04 Feb A Guide to Fixer-Uppers
Whether you’re doing it for yourself or to sell on/rent out, there’s plenty to think about before renovating a fixer-upper!
Figure out your Finances
The majority of high street banks won’t lend money if the property is derelict or not fit for habitation (eg no electricity or running water). However if you do need finances there are still plenty of options available to you. It’s important to speak to your financial advisor – most estate agents will have one that they recommend in your local area. They’ll help you identify the cheapest way of borrowing over the shortest period of time. It’s also important to look at the total cost of borrowing and not just the interest rate. Look at any additional costs such as admin fees.
Other options to consider include sharing the financial burden with a business partner of family member. Have conversations with people you trust. If you do go down this path make sure you have a really good relationship as stress levels could run high on a project. You should also consider making a contract to cover any eventualities.
Write the numbers down. Whether you’re a pro at Excel or prefer to put pen to paper, jot down all the work required and make sure you can afford it. Most importantly, you may not feel like you’ll need it, but include a contingency because you’ll never know! Most construction projects use 5-10% of the overal cost as a contingency.
Speak to your agent about previously sold house prices in the street to get an understanding of the resale value after the improvements are made.
Consider the Condition
If the property is old or in poor condition it’s best to get a full strucutral survey done. They’re not cheap, but you’ll be thankful if it uncovers any hidden issues. It’ll also allow you to better costs for improvements, which is crucial if you’re hoping to make a profit or are working to a set budget.
Fixes such as patching walls, replacing kitchens and bathrooms are relatively cheap, but if any roof or structural repairs are required you could be seeing your costs spiral.
You should get several quotes from builders for the work beforehand so you know what to expect and to ensure you can afford the work. You could even take your preferred building on a property viewing to check that they are happy with the costs they have proposed.
The House Owners Association have attributes the following estimated costs for budgeting:
|Extension||£26,000 – £34,000|
|Damp||Up to £16,000|
|Double glazing||£400-£600 per window|
|Installing central heating||£4,000|
|New roof||£4,500 – £12,000|
|Fixing rot||£1,000 – £2,000|
|Woodworm treatment||£450 – £800|
Location Location Location
If the prospective property is in a desirable or up and coming area, you’re set for a much larger profit. What are the schools like? Is it near local amenities and restaurants? Is there parking? Good public transport links? Do the neighbour’s houses look well kept? Make sure you research the area, especially if you are unfamiliar with it. Use the estate agent’s knowledge too. Make a note of any questions and ask them during the viewing.
Most listings these days are advertised with a floor plan, making it super easy for you to plan out any changes. Any layout changes will depend on what you’re doing with the property. If it’s your dream forever home make whatever layout changes your heart desires. However, if you’re purchases to fix up and sell on, it’s crucial to consider the target market for the home when making any layout changes.
For example, most families will want more than one bathroom, bedrooms close together, open plan living and a separate space for mountains of toys! This could include knocking a wall down between the kitchen and bathroom, adding a conservatory or extension or even extending upwards into the loft.
Younger professionals may want an office space and an easy to maintain garden. If it’s a bungalow it will appeal to the retired market, so don’t do things like add needless steps!
Finally, make sure you check if you need planning permission prior to commiting to buying! The process can be lengthy and costly so ensure you understand what you could be getting yourself into.
When done well and to plan, you could make anywhere from 10-30% profit – which will be very nice indeed! Find your fixer upper with one of our expert agents by clicking here.