When it comes to property, I’m a believer in taking educated risks, as one popular training property guru signs off… “if you risk nothing then you risk everything”. There are, however, some risks simply too big to take, and by taking no action it can often be your best action.

Recently we looked at one such project.

With a central town location and weighing in at an impressive 11,000sqft this 4 story ex-commercial space was on for ‘only’ £300k.
That equates to £27/sq. ft. and with the average residential prices in the area around £275/sq. ft., it looked very promising…The downside, it hadn’t been inhabited for 20 years.

Doing some ballpark numbers before visiting we worked out there could be around £400-450k profit in renovating it into 9 large 2 & 3-bed apartments.
This property was going to auction, and sometimes people don’t visit the property when buying at auction, they get sucked into the lure of it… that would have been a big mistake.

While the spreadsheet numbers were very favourable… when you turn up and even the pigeon have moved out, because it’s so grim, you need to question why.
Factors that can be overlooked by the super eager to run a development like this should be.

Can I:

• Get lending for the purchase (is it even mortgageable)
• Can I get development lending to do the renovation, who’ll take the risk and at what price?
• How long will it take to turn around from purchase to selling of each flat (I’d say 30-36months min)
• How much will that cost in finance costs?
• What’s the access for builders? (in this case, very limited)
• Can I get insurance? The building had a number of very dangerous elements to it.

In the end, it was a pretty smelly but fascinating tour of what once must have been a fabulous space.

While the numbers looked good on paper, it could have been the mother of all horror stories.

So on this occasion, not for us.

Happy Property Hunting,
Nick Hume

Featured Photo by Vijit Bagh from Pexels