BRRR – Buy, Refurbish, Refinance, Rent problem?
BRRR misery – Hi all, I need some help in solving a current situation concerning BRRR.
I recently purchased 2 terraced houses next to each other to turn into 7 ensuite rooms and 2 x 1-bed flats to rent as service accommodation for £420k.
I had an initial Gross Development Value (GDV) valuation of £970k with refurb costs of £220k.
I have just had a surveyor report valuing the property at £250k and need advice legally or otherwise as to my options, of course, based on that valuation I can not refinance?
Many thanks
Anthony
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Member Since July 2013 - Comments: 1266 - Articles: 1
10:56 AM, 19th November 2021, About 4 years ago
Can you elaborate on those figures? Are you saying it’s worth half the initial price you paid?
Member Since January 2020 - Comments: 559
11:25 AM, 19th November 2021, About 4 years ago
As Puzzler said, you haven’t given enough information to go on. With my valuer’s hat on lots of questions are raised. The GDV of £970 sounds very high for two terraced houses; you need to explain what this is based on.
You probably need to get a chartered surveyor to critique the deal as from what you’ve said things don’t stack up.
Member Since November 2019 - Comments: 9
11:32 AM, 19th November 2021, About 4 years ago
Reply to the comment left by Puzzler at 19/11/2021 – 10:56
Yes i purchased for £420k for both its now been valued less than i bought it for
Member Since November 2019 - Comments: 9
11:38 AM, 19th November 2021, About 4 years ago
Reply to the comment left by Graham Bowcock at 19/11/2021 – 11:25
The property is going to be used as serviced accommodation the building was bought as a commercial building not residential the £970k GDV was based on the initial value plus the serviced accommodation income
Member Since September 2015 - Comments: 31
4:00 PM, 19th November 2021, About 4 years ago
Hi Ant,
Like many others, I’m having trouble following this thread.
How did you acquire these properties, buy auction by any chance?
Is the refurbishment now fully complete?
I don’t think the surveyor will increase his valuation based on predicted figures that you may or may not obtain from running your business from the property. At most you’d probably need a few years’ of filed accounts in order for it to have any bearing on the valuation.
Member Since January 2020 - Comments: 559
4:05 PM, 19th November 2021, About 4 years ago
Reply to the comment left by Ant1 at 19/11/2021 – 11:32
Did you have a mortgage and/or valuation when you purchased? If so, is there anything in the methodology to explain the new lower valuation?
Member Since November 2019 - Comments: 9
4:20 PM, 19th November 2021, About 4 years ago
Reply to the comment left by Gary Bray at 19/11/2021 – 16:00
Hi graham
The property wad bought offf estate agents
For £420k under commercial usage i spent £ 220k refubishing it put in 2 dormers how can it be valued at £250k
Member Since January 2020 - Comments: 559
4:27 PM, 19th November 2021, About 4 years ago
Ant, my specific question was about whether or not you had it valued when you bought it? If not, how do you know it’s worth what you paid for it? Has the valuer at £250k provided any methodology or reasoning for their figures?
Member Since November 2019 - Comments: 9
5:17 PM, 19th November 2021, About 4 years ago
Reply to the comment left by Graham Bowcock at 19/11/2021 – 16:27
I bought 2 seperate buildings for £210k eack regardlrss of valuation how can they ne valued at 125k£ each after 220k£ refurbishment im bafled and i think i need legal adive
Member Since September 2015 - Comments: 31
5:23 PM, 19th November 2021, About 4 years ago
Reply to the comment left by Ant1 at 19/11/2021 – 17:17
Something’s not right here. Do you have any Rightmove links or the post code and door numbers?