The ultimate guide to doer-upper property

The ultimate guide to doer-upper property

Buying a so-called ‘doer-upper’ can be a great way of putting your own stamp on a property – and making a profit.

But what exactly is a ‘doer-upper’, what should you look for and what are the key things you need to consider before taking on this kind of project?

Our guide provides all the answers…

 

What does doer-upper mean?

A ‘doer-upper’ or ‘fixer-upper’ is a property that’s in need of repair or cosmetic enhancement – often with an aim to add value or make a profit.

Developers often look at doer-uppers to ‘flip’ – meaning they buy and renovate before selling on for a profit.

Traditional buyers, meanwhile, might consider a doer-upper because it’s cheaper than buying a ‘move straight in’ home and gives them the opportunity to turn it into a home that works for them.

 

Is it worth it to buy a fixer-upper?

Taking on any kind of property project requires a commitment of time as much as money.

And, of course, there are pros and cons to a doer-upper just as there are for any other type of property:

 

The pros of buying a doer-upper

 

  • They’re often cheaper because they need work
  • You may have more choice when it comes to location
  • There may be an opportunity to add value
  • You can personalise the property to fit your needs

 

The cons of a doer-upper

 

  • Renovation work can be expensive
  • You may find unexpected, costly problems once work begins
  • If work overruns, you may end up spending more
  • Completing a doer-upper takes time

 

Things to consider when renovating a house

Before you commit to a doer-upper project, there are a whole host of things you should consider…

 

1. Buying for the right price is hugely important

What you spend buying your doer-upper can make or break the amount of value you’re able to add by the work you complete.

If you pay too much on your purchase, your profit margin will become narrower, so be prepared to pay what the property is worth in its current condition and no more.

Competition for doer-uppers can be fierce and if there’s a lot of interest in a particular property, you could end up paying more to secure it.

 

When assessing the value of a doer-upper, you should:

 

  • Visit with your builder or architect for a second opinion
  • Know what you plan to spend on renovations and be aware of how much work you can do yourself
  • Be aware of your finance options on the property

 

2. Widen your search area

By taking on a doer-upper, you may be able to afford to buy in an area that would normally be out of reach for you financially.

Widen your search area initially when looking for a doer-upper project and weigh up the best locations that meet your needs.

If you’re buying a doer-upper to live in for a long period of time, buying in a traditionally more expensive area could be the right option for you.

But if you’re looking to make a quick profit from a ‘flip’ property, you’ll need to consider if you’ll be able to get back any extra money you spend buying the property through the renovation work you carry out.

 

3. Get involved to save money

One of the best ways to save money on a doer-upper project is rolling up your sleeves and doing some of the work yourself.

However, you should always be aware of what you can realistically do yourself and what should always be done by a professional tradesperson.

Gas and electrical work should always be carried out by licensed, professional people.

But you may be able to save some money by taking on easier work yourself, including:

 

  • Painting and decorating
  • Tiling and grouting
  • Installing cabinets
  • Laying wood flooring

 

4. Stay on top of your budget

One of the most difficult things to do with any doer-upper is staying within your budget.

Doer-uppers have a habit of throwing up nasty and expensive surprises when work is under way.

The key to staying close to your budget is in your preparation.

You should:

 

  • Be clear on what your project will cost before any work begins
  • Know how much work you will do yourself
  • Add a comfortable, affordable ‘buffer’ to your overall budget to cover any additional or unexpected costs once work begins

 

5. Consider buying at auction

Doer-uppers often come up for sale at property auctions and the auction room, or an online event, can be a great way to pick up a bargain.

Properties sold through auction, however, require a different approach and are much faster transactions.

So, you should:

 

  • Have your finance in place before you attend an auction
  • Have visited any properties you’re interested in before bidding, alongside studying legal packs
  • Have a maximum budget in place for a purchase that you will not exceed
  • Have your deposit ready to pay should you be a successful bidder

 

If you attend a live auction and make a successful bid, you’ll exchange contracts with the seller there and then, and will have to pay a 10% deposit.

You’ll then have 28 days to complete the sale.

Under the Modern Method of auction, usually an online bidding event, you’ll pay a reservation fee immediately to secure a property, before having 28 days to exchange contracts and then a further 28 days to complete.

 

6. Always get a survey

To best eliminate any nasty, costly surprises, always commission a full structural survey when buying a doer-upper.

A full survey will reveal any potential problems with the structure of a property that can’t always be seen with the naked eye.

Once you have all the information provided by a survey, you’ll be able to decide if you wish to proceed with the purchase.

 

7. Don’t forget about planning permission

If your doer-upper project requires major structural work, you may need planning permission.

Planning rules can vary from area to area, so if you find a property that you’re keen to buy, speak to the local authority planning department to establish whether you’ll need permission.

Some work may be able to be completed without planning approval, but properties in conservation areas or Areas of Outstanding Natural Beauty may be under an Article 4 direction, limiting permitted development rights.

 

What to look out for when buying a house to renovate

When viewing a doer-upper, try to leave emotion at the door and look at the property with a keen eye.

You should also consider:

 

1. The standard of other properties

There’s an old saying about buying the worst house in the best street and, to an extent, that’s true.

Look at other properties in the road where your potential doer-upper is located.

Have other people carried out work and, if so, what have they done?

What have other properties sold for and is there a ceiling price in the road?

Having all this information can help to make your decision on whether to buy much easier.

 

2. The length of time the property has been on the market

Try to find out how long the doer-upper you’re viewing has been on the market and whether it’s been reduced in price.

Doer-uppers that have been up for sale for a long time can sometimes be a red flag – perhaps because other potential buyers have discovered potentially costly problems.

 

3. Return on investment

Do plenty of research into the area where you’re considering buying your doer-upper.

Find out about plans for the local area, including road improvements or potential development work nearby.

Is the property you’re looking at near a sought-after school, or is it close to good transport links?

All of these factors can play a part in increasing, or decreasing, your return on investment.

 

4. Affordability and finance options

While most property purchases are funded through a mortgage, doer-uppers can sometimes require other forms of finance.

Traditional mortgage lenders won’t always provide a mortgage if a property isn’t considered ‘habitable’ in their view.

That often means doer-uppers with unusable kitchen or bathroom facilities are classed as ‘unmortgageable’.

So, if you’re keen to buy a major project like this, you may have to consider other forms of finance – unless you’re a cash buyer.

A bridging loan or refurbishment mortgage could be options to fund your purchase and renovation work.

However, these types of finance often come with much higher interest rates than traditional mortgages, so always seek independent financial advice.

 

Further reading…