renovation as investment

[Roger]

I am quite keen to buy a ruin in France and then to do it up for resale, apart from the general market problems, I am anxious to start this and do it properly. I am also aware that the are numerous pit falls but if anyone has experience on doing this I would be very pleased to make contact.  Roger

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[LEO]

[quote user="Roger"]I am quite keen to buy a ruin in France and then to do it up for resale, apart from the general market problems, I am anxious to start this and do it properly. I am also aware that the are numerous pit falls but if anyone has experience on doing this I would be very pleased to make contact.  Roger

Post edited by the moderators - Please do not post your personal details on the message boards.[/quote]

IMHO the above is not sustainable!

[AnOther]

I'd go further and say that IMHO it's MADNESS, France is not Sarah Beeny land - but I'd be fascinated to follow the story though, good luck [;-)]

 

[BJSLIV]

1 Ruins aren't cheap any more

2 Building work is expensive and the coordination of trades time consuming.

3 If you try to do the work yourself it can be hard to sell to a French buyer who will  expect all the guarantees that come with French building work.

4 The French don't place the kind of premium on refurbished property that the Sarah Beeny projects trade on. Hence the profit margin is tight. Its very easy to find that cost plus money spent is less than the market value.

5 The Brits who do appreciate that kind of thing may not be buying in the next few years.

6 If its not been your main residence the tax man will want a large chunk of the profit, say 35%.

7 If It has been your main residence he would only want 18.6% of the profit

 

[Anton Redman]

The equivalents of stamp duty and estate agents fees swallow a huge percentage of sale cost versus the UK. Either property is cheap and there is not much local demand or property is expensive. Typical new build costs are frequently under € 1000 key in hand and it is hard going to keep a renovation under that figure. The TVA situation on conversion of part an exisitng building into a dwelling is a potential black hole. Outside of the core of major cities and a few second home hot spots building plots are freely available.

The only budgets you ever see on SB's programme are a split of the amount of money available. You never see details such as  : 25 sheets of plaster of 1.2 by 2.5 plaster board yeilding 65 square metres of wall as € 5.89 a sheet - Screws 25 per sheet € 5.90 a thousand etc etc. 

At present we are seeing in many areas the backlash from a decade British people paying too much spending too much and expecting to come out with a profit. There are parts of France where the supply of renovated and part renovated houses greatly exceeds the demand almost irrespective of price. 

I think it can be done but you need to have a very good eye for potential and know your local market.

[Panda]

Whilst I agree with most of BSLV's post above I don't get the tax points 6 and 7, if it's your principal residence there is no capital gains to pay if it hasn't then it's around 27% I believe, unless things have changed.

I am considering another property at the moment despite all of the above, I seem to be collecting them!  It all depends on the price you can get a property for and how long you intend to keep it, how much you depend on selling it to live etc. etc.  The house I've seen has been dropped by 100k which is more than 50% of it's original value, this is in the Alps where this kind of thing just doesn't normally happen.  There are going to be properties about that will make you some money in this market, it's a huge gamble and must be seen as a long term project not to make a quick buck.  I'm going to live in the one I buy here if I get it, my other properties are rented out and I intend to keep the others until the capital gains is 0 which is 15 years, 5 of those have passed already.

So, unless you are making long term plans of plus 10 years I would not recommend it as a career move but am doing it a bit myself!

[Patf]

We have friends who have been here about 20 years, and have made a living out of renovating, selling and moving on. About 6 times.

But the house they are trying to sell now is self-built, and has been up for sale for about 3 years, still not sold.  It could be priced too high, or not acceptable because not built by artisans, and so doesn't have the guarantees.

So the market seems to be changing, and in particular, very few british buyers.

[AnOther]

THIS looks like a useful site for what you propose, also THIS one.

Technically at least even DIY builds and restorations are supposed to be covered by 'Dommages Ouvrages' but it's next to impossible to find any insurance company who will issue a policy under such circumstances, understandably so you might perhaps say [blink]

“Dommages Ouvrages” is an insurance policy that the owner of a newly built property or a renovation project is expected to take out. It costs between 2 – 8 % of the overall construction budget. The guarantee lasts for 10 years, and insures you and any future owner against major structural damage resulting from poorly planned or executed building-work. Theoretically, this type of cover is a legal obligation however in practise there are no sanctions for private individuals who do not insure. You should however be aware that in the event of resale of the property within the 10 year period, the notaire representing the purchaser will require proof of cover, and will inform you that the purchaser has a right to claim from the vendor for any damage that would normally have been covered by the guarantee. If you are not able to provide proof of cover, this could prevent the sale going through, or at least become a bargaining point for the purchaser."

[Panda]

 

The above is very much dependent on the works required and the notaire conducting the sale.  I have always employed artisans to do the major works, electrics, new roofs, new central heating sysems, new pools etc and only used those who have the decanale insurance.  I have sold on properties and all the notaires asks is whether any of the work is covered under a 10 year guarantee.  I then produced the relevant copies.  He only asked this because planning permission had been applied for on the property, if it hadn't he wouldn't have asked, not that I am suggesting that anyone should not apply for planning I'm just stating it as it is here.

So for me it was straight forward although I had the distinct impression that I could just have said no, i.e. it was just another tick box for him and nothing more will have been said.  The notaire did not ask at any stage what had been done in any detail so if I had rewired the place myself who would have known?

As I said it is dependant on how much the OP intends to do himself, selective use of good registered contractors is the way to go IMO.

