Repairs: What Can Make or Break a Deal?
Knowing when to walk away from a potential investment property because of unforeseen problems can be a tough pill to swallow. A property may be in the perfect location to add to your portfolio, but if an expensive repair comes along, we need to decide whether it will make or break the deal.
When looking for an investment property, crunching the numbers is vital to making a property profitable or not. Everything comes down to cost. If we make an offer on a property before costing up a specialist repair, we could end up out of pocket rather than cash flowing.
When looking to buy a property for our clients, we have to be very aware of certain repairs which may make or break a deal, for example, damp, asbestos, roof damage or structural issues. If we suspect any of the problems previously mentioned, we call in an expert for advice. Some specialist repairs can be surprisingly low on cost and inconvenience when compared to others.
This can separate us from the average investor, who may run a mile when something like dry rot is mentioned. We always instruct a trusted professional to come in and quote for a job before making an offer on a property – that way; we have peace of mind that no stone has been left unturned.
Having a quote to rectify a specific problem can be used during the negotiation process. For example, if a property has dry rot, we would make an offer on the property minus the cost and time delay to complete the necessary work. That way the seller knows exactly why an offer has come in slightly lower than anticipated (or previously discussed) and we have a quote for the necessary work from a trusted professional.
Sometimes the defect isn’t nearly as costly as first feared. According to figures from the Building Cost Information Service and the Royal Institution of Chartered Surveyors, the cost of eliminating damp from one wall of a terraced house can be as little as £204.
There is, however, a big difference between dampness in one wall of a house and rising damp that affects the whole house. This can cost tens of thousands of pounds. And dampness is often not the highest cost repair. Japanese knotweed can be extremely costly, and from our experience, would tend to be a deal-breaker as you cannot eliminate the infestation (you can only control it).
Asbestos can be a costly house repair that many fear being found in their property. Asbestos presents a health hazard to all occupants, but only if it is disturbed. The safest course of action is to hire a licensed contractor to remove it. Asbestos can be found throughout the home and can be found in insulation, fire retardants, ceiling and floor tiles.
Once a specialist repair has been quoted for, we can start the negotiation process. For many individuals, this process will involve speaking with the seller’s estate agent or solicitor. We always try and talk to the seller themselves, to allow for transparency with an offer on their property and reasoning behind the offer made. We find this is the best way to work, but it may not be possible. This is where we need to remove emotion from the property buying process. If the seller is not happy with an offer, and we cannot secure the property for a price that works with our budget, a deal is not made.
If you’re interested in investing in property but don’t have the time, knowledge or know-how, click the link below to book a call with me.
