How much to pay for a doer-upper?

[HandbagsandSnotrags]

So, we've seen a (potentially) lovely house but it needs a lot (conservative estimate £100k, realistically more like £150k) spending on it to get it up to scratch.

Done up it would be worth say £850k (others in the area go for a bit more but have bigger gardens and / or are detached / larger).

So if spending £150k would get you a house worth £850k, but would be a lot of work and upheaval, how much would you be prepared to pay for the house?

We don't want to make money on it, as in sell it on, but it feels wrong to take on all the work and deal with all the disruption if we could buy the finished article for the same (or maybe even lower) total spend.

625 to 650

Bear in mind if you think the budget to do it up now is £150 it could easily be £200.

About 600

See its on the market at 725 which just feels like a lot to me. If you were frugal in doing the work and encountered no unexpected surprises I can see how you might just break even, but what's the point in the hassle and risk of taking the work on???

You need to cover yourself for it costing double and the market not really performing too plus the inconvenience of the work/disruption possible rental costs etc

Thanks for your thoughts.

I think if we do offer it will be very low. It just isn't worth the cost / hassle at anything over 650.

The price you offer will really depend on whether you are competing with a builder or not. They can often go in and out more quickly and economically. I would start with £650 but maybe go to £685 tops. It depends on how much you want it and most people don't break even when doing up a house unless there is a rising market. You can get a builder to come and have a look with you, or a surveyor, to get a realistic price. Be very very critical of everything that is not right because so many surprises lurk!

If I didn't make money and only broke even every time I would be very disappointed and have no career!

I suspect that if you are buying it in order to get a bargain then it probably isn't going to work out. There are people out there who actually enjoy the process of doing a house up, who put a premium on doing it the way they want it compared to having it already done. If it's in a desirable location then I would expect to barely break even on doing it up. So 700.

On the other hand, if no-one else is buying at 700, there is nothing wrong with offering 650. It's only worth paying what it's worth to you, iyswim,

Something to bear in mind as that no, you don't intend to do it up and sell it on NOW but your circumstances could change and you don't want to find yourself with a house you NEED to sell and that isn't worth what you've piled in to it. Given the likely costs 650 would be my comfort zone too.

I think it will go for more than we are prepared to pay so this is probably an academic discussion but interesting to hear people's thoughts.

I think I was surprised that difference between asking price and potential price was so close to the cost of the work required - I, naively perhaps, expected a financial benefit from taking on the risk and effort of the work.

Problem is everybody still expects the market to rise. So they will pay more than makes sense expecting a rising market to get them out of it. The trouble starts when it doesn't do that or you screw up the doing up........

Haven't read the whole thread, but I would say that if the vendors are genuinely selling the property as a doer-upper, then there is plenty of scope for negotiation. I would always start on the basis that 10% below asking is reasonable - so you're already at 650. We are in a similar position with our house (as vendors) and we are open to a sensible discussion about how much work needs to be done and at what cost. Mind you, we have planning permission, architects drawings and quotes for the major items.

I would agree with what both MillMollyMama and noddyholder said (ie. a lot of people go into this sort of thing thinking they can make money but relatively few actually manage to - you need to know what you're doing).

I've just bought a house in need of work for about £100K less than I think it would sell for done up. But we have to sell one that needs the full works as well. I think a chat with a good agent about value now and value with new kitchen bathroom and doodads should give you an idea.
I would rather buy a wreck and make it mine over time than a house with someone else's taste stamped on it.