Or does this sounds like a good idea, buying run down property.

[justgivemeamo]

I own a flat in a great tourist city, the mortgage is 100 grand - I put down 15 g deposit, its now worth 140 grand and I have been renting it out as holiday let, but I have struggled to pay the bills and the mortgage. Its also a little too close to family than I would like.

I am currently in between jobs, have a buyer for my flat, but realised I cant get a mortgage.

An opportunity has arisen for me to buy a property off a friend. Its a run down flat, one bed needs lots of updating, and work on basics like electrics, its in an OK area, not great BUT it has potential, its spacious and its worth about 40 grand. My DP have kindly offered to help me with renovation costs and I wont need a mortgage.

WWYD, am I mad to give up my little flat in great tourist town, but has no further development potential, or give myself a project on this flat and it will be mine.

You've no job, you can't get another mortgage (or even renew a decent deal on your current) and a buyer for your flat. I'd go for it. You can ways move on later if it's not the right area for you.

Is it likely that you will be in employment soon?

Where are you living if you rent it out?

Are you just trying to work out long term?

What is the rental likely to be in the run down flat if you do it up?

I plan to be working soon yes.. The area has a ceiling especially the row the flats on. Its about 400 with one bed maybe a little more for two bed. Thinking longer term I could live in it or rent some when nicer for me but it would be my assets.

Long term you will own outright so any rent will be straight in your pocket rather than paying big chunks in interest - you could also 'save' the difference in the mortgage

As you are struggling this seems like a good option -

Invest in the mortgage free property and this will give you time to save/increase value at a later date

Don't forget you will be liable for capital gains tax on the profit from your rental flat.
Get an independent valuation / structural survey before buying, also get advice from local estate agents about the flat's potential.
Don't assume that because you're buying from a friend that there won't be any hidden problems.
Presumably you can't remortgage your current flat because you are not in employment, but if you get another job, would you be able to remortgage at a lower rate? Have you considered letting out to tenants, possibly direct to avoid letting agents fees? This plus remortgaging could make your current flat profitable.

Are you saying the flat will be worth four hundred thousand if it's renovated, but you've been offered it for 40 thousand ?
If that is the case, then there must be something very seriously wrong with it! Make sure you get a full structural survey and a very good solicitor. How long is the lease? Maybe that's why it's so cheap if there isn't many years left on it?

I am under no illusion about condition of the place I know it hasnt been worked on for years and year, need re wiring, re plastering, floor looking at, the heating actually is brilliant, and has a relatively new boiler in it, but bathroom and kitchen need replacing.

Its worth now about 40,000 and wont ever be worth 400,000 ( maybe in next century perhaps!)

We would have to negotiate a lease, its freehold at the moment so probably about 125 year lease...

OP - your post last night confused me?
Its about 400 with one bed maybe a little more for two bed.
400 what?
What would it be worth today if it was done up and in good condition?
and what rent could you achieve on it?
I totally renovated a two bed flat recently. it was worth it, but it was expensive to do

Also, it's very unusual in England for a flat to be freehold. Why do you need to get a lease on it?
Is it in a purpose built block or a converted house? If it's ground floor, has it got a damp course as that is very expensive to do?

If you did buy this flat to renovate, I'd look at whether it's possible to get a buy to let interest only mortgage on your existing property and let it out on shorthold assured tenancy basis- then you know that there is a regular rent coming in. Having a job asap will help with getting a new mortgage though

the flat is currently attached to another property my relative owns the freehold for both , so deeds need to be split and I think ( rough outlines from solictors so far) have indicated I need to buy the leashold off my relative ( for long period eg 125 years) so shared things like roof can be sorted out and drive ways.

Done up - 50 maybe 60 at a good push done really well and possibly with 3rd bedroom.

rent, done up 450

with current flat I get more let out as holiday rent, than with a an on going tenent but its not enough to cover all my costs comfortably.

If you buy this one before selling the first then you will pay stamp duty plus an extra 3% stamp duty under the new 2017 regime although that only applies to properties over £40k I think so do check the point and perhaps price this one at £39k instead.

If you are created a leasehold for the first time then you will need a property lawyer who knows what they are doing and whoever is creating it needs to be very careful to get it right. I am assuming there is no mortgage over the other property your flat is being carved out of.

my property is worth about 140 and will be sold in a few weeks, before I buy this other one. Which will be around 40 k 0r 35k.

How do you know if a property lawyer has done it before, I can ask but are they going to be truthful, do you have any idea how much it may cost Lucy? There is no mortgage on the whole property no.

I guess so long as the property is reasonably sound, and you have a full house buyers survey done on it so there's no nasty shocks, it could be a good buy for you in the long term. You get to renovate it to your standards and tastes and you end up with a home with no mortgage on it, I hope it goes well for you.

Thank you innagazing.