Property Refurbishment – A guide for newbies

by Mark Alexander

21:30 PM, 16th August 2012
About 9 years ago

Property Refurbishment – A guide for newbies

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Property Refurbishment – A guide for newbies

I spent most of yesterday with a lovely couple from Luton who emailed me asking for some guidance. After exchanging several emails we decided to meet and they came over to Norfolk. They have six buy to let properties at the moment, a decent liquidity fund and plenty of equity in properties. They wanted advice on how to get into property refurbishment.

The day started with a trip to my accountants in Norwich where we discussed the difference between property investment and property trading. It is important to have a very good idea of whether you intend to sell for a profit or to hold as an investment before you do any deal as investment and trade are taxed and financed very differently.

I’ve written this article for my new friends but I’m publishing it as I’m certain it will be helpful to others. Please feel free to post questions in the comments below.

Once we had cleared up the tax and accounting issues we went for lunch and discussed property sourcing. I explained that probate lawyers and independent estate agents are well worth building relationships with. WHY and HOW were the inevitable questions.

The ideal properties to refurbish for a newbie are habitable but very tired. Ideally you need to find those properties which don’t look like they’ve been decorated for 30+ years. Most people are put off buying these as they don’t look pretty and people often lack vision, refurbishing a property isn’t most peoples ambition in life and most people want to buy a property to live in. If a property needs to be gutted the purchasers will need to live elsewhere whilst the work is done. Most buyers can’t afford to do this so these properties tend to stay on the market for a long time. First time buyers almost certainly can’t buy such properties as their mortgage is usually a very high percentage of the purchase price and they struggle to raise a deposit, never mind another £20,000 or so to refurbish the place.

Properties fitting this description often come onto the market when somebody has died. The family usually just want the money, they can’t be doing with the hassle of a refurbishment project to maximise the value of the property. Added to this, they often just want to get rid as emotions are involved too.

People  die in every town pretty much every day so there’s a plentiful supply of these properties. Trawling around the estate agents just doesn’t cut it though. What you really want to know is who’s likely to accept a very low offer for a quick sale. That’s why it’s good to build relationships with probate lawyers and local estate agents. Some guru’s will tell you that leafleting works.  Not for probate sales it doesn’t I can assure you. When the family eventually go into the property all they are looking for is bills and everything else goes straight into the bin.

My advice to Mr and Mrs Luton, who had no such professional contacts, was to get some business cards printed up. There is no need to go to the expense of setting up a company, just some simple business cards with name, contact details and a strapline such as “we buy tired properties” is enough.

During conversations it transpired that Mr & Mrs Luton hadn’t updated their Wills for years. This is obviously the perfect opportunity for them to talk to a lawyer in an estate planning department. The lawyer will obviously need details of assets and liabilities to provide the necessary estate planning advice. In the process of providing this information Mr & Mrs Luton will have an opportunity to let the lawyer know what their business plans are and the lawyer will see that they have the ability to follow through on their plans. For the lawyer Mr & Mrs Luton will be excellent contacts when other clients talk to him and/or his colleagues about disposing of an inherited property quickly. The lawyer probably attends networking events too and is likely to be able to introduce other lawyers and estate agents.

Most professional networking events (not property networks) are interested in finding interesting new speakers and Mr & Mrs Luton have an interesting story to share. Not only do they want to buy properties but they are a new business and may be a source of work or referrals for many of the attendees and their connections at the networking events. What better way to find useful contacts with testimonials than through a professional networking organisation?

I could easily write a book on this subject but I will keep the article short in the hope that you will ask lot’s of questions.

One thing I will touch on just quickly is whether or not to buy and whether to sell or hold following refurbishment.

How do you know whether you have found a bargain property?

The simplest way is to check is on websites such as Rightmove to see what similar properties are selling for in the area and then go and look at a few. Also look at what similar properties have sold for recently. More useful tips on this HERE. To break even, the property you are looking to buy should work out cheaper than buying a freshly refurbished alternative AFTER you have factored in the costs of refurbishment. There’s no point dealing with all the hassle of refurbishment unless you can make a profit and remember to factor in the cost of your own time. Typically I look for a 20% to 30% profit margin. Deals like this aren’t easy to find, too many TV shows have had their effects on that so expect to have to walk away from a lot of deals but always explain to the person who introduced the deal why it’s not for you. If you simply keep saying no the referrals will stop. If you explain why a deal isn’t for you then you are one step closer to them finding you a deal that does fit. When you do eventually find a good deal it is VERY important to act quickly and make a real fuss of the person who referred it. Do not make the mistake of offering solicitors or estate agents finders fees – they are not allowed to take them. By all means buy the introducer and their partner a nice meal or a small gift after a deal has been done though as a token of your friendship and gratitude. I also try to refer business back to people who refer to me so if I meet somebody who is selling a property I refer them to the estate agents who have become my “friends”.

