Expert Advice for Derelict Property Investors
Parmdeep Vadesha
October 08, 2008
For many property investors, buying and restoring a derelict property is a very good investment. For many first time property investors, restoring a ruined property and then reselling it for a higher price is the fastest, easiest and most cost-efficient way to get their first step up the property ladder. Not many people are ready to undertake such a major renovating job, so many of these derelict properties are selling for next to nothing. But for property investors with the courage to undertake the major endeavour of doing a property overhaul, then you have much to profit.
Experts advise investors of derelict property to take it slow. Do not endeavour to restore the most ruined house you can find on your first go. Stick to "conservative repair" for the meantime as you get your feet wet. And as you gain more experience in renovation for resale, then you can more on to the bigger and more complicated properties.
Be on your toes when buying at an auction.
Many auction houses include derelict properties as part of their investment portfolios. If you want to invest in a cheaper run-down property, an auction is definitely your best way to start. However, be very informed and aware if you plan to purchase a property at an auction. Auction buying is highly speculative and the process of the auction sale requires a whole lot of quick thinking on your part. Although you can pick up a very good bargain at an auction, the truth is that buying properties at an auction can be quite risky. It is a highly competitive market where buyers are expected to be able to come up with the required cash in a few weeks time. It is definitely advisable to conduct a thorough preliminary research on your chosen before embarking on an auction sale. Knowing how the auction process works is also essential before you jump in and join one.
Keep your finances in order.
As previously mentioned, most of the auction houses in the United Kingdom require you to put up a deposit equivalent to 10% of the property´s purchase price once the hammer falls and you have put in the winning bid. Furthermore, the balance is expected to be paid 28 days later. Make sure that you have the ready finances to undertake this large-scale purchase.
Furthermore, buying a derelict property entails expense. Aside from your mortgage payments to your lender, you also have to consider the surveyor´s professional fees, costs in obtaining planning permission and of course, the expenses involved in building and renovation. Most of these run-down properties require a complete overhaul and thus a major renovation job. Factor in the cost of rewiring, a new planning job, re-tiling the kitchen or fixing up the bathroom. Indeed, the cost of repairs can take a whole lot of your time and efforts. However, for property investors with the heart and the resilience to undertake a major fix-up, buying and renovating a run-down property can still come up far cheaper than purchasing a new one.
Experts advise investors of derelict property to take it slow. Do not endeavour to restore the most ruined house you can find on your first go. Stick to "conservative repair" for the meantime as you get your feet wet. And as you gain more experience in renovation for resale, then you can more on to the bigger and more complicated properties.
Be on your toes when buying at an auction.
Many auction houses include derelict properties as part of their investment portfolios. If you want to invest in a cheaper run-down property, an auction is definitely your best way to start. However, be very informed and aware if you plan to purchase a property at an auction. Auction buying is highly speculative and the process of the auction sale requires a whole lot of quick thinking on your part. Although you can pick up a very good bargain at an auction, the truth is that buying properties at an auction can be quite risky. It is a highly competitive market where buyers are expected to be able to come up with the required cash in a few weeks time. It is definitely advisable to conduct a thorough preliminary research on your chosen before embarking on an auction sale. Knowing how the auction process works is also essential before you jump in and join one.
Keep your finances in order.
As previously mentioned, most of the auction houses in the United Kingdom require you to put up a deposit equivalent to 10% of the property´s purchase price once the hammer falls and you have put in the winning bid. Furthermore, the balance is expected to be paid 28 days later. Make sure that you have the ready finances to undertake this large-scale purchase.
Furthermore, buying a derelict property entails expense. Aside from your mortgage payments to your lender, you also have to consider the surveyor´s professional fees, costs in obtaining planning permission and of course, the expenses involved in building and renovation. Most of these run-down properties require a complete overhaul and thus a major renovation job. Factor in the cost of rewiring, a new planning job, re-tiling the kitchen or fixing up the bathroom. Indeed, the cost of repairs can take a whole lot of your time and efforts. However, for property investors with the heart and the resilience to undertake a major fix-up, buying and renovating a run-down property can still come up far cheaper than purchasing a new one.