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I tried to post this yesterday, but it never showed up, so here goes the 2nd try!
I've inherited a 3-bed semi in Preston, and it's in a dilapidated state. I was going to offload it (valued at £125), but for some mad reason, decided I might give letting a go, so got a guy in to take a look and tell me what it would cost to refurb. He talked to me about potential rental for it (he says £900 a month, the local lettings agent says £695 - quite a difference!). He told me it would cost around £30K to get to a good standard for either letting or selling - but now the budget has come in at closer to £45K with VAT on it.
I'm starting to think that this project might be beyond my scope (it's not that it isn't affordable, it's more a case of how much money do you throw at something before it becomes a completely pointless exercise?). If I spend that much on it, OK I can just flip it and get my money back out plus a bit on top, but then there's CGT to come off that. There's a cap on the rental, due to the size of the house, even though it's in a really good area, and the same will apply if I sell it. It's unlikely to get much more than £200 on point of sale even done up. So, it seems to me the only real winner here would be the refurb chap.
Alternatively, I could take the long view and let it out at what the local agent claims is the going rate, because the money is in the property, I can sell it down the line, and in the meantime, I will have the rental income. It's just going to take quite a long time to recoup the outlay in terms of cash.
My question really is what is a realistic price to be spending on something like this? Obviously each property varies in terms of what it needs, but this one is major. It needs a full rewire, gas installation, gas central heating installation, removal of asbestos pipe lagging for the old central heating system, a new kitchen, a new bathroom, full plastering of walls and ceilings, full decorate (just white paint really), full floor treatment (laminate downstairs, carpets upstairs), new double glazed windows, internal doors throughout and k-rend on the front. That's before we even deal with the rear garden landscaping. It's just growing, each time I talk to the renovation guy, and I'm starting to think I should have just left it as it was, got it cleared and offloaded it.
I realise this is probably because I'm new at this, and the guy keeps telling me to think positive and I'm not losing any money because it's all going into the property, but that's easy for him to say, he won't be the one haemorrhaging money.
I'm thinking of just doing the major stuff that has to be done, then a quick tidy, cheap kitchen and bathroom, forget the front rendering, and offload. But that's me in panic mode. Any advice would be most helpful.
Hi £45'000 seems horrendous and looks likely you have started shelling out is it reputable builders and I see you mentioned VAT ? Are they VAT registered? Have you checked? A good building company would have given you a contract and also a penalty clause on time limit ! The way it reads makes me dubious ! I have just build Two houses from the ground and cost £ 165 K ! Hope I'm wrong !on the positive side try and hold on to the property as what would you do with the money?
I've just received a second quote from another builder. £80K plus VAT! They're taking the roaring piss now.
Carol*Moderator addition* - See Carol's new post: Received estimate - feel sick
Hi Carol,Welcome to Property Tribes. You have a valuable asset in this property and I believe you are right to explore all possibilities.In the first instance, I would get another builder in to quote for a basic refurb to get it up to lett-able standard. The quote you have sounds excessive to me.If you find a local lettings agent to work with, they may be able to recommend a reputable & trusted builder to you, and also help project manage it for you.So a reputable local agent is your first step here imho.They can also advise on achieveable rents and start advertising your property prior to refurb completion to ensure you get a tenant in asap.We have a 2 bed terrace in Preston (Ashton under Ribble) in very good condition and it rents out at £495.00 pcm, so the letting agent appraisal sounds far more realistic to me than the builder's!You must find a good team of people to advise and support you, otherwise I fear you are not going to have an enjoyable or profitable experience!The long term view would be to refurb this property, and hold it for a long time, to hopefully benefit from some monthly net cash flow and also some capital appreciation.The short term view would be to sell as is and lose all that potential ... or do the refurb and sell on, but be subject to CGT liability.If I were in your shoes, I would do a basic refurb and let it out for the long term. You can always sell in the future if you find that being a landlord does not agree with you.These threads may assist you:Top 10 Property Tribes resources for novice landlords and BTL investors How to vet a lettings agent ... 12 questions to ask Property Investor and Landlord "Power team" Refurb Costs.............Help!! Blue-print of a refurb with Sue Elkington Approximate refurb costs Hope the above helps for starters?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks very much for that - I think what's concerning me is I have one guy accusing the other of not being entirely honest, and so forth, and I find myself wondering if everyone is in each other's pockets. I have asked another builder to give me a quote, because I believe it's wise to not always go with the first person you speak to. The one I did speak to rushed ahead and had the asbestos garage removed - which I agreed needed doing, but I wasn't so keen to do it straight away, and that cost me £1600. I've already ordered the gas supply (another £377), so I'm kind of committed, at least to some extent.
Thanks also for the links, I'll take a good look. This site is really helpful.
Carol you haven't signed a contract so you're not committed ! Just tell him you want to have a rethink and let him know in a weeks time ! Seem like you have been rushed into this so tell him ! Also ask him where he took the asbestos as he should be able to produce a receipt for getting rid ! If reputable!
You're right, I should get a proper receipt for that from the firm that came to remove it. I only have his invoice - but not the original one.
I've spoken to another local builder who is happy to go and give me a quote, so I just need to find one more. I need to get 3 separate views on it, just to be sure, and although I'm certain the garage needed to go, I don't think it should have cost anywhere near that. As for the asbestos lagging in the pipes, that's definitely there, but shouldn't cost an arm and a leg to remove. He's telling me he can't get it below £1100 plus VAT at the moment.
No contract signed, nothing firm yet. I'm wavering so much about it, because I know I don't want to spend silly money on it. It's a pointless exercise for the potential yield.
Carol forget the price propert is worth you are investing whatever the work come to I:e 30 - 40 k and the return for that at £ 600 per month is 18 per cent absolute no brainier keep the property always yours and will increase ! Bank rate big fat zero !
I've got another builder going to have a look - he has to get the key from the first builder.
So they're now in contact with each other, and first builder has just texted me to say he's booked in the firm to remove the asbestos lagging 'as agreed' and paid them a deposit. I didn't agree this! I agreed the work needed to be done, but I stated, quite clearly, in writing, that I couldn't approve any further work until I have the grant of probate. He seems to have conveniently forgotten this, and he's gone ahead and booked the firm to remove the asbestos (without agreeing a price with me, I hasten to add!) and paid them a deposit on my behalf!
I've just re-sent him the email in which I told him I wasn't approving any work, and asked him to cancel the firm. He said he 'had' to book them, because they were busy. In the same email where I said I wasn't approving any further work, I also quite clearly said 'there is no hurry'.
I feel like I'm going mad!!!
Ask him to give you a copy the asbestos disposal certificate for the garage roof.
You've no need at all to pay him the deposit for the asbestos removal in the house as you didn't instruct the works. He sounds like a wrong'un. Don't touch him with a barge pole. Always get 3 quotes. For future reference - never arrange for the next quoting builder to pick up keys from the existing builder!!
If you can't get any recommendations for builders off friends or associates, try MyBuilder.com
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hi Carol, Can you call me on ... (*Moderator note: content removed*).