Location, Location, Location.

 

Ok, I agree, there are not many people who would not jump at the chance of living in their “dream home”, in a “dream location”. - It’s what many of us aim towards from the day we buy our first property. - It’s one of the reasons the number of Self Build projects goes up pretty much every year and why the Self Build industry manages to remain fairly strong through the times that the rest of the industry may be suffering badly (for whatever reason). It’s also why so many people buy run down property to renovate and convert, - and it’s probably one of the main reasons why you are reading this guide.

We all want to improve our standard of living as we get older. We all need that extra space for the growing family, the business, entertaining, or whatever, and we would ALL prefer to live in a beautiful location, in a house that is going to sell quickly if we want it to, and make us a good profit if and when it does so.

Unfortunately, there are only “so many” dream plots. There are only “so many” dream locations, and most of them have price tags attached which put them totally out of reach for most of us!

So, bearing that in mind, when we start to plan a Self Build or Renovation project, what should we aim for? – Where do we pitch our targets? – And is “location” really a word that should be such an important factor in any decision we make, to such an extent that’s worth repeating - twice?

(and I understand that some of you may strongly disagree with what I am about to say. – BUT it can be useful to see both sides of any argument!).

In short, and as a rule which covers “everyone” in the UK (- and not just the “few” people who have plenty of money to spend), I would say that:

Now that you are thinking “This guy hasn’t got a clue”. - Let me explain:

Location IS important for various reasons, and there are a number of factor which the location of your property CAN affect.

 1) End Value. 2) “Sellability”. 3) Quality of the neighbourhood. 4) (sometimes) The quality of local Schools. 5) The areas “social standards” and “amenities”. 6) Standard of living.

However the “goal” that we are all advised to keep as our “Number one priority”, of finding “The best plot we can possibly afford”, or “The best location” is, to a certain extent, I feel, misleading, - and if we were all to adhere to its principals TOO closely, many of us might well end up with our projects either failing completely, or not giving us the improved standard of living that we set out to achieve when we had the idea to have a go at a Self Build / Renovation or Conversion project in the first place!

When we start to think about taking on one of these projects we all tend to seek out advice from people who “know what they are talking about”. We buy books, we start to watch all the TV programmes designed to help us to find out about how to go about it all, we buy magazines, we visit shows etc.

In general, we are advised by the “specialists to “push the boat out” and “spend as much as we can” on making sure that we are getting our land or property “in the best place” that we can afford.

We are sometimes told that we should allow “£X” of our total budget for our land to make sure we get something of good enough quality, or that paying less than “£Y” would devalue the project, and would not be the right thing to do.

Because, if we “follow the rules”, the end value and the sellability of the property value will be maximised.

– That’s Great! - You should make a good profit, “if and when” you come to sell. - But what about the other factors which are just as important to your “overall” standard of living that need to be brought into the equation?

1) You may end up having to build a smaller property than you had hoped for due to the fact that you have had to spend more of your total budget on your land. – If you think about it, there is a “counterbalance” argument against “location location location” here.

The main “knock on” effects of that are:

i) Less “living space” for you and your family

ii) A smaller house = A lower value house!! – So, in fact, the extra money you have spent on buying the land may, in real terms, contribute to the end value of the property on that particular “expensive plot” actually being reduced from its maximum potential level!

2) Simply because of the fact that we are all brainwashed into thinking that “location” is so important, there is usually more competition to buy the land. This could result in a “bidding war” and “inflated prices”, which can in some circumstances make the project pretty much “financially unviable”. – In other words, the high cost of the land, plus the build costs can mean that the total cost of the project comes to more than the end value once it is all finished.

3) If we are all trying to buy the “Best plots” we will all watching for them to become available. There may be a number of potential buyers waiting for one plot in a particular area. When it appears, it can only be sold once. – The lucky buyers can then get on with their projects whilst everyone else has to either “sit and wait” for the next one to appear, or start to think of a “Plan B”! – If you stick to your guns and wait, you might end up twiddling your thumbs for a long time!

4) The “Best area”, using the “location location location” theory, may (or may not) be the best option financially in the long term, but it may not actually be in the best place for you or the rest of your family to live.

It may mean uprooting your family and going from one area to another. It may mean you moving further away from your work. It may mean your children having to change school and leave all their friends behind. Your family’s social life may suffer by you not being able to get to all the places that you have been going to for years. - The list goes on.

5) Your living costs may end up being much higher than they would if you had chosen a less expensive area. You may have “maxed out” your mortgage to be able to get the house finished, - so your monthly payments are now much higher than they used to be. Then add the fact that Council tax and many other general living costs vary greatly from area to area, and you could soon also find that your outgoings overall are substantially more than they used to be. – The extra “pressure” on your day to day “living expenses” once the project has been finished and you have moved in can quickly take “the shine” off your new lifestyle. – What’s the point of paying all that money for the plot and pushing your budgets to the maximum just to be able to live in a particular place, if you are now continually “stressed out” because of the new financial pressures that living where you have chosen has put of you?

It could end up being a case of: “Lovely house – Lousy car and no more holidays!!”

The location of where you live is important. BUT, maybe not in quite the sense that we are often led to believe:

Generally, the some of the most important factors in OUR LIVES “as a whole” include:

Schools, work, friends, family, living costs, social life, locality to the things we need “day to day”, and being where we feel “comfortable” and “at ease”.

