Experience 4: The Crewe Property

Index

• Experience 1: The apartment
• Experience 2: The Weoley Castle Property
• Experience 3: The Willenhall Property
• Experience 4: The Crewe Property
• Analysis of the Property Market 2010 
• Analysis Update  
• The one that got away
• Repossession Report 2010: 36,400 
• The Dangers of Investing Abroad  

I've heard a lot about property deal packagers and decided to give one of them a try. In June, one company was offering a 2bed house in Crewe, Cheshire for £5995 all in. There would be a mortgage of £51,000 to maintain at a cost of £200 pcm. I paid the fee and completed in July while my Willenhall property was being refurbished.

The company said that he can find a builder who can put in a central heating system and redecorate for under £3000. In fact, it only cost £2700 but it took 3 months to do. The company also arranged the letting agent who would also manage it for me. The company said that it would rent for £450 pcm.

When the agent showed some tenants round the property, she noticed that there was a musty smell and the presence of flees - the previous owner had pets! She also noticed that the property had an extensive damp problem. So she hired a builder to do an estimate, and he suggested, that if I'm gonna do it, I should do it properly - get a new kitchen and bathroom. I agreed to it immediately because this is what I did to my other properties. The cost was £8000 on top of the £2700 I paid earlier. This took another 10 weeks to complete which is relatively quick considering the amount of work that needed to be done.

Now that the work had been done, the agent managed to let it for £495 pcm - £40 more than the stated rent. So, refurbishing a property to a high standard, not only achieves a higher rent, but it also increases the property's value. Unfortunately, because the equity is used as a deposit in these types of deals, you can't draw any increase in value efficiently. But, if you paid a deposit, you can remortgage after 6 months to release the deposit and any increase in value. So, I completed on the property on 5th July and rented it on 23rd December that's almost 7 months - 7 interest payments of £200 each.

I conclude that the average time to properly refurbish a property is 6 months and the average cost is £11,000. I'm sure there are builders who'll spend less time doing it and hence charge less. Personally, I don't worry about these one-off costs unless they're prohibitively expensive. I calculated that the maximum spend is as follows:

Double glazing	5000
Central Heating	2000
Kitchen	3000
Bathroom	2000
Flooring	1000
Decorating	1000
Drive	2000

This gives a maximum total of £16,000. Barring structural faults this is the most you can expect to pay for proper refurbishment to a high standard.