How much is a bucket of dirty water worth? Or how a hole in the roof saved me £25,000.
You might have seen it’s not actually a bucket it’s one of those really useful storage boxes, but it’s full of water, dirty water. That’s because I’ve put it under a hole in the roof which is in my latest buy to let property which I completed on literally five days ago.
Now, I sent my son-in-law around to have a look at this property. I wasn’t really expecting to buy it, it was on at a very full price £140 thousand, more than I usually pay for a property where I’m based but he wanted the experience and he wanted to gain a bit of knowledge inspecting properties so I sent him around.
When he got there he discovered that there was a hole in the roof and the vendor and the vendor’s agents didn’t realise has a hole in the roof and the vendors agents were quite alarmed because they’d been a certain amount of damage to one of the bedrooms and to the bathroom. So my son-in-law rang me up and he said “The vendor’s agents about to ring up the vender and advise them to take the property off the market until they get the works done” I said tell them to stop, tell them that we will make an offer on the property in its current condition, and we will do the works which will save their client having to do the repair works.
So we made what was really a very cheeky offer, I told my son-in-law to offer £115 thousand. I didn’t really expect them to accept but about 10 minutes later he rang me up from the property, he was still with the estate agents, the estate agents had spoken to their client and explained there was a hole in the roof, that the property looked terrible, that there was a work to be done but we were here and we would buy it as is and we’d pay the £115 thousand. After a bit of toing and froing with my son-in-law on site we agreed £118,500. Brilliant!
We left it for the solicitors, put in solicitors hands. It’s a cash purchase so you think it’d go quite quickly, these things never go as quickly as you hope they will. After a couple of months we were getting close to the point of completion and by that time they’d been a lot more rain and I was thinking to myself, well I wonder what’s happened? Has anybody actually patched the roof? Obviously we weren’t allowed to as we don’t own the property. Has anything actually happened or has it just got worse and worse and worse?
So I made an appointment to go and see the property, I grabbed the keys, the agents let me have the keys which meant I could look around, and when I got to the property I could see that it was in much, much worse condition than when my son-in-law first went to see it. In fact the water had started coming through the hole in the roof into the bathroom, into one of the bedrooms, but it’s also going through now into the first floor, into the ground floor, and the kitchen ceiling was in a terrible state. And it just looked terrible, it just looked awful.
I went back to my son-in-law and said we’re going to have to renegotiate, so I said look you can do this because you spoke to the agent originally, this is good for your training, so I want you to ring the agent and I want you to say that I’m mad and cross that the property has been neglected, that we were buying it as seen but it’s now not as we saw it, is in a much worse condition and I want at least £5 thousand off the price.
So my son-in-law rang up. Now the agents weren’t terribly impressed by that but he sent them photos over showing how the property had got into worse condition, they rang the vendor, the vendor was very unimpressed and wouldn’t even look at the photos, so we just left it for a day or two then we went back and we were told well the vendor wants to put the property back on the market so we left it a little bit longer again. We went back and said look you don’t really want to put the property back on the market, your client doesn’t really want to put the property back on the market, they’re now putting the property back on the market in a much worse condition, who’s going to buy it? Whoever buys it is going to want a substantial discount because it looks terrible and it looks like it needs a lot more work.
In the end, common sense prevailed and they reagreed the price and we agreed a price of £115 thousand.
So how much is that box of dirty water actually worth?
Well, it was on at £140 thousand and we paid £115 thousand. So you could argue that that box of dirty water is actually worth £25,000. At the very minimum you could argue that it’s worth £3.5 thousand because before I put the box under the of the hole we’d agreed £118.5 thousand and we then got it for £115 thousand. So that box is worth somewhere between £3.5 thousand and £25 thousand. And it just goes to show what could happen.
One of the reasons why I love that deal is because it was so opportunistic. If my son-in-law hadn’t arrived at the exact moment when the property had been on the market for a while and everybody assumed it was in good condition but when they walked in they could see it was actually in poor condition because of the hole in the roof we’d have never have done that deal.
And of course, when you look at the photo of the hole in the roof it’s like four slipped slates. The roofer went around yesterday, the roofer is going to do bits and pieces there. There’s a flat roof which they’re going to look at, and they’re going to change the gutters which probably need doing, and all in all the whole roof works gonna cost £850. So that £850 has essentially saved £25 thousand off the purchase price which I think is a pretty good deal.
I hope you found that informative and inspirational and if you want help in property please do come over to my website thepropertyteacher.co.uk. Loads of great resources there including my blog. There’s loads of free videos, loads of great articles, there’s free reports to download including Learning With Peter where you’ll be able to access resources like my video courses, like my ebooks including my home study course The Successful Property Investor’s Strategy Workshop which I’ve literally sold thousands of copies of which takes you through how I started in property literally with none of my own money but how I was able to build a portfolio of £2 million worth of the property in just four years. I’ll show you everything that I did right so that you can do the same and I’ll show you everything that I did wrong, I tell you about all of my mistakes so that you can avoid them so that you can progress in property far more quickly than me.
Until next time, here’s to successful property investing.
Peter
Peter Jones
(ex) Chartered Surveyor, author and property investor
https://thepropertyteacher.co.uk
PS. By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same.
For more details please go to:
https://thepropertyteacher.co.uk/the-successful-property-investors-strategy-workshop