First-time buyer with renovation ambitions: please critique my plan!

[ComingUpTrumps]

Hi all, I’d be grateful for some advice please.

I’m a first time buyer, early 30s, and looking to buy a house this year in London (just by myself). Finance-wise, my deposit is all ready. I’m confident I can get the mortgage I’m aiming to get and I know which areas I want to focus on for house hunting, which are within my budget of £650k - south London (West or South Norwood, Tooting, Streatham, Crystal Palace). I'm focusing on London as I work in central London and don't drive, so would like an area of London with good transport links.

I’ve been thinking more and more about focusing my house search on houses that are liveable but need updating and have potential to extend. The idea is that I can add value to the house through doing it up bit by bit whilst living in it and, ultimately, turn it into somewhere I’d like to live in. It would be a project and would take time
and effort, and money(!) but the idea is it would be an achievable project that I could do over time.

In terms of potential renovation I had in mind and the order of it, I was thinking: outward extension first, then bathroom, then kitchen - and maybe a loft. I realise extensions are much more expensive than kitchen or bathroom renovations, and also that the latter are pricey to begin with.

In terms of financing the renovation, I plan to buy somewhere under my overall budget and use the leftover money to fund the renovation. My overall budget is £750k, and I’m planning to use £650k (or less)of this to buy somewhere, and then then to set aside a further £28kish of the £750k for moving costs (£22.5k for stamp duty, £5k ish for moving costs and basic furnishings). That comes up to £678k, so would leave me with £72k for renovation, which I would do bit by bit.

In terms of logistics and other considerations, whilst I am a first time buyer and have never been in that exact position before, my family took this approach in a house I lived in as a teenager, buying a livable place and extending it outwards and renovating a room to add in utility room and downstairs loo. It took about a year altogether.

I’ve also recently house sat for someone for a couple of weeks whilst they were having a loft extension done. I was also looking after their pets, which added an extra layer of stress to the situation! Thankfully though, as I don’t have any pets and no kids yet, if I were to buy somewhere now and renovate it over the next 18 months to 2 years, I wouldn’t have to worry about looking after pets or kids whilst the work is being done. I'd like kids one day so would like to buy a place to update it into a nice house big enough for a couple of kids.

Full disclosure: I can only do very basic DIY and I have no background or qualification in house renovations, so would have to hire people to do the actual work. In theory, I could learn how to do it, but it would obviously take a long time to and is unrealistic as I have a fairly demanding full time job. I can work from home for a couple of days a week and am lucky that my parents have offered to keep an eye on any renovations being done when I'm in the office. If I’m being 100% honest, whilst I’m genuinely interested in the idea of renovation, I know it will be difficult and I’m swayed by it after seeing some of my friends renovate their places (some did it themselves and others got people in to do it).

I think the main things to consider with renovations are: budget, time and quality. I feel fairly relaxed regarding timings, especially if the house is livable and I can do the work bit by bit, but I think it will be mentally challenging and stressful. I am concerned as well about how much to budget for the renovations overall - as the sky is really the limit when it comes to these things. I'm frightened of potentially running out of money midway through a renovation, so doing it bit by bit, and saving more money into the renovation fund as I go, is the way to go, think - as well as getting several quotes for each bit of
the renovation.

All thoughts welcome - I'd be grateful for feedback that's as open and honest as possible. Thanks!

I don’t have any experience of extensions, but are you saying you expect to get an outward extension AND loft conversion out of £72k as well as bathroom and kitchen refurb? If that’s the budget for all of that, then I’m afraid it doesn’t sound very realistic - I may be misunderstanding though.

I think there’s limited value in having this sort of general plan, because different houses will need different things doing to them. Others may disagree but I think you need to find specific properties that appeal to you and then price up what needs doing, rather than having a generic renovation plan in search of a property. Because any house you find is likely to need some other work doing, either when you move in or just along the way while you’re living in it, eg you might find one where the kitchen is great but you need to do some roof repairs, and maybe some doors and skirting boards need replacing and there’s some electrical jobs and so on and so forth.