To read my strategy on whether to sell or hold a property following refurbishment click HERE.

Property refurbishment - Just one more thingIf you buy with a mortgage and intend to sell watch out for early repayment charges. If you buy without a mortgage remember that it is difficult to get one for at least 6 months following a purchase. If a property isn’t habitable you may well decide to buy for cash or use bridging finance and refinance later. What you might also consider is a deferred completion. In simple terms, this is where you exchange contracts now and agree a completion date in say three months time. You then make your offer subject to these terms and on the basis that you want to be able to refurbish the property between exchange of contracts and completion. Solicitors standard advice to vendors is do not agree to these terms. The risk to the vendor is that the purchaser could destroy the property and significantly reduce its value and then fail to complete. A compromise to reduce the risk to vendors is to pay a 50% deposit on exchange of contracts. Obviously you would have to have cash to do this as a solicitor would never advise a vendor to allow a charge to be taken over the property by a lender or bridging finance company. Such deferred completion arrangements can be the difference between doing one deal at a time or doing two if liquidity is tight.

Please ask questions by leaving comments below. There is no such thing as a silly question.

For details of more articles and useful calculators for Property Refurbishment please


David Maude

15:47 PM, 13th September 2013
About 8 years ago

Good afternoon Mark,
Hope you are well.
Reading through your article, you seem the absolute perfect person to approach regarding advice on how to enter into this amazing industry.
My experience surrounding property refurbishments may be slightly more advanced than your usual novice, as i currently work for a well known house builder and rent out a flat, however, i still regard myself very much a beginner.
Ideally my goal is to begin purchasing properties and refurbishing them as cheaply as possible utilising my connections within the construction industry. Your idea regarding probate lawyers is an avenue i never considered but also would play a perfect part of my plan, as my partner works for a solicitor as a probate legal assistant.
However, my question for you surrounds financing these projects. I currently have 2 mortgages, 1 for the apartment i live in and the other for the apartment i rent out. The residential mortgage has 10% equity and the buy-to-let with between 15-20%. Obtaining a third mortgage without any deposit would be near enough impossible, but i want to be on the search for a property to refurbish now, rather than waiting the number of years it would take me to save enough for another deposit.
What would you suggest?
Do i sell my rented property and invest the equity into another property requiring development? If so, do i get a mortgage that would cover the purchase and available budget for refurbishment? Do i get a loan for the refurbishment? Do i put as little down as a deposit and use the remainder to complete the refurb?
Or... do i keep the rented property and search for another solution that i've overlooked?
Your assistance would be gratefully appreciated.
Thank you,

Mark Alexander

16:56 PM, 13th September 2013
About 8 years ago

Reply to the comment left by "David Maude" at "13/09/2013 - 15:47":

Hi David

The property refurbishment business requires cash to get into, lots of it.

Your conventional lenders are not into this so expect, at best, to be able to borrow around 70% of the property value before refurb and 70% of the refurb costs.

However, to play it safe lenders want ALL of your money to go in first.

Let's assume you are buying a derelict property for £100,000 and planning to spend £100,000 on the refurb to end up with a property worth £300,000.

The lender will expect you to put your £60k in first, then lend you £40k towards the purchase, then lend you the refub money at stages based on architects certificates. You will have to find the money from somewhere to pay for labour and materials and the lender will pay you back when you get to the next stage.

Sorry but I suspect that's not what you were hoping to hear.

All the best anyway.



Anthony Ayton

14:10 PM, 2nd November 2014
About 6 years ago

Reply to the comment left by " " at "23/08/2012 - 16:33":

Hello David, The fastest way to find a refurbishment project fitting your requirements would be to go to Repolist. Repolist is a real time database that catalogues repossessions and properties requiring refurbishment across the UK. There are over 5000 properties in this database at any given time. Full internal photos and agent contact details are all provided. Please fill in the contact form on my business profile page if you are interested in finding out more.

Anthony Ayton

16:49 PM, 4th November 2014
About 6 years ago

An excellent article. But do you know that a lot of 'bread and butter' refurbishments projects are hidden in plain view. One strategy that i like is looking for houses (generally in victorian streets) where some of the houses are larger than others. What is the price differential between the 5 bed and the 3 bed? Is that difference big enough to support a loft conversion with profit? Or a rear extension? Since the recent planning changes neither of these procedures necessarily require planning permission (provided the dormer does not face the carriageway, the property is not listed, and has unused permitted development rights).

By far the quickest way to find refurb projects like this is Repolist. The UK's largest real time database of repossession and refurbishment properties. If you would like access to this database, please contact me through our business sponsor profile.

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