There’s good money in bungalow refurbishment

There’s good money in bungalow refurbishment

15:09 PM, 28th June 2012, About 11 years ago 11

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Whilst a bungalow isn’t likely to provide you with the highest possible rental yield, bungalows should not be overlooked as property investment opportunities, especially by investors with with good refurbishment skills or a good team of tradesmen.

The development of bungalows has slowed massively over the last 40 years or so due to the rising costs of land. Developers can build at least double the number of townhouses on a street compared to detached bungalows and that’s the reason they are not so keen to build them. However, the baby-boomers are now reaching retirement age and as their bones and muscles start to creak, due to the onset of old age, a bungalow is often a consideration for them. They may well be looking to downsize at this stage of their lives so demand is high and supply isn’t, that’s always a recipe for making money. Rule #1 in economics, according to the legendaty Adam Smith, is scarcity and bungalows certainly fit into that category when it comes to housing supply. As more and more baby boomers decide that a bungalow is what they want, scarcity will increase and you know what that means? Yep, prices will soar. I’ve written this article on the basis of making a quick buck on buying, refurbishing and selling bungalows but you can see why some landlords are happy to trade of low yields against capital growth can’t you?


Nice bungalows like this are few and far between when you want to buy one

Where are all the nice bungalows?

Try finding a nice bungalow which is ready to move into, they are few and far between. One of the main reason they are sold is that the owners have died. The residents of bungalows are generally much older and don’t tend to move around too often so whereas the average house changes hands every seven years, bungalows are owned for a lot longer. As bungalows are generally occupied by older people the maintenance can be a bit hit and miss too., not to mention their taste in wallpaper! What would the DIY shops do without DIY pensioners? They even have a marketing phrase for them now “the grey market”. This also keeps garden centres in business but as time goes by, and people get older the properties and the gardens often become neglected.

Bungalows and development opportunities

As I explained above, when a bungalow comes on the market, more often than not it’s because somebody has died or has been taken into long term care. The next generation (now the baby boomers) want something nice and for the reasons described above there are very few. Therefore, these tired bungalow properties tend to stay on the market for a long time and the new owners (the beneficiaries of probate) eventually want to get them off their hands. In steps the developer. I’ve refurbished a few bungalows myself, OK, I confess, I didn’t lift a finger as I’m useless at real work, but I do have a good team who know what they are doing. I prefer the properties which are structurally sound but need all of the following;

  • New electrics
  • New boiler and heating system
  • New windows
  • Removal of artex/wallpaper and re-plastering
  • New skirting boards and coving
  • New kitchen and bathroom
  • Decorating
  • New carpets
  • New fences
  • Tidy garden
The cost of these works is typically £20,000 to £30,000. Do consider opportunities to extend and to move internal walls around to make the place modern too. Open plan living is becoming increasingly popular. If you get your figures right it’s possible to make a 20% – 30% mark up on costs. For example, purchase price £140,000 + refurbishment say £25,000 = £165,000. Sale price £210,000. Profit £55,000 (NICE!). End to end (the date you agree to purchase through to sale) these deals take around 6 to 12 months to complete

Crunching the numbers and arranging finance

The two most popular ways of financing projects such as this, assuming you don’t have 100% cash,  are either via a buy to let mortgage (some lenders such as TMW specialise in refurbishment mortgages) or by using bridging finance. The latter appears more expensive at face value but actually can work out cheaper so do take advice.

If you would like further guidance on raising finance please call my business partner, Neil Patterson, on 01603 489118 or email

Please leave comments and questions below and if you’ve enjoted reading this article please share it.

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

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John Frith

21:10 PM, 28th June 2012, About 11 years ago

Begs the question that I've often wondered. Is there much chance of getting planning permission for a two storey rebuild? Maybe on the edges of a bungalow development?