Inother words: - Not choosing to move somewhere because you are told that “That is the place to be” or that “If you live here you will make a good profit”. To my mind, those are two very poor pieces of advice, which if followed can lead to major problems in many areas in years to come.

Once the project is finished and you have moved in you want to feel that you are in “the right place FOR YOU as an individual or a family”. – That is a far more important factor than being in the right place “Financially”.

Catchment areas for good schools don’t necessarily have to be associated with high property prices.

Moving to a particular area for the quality of the education your children would receive, would be, in my estimation be a far better reason than moving there because a properties resale value will be higher when you come to sell. 

Living in a nice area, but having to travelling with the “masses” for hours on end, five or six days a week, month after month to your workplace on the other side of town can quickly become a drag.

Leaving home early in the morning, to try to beat the traffic. Then getting back late at night can soon “take the gloss” off your new way of life! – You could find that you have spent a lot of time, money and effort creating this lovely place to live, but due to spending so much time travelling “back and to” to work, - you’re never at home! – The kids end up moaning that they never get to see you and never to go anywhere. Your partner may end up finding that there is far more responsibility for the family and the home on his / her shoulders, and could start to get fed up of not seeing enough of you. – In the end you could end up sitting in your lovely garden, thinking: “Was it such a good idea?”

Great, you have got your “fantastic new place” in that prime location. - But your friends and family are now over 25 miles away. Maybe it’s summer and you fancy a barbeque like you used to do every weekend. – You only have one “guest” bedroom, so only one set of friends can stop over. – You invite 30 people and only 10 can be bothered making the effort to come all the way to you, - and then have to drive back later! – All of a sudden you could start to feel like you are out on a limb, losing touch with your friends and family and actually starting to feel a bit lonely! – Nice house though!

You need to match your location to your budget, and not the other way round! - If you don’t, you may suffer financially for a considerable time. If you stretch your budget too far because you had to find that extra £50,000 for your wonderful plot, you may end up going right up to your borrowing limits on your mortgage, maxing out your credit cards and overdrafts to get everything finished, and struggling for the next 3 or 4 years to get yourself back onto an even keel.

It’s all very well having an upmarket address, but if the pressure it puts on your family financially is overbearing and causing family problems, it probably isn’t a good move! – Ok, you can sell the place and make that “extra money” if it’s in a higher quality location, but are you building or renovating to just “sell it on” or to “live in” it?

More importantthan the “cost to buy” a building plot can often be the cost to develop it.

Here is an example to make a point:

You find a lovely hillside plot with beautiful views in an ideal and much sought after location. – It is more expensive than you can really afford, costing £40,000 more than you had been hoping to pay, but you remember what everyone says about “location” and you decide to go for it ( you’ll make some cutbacks in other areas and see if you can borrow a bit more on the mortgage to cover it).

As you start to design the new house, you find that you are going to need to cut and area of ground away to get a big enough area to site the size of house want. You are also going to have to build up another area which is presently sloping away. You then find that you are going to need retaining walls to hold the slope of the hill where it is high near to the building. – These have to be designed and are expensive to build. The Building Regs department then tells you that you will have to use a piled foundation for safety, due to the slope of the ground and the possibility of “land slip”.

All of a sudden you find that you are in a complete mess, and you haven’t even started the building work!

That is just an exaggerated example of how the location of your land is important (although I know it is entirely possible – because I have done it! here is a photo to prove it!) .

Spending a lot of money for a “prime location” is fine if you can afford it, but if you end up getting a smaller plot than you really need, JUST because of the fact that “it’s the biggest and best you can afford in that location”, you may find that you have made a mistake.

One of the driving forces in bringing you to the point at which you decide that you are going to Self Build is the need for more “living space”.

If you then go for “location” rather than “suitability” with regards to what you can build on the land, you may find yourself having to “scale down” your goals when it comes to room sizes, number of bedrooms / bathrooms etc.

If you end up living in somewhere that turns out to be “still too small” for the needs of you and your family, it could all turn out to have been a waste of time in a practical sense, even though you may eventually “turn in” a reasonable profit when you come to sell it.

These are the main “guiding principles” of the “location, location location” theory, “How much will it be worth when it’s finished? – Will it make us a good profit? – Will we be able to sell it quickly?”

Make no mistake, these factors DO HAVE a level of importance when it comes to making your decisions on which plot or which renovation property you should buy. - If you ignore them completely you could be making JUST as big a mistake as you would be if you attach TOO much importance to them.

There are dozens of important factors you need to weigh up before you decide “which” is the ideal plot for you to buy.

To my mind, the most important ones are listed above in numbers 1 – 5. BUT, if you also give SOME attention to “number 6”, - BEFORE you make your final decision, you should find that you have covered “most of the bases”, and be in a good position to be able to make the right decision for you and your family.

I have actually purposely been a bit more biased against the “Location” argument than maybe I need to be, but for a

reason.

Many people who start out on one of these projects will have little or no prior knowledge of the industry, and will try to learn the subject as they go along. Watching TV programmes, reading magazines and visiting exhibitions AND reading this guide!

The “general” picture that the media tends to paint for you, is that you should spend as much as you can possibly afford to on your plot. – And, in fact I agree!

In other words, the price you pay for your land or property to renovate should take account of the many other factors (some of which are listed here and some others you will find as you read more of the guide), as well as taking account of the likely “end value” and sellability.