Struggling to find renovation project to make money on?

[Turnish]

We live in London. Looking to buy a renovation project somewhere fairly central and work up the ladder like people always advise. We can afford up to about a £1mil. But I can’t seem to find any renovation projects? Those that exist are for sale at such a high price that there’s no money to be made

I don’t know where you’ve been for the past few years but working your way up the ladder through renovating is very much not possible now. Also, with a budget of £1m you’re starting from quite a few rungs up anyway.

If you’re desperate for the renovation experience look at auctions, but I doubt there will be much in central London.

Unless you are a builder or have access to a builder who will work for free, you cant make money renovating anymore.

The costs are insane.

You won’t make a profit on doing a renovation these days. £1m is hardly starting at the bottom of the ladder… 🤣

This

If you have a 1m budget why do you want or need a renovation project? Get yourself to zone 3 and find an already renovated house (or a decent apartment if you’re set on central)

Because we want to make money to move up the chain

You can already start several steps up the chain with that budget though…

It's very hard in central London as many buyers are cash rich and want to do up properties and therefore will pay top dollar for the renovation project just to be able to have a doer upper!
I've done up various bits of houses in London over the past 20 odd years,it rarely makes the big bucks, just makes it more saleable etc

The way to make money, and a friend has done this plenty, is to anticipate the next place that's going to be hot eg she moved to Hackney before it became cool and made a killing when she sold and she's done that a few times. That's the best way to make money

As previous posters have said unless you have the skills to do the work yourself or a builder in the family who will do the work at cost, this is just not feasible anymore.

For example in the past I made money by adding a loft bedroom to my house but if I did the same in my current property it would not increase in value by the amount I would have to spend because building costs have increased so dramatically.

The issue is the price bracket, unless you find a rare probate sale most properties worth £1m are renovated or looked after.

Unfortunately, people have been doing this for 20yrs so everywhere in central London which was prime for renovation has been done. There is only so much that can be done to a property and so, if 20, 15 or 10 years ago, someone bought a terraced property in London, opened up the downstairs, extended into the side return and possibly out the back a bit, added a bathroom and went into the roof space, then there is nothing more to do to that properly other than changing the decor. Also, even those properties aren't necessarily coming onto the market as, unless you're the person who did those changes and have sat there since and have paid off the mortgage, you may well not be in the position to make the jump to the next level yourself as prices at all levels of the ladder have jumped.
If you do find one, I think you'll find all of the developers are after it

We are on the cusp of pulling out of a renovation project for that sum. We do have access to builders / architects and structural engineers who've told us that the cost won't be recovered so you either need to want to live there forever or walk away. We do want to live there forever but have had to reduce our offer significantly because the costs of remedial works and then renovation are just too high to make the agreed price work. And we are not the first people to walk away.

Renovation costs post Covid are crazy. We renovated a probate sale house similar to what you are thinking but making our money back wasn’t the aim - we aren’t builders, that’s not real especially with stamp duty

We wanted something we could buy firstly with a mortgage we could pay and it took us several years to have enough to actually get the building work underway - and the intent is for it to be the last one we buy

Not sure it’s a realistic aspiration tbh

As has been pointed out by others, this is nowhere near as easy as it once was.

Renovations that a few years ago might have cost £200k now could be £300k - £350k.Capital growth in many areas is flat. Borrowing costs have risen.

It's not the easy, sure win game it has been in the past.

As anyone who has watched homes under the hammer will know, 95% of people only made profits on renovations due to the rising market. Many would have made more by sitting and doing nothing.

Anyone fancy this beauty?
Hopefully they will clear it before exchange.

https://www.rightmove.co.uk/properties/153418916

Oh god that red and black wallpaper 🤢

Or, go and buy this one on the same road that's all done for £210k more!

Yep, we bought what we thought was a renovation project London borders. It turned into a shell project, which was only fully complete in time for our 5 year mortgage renewal. The agents have valued the property at pretty much the cost of the renovations + shell cost, after we take of stamp duty, legals and removals, we made nothing. Renovation seems to only be about having things done as you like them. You need to find a builders house that you can afford to redecorate, so all the structural elements are completed and have paperwork: buildings regs etc.

How much money were you hoping to make?

I don’t think this is a thing anymore unless you’re a builder yourself and can do all the work.

We made some money on a property in London that was basically fine but very unfashionable. So everything needed doing but only cosmetically. That being said, I suspect the real money was made due to market movements. I’d buy somewhere you want to live but try and find something you can tart up a bit. You might make a bit of money depending on the market but don’t buy something you fundamentally don’t want to live in because it might not end up being a great money spinner. Or do what you’re doing outside of London - cheaper labour and more chance of getting a bargain.

I do like renovation projects but it is 100% about being able to make a house how you like it (and/ or the joy of a period house) and any ‘profit’ we’ve made is only due to rising markets at the point we naturally come to sell. And my husband is very handy which helps.

I agree about buying in an ‘up and coming’ area (my friend and I bought a house when we were in our 20s for £261K and sold it, having done nothing at all, 4 years later for £396K after a bidding war, all because the reputation of the area had changed.)

My other tip is 1960s and 1970s houses which I think are still undervalued and underrated but can be so cool and gorgeous when done sympathetically and are - in my view - period houses waiting to happen. I think the mainstream will cotton on in the next decade, maybe less. So that’s what I’d be looking for as a doer upper, but mainly so I could enjoy living there and hopefully sell in 5 years or so when I was ready to move on anyway, at which point everyone else gets on the 1960s bandwagon!

This is perfect if you’re looking for a doer upper in an up and coming area. I think £900k is probably too hight though.

https://www.rightmove.co.uk/properties/153359477

"My other tip is 1960s and 1970s houses which I think are still undervalued and underrated but can be so cool and gorgeous when done sympathetically and are - in my view - period houses waiting to happen. I think the mainstream will cotton on in the next decade, maybe less. So that’s what I’d be looking for as a doer upper"

I totally agree with this. An early 1960s house on a very large plot near us went up for sale in June. There was a lot of interest and it went to best & final offers about six weeks later.

How many houses do you hear about going to best & final offers these days?

The asking price was £1.5 million but I understand that the offer accepted was above £2 million.

"I think the mainstream will cotton on in the next decade, maybe less."

I started a thread a couple of months ago of a 1960s mid century modern style house and I was really surprised at the number of people saying how much they liked this type of house

https://www.mumsnet.com/talk/property/5131073-just-saw-a-really-interesting-1960s-house

Apart from the 1960s/1970s houses mentioned above, I think that your only realistic chance of finding something is to look for a detached bungalow on a street with two storey houses.

You then knock it down and rebuild it as a larger two storey house. This also has the benefit of making all the work zero rated for VAT.

A couple of examples that might be appropriate:

Here is one that already has planning permission in Putney SW15 for £700k
https://www.rightmove.co.uk/properties/150193964#/?channel=COM_BUY

2 bed detached in Streatham for £580k
https://www.rightmove.co.uk/properties/146057798#/?channel=RES_BUY

3 bed bungalow in Chingford (£550k cash buyers only)
https://www.rightmove.co.uk/properties/148386041#/?channel=RES_BUY