Investing money into residential property can be a great idea, and especially when there is the potential to add value. This is the thinking behind many homebuyers’ eagerness to buy a ‘doer upper’ or ‘fixer upper’, a property that is in need of refurbishment.
Whether the purchase is motivated by only having a limited budget available, or the desire to put one own’s personality on the property, buying a doer-upper is a great way to get a good deal on a new home. Armed with plenty of imagination and a healthy dose of realism, it is possible to turn a modest investment into a big pay-off.
That said, unless you know what you’re letting yourself in for, there is a real risk that you could get in over your head and/or budget. The best time to decide whether a property is worth the time, money and effort it needs to turn it from a not-so-great home into a showstopper is before you put in an offer to buy it. Here’s how to gather the relevant information.
1. Is the property in a great location?
It is the case that most homebuyers find it difficult to look beyond outdated décor and cosmetic imperfections. If they cannot picture themselves living in a property as it stands, their interest isn’t piqued. Only a small proportion of buyers will be willing to renovate their new home. So, if you are prepared to put in the necessary work and, crucially, the location is right, you could be onto a winner.
As estate agents up and down the country will confirm, location is everything – you can always change the house, but you can’t move it somewhere else. Speak to your local agents about desirable residential areas and local property market trends. Find out about nearby schools and transport links, shopping and leisure facilities, bars and restaurants. If you can find an unloved house in the perfect spot, prick up your ears.
2. Does the building have ‘good bones’?
The next most important thing to look at is the construction, layout and overall state of the building. Look for spacious rooms with plenty of natural light and a layout that is optimised for the flow of how people live. Of course, you can always move walls and reconfigure floor plans but it’s a major expense that means less financial gain.
Homes that are in a poor state of repair may require structural work anywhere from the roof and gutters all the way down to the foundations. These repairs can be prohibitively expensive, taking a large chunk out of the refurb budget, and prolonging the process. New wallpaper and carpets are simple to upgrade jobs by comparison.
3. What does the Building Survey say?
Next, make sure that you carry out a full Building Survey – the importance of this cannot be stressed enough. An experienced Chartered Surveyor will inspect the property and provide you with an expert report on the condition of the building including any serious defects and urgent repairs.
Clearly, the more structural repair work you need to undertake to restore the building to a healthy condition, the more expensive the refurb will turn out to be and the longer it will take. Armed with the necessary information from the survey findings, you are able to make important informed decisions – how to budget for the work, whether to ask for a price reduction or withdraw from the purchase and keep looking.
4. Do you need additional specialist surveys?
While a Building Survey will give you a comprehensive overview of the condition of the property you are considering purchasing, there are limits to what can be covered. Surveyors are unqualified to test services such as gas or electrics, and the survey findings are based on a visual inspection of accessible areas.
For full peace of mind, and especially if the survey has highlighted concerns, it may be worth commissioning specialist investigation to check for damp issues, timber decay, roof problems or subsidence. It is also advisable to have a separate electrical survey carried out, particularly if the seller is unable to provide a recent Electrical Installation Condition Report (EICR), and insist on an up-to-date Gas Safety Certificate and Boiler Service Certificate.
5. Can you put a realistic budget in place?
Only when the property in question has been given the professional once-over as suggested above, will you be in a position to decide whether to proceed with the purchase. Does it make financial sense to buy this particular renovation project? Will the uplift in value covers the cost of refurbishment? And is there enough money in the kitty to make it happen?
Putting together a realistic budget is key to the success of any makeover project, so once you have cost estimates for the jobs that need doing, the next step is to take a long hard look at the finances. Bear in mind that despite your most prudent financial management, doer uppers are notorious for throwing up ‘surprise’ costs when you least expect it. Add 10% onto the overall budget so you have room for manoeuvre.
6. Who will do the building work?
Finally, you need to assemble a team of experts to help you carry out the renovation work. Obviously, a lot of money can be saved by going the DIY route, assuming you have the necessary skills. While most enthusiastic DIYers will be happy to carry out routine painting & decorating jobs, major works should be left to the professionals.
Prioritise your schedule of works in order of urgency, starting with external and structural building works before moving onto internal refurbishments, redecorating and finishing touches. When it comes to interior home improvements, kitchens and bathrooms sell houses – an important consideration if you are thinking of cashing in the profit. On the other hand, if the property is going to be your long-term home, you have the flexibility of prioritising your refurb efforts where it will most enhance your lifestyle.