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  • Refurbish/Develop

    Best way to add value to 2 new BTL purchases?

    Hi,

    I have managed to source 2 properties BMV. One negotiated £65k (market value £80k) and other £72k (market value £88k). Plan is add value and refinance in 6 months and rent out. Pull out as much capital and go again.

    Now both are in good condition but from peoples experiences with valuers what tends to add most value in their eyes? Also is there a fixed amount needed to spend to impress then to full market value and do I need to show receipts or simply showing pics before and after?

    This is a learning experience for me with this model. I have traditionally just purchased a property as BTL and over time let it continue to grow cap growth while providing a great income rental stream.

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    I have been curating potential answers to this question on this thread:

    Best way of adding value to a property?

    The answer really depends on the potential of the properties themselves, your budget, and your skillset and builder contacts.

    If it is just a simple refurb, then kitchens and bathrooms are the two rooms that add the most value.

    For larger scale projects, doing a loft conversion or extending using PDR is a good way forwards.

    If you don't to some significant work, and document it via receipts and photographs, then, in six months, its likely that the properties will be valued at what you paid for them, because you set the new market value by purchasing them at those prices.

    See - Revaluation - bought cheap, but no work done 

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    Hi, I dont have any personal experience of this but at a seminar I was told by a speaker that 15% of the purchase price was a min. for a refurb that would break through the barrier set by your purchase price.

    Adding an extra bedroom by dividing oversize rooms is a win.

    Good luck

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    The reality of a down valuation is a hard pill to swallow

    but it’s a reality

    a valuer can make or break a deal  and if he down values your plans are sunk and you will have paid for the privilege

    If I was you, have a plan B and don’t depend on a valuer

    If you can’t do the next project with your own cash don’t expand is my advice

    see a re-mortgage as a plus not as a deal maker in 2019

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.


    Hi Mark,

    Just out of interest, which speaker did you go to see who provided you with this info?

    Thanks.

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    I have done 2 now and my expeience has been that valuers have undervalued by about 20%, even after refurb. Despite proving them wrong they just don't budge. So be prepared.

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    What about paying for your own RICS valuer and adding that to the pack to show mortgage appointed valuer when he comes - so he can read over that as he goes and does his numbers. I was informed that can sometimes help?

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    Just be aware that refinancing in 6 mths time could be very different from today's rates, and also property values could be a lot lower than today.. That is part of the gamble you are taking.

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    It is not easy to make the refurb, revalue, remortgage model work these days although it is still being taught by gurus as a viable option.

    Valuers valuing at 20% lower than the owner is looking for seems to be widespread and it is vital that you have a plan B in place just in case this happens ie don't rely on paying back a bridging loan on the strength of a high valuation.

    It is worth mentioning as well that a £100,000 property being sold for £85k is not actually BMV at all if it needs £15k worth of work to smarten it up.

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    Thanks for the feedback - Vanessa and other members here are a real asset!

    Certainly some alternative strategies needed as a plan B if valuation does not come back higher. Although, the next two deals I am looking at are small value (BMV) deals that I'm looking to add value (I like the idea of adding a room - also for rental yield) but as they are small value it is not a deal breaker. The rental yield will be a bigger factor and getting an increase in valuation will be a cherry on the cake to pull capital out and keep the momentum going for some other small units.

    Problem with me is that I take too long to analyse a deal - market overview - run some scenarios and possible renovation options etc. Then the deals are gone. However, I'm going to continue with my cautious approach as no need to rush.

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