Purchase of v. dilapidated property- pitfalls

[Mina]

I had a look at a potential investment property today. Freeholder owns all three flats in house, he lives in the top one. The whole building has a strong air of neglect. the flat i looked at hasn't been occupied for a long long time, garden overgrown, damp problems evident. Apparently the freeholder is out of the country for most of the year and the flat above, also empty, is being marketed at less than market value (as a letting, not for sale) because it's so neglected.

Would this send off warning signs to you? What concerns would you have in particular? I wanted a 'do-er-upper' but I'm concerned about spending money on a basement flat when the two above are so neglected. The front of the building is a mess as well. I could almost see the tumbleweed blowing across the front....If all of this doesn't put you off, can you advise me as to what if anything I should look out for?

[MarkD]

It all depends on your viewpoint...

Some would be put off, but many have a strategy of buying run down properties so they can add value. If the property was refurbished etc you should work out the value, work out the cost of refurbishment and negotiate a discount of at least the cost of works, more to ensure a decent profit. From there you can decide whether to rent or sell, but it all depends on your own strategy and what you are comfortable with.

Hope this helps at least a little

[Mina]

thanks Mark. yes, the whole point of my looking is to add value but with a property that needs work on it, would you be worried if the freeholder was letting the structure as awhole deteriorate? Is this somethign any other investors have encountered before?

[Poppy]

Mina, why would anyone buy a leasehold flat knowing BEFORE they bought it that the freeholder was not maintaining the structure? Let's hear your answer to that first please.

[MarkD]

Sorry, I mis-read, I assumed you were buying the freehold / all the flats.

If the structure is not being maintained, then sooner or later the leaseholders will probably end up with a large bill for everything to be put right, either from the current owner or a new owner.

Probably best to avoid unless you can purchase the freehold yourself.

[Mina]

Poppy, if you read my first post, you would see that that was exactly my concern and being new to this game, I wanted to see if my instincts to steer clear were right.

Ok?
Thank you again Mark.

[Mogs]

Why would anyone want to buy a flat in a property that is negleted?? If the other two flats look sad, why would any sane buyer think, well maybe the others will be bought up, and it will all be ok in the end. Keep looking sounds more of an option. :confused: