Advice Needed on Sizeable Home Repair Costs

[cookerz]

Hi,
My family has recently inherited an family home, unfortunately it is in complete disrepair.
From the quotes I got, the average total reparation costs come to £60-70k (approx).
I just wanted to run the quote past someone and see if these figures sound about right.

Heres a quick overview:
Its a 3 bedroom semi 1930s home. Its in poor structural and cosmetic condition, furthermore it requires full modernisation including: windows, drainage, plumbing, & electrics & removal of asbestos in ceilings.
There seems to be a great deal of rot and water damage that was visible after we removed the wall paper and carpets.

Furthermore the extension is in disrepair. The flat roof is leaking and ivy has penetrated the walls.

I don’t know too much about these types of houses but from what I understand many were built in the UK between the wars.


My concerns:
The total seems like a lot, but at the same time it has not been looked after or lived in for many years.
Do the quotes sound excessive?
Its it even worth doing all the work?
Shall I just sell the property as is?

I would really appreciate any advice.

 

[Con65]

Hello Cookerz:

I'm assuming you are talking about a semi-detached house. In the US we'd probably call it a two family townhouse.

There isn't anywhere near enough information to give you an answer as to how reasonable the repair costs are. Assuming you don't want to live in the house, what you are asking is a common investment problem.

The question is can you sell the property now for more than it would bring if you repaired the damage? I'm assumung that you have zero cost for the property at this time.

Here's how I would approach that decision:

1) What is the location in the UK. Are you talking about Surrey or Leeds? If you are talking about the London area is the neighborhood improving or going downhill? What you are trying to determine here is the difficulty of finding a buyer.

2) Has the UK property market turned the corner? We lived in Wimbleton in the early 1990's when everyone had negative equity and then again in 2002 when the market was red hot. My friends tell me everything is in a down market again.

3) What is the condition of the neighboring houses? It wouldn't be smart to put that amount of money into repairs if the neighboring semi is in a similar condition.

4) What is the amount you can sell the house "as is"? For this number, you'd have to find an estate agent that you can trust (would you believe that some of them have been known to lie?).

5) What is the repair estimate from the most reputable firm you can find (after talking to several references who are not their relatives)? Suggest that you have an attorney draw up a contract that covers only payments based on completion of milestones.

Once you have done the above, use this formula:

(As is Sale Estimate * 90%) + (Repair Estimate *125%) = Minimum Target Price

Notice that I have reduced the estimated "as is" sale price and inflated the repair estimate. My experience buying property is to assume the worst and you'll never be disappointed. Use whatever percentages make you feel comfortable.

Once you've done that equation, examine recent sales of similar homes in the neighborhood to see how they compare to the "Minimum Target Price". If they are close, use (1), (2) and (3) above to decide what to do.