Will you have other money / savings available for things that break or need sorting, or is that also coming out of the £72k? When you move in and live in a house you WILL find loads of unexpected things that need doing, and you’ll need money for that stuff. There are likely to be all sorts of unexpected small bits to do along the way. For example our front door needed replacing unexpectedly (long story)!

I don’t mean to rain on your parade. But I think you need to find a specific property before you decide what renovation actually looks like.

Also, where are you living now and do you have much furniture already? If you need to buy everything, £5k might not go that far although you can potentially pick things up second hand. Things like a new mattress, a decent TV and appliances will potentially take a big chunk out of that.

Another thing to mention is the mental juice involved in making decisions. The more work you do at once, the more choices you need to make. We are living in a doer-upper and are doing things very slowly partly because we are busy but also because we can only make so many decisions at once.

Good luck with house hunting!

72k - pretty sure people have used that for just a small single story extension OR a loft conversion OR the kitchen bathroom, electrics , boiler and flooring of a basic update

Extensions are very expensive now. You need to be allowing at least £100k for that alone and probably more in reality. Architects we know have said that construction costs are so high now there's very little money to be made.

We did all the work ourselves in our flat (my DP is an electrician and was able to borrow some carpenters / plumbers to help with the odd pieces of work he couldn't do) and it cost us more than £70k in total over 8 years. And that was before construction costs doubled.

Our windows, for example, cost £30k on their own.

As someone said, I'd concentrate on finding somewhere you like and go from there. Building work is exhausting to live around and stressful and goes on for much longer than you expect it to.

Im not sure you've actually done your sums correctly. You say your budget is £750K but you only want to spend £650K on the property.
How much deposit do you have?

My observation would be that with a budget of £650K, you'll likely only get a flat in most of those areas mentioned. If you want a house that's a doer upper, I'd look a bit further afield to areas that have more houses (some of the places you listed mainly have flats and any houses are already done up and command higher prices). Have a look at Penge, Elmers End, Beckenham as there are lots of 3-bed houses ripe for extending outward and upward. There are multiple train lines in those areas, some of them faster to get into town than areas that are closer.

Otherwise, I think the overall idea is sound. It's pretty much how we all used to buy houses, before people wanted everything instagrammable from day one. It'll cost you more than you anticipate, but if you are happy to pick off projects one by one over the next several years as you save then it'll be fine. As others have said, don't try and map it all out in detail. Find a place you can see yourself living in for a good length of time (like 10 years), identify that it has potential (e.g. no potential planning issues with loft conversions for outward extensions - check to see what work neighbours have done so you can see if a precedent has been set) and then go for it. Also, you need to live in a place for a while before committing to works to fully understand how you use the space. I would do the thing that is most likely to add financial value long term first as there will be some works you'll never get round to doing due to running out of money and / or patience. Living with building works is a PITA so you need to do a bit, then have a break before doing a bit more.

Just for examples we’ve recently had work done on our small, average, 3 bed detached house. In the Midlands so well outside of London.
New windows 12-15k
New flat roof for garage in felt and replaced all guttering on the house 4k
New kitchen 15-20k without appliances -small kitchen
Garden 2k for materials - we did the work ourselves but I paid DS and his friend for labour 1k

When buying any property a full survey is worth it but once you start renovating there can be some very expensive surprises.

We inherited a second home which had already had a lot of work done but had a chronic damp problem. It was an old building so initially we had it rerendered. Removing the old render threw up some serious structural problems. The we had the internal walls sorted out and found even bigger problems. What was a 20k quote ended up costing 40k. This was 10 years ago so you can probably tripe that cost. It did include two new shower rooms and new radiators, but apart from that the building looked no different after the work was completed. Just a little tidier and a lot warmer and drier.
I think that if you are imagining creating a glossy magazine show home on that budget you need to lower your expectations, extend your time line and triple if not quadruple your budget.

Houses are money pits.

I have experienced a large renovation and my advice is don't!

Even if you learned some skills it horrendously expensive and it's hard to add value. If you are using professionals for everything then it's really not worth it, buy a better house to start with

My dad recently had a loft conversion, kitchen extension and added a bathroom upstairs. Lots of things cropped up and it cost him £160k. He had the money for it so didn't matter but you sound like you're massively under budgeting. You also need some spare money as things can go wrong/anomalies can crop up. I think your plan is a bit unrealistic.