Richard Facer

20:24 PM, 22nd August 2012, About 11 years ago

Really useful insight around bungalows. One of those light bulb moments for me. Just need some funding now. thanks Mark

Jerry Jones

15:31 PM, 28th August 2012, About 11 years ago

Finance problem on this is as follows. Use a refurb B2L mortgage and then sell. Is this enough for it to be treated as a B2L investment as opposed to trading and thus taxed at income tax rates? Proobably safer to let it at a low yield for a year or so and then sell, but that means giving some retirees the boot, which leaves a nasty taste. Or are bungalows lettable to the normal more transient tenants, I wonder?

Mark Alexander - Founder of Property118

21:15 PM, 28th August 2012, About 11 years ago

Hi Jerry

The type of mortgage used will not help you win any arguments with HMRC unless you actually let the property. The good news is that bungalows let just as well to young families as they do old ones. Just don't expect the yields to be very good. It's then a balancing act as to whether the cost of holding and letting for 6 - 12 months, and having to redecorate before selling, is worthwhile in comparison to the tax savings. Often it is but that can also means leaving capital tied up for longer than you wanted to. Obviously the wealthier you are in terms of available capital the less that matters.

20:43 PM, 4th March 2013, About 10 years ago

Just watched Homes Under the Hammer and the best deal seemed to be a bungalow refurbishment project. I Googled Bungalow Refurbishment and 'hey presto' here I am and there's a ton of useful info here, especially on the financing side of things. I'll be looking at bungalows in my area and may well be back with more questions as I've been looking for a little project to keep me busy and to make a decent return on my money. I'm in the building trade myself and have all the trades contacts I need. Thanks guys and keep up the good work, great website 🙂

David Gill

22:38 PM, 19th June 2013, About 10 years ago

Great article, I read it, enjoyed it and acted upon it because it made absolute sense.
Brought a Bungalow in a very nice town in North Wales, got it after a lot of patience and negotiation for £132k spent £18k doing it up just has Mark suggested. Had an Estate agent around today urging me to take offers on £210K, After costs a potential profit of just over £50k. Thanks Mark,.

Mark Alexander - Founder of Property118

22:45 PM, 19th June 2013, About 10 years ago

Nice one David! I think you owe me a drink my friend but I will settle for you becoming a member of The GOOD Landlords Campaign 🙂

Please see >>>

Vanessa Warwick

6:22 AM, 20th June 2013, About 10 years ago

Bungalows are a dying breed in the U.K.

Just 300 of them were built last year.

They are popular with developers because they often come on big plot sizes and they offer scope for forcing the appreciation as they can have a loft conversion done to add more bedrooms, or a 2nd story can be added, or, more often than not, they get knocked down and two new houses go up!

Bungalows are most prevalent in coastal areas where they are favoured by people retiring by the sea.

A friend of mine is refurbishing a bungalow in the beautiful village of Pett Level in East Sussex. She is adding a second storey and turning it into an "upside down" house with the living areas on the 2nd floor. By adding the second story, she has also achieved a sea view, which adds a significant premium to the price. 🙂

As people are living longer, they often want to retire to a bungalow, but they are few and far between. With scarcity comes value. I know a chap in Poole who only buys bungalows and rents them out to retirees!

Related reading: The humble bungalow is on "life support" ....

Richard McTaggart

17:19 PM, 24th May 2014, About 9 years ago

after a brain-hemorrhage in 1990*
my wife decided to sell our house!
with my half of the equity,
and as i used a wheelchair*
I thought> buy a bungalow!
I'd worked out as they are not being built anymore!
the price can only go up*
I had one brain-cel left you see!!
I found a three bedroomed one in Rowde/Wiltshire*
and now live in peace with my cat> Claude*

Anthony Ayton

15:35 PM, 4th November 2014, About 9 years ago

As Vanessa said earlier bungalows do often come with big plots surrounding. the other great benefit of this is that with the new permitted development rules it is possible to massively increase the footprint of a bungalow without recourse to planning (provided that there have not been other previous extensions).

If you are looking for refurbishment projects of any kind, Repolist has literally thousands of opportunities in our real time database of refurbishment and repossessed properties. If you want to find out how to access this database, please fill in the contact form on my business profile.

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