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HomePropertyBuying Selling and Renting PropertyHow to find really cheap property to do up

How to find really cheap property to do up

There are twin principles when it comes to developing property, one is creating something very saleable that makes top dollar on the open market and the other is controlling your costs.  Part of cost controlling undoubtedly is to do with how much you spend on the renovation but a big element is how much you buy a project property for, assuming you are not opting for a ground-up build.  The cheaper the price you pay, the greater your profit will be at the end of the day.  The old adage always has been that you make money when you buy not when you sell; every pound off the asking price is a pound in your pocket

How can you source really cheap properties and snap them up before other people get to hear of them?

Everyone hopes to find that bargain-basement house, the near-derelict home that comes up in the estate agents’ window or the repossession at a knockdown price going through an auction.  But the problem is, that what you see is what everyone else can see so unless you get really lucky or have some contacts in the trade then you are going to have to be a bit smarter to spot your refurbishment bargain.

Finding a good property is not necessarily about finding a really cheap property or one at a rock bottom price.  They are around but you are unlikely to be the only person in the running for them.  Bit a more savvy and start to truly understand the property market so that you can work out trends in purchasing patterns and fashionable areas before anyone else has realised so that you are ahead of the game.  Always remember that, at the end of the day, your profit is the final sale figure less your costs and you can also still turn a really good profit without having to necessarily start with a very cheap house; it is all relative.  Here are five key factors which will always surround a successful property development:-

  • Understand interest rates and the impact they have on borrowing and thus the movement of buying and selling of houses
  • Employment rates
  • Inflation
  • Supply and demand
  • The ‘feel-good’ factor

Take Covid-19 as an example, apart from the anticipated looming recession which is bound to hit the property market, what other impacts has Covid had?  The Coronavirus has encouraged a percentage of people to want to move away from urban and even suburban areas to protect their families.  Who saw that coming?  Perhaps we should have done, after all, scientists have been saying for years that another global pandemic was not a question of ‘if’ but ‘when’.  Not only has Covid seen a trend away from cities but it has impacted significantly on employment and the mid to longer-term effects of this have yet to be felt.  At the moment, demand for housing is outstripping supply as there is a post lockdown surge from people who had planned to move but were not able to due to lockdown and those people keen to move before the next spike but what will things really look like in a year or two years down the line?  Covid is probably a bit of an unusual and unique example but it just goes to highlight the importance of understanding these five key factors when it comes to trying to figure out what property is going to do next and therefore, where you might bag yourself a bargain.


The trick with location is to find the next great location which currently may be the sad end of town with not much going on.  But if you are able to spot that a developer is going to be building a large estate on an ugly brownfield site and is throwing into the mix a couple of new schools and a train station then this could be the time to snap up some of those tired old rundown terraces which are made uglier by the brownfield site and currently have no usable amenities.  It’s all about spotting trends and history dictates that it is on the fringes of urban or suburban areas that the best development takes place.  Remember, if you do buy in the worst area in town then literally, the only way is up.

Chance your arm

Don’t just rely on the internet and estate agents, this is where every other person is looking, drive around the area that you have targeted and just knock on some doors – you will be surprised at how this can work and you might be able to make a private deal with a resident and avoid using estate agents.  Or, have flyers printed and push them through some doors.  If you find a derelict property then the Land Registry will help you trace the owner.  There are lots of online resources as well which can keep you informed not necessarily in finding cheap property but in monitoring industry trends and highlighting where buyers are looking for homes.

Finding motivated sellers

One of the tricks to finding a good purchase price is to be able to spot someone who really needs to sell quickly, this is known in the trade as a motivated seller.  This could be someone going through a divorce or someone sadly in financial difficulties or the property may be for sale because the owner has passed away and the family want a quick settlement.  It is a fact of life that someone else’ misfortune can be to your advantage.  Estate agents are often a good bet at passing on someone’s circumstances so highlighting this type of seller without going into too much detail.

Never be in a rush

Any experienced property developer will tell you that you never regret the deals that you don’t do – there is always a better one right around the corner but it is easy to get impatient particularly if you are new to property development.  Buying in a rush even if the price is brilliant almost inevitably means that you will overlook some key detail as you trip over your own feet to sign on the dotted line.  It’s easy not to check as thoroughly as you should and end up with an unsaleable property because it has the neighbours from hell or an outstanding planning application or structural problems or that fantastic garden that you can see from the kitchen mostly belongs to next door.

Buy at auction

It’s specialist enough for you to either take someone experienced with you or wait and watch a few so that you understand how it works.  Comparing an auction to a game of poker is not a bad analogy so it is very important to know the form and how to play the game.

Target the ideal buyer

Always keep in mind the end game – your target seller.

Adding value

This is the mantra of all successful property developers; success is about adding value and not developing value which basically means sitting back and waiting for the market to rise.  Success means making a profit in a tough market because you were able to get enough clearance between what you paid for the property and your final sales figure even in a tight climate.

And always remember that there is a limit to how much value you can add to any property; a house is always ultimately limited by its size and its postcode and even if it does look like Blenheim Palace inside, there is still a maximum ceiling that it can be sold for.

Buying low will protect your asset against a declining market meaning if you do have to hang onto it for longer than planned, you haven’t paid over the odds.

Controlling costs

Most people understand this to be the control of refurbishment costs, not going for that Smeg fridge when you are renovating a house destined for student rental.  But there is a layer of less obvious costs and this includes things like professional fees, the cost of your borrowing and other incidental legal and professional expenses – they can soon mount up.

Staring through a glass darkly is the best way to describe a newby property developer trying to fathom out which lending institution to approach for funding.  Some months down the line and you are still none the wiser; it’s not just cost that you need to be aware of when looking for commercial lending, it’s the massive amount of time you can waste chasing lenders who have never to going to entertain your application.  This might be because you are a new starter or because they just don’t like the type of project you are involved in for their current portfolio.  A good specialist broker will save you time and time is, of course, money.  You don’t want to end up paying over the odds for your borrowing and the broker’s job is to find you the best interest rate and terms available in the market with targeted applications to warm institutions who will entertain your application.  It’s just about focusing on your costs every step of the way, the price you pay for the property is probably the most important but there are other significant decisions along the way too.

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