Refurbishment costs and building a team

Hi Graham,

Just something to consider before you get this far. Are you going to be using BTL finance?

The reason why I ask is that if the property is not in rentable condition the lender will hold a full retention normally and it would need to effectively be a cash purchase.

You can of course use specialist commercial finance such as bridging loans, however the deposit required will be at least 30% plus and the costs higher.

If you are starting out with a large cash reserve fixer uppers can offer higher profit margins, but if your funds are limited you will need to look at properties in rentable condition.

Personally I would say that 'rentable condition' is quite a subjective term and having refurbished seven properties in the past two years, I have yet to encounter any retention problems. So long as the safety and integrity of the house is sound is: foundations, roof and walls etc, everything else is 'in need of improvement.

I have formed an excellent relationship with a kitchen fitter, a heating engineer, an electrician and a carpenter/builder. I pay them on day rate and pay them very quickly. I never have a problem getting hold of them. I walk round the house, didcuss what needs doing and discuss roughly how long they'll need. I never ask them to quote as this is the expensive way to work as they'd find a way to charge extra if they went over budget anyway. I 100% trust them - and have yet to have a problem.

I buy my kitchens from Howdens and typically cost about £1100 inc oven, hob and extractor. I buy worktop elsewhere as howdens only sell in 3m lengths and others sell in 2 and 4m lengths so often is more economical. It usually takes a week to fit, tile etc and I pay £120 a day. If you allowed £2500 for a decent kitchen, new oven etc, tiled walls and floors you would be too far out.

It's about the same for a bathroom with bath, screen, thermostatic shower (never electric), basin and toilet.

So long as you're not knocking walls down, allow three months to get everything done.

I buy floor and wall tiles from wickes. Never, ever buy from anywhere that doesn't have stock. I buy bathrooms from wickes too. Their bundle deals can't be beaten and again they have everything in stock.

I also fit old stripped pine doors. They take ten minutes to sand and Danish oil and always look fantastic. I buy them for £50 each and they never look damaged or marked. I have one house where I was persuaded to save the existing panel doors and paint then. In February im back in to redecorate so all the doors have to come off to be painted. It'll be hell.

To refurbish a kitchen, bathroom, decorate thru out with new carpet, doors etc usual costs me between £6 and £10k. I find that if you want a decent trademan, shop locally and ask one if he knows another. All my little helpers know each other and are keen to help each other out. Consequently I never have a situation where a plumber tells me he's got to go off the job until an electrician turns up. They help each other !!

We have a Christmas party in a local restaurant every year. My treat. We all get on so well. It helps as I'll be needing them for maintenance and sorting problems in the future.

Hi Graham

I was in the same position as you when I purchased an auction property last year in a town where I already had a couple of properties rented via a long established local Letting Agent. I asked the agent for a recommendation for the refurb work and was put in touch with one of the main contractors used by them. He works on over a thousand of the Agents properties and also works for a couple of Agents in nearby towns. He was superb - only used excellent and reliable tradesmen known to him, kept to his original estimates and timescale, and - best of all - was able to provide sound advice regarding what scope and standard of work was required for the local market to optimise rentability. Also, as he doubtless will be required by the Agent to sort out any future maintenance problems,he now knows the property well in terms of electrics, plumbing, etc and will be in a knowledgeable position to rectify issues. He also met the tenants on the evening they moved in to explain how everything worked (a service he routinely provides but doesn't charge for). I wouldn't hesitate to use him every time for future purchases in the area, and I would also follow the same process in other areas. The Letting Agents have already tried and tested their Contractors and hope to benefit from the recommendation by getting the property on their books, once ready for renting.

If anyone can supply me with the contact details for a bathroom fitter in Hampshire that will fit a bathroom in 4 days for £2,500 all in, I'd appreciate it.

Hi,
for kitchens I always use Magnet as I get mega discounts via the LNPG group. I believe they are a better option than Howdens for both price and range.
For installation I use a local to Portsmouth lad called Jamie. Excellent workmanship. Very reasonable.Just needs to be reminded to turn up on the first day! He doesn't do plumbing.
For other Hampshire recommendations google PDPLA or my group Hampshire Property Network. Allan

Neil raised an important point re the lettable condition of a property at purchase. If a refurb'er buys a property that requires works and may not be habitable straight away ("habitable" by definition of the lenders valuer - not the purchaser) then the lender may indeed apply retentions. To be fair a "buy to let" mortgage is offered by a lender to enable an investor to buy a property and then let it out straight away.

There are finance products available that lenders offer refurb'ers which mean that the terms of the loans are not breached, that the vacant properties can be refurb'ed and then made in to a mortgageable condition, and some of these products allow the initial loan to be switched in to a BTL mortgage even after just one month of ownership.

For personalised and detailed info on these financing strategies, my team would be pleased to assist.

Howard

Howard makes a good point that "habitable" is as defined by the Lender, even if Surveyor notes on valuation suitable for mortgage loan. Refer to this associated post on properties with damp.

http://www.property118.com/retention-btl-mortgage/71784/

Allan