What a long and drawn and process this has been. I had no idea that it would take quite so long from completing the refurbishment on the house through to exchange and completion.
The main problem appears to be that after you have accepted a quote, buyers (often through no fault of their own) are taking ages getting everything in order and there seems to be little you can do to speed the process up. In the case of our buyer their mortgage offer (which had been agreed in principle before we accepted) took weeks to come through. In the meantime the buyers had two surveys done, one of which took a long time to carry out and even longer to report on.
In retrospect the whole thing when through smoothly, just very slowly. This leaves plenty of time for worry and fret as you know that if a buyer pulls out you will have to wait another two or three months from getting another offer to getting to exchange again. All in all the house was not actually available for anybody else to buy for much of the last 6 months, it has just been under offer waiting for paperwork and due process.
Initial calculations look like we will end up making just under 13% return on capital in just under 12 months but this reduces to 8% if I take a very prudent account of financing costs. I will need to do some work to find out how much of the finance costs (bearing in mind I borrowed against my main home) I will be able to claim against the cost of the refurbishment for CGT purposes. I can see an accountant getting a slice of the profits!
Never mind, if I have to pay CGT it won't be until January 2011.
6 comments:
Don't forget that some of that "profit" is really wages - after all, I am sure that Mrs APD doesn't clean houses for free (if she does, send her round...)
She is on her round now, having said that have you ever seen Ms APD's shoes?
More seriously an 8% return on leveraged money is very good and there are many VC's who would be happy with that.
But the 8% is conditional on your valuing your time at zero. Once you take into account how much time it takes to find the house initially, work out what has to be done, find contractors, monitor them, etc etc, and you multiply those hours by your wage rate and subtract that from your profit, the return will be lower.
With the value of hindsight you should have sat on cash from Sept to March, and bought the FT100. I think it is up 45% since then...
With the value of hindsight I should have purchased several houses in the area 10 years ago and sold them in August 2007.
I should then have followed your plan!!
PS My skill in stock picking is not good. I turned £7,500 into about £2.50 in the dot com boom.
At last! Congratulations. PS - I believe now may be a good time to forward my invoice as there may be a chance that you won't question it among all the others that you will now be having to pay!
I question all invoices especially from "Anonymous"!
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