everything from land for sale, to properties up for auction and derelict/repossessed properties. They handily list the potential ventures one can take with each property they list e.g. “this house has space to create a room in the roof”.

Certain estate agents put listing on special sections of their website, such as Foxtons. They list some of their more rundown properties, however they still don’t show all of them and you may need to request directly to see as even the ones on this section of the site appear to be the most presentable of their options.

Some sites such as PropertyToRenovate offer a subscription service for a more refined and specialised search engine that will allow you to be more specific with your requirements and provide you with daily updates on new properties.

Portals

Another method is to use sites such as Rightmove, Zoopla and OnTheMarket and select very specific criteria and do specific locale searches. Once you have determined your general area, break it up into sections so you are dealing with a smaller number of properties at a time.

A Numbers Game

As with many things, finding the right property is a numbers game. You need to be able to invest time in researching and looking through a lot of properties daily. The more estate agents you contact, the more sites you visit, the more email notifications you sign up for, the more likely you are to find the right home that meet your requirements. This way you will avoid missing out on the gems that could otherwise slip by you.

Remember to set up alerts. Properties come and go constantly and the best way to be on the ball and not miss out on any gems is to set alerts for individual websites matching your criteria. This way you can receive daily emails alerting you to new prospective places to buy. Most websites encourage this anyway, but make sure you opt into this option and make sure the emails you receive are not general mail outs and are specific to your needs.

Viewing the properties

Before viewing properties, it would be a good idea to find a builder or a building surveyor to come along with you on viewings. As they can cost upwards of £200 for a walk around and estimates, it is advisable to do an initial check on the property first without them to determine whether it seems like the right property for you, or to at the very least sift through all the available documentation to see if on paper it appears to be your desired house. They will be able to alert you to any potential problems and they will be able to advise you on expected prices for your desired renovations.

Picking the right property

A good idea for first time projects is to look for place with easy fixes. Taking on a big risk with too many variables and unknowns is a risk that first time buyers will probably not want to take. This of course means still more than just a quick paint and a clean but is not as much as rebuilding entire structures. Such easy fixes would include:

  • Updating out of date wallpapers/carpets- picking a timeless carpet and wallpaper will ensure your property is still in fashion for years to come
  • Redoing old fashioned bathrooms­- pistachio and pink bathrooms may have appealed in the 70s, but outdated tiling can seriously devalue your properties desirability

It is also important in this sense to look for larger projects that can be done at a later date. If there are space for loft extensions that you cannot afford at the time of purchase, or walls that can be knocked through to create more open plan spaces, they may be able to be done further down the line.

How long has it been up for sale?

Once you find the property you like, there are numerous factors to contemplate before laying down an offer. Firstly, consider how long it has remained up for sale. If the house has been on the market for an extended period of time, you are best to question why. It could be a warning sign of underlying problems with the place that could cause issue for your renovation plans, or it could mean that it is just not a good idea to modernise and update the property for any other reason. Occasionally these properties lie around for a while just because there is a lack of people wanting to invest in this type of property, other times it is something more insidious that could end up putting you at risk.

Physical condition can at first appear skin deep. Occasionally a property is undesirable just because of its fixtures. As long as such a place is structurally sound, as long as you stay within your budget, you can turn a shabby den into a desirable pad.

Regulations and Permission

A crucial thing to look out for in any property is the planning permission and building regulation limitations. It’s all well and good finding a run-down property, but often you will need to apply for planning permission to perform what you want to do and it could end up being rejected and you will be stuck with a dead end property. Some houses will already be listed with planning permission granted so it is vital to sift through the finer details during your selection process. Even internal modifications, such as knocking down walls, can be restricted so keep an eye out for such obstacles.

Planning Application History

If you cannot find the full extent of planning permission, you may have to dig deeper into similar plans for properties in the area you have selected. You can ascertain this by visiting the planning portal of the local authority and seeing requests for past planning permission. To find out whether these have been enacted you can search through google street view and aerial view to see if these plans went ahead successfully. Unimplemented planning from over three years ago has likely expired, suggesting the owner didn’t have the finances to fund their own development and might be interested in a sale.

Searching For Hidden Gems

Another on the ground methods for finding hidden properties is to hit the road yourself. By walking or cycling down streets in your desired locale, you can come across some dilapidated properties that may be a bargain. You can either approach these properties to ask directly, or visit the land registry to find information on who owns the property and contact them through these means.

Social media has become an increasingly popular way of finding places to live, with hundreds of pages dedicated to specific areas and other criteria for properties to rent and for sale. A simple search through Facebook will show you a plenitude of groups where you can ask questions, much like any other internet forum/chat room, to see if there are any properties matching your criteria.

Oddities

Occasionally you will find potential properties where you least expect. From old shops to offices and cafes, there are many places that were not traditionally houses that could be done up into lovely homes. A common one over the recent years has been old pub conversions. Many pubs have gone out of business and these old buildings, whilst beautiful, are often not known how to be utilised. Whilst this could be a big venture, it could also give your rundown property an innate character and selling point that you will not have to work for.

Another odd thing to note is that if there are bats in the property…you’re in trouble. Make sure if your potential purchase has been uninhabited for a long time that no bats have taken up residence there by getting an official survey. It is illegal to disturb bats that are roosting in a building and the costs incurred in ignoring this far outweigh the costs of a survey.

After Repair Value

A technique to determine your properties price after repair is to assess similar properties in the same area. The place you buy will naturally be significantly less than the more desirable places in the surrounding neighbourhood, but once you fix it up it should, ideally, be selling for the same or more of similar sized houses in the area. Take into consideration the type of house, not just the number of rooms and square footage. Assess the increase in profit in comparison to your renovation budget and see whether it is worth selecting this venture.

It is also worth noting the absolute high end, or the ‘ceiling value’, of a property of its type in the area. If you can only make so much profit on it, is it worth the shot? It is unlikely that your newly dressed house will exceed the highest priced in the neighbourhood, so be wary of these limitations.

Preserve the properties character

Many homes will have been stripped of their original qualities that lend them their charm. The benefit of fixer-uppers is that they often retain their original features, though they may be in a bit of a state. Potential buyers often look for these qualities and will make your home stand out amongst a sea of identical renovations.

On this note make sure your house is in-keeping with the rest of the street. Though this is not essential, it will lend to your advantage if your place does not stick out like a sore thumb! That is not to say you shouldn’t give your house its own characteristics, but don’t go wildly modern in a row of Edwardian fronted buildings.

Key points

To round up, these are the top things to consider when buying a home for renovation:

  • Make sure you are fully committed to the project in all its risks– assess your risk to reward proportion to make sure you are making the right decision
  • Work out your budget- planning, planning, planning. This can not be stressed enough- if you are not organised you are asking for something to go wrong
  • Look persistently and in every possible place- properties will not come to you, you have to seek them out
  • Contact agents directly and build up a rapport- establishing a relationship means you will be one of the first people contacted when a potential property comes up
  • Watch out for hidden costs- this comes back to budgeting- allow yourself some breathing room so you don’t incur any costs that could jeopardise your project
  • Find the right location for you, or for future selling– what might be desirable to you might not be the status quo, so make sure if you plan on selling on, that the house will retain a re-sell value
  • View the properties with a building surveyor- structural problems are often the first hurdle when buying properties that need to be done up
  • Make sure you have planning permissions secured- there is nothing worse than putting hours of planning and money into a project that might be rejected at the drop of a hat
  • Assess the properties ARV (After Repair Value)– make sure your investment will come back to reward you if you plan on flipping the property

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