This is something I have wanted to write blog post on for a while.
In 2012 I bought my first home which was a doer upper. The main reason for it was because I could not afford to buy anything in any of the areas I wanted to live in. I looked around and I eventually found a property that was ideal… It is always a good sign when the agents put no internal photos on rightmove etc.
I made a viewing and the property was ideal and ticked all of the boxes:
- Cheap – tick!
- Within budget – tick!
- Potential to build in some value – tick!
- No structural problems – tick!
In short the property was sturdy and sound, it needed a rewire, central heating installing, plastering, decorating, new kitchen and bathroom – so no small jobs.
Things to consider when buying a doer upper
Why are you buying it? I had 2 reasons, the first was I could not afford to buy something in an area I wanted and I also could not afford a huge monthly payments as I was living alone. Buying a project house meant it cost me less each month than rent would and I could build in some value to hopefully help me on to the next step of the ladder.
What work needs doing? Everyone has different levels of what they are comfortable with. I was happy with everything so long as it was not structural.
How cheap is the property compared to how much the work will cost? Is it cheap or is it cheap because of how much it will cost to put it right? There is a different.
I bought the property for £84,000. I worked out it would cost me around £15k to make it nice, but to budget for £20k just in case. In my head I had worked it out that the property would cost £104,000. Similar properties were selling for around £125,000 at the time.
It took me around 2 years. The first jobs were some of the biggest and 3 of the 4 most expensive:
Bathroom, Rewire and central heating (the only job more expensive that the bathroom was the kitchen). I needed the bathroom doing as the old one was not very nice (which is being polite), the rewire needing doing as it was a fire hazard and GCH I did because it made sense to do it early in the process before decorating etc. The kitchen, I had a kettle, sink, microwave and a slow cooker (which are game changers btw).
Once those jobs were done which took about 6 months, we could then move on to some of the other jobs. Front and back door, a new window and then decorating.
As mentioned it took about 2 years to do, I could have done it quicker but I did not have the money and I was in no rush, it was warm and dry. I did one room at a time.
By the time I had finished I worked it out I had spent around £18,000 so more or less slap bang in the middle of what I had budgeted.
Some quick maths
I bought it for £84,000 and put down £13,000 (15% deposit). That left a mortgage of £71,000.
I lived in the house for 4 years. Over those 4 years I had paid off around £9,000. That left a mortgage of £62,000.
When I sold the property I sold it for £155,000. £155,000 minus £62,000 gave me £93,000 to put down on my next home and also gave me around £53,000 profit. Then there is also the fact I paid £300-350 a month mortgage instead of around £600 in rent.
The next step on the ladder
Those 4 years and £93,000 equity meant I could afford to buy a home in an area I wanted to live in. Without that doer upper, I would never have been able to afford that next step.
This is why I am a huge fan of doer upper properties. But you have to do your research first.