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  • Property-a-holics

    Would you buy the..worst house on best street or best house on worst street?

    Hi all,

    The important saying in real estate of "buying the worst house on the best street" rather than 'best house on worst street' because you cant change a property’s location which is considered more important that the physical characteristics of the property, is an old one..

    With that in mind:

    Would you buy a worse property on the best street, so there is potential to add value to comparable good properties on the same street thereby getting a discount, or buy a best house on a worst street at a discount needing no works?

    (Assuming the level of discount to be the same, and taking into account Time Vs Money).

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    Option 1 every time - opportunity to add value, easier to let and at to a better tenant at a  higher rent, easier to sell on, lower probability of issues relating to crime - break ins, vandalism etc.
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    Interesting Tim, I'm sure you would only choose option 1 if the house needed cosmetic works, not structural changes, to the property. Structural renovations would require major changes to the "bones" of the property, and are expensive and time consuming..?

    You can only bag a bargain by avoiding competition from other buyers, so if there was a lot of interested buyers re option 1, you could end up with an overpriced property to start with.

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    Good question! I have to admit I might be tempted if option 2 could be turned around more quickly, but on balance, I agree with Tim for same reasons.

     

    We've done a property in a bad neighbourhood. It cashflowed extremely well, but in the end the hassle wasn't worth it. We sold it a couple of years ago.

     

    Kind regards,

    Jayne

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    Jayne Owen @jayneowen

    Editor and Writer: Your Property Network magazine

    Investor: Mozaique Property, South & West Wales and South West England

    Occasional reviewer at The Property Bookshop (@Property_Books)

    Worst property in the best locale.

     

    This includes my own house, I purchased it for the location and it has doubled in value over the last 5 years, with only 30% of the intial purchase price in works.

     

    It has had some serious work though!

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    Option 1 - Agree completely with Tim.  

     

    I note your follow on comment regarding structural work and competition for deals that do ot require so much work.  All works would be taken in to consideration (hopefully) before making a decision whether to make an offer and one would then stick to one's budget and move on if the competition pushed the price beyond one's price limit.

     

    There is of course an argument that says smaller but more regular profit is better than the occasional big profit.

     

    Regards

     

    Steve 

     

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    Hi Li,

     

    That would be my ideal purchase for our next resi but I may have trouble convincing my wife that it would all be worth it in the long run.  Well done for doing what you did.

     

    Regards

     

    Steve
    Li Sharratt said:

    Worst property in the best locale.

     

    This includes my own house, I purchased it for the location and it has doubled in value over the last 5 years, with only 30% of the intial purchase price in works.

     

    It has had some serious work though!

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    I presume the opening post was making the assumption that a) the properties wld be structurally sound and b) one wouldnt have to pay over the odds to land either house. If not, it should have been stated that 'the worst house is a wreck, whilst the best is pristine'.

    On the basis of those assumptions both houses in same structural condition and asking prices reasonable - option 1 without any hesitation whatsoever every time..

    Fernando Duzaza said:

    Interesting Tim, I'm sure you would only choose option 1 if the house needed cosmetic works, not structural changes, to the property. Structural renovations would require major changes to the "bones" of the property, and are expensive and time consuming..?

    You can only bag a bargain by avoiding competition from other buyers, so if there was a lot of interested buyers re option 1, you could end up with an overpriced property to start with.

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    Just to be different -

    Why not buy the worst house on the worst street.

    The LHA rent would be exactly the same as the best house on the worst street but it would be the cheaper  to purchase and so cash flow the best!

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    Jonathan Clarke. http://www.buytoletmk.com

    Ah but Rich that is illogical I would say. Someone always has to live in the worst house in the worst street by definition. If that worst  house  is boarded up, not habitable, derelict  etc then you could argue you would add value to make it a  better house than the worst or it doesnt really count as a house because a house is by definition somewhere where somebody lives.

     I take people ( not always by any means) from the streets, tents, hostels, their mates settees, their abusive partners etc etc , They are more than wiling to take the worst house on the worst street because to them it is a step up from their existing living environment and they view it as a palace and often far more prefrable to their existing lifestyle for a variety of reasons. They then aspire to living in a slightly better house and so on like most of us do. Someone has to take the worst house in the worst street and there are opportunities for investors if they snap these up i would say 

     

    I agree Rich  totally with your follow up post about clarification on what we mean by best and worst. As an investor I maybe want to make out that it is the worst house in the worst street to the agent/vendor/ surveyor etc to get a reduction in price. But to me I may see the worst house in the worst street in terms of investment as the best house in the worst street and then we start going round in circles and back to square one!!  

     

    There is some validity of having a medium/ long term strategy if you are a big investor/developer of buying quite a few  of houses in a run down street where various houses for a variety of reasons  bring down that street as opposed to a neighbouring street. It could be as you say for factors such as crime/lighting/ dogs/certain families/ boarded up houses etc. You can then bring an influence to that whole street and uplift it to the advantage of all in incresased value for you and better living environment for your tenants hence better rents. 

     

    I recall viewing a house in one cul de sac  where one house had fallen victim to a house fire. There was scaffolding up tarpaulins over it. gas mains dug up  dirty water in the street blackened furniture outside etc. It looked a bit like a mini war zone at the time. The owner of the flat i viewed a few doors down wanted a quick sale and talking to the agent i sussed that people were naturally put off my the `kerbside appeal` of this street. the 1st impressions were not good but it was only a temporary phase in that streets life. I bought the flat and maybe got it cheaper beacuse the vendor knew the house fire would have put people off. 4 months later that house fire house looked better than the ones around due to the insurance reconstruction. It went from the worst house to the best house in four months and maybe had a slight uplift on the whole street.

     

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    Richard Greenland said:

    Simple. Because no one would want to live there.Jonathan Clarke said:

    Just to be different -

     

    Why not buy the worst house on the worst street.

    The LHA rent would be exactly the same as the best house on the worst street but it would be the cheaper  to purchase and so cash flow the best!

     

     

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    Jonathan Clarke. http://www.buytoletmk.com

    I have one of the best houses on a lousy street in Middlesbrough (Thornton St in North Ormesby for those who know it). It's the first one I bought via a portfolio building comapny in 2003. Problem is that my letting agents seem to be having a lot of trouble in finding anyone who wants to live there. Cashflow is OK when it's let but the voids are a killer.

     

    I'd welcome suggestions on how to find tenants that aren't a nightmare and that my agents will be happy with - they do lots of LHA tenants but I have a feeling that they may not be as creative in their marketing as I'd like.

    Angela Bryant said:

    Yeah, I buy the worst house in the worst street too Jonathan (although I have to say, I think we're quite 'pussy' with our worst bits round my way compared to some:-)

    The tenant who moved in to our latest palace actually cried with joy and relief to be moving in... it's so touching, I love those moments.

     

    I've always thought the problem with property investors is that they're just tooo middle class.

     

    Angela

     

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