I was recently put into a situation where I had the opportunity to snap up an extremely undervalued property. It was undervalued by 50-60k because it’s in dire need of some intensive renovation loving. However, after making the required amendments, I would still be quid’s in by a considerable amount. Unfortunately, I’m not a builder, nor do I have anyway near enough knowledge or experience to try and shortcut the project by doing any of the work for myself. If I was going to take on this project, I would need professional help for pretty much everything. I suppose I could manage slapping a few coats of paint onto random walls and hmmm…errr…yeah.
From what I understand, the problems with the property are quite serious. It’s suffering from a serious case of subsidence. The walls aren’t completely crumbling, but I’m convinced a horny couple could bring the house down. Boom, Boom. There’s also something wrong with the roof. Don’t quote me, but I think the agent said there’s a “rodding” issue. I tried googling it, but no cigar. I’m starting to think I misheard the snake. But whatever, the point is, the place is all kinds of fucked up. If an agent admits that a property is in bad shape in this currently dry market, it really must be messy.
My main point is, being a developer is one thing, but I’m merely a buy-to-let landlord. There’s a significant difference between the roles and key skills each role is required to have. After consideration, I decided to walk away from the project for various reasons.
Here’s a list of reasons why i walked away; perhaps these are reasons you should consider if you’re in a similar position:
- Renovating a property can be a full-time job; I already have a full-time job. I couldn’t deal with having 2 full-time jobs. More importantly; no word of a lie, I’m seriously cool as shit, which means I have a social life that needs maintaining. When i’m not working, blogging, playing chess online, watching Star Trek and painting War Hammer figurines, I seriously am cutting shapes on a dance floor in a trendy establishment. Bottom line, I would struggle to find the time, which this development desperately needs.
- While i’d be at work during the hours of 9am to 5pm, I would need someone onsite to manage the project. More specifically, I would need someone to keep an eye out on the the cowboys (the builders). I’ve heard too many stories about workmen taking one too many sandwich breaks. The last thing I want to do is pay a group of hairy lumberjacks to sit on a bench, with their asses hanging out, eating cucumber sandwiches.
- I’ve never done a development project before. I know, I know, that’s a weak excuse; if we all used that excuse, no one would do anything. But the point is, because I wouldn’t be on site for the most part of the working day, I actually wouldn’t learn much. I already know how to pay people to do things (all kinds of things). I’d feel a lot more comfortable taking on a development project whilst I’d actually have the opportunity to learn something. There’s really not much point undertaking huge projects if I’m not going to walk away any wiser. I want to learn so I can prosper with my future projects.
- Renovating property can be a lengthy task. All my investments are long-term projects and I intend on keeping them that way. I’m not one of those big shot developers like you see on Property Ladder. If I were to buy this property, it would be for buy-to-let investment purposes. The renovation would take at least 6 weeks, which would mean I would be paying the mortgage out of my own pocket for at least 2 months, as opposed to rental income taking care of business. That’s lost profit as far as I’m concerned.
- Because there are some major fundamental issues with the property; the restoration would entail going down to the core of the property and start mending from the base. When builders start digging deep, other problems usually start to come to surface. That’s when time and money starts to spiral out of control. I prefer it when financial skeletons remain in the closet.
- I go away on holiday in 7 weeks. If I start getting the wheels in motion now, I could end up owning the property whilst i’m out of the country. That would be a foolish mistake. I know I’ve referenced Property Ladder already, but I just need to do it one more time, I promise. Seriously, Property Ladder is like my Quran. Anyways, I’ve seen 2 episodes now where the developers go away on holiday during mid-development. The developments get delayed and they ultimately lose money. What kind of bullshit is that- going away on holiday during a 6-8 week development? Crazy mofo’s…I seriously can’t understand the logic behind that kind of Tom foolery.
- Like with all developments, you need good tradesmen to execute the development. Not just in terms of skill, but also morality, as in, won’t charge you an arm and a leg for a job that’s only worth an arm. Do you know any honest tradesmen? I sure as hell don’t. Most experienced developers have relationships with tradesman, consequently have a team of people they can trust for their projects.
They were all my main concerns; enough to scare me away, that’s fo’sho. I’m not trying to encourage everyone that has development aspirations to run away from their dreams like a little sissy. I’m just saying, if you don’t know shit about renovating property, be careful. It’s not all glam like you see on Property Ladder. Shit, I lied (I promise I won’t mention PL again, seriously). Perhaps before you decide to undergo any development projects, you may want to consider my points and plan ahead so you’re prepared.
For anyone considering taking on a development project, i’d like to point you in the right direction, Golden Rules For Property Development.