72k is a very small budget. You might just do a modest single storey extension for this.

Before anything you need to check your finance. Are you saying you have 750k in cash? You do not require a mortgage at all? I just wanted to confirm as if you need a mortgage they won't give you over the house worth for you to fund the renovations.

For 72k you may get a single storey extension. You won't get a loft conversation as well.

First of all, just to double check where your money is coming from. If you're planning to spend 650k on a property with an overall budget of 750k that will mean you need to have deposit plus mortgage PLUS the 100k difference between 650 an 750. Mortgage companies only lend on the value of the property on the day you buy it - not on an expected value after renovations.

Find your house first and go from there.

It is currently more expensive to do renovations that to buy a house where they have been done because the cost of materials and work has gone up. Unless you are going to keep the same house for ten years or so or do all the work yourself you will not make money doing this at the moment, especially in London.

Where did you get the idea that all that work could be done for that price?

I live in the north east, the cheapest part of the country.

A legal fairly basic loft conversion as a habitable room is likely going to run you £25k+ plus alone.

A non legal 'hobby room' boarding is about £12k (this adds no value and cannot be sold as a usable room).

Up here a bathroom will set you back £5k for a budget one stop bathroom fit package and depending on size £5-£10k for a kitchen using DIY kitchens + a local fitter.

That would leave 32k for the extension and I doubt you would get one for that. An extension can cost as much as the house itself these days.

Also like PP where is this £72k coming from?

For £72k I’d forget any ambitions of extending or loft conversion. It’s just not feasible.

Kitchen, bathroom and basic decorating and making good will swallow most, if not all of your budget. Concentrate on finding somewhere with “good bones” in a good road/area, perhaps with the potential to expand in the future.

I’ve already done a couple of renovations in south London, but that was pre Brexit. No way I’d attempt that now.

OP - you are being absolutely unrealistic with thinking that £72k will get all that work done…
especially in London..

Based on what you’ve said, I’d say you wouldn’t get change from £200k.

Extension - £50k
Kitchen - £30k
Bathroom - £10k
Loft - £30/40k
Plastering - £5k
Flooring - £15k
Electrics - depending on what needs to be done? I’d rewire now if it needs doing in the next 20 years…. £15k
Plumbing - £15k

What’s the condition of the roof like? That’ll easily add on £10/20k if it needs doing..

I’d also have a contingency for anything else that could go wrong also…

Back to the drawing board for you.

Forgot to add decorating costs - £5/10k…

As someone has said, find your house first and then work out a plan.

From my experience, it seems odd to consider doing an extension separately to other work- in london often extensions are kitchen diner extensions into the garden; so they incur the related costs for a new kitchen, new flooring etc (and often new downstairs loo).
I think you'd have to be quite savvy to be able to do a new kitchen diner extension within your budget- and I think it would be extremely hard to do this plus bathroom.

For context, renovating, buying and fitting a new bathroom in london can easily cost 10k plus and this is for a mid range one with an affordable builder doing the work.

A loft conversion in london would also cost your entire budget in all likelihood.

I'd recommend looking for a house that you can afford and that is live-able in. Think about what the priority is (is the bathroom good enough? Is an extra bedroom eg loft conversion essential?) and do the work gradually.

Once people see a "dooer upper" their eyes mist over with thoughts of the romance of a renovation, making their mark, adding value, all the things you said...... and their heart leads their head when costing it all..... and the results is people over spend on dooer uppers, underestimate the renovation costs and over estimate the value added. Unless you are very good at spotting a bargain, have a cheap way of renovation ( ie own a company and can do it at cost or are very good at DIY yourself) and have someway to understand and manage the total value of it all in what is (currently) a falling market, as a FTB, just by something than needs a redecorating and perhaps a new bathroom and/or kitchen to cut you teeth on....Then start looking at dooer uppers.

Have to agree with previous posters in that 72k will definitely not get all that work done. We had a single storey side extension done 2 years ago and it cost nearly 100k all in - and that was no kitchen. And we're not in London!

I would think 72k would be enough for renovating without an extension though, new kitchen/bathroom/floors/boiler etc - perhaps better to look for somewhere that needs updating cosmetically but doesn't need an extension?