[WJT]

[quote user="Panda"]

 

The above is very much dependent on the works required and the notaire conducting the sale.  I have always employed artisans to do the major works, electrics, new roofs, new central heating sysems, new pools etc and only used those who have the decanale insurance.  I have sold on properties and all the notaires asks is whether any of the work is covered under a 10 year guarantee.  I then produced the relevant copies.[/quote]

Hi Panda, when you say you produced the relevant copies. May I ask, copies of what? I assume you mean the factures?

[Panda]

 

Hello

Yes, factures and a copy of  the artisans decanelle (where I had one) , for the pool I had a 10 year guarantee on the liner and this was a part of the contract for installation.  To be honest the notaire took not a great deal of notice of any of the documents.  I'm not even convinced he passed them on to the buyer as they were never part of the acte de vente. 

My point before was really that the question was asked but it was more along the lines of, are any of the works guaranteed, if so can I have some documentation, (not the works must all be guranteed I must see the paperwork).  In this case some were, some I had a decanelle for, some not, no cross check was made, those I had, I gave those I didn't nothing was said.

It comes back once again to the notaire not being a representative of the buyer, just a collector of taxes. 

 

 

 

[WJT]

Panda, I had always assumed the facture would be enough. I think I have a copy of two of the artisans decimal but one (a macon) I don't have but did see it. We have no plans of selling so I'm sure it won't be an issue but just wanted to understand what you meant. I just hope the artisans honour the warranty if something were to go wrong within the ten years. Thank you Panda.

[mint]

And don't forget that any warranty is only good so long as the firm continues in business.

The people who constructed our fosse promptly went bankrupt when we requested them to come and finish off the works.

[Braco]

I have many years of experience in the UK. As with all property developments there are four key elements:

Access to money

Project management skills

Design flair/knowledge of the market

Marketing

Do your sums add 50% to the building costs and remove 25% off the sale price.

If the sums still add up then go for it.

Just another point builders and DIY ers usually make the worst developers - the auctions are filled with their half finished renovations.

[Anton Redman]

" Do your sums add 50% to the building costs and remove 25% off the sale price. "

If you do not know your costs by now you should not be doing it. Buy at the right price and know what it will sell for.

[Scooby]

[quote user="Braco"]I have many years of experience in the UK.

there are four key elements:

Access to money

Project management skills

Design flair/knowledge of the market

Marketing [/quote]

As you say you have many years experience in the UK.  I suggest you have missed a key element off your list:- Understand your market.  The market in France is completely different than the market in the UK.  Rural french aren't interested in renovated houses - they have a completely different attitude to property than Brits so property development in France was risky in the 'boom' years.  Many people living in larger cities rent.  Given the market for Brit, Dutch, German house purchases etc has collapsed, property renovation is something I wouldn't touch with the proverbial barge pole.

[Braco]

Hi Scooby

I think I did list knowledge of the market. A 50% overspend on major renovations (works costs only) is fairly good going. The point I was trying to make is that most people enter a project with an over optimistic view on how cheaply work can be carried out and an over high estimation of resale value.

During the past ten years or so many marginal schemes have been rescued by rising property values. That safety net is no longer present.

The market is not dead. Present value on both sides of the channel will adjust downwards over the next few years.

[AnOther]

No further input from the OP I see, have we a troll ?

[peterd]

Just to correct Sweet.  French artisans insurance remains even if they have gone out of business. That's why it is so bloomin' expensive!

When using artisans get a copy of their insurance as well as the facture (invoice).

PD

[mint]

Ah, Peter, that's obviously where we went wrong.

In our defence, we weren't even living here then.  They constructed the fosse in our absence and we came over to pay them.

They agreed to come and finish off some ground works.

Next thing they'd gone bankrupt.  Greenhorns that we were, we requested the manufacturer's warranty on the Flygt pump, not even their own supposedly 10-year warranty.

No response.  Eventually, the maire wrote a letter on our behalf, at which point, the chap wrote to say he'd injured his back and could no longer work.

[napoleon]

I have learnt a lot from the replies to an interesting question. The responses typifies the depth of knowledge and general helpfulness of forum members.

Unfortunately the OP seems to have vanished without visiting since asking for help and advice. I would like to know how he feels now after reading all the discussion points.

[cognac]

as an experianced builder and property developer i understand the full implications of renovation and new build , the costs for renovation in france is a lot more, the main reason for this  is not cotisations or tax but overcharging so called builders  some of the work and prices here are mad the main reason for this was the lack of good tradesman and rubbish ones taking advantage of the situation , i as a builder can make any renovation pay , the man secret is not selling or renovation costs they are fixed to a degree but buying at the right time , and now is one  of those , there are some great bargins to be had   but dont feel sorry for  anyone or there sob storeys looking at places , if you do buy a place in the charente /cognac area  i can recomend a good building team who dont overcharge  and another thing property in very cheap in central france for a reason  , limited buying market ,

[Cat]

[quote user="cognac"]as an experianced builder...

...i can recomend a good building team who dont overcharge  and another thing property in very cheap in central france for a reason  , limited buying market ,[/quote]

Would that be the same building team that you were promoting with your first post to the forum cognac?

http://www.completefrance.com/cs/forums/1626932/ShowPost.aspx

[Cendrillon]

[quote user="Cat"]

[quote user="cognac"]as an experianced builder...

...i can recomend a good building team who dont overcharge  and another thing property in very cheap in central france for a reason  , limited buying market ,[/quote]

Would that be the same building team that you were promoting with your first post to the forum cognac?

http://www.completefrance.com/cs/forums/1626932/ShowPost.aspx

[/quote]

LOL Cat, you beat me to it![;-)]

[Tony F Dordogne]

No response from OP seems to be starting again and Cognac doesn't respond to the question :(  Sounds like spring has sprung on LF again and the phantom OPs are at it again.