BRRR – Buy, Refurbish, Refinance, Rent problem?

BRRR – Buy, Refurbish, Refinance, Rent problem?

10:31 AM, 19th November 2021, About 2 weeks ago 24

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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



Comments

by Ant1

18:24 PM, 19th November 2021, About 2 weeks ago

Reply to the comment left by Gary Bray at 19/11/2021 - 17:23
Thanks for all the replys but i think i need legal advice

by Gary Bray

20:00 PM, 19th November 2021, About 2 weeks ago

Reply to the comment left by Ant1 at 19/11/2021 - 18:24
Best of luck mate.

by Andrew Miller

9:22 AM, 20th November 2021, About 2 weeks ago

I'd say your issue is with the original £970,000 GDV so called 'valuation'. How was this calculated and with what sold comparables to evidence it?

by Ant1

9:42 AM, 20th November 2021, About 2 weeks ago

Forget valuations !!!!!!
How can i purchase a property spend almost quater of a million on it and its worth half what i paid for

by Ant1

9:42 AM, 20th November 2021, About 2 weeks ago

Forget valuations !!!!!!
How can i purchase a property spend almost quater of a million on it and its worth half what i paid for

by Puzzler

9:51 AM, 20th November 2021, About 2 weeks ago

Reply to the comment left by Ant1 at 20/11/2021 - 09:42
Exactly, that's what we are all asking - do some research on rightmove and then come back to us

I recently watched a couple of auction lots and they did go for double the market value for some reason

by Andrew Miller

9:57 AM, 20th November 2021, About 2 weeks ago

I know this is frustrating for you but in terms of lessons for others the GDV drives EVERYTHING. Who calculated it and how? Where's the evidence?

by Paul Thomas

10:02 AM, 20th November 2021, About 2 weeks ago

My experience of owning two houses next to each other is that lenders are not too mad on it. To the point they would not lend on one ( well, I bought cash and did it up ) until after a good few months just incase I knocked the two together essentially. Even though one was held privately and the other in my company.

by Ant1

10:44 AM, 20th November 2021, About 2 weeks ago

In response to Andrew the survey was carried out by a rics surveyor for the gdv the property is commercial i am concerned about the half in value of the original cost after spending aprox 220k£

by Graham Bowcock

11:57 AM, 20th November 2021, About 2 weeks ago

If you paid for an RICS surveyor to provide GDV , have you gone back to them? There are several steps you need to take.

Firstly, check their TOB - what did they agree to do?

Then, in the report check their assumptions.

GDVs are notoriously difficult as they rely on a number of assumptions. The surveyor should have clearly set out the assumptions that they relied on in making their valuation. This is a requirement of the RICS Red Book.

I'd be surprised if the GDV actually included future income; that sounds odd.

You haven't said if you were advised on the original purchase. Were you? If not, is there a chance that you have overpaid?

In terms of the latest valuation, does it actually stack up (forgetting that it's lower than you need)? Has the valuer got evidence for their conclusion? Is there a decent methodology as to how they calculated their figures.

I think there's a few steps to get through before you consider legal advice, starting with going back to the valuers.


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