How much cash do you have i.e. what's your deposit? Overall I'm a big fan of doing up somewhere and reaping the rewards with an onward purchase. I'd personally focus on the practical things - make sure the roof/windows are sorted, electrics and plumbing are up to standard. Work outside in basically. If your cash stretches to do all of that in the first phase then great. Then tart it up a bit here and there with a payday reno, decorating, new tiles/floor here and there, and then when you come to remortgage take out a chunk to do the big building work. Thats how we've done ours and it worked well

Also early 30s and 8 months into a London renovation, I would echo everything said above around the finances and also in having a look at what your budget gets you and get a feeling for your priorities. Lifestyle wise a spacious flat in CP near the park vs family house in Norwood would be quite different vibes!

The key is finding a place you like in your budget and then figuring out the rest. If the limiting factor you're coming across is house size/location and you need to renovate somewhere to get that then you'll have a more tangible view of the trade offs.

We definitely found there was also quite a spectrum between full do-er upper vs needs a bit of modernisation vs all ready to go, and sometimes the price differentials weren't as wide as you would assume e.g. do-er upper only ~£50k cheaper than done up

If your heart is set on a reno I definitely feel like somewhere which is liveable in would be the way to go but beware of hidden stuff - old houses especially often have some fun/expensive surprises even after survey! I'd lean on your friends who have done renos to come with you to spot stuff on viewings (damp, sloping floors, cracks etc).

Personally I don't regret going the renovation route but definitely massively underappreciated how much work it would be physically and mentally and I don't know if I'd recommend it unless you fall in love with a house and have a clear vision for it, are being limited by budget to get what you want or really fancy a challenge / project for the next couple of years.

Pros of a reno house:

1. often you can get a bigger house or a better location by being the worst house in the best street
2. you can do it exactly how you want (grown up Sims)
3. it's v rewarding when a room or a task finally comes together and fun to have a very tangible side project
4. You will learn a huge amount of life skills and facts about things you never even thought about before and acquire a great tool collection!
5. if it's an older house you might come across old treasures we found a 1900 matchbox in the walls and original features
6. Maybe you'll make some extra money at sale - although depends on the housing market, how much you end up spending, inflation etc.

Cons:

1. Expensive as everyone has said extensions are 6 figures in London at the moment. That said I do think your budget could cover modernising a 3 bed family house though - new bathroom /kitchen / decorating and any stuff that comes out of the survey, but factor it into your offer and do lots of research on recent sales of fully done up properties on the surrounding streets to make sure it makes financial sense. Sometimes it actually makes more sense to just buy something ready to go in the current market!

2. Mental toll - it can be truly exhausting living in a project house whether you're doing a lot of DIY or have a revolving door of trades in your space. Especially working a full week and then doing manual labour on the weekend for months on end. Don't be deceived by the first few months of adrenaline and excitement and definitely build in some breaks and fun things to not burn out!

In summary, as it will probably take over your life for a bit, and consume lots if weekends / evenings make sure you love the house and have a good vision of its potential to justify the investment of your money, time and creativity!

Yeah I think a lot of people don't understand 'doer ups'.

People either think its 'just cosmetics' then get a shock when the realise it a lot of under the surface work not just ditching the 80s wallpaper and wood panels or think that they can essentially build a whole new house with the huge discount they'll get (often while still not accounting for the work that needs doing to the existing structure).

In reality a 'doer up' is priced at the market value minus the work and possibly minus up to 10% extra for the drop in market (as many buyers can't take on a reno). They aren't really 'bargains' especially to non trades people who can't do the work themselves so have to pay market prices.

So for example: if a house is in good condition would be worth £300k but it neglected and needs a new roof (£8k), rewire (8k), new boiler and some heating fixes (5k), new basic bathroom (5k), new basic kitchen (£8k) then it will be likely marketed at between £240k - £265k most likely and while £50k off sounds like a bargain with the £34k+ (because contingency are always needed, projects often go over budget) of work already required it not enough to do crazy things like build extensions and convert lofts.

Not RTFT. The budget is way too low. Depending on the age of the property it might need a lot done. Do-er uppers usually need a lot of work.