In this series we recount real stories, collected from our team, our partners, our clients, and other investors, about things that can go wrong when buying property outside your hometown.
This week we chatted to our ex-Project Manager, Ross about a property renovation that didn’t quite go as expected.
Ross was managing renovation works on behalf of a property investor who had just purchased a new property in Leeds. The works the investor had outlined on the schedule included fitting a new bathroom, updating all the decor, installing new carpets and doing extensive roof repair works. “We agreed on the budget and timescales, and I gave the refurb team the go-ahead to get started on the works,” he explained.
After stripping out the house and clearing all the waste, the refurb team finally managed to get access to the basement, where they found that the floor joists were completely rotten!
“We could see that a large number of the joists supporting the ground floor were rotten; some had rotted so badly that they were no longer fixed into the external walls! At this point, we knew that we had a serious problem on our hands, and there was no way we could fix it within the current budget” Ross said.
The team assessed the extent of the problem and what needed to be done to resolve it. Ross discussed the findings with his client, explaining that there was no money in the budget to cover the additional works that needed to be done. “The client was distraught when we told him that he was going to have to increase his budget by 40%, and he remarked that he should have asked the agent for access to the basement on the viewing, but he didn’t really want to go down there.” The client knew that this was a problem that needed addressing urgently and eventually, he agreed to the extra costs.”
This was obviously not great news for the client, “but they weren’t able to spot these issues during the viewing and they knew that in order for the investment to succeed, it was the right decision to spend the extra money,” said Ross.
The team got to work, removing the full ground floor, including the kitchen, stripping out all the ground floor joists and replacing them with new ones to support the floor. Ross eventually handed the property over to the letting agent, and they found a tenant who moved in shortly afterward.
“Fortunately, the investment was still fruitful and although extra spend was required, it was worth it, as reducing the budget in other areas – for example, by installing a more basic kitchen or compromising on the new bathroom – could have cost the client money in terms of reduced rent in the years to come.”
Ross now makes a point of asking to inspect every single area of a property when viewing it for an investor. “If you can’t access a particular area at a certain point, arrange for a second viewing when full access is enabled,” he said. “Agents are always trying to hide things, but now they know that we look everywhere”
He was also keen to stress that the budget for renovation needs to have some contingency and flexibility to account for the worst-case scenario. “It needs to be flexible to ensure that the property (and the works) are completed to a good standard and that nothing is missed.”
Top renovation tips to consider when investing in property outside your hometown
– View every corner of the property – to avoid finding nasty surprises!
– Instruct a professional to carry out a full condition survey of the property before you buy it, as they’ll be able to detect any structural issues which could cost thousands to repair.
– Renovation work can cost more than initially expected because some items are only revealed once works have begun, so keep some money aside for these.
– Choose your builders wisely – use tried and tested builders that have been recommended by previous clients and ensure they have the appropriate level of insurance cover for the job.
If you want to start investing in property but aren’t sure about investing in an area you don’t know, why not rewatch our latest Property Investment Masterclass? Through this on demand webinar, we go through the areas we choose to invest in and how you can too. Watch it here