A trained surveyor, Phil Spencer is best known for fronting some of the UK’s favourite property shows, including Location, Location, Location and Love It or List it alongside Kirstie Allsopp. He has written three books and hosted podcasts and radio shows. Spencer joins Telegraph Money as a regular columnist to share his knowledge and experience from over 20 years of buying and selling property and operating as a landlord
I can say with confidence that I will never do better than the first property deal I ever made, although it led to my biggest mistake. A friend of mine was struggling to sell his south London flat and wanted to be bought out. As a rare laterally converted property – where two properties across one floor have been combined – I sensed an opportunity.
However, it was a risk. This was 1997 and I was just 28, had no real money of my own, and knew that if my plan didn’t work I would be in trouble.
The idea was to convert the four-bedroom flat in Wandsworth into two more market-friendly smaller properties, sell one and live in the other. It was in an elegant three floor, detached building right on the common. There’s no reason why a smaller flat wouldn’t be snapped up.
I would rent the flat from him while the work was being done and then buy him out with the sale proceeds. To help reduce my upfront costs I offered the builders and architect a share of the proceeds from the sale. It worked. I was left with a flat to live in and my friend achieved the sale he was looking for with £160,000 in his pocket.
With a bit of luck and a plan I had jumped two rungs up the property ladder, leaving me with a mortgage-free apartment and a friendly new neighbour by the time I reached 30. Unthinkable now.
A year later I spotted the opportunity to pull the same trick with a property flip on the flat two floors below. I had a buyer lined up and I was going to sell it to him on the same day I bought it, at a higher value on the basis that he could split it in two. Everything was ready to go, but I went on holiday before I had paid the deposit.
Here was my first big mistake. I got ahead of myself. While I was away a builder I had asked to put together some initial quotes got wind of what I was doing, went directly to the seller and managed to beat me to it. I can’t blame him, I would have done the same in his position.
As a result I lost around £250,000 of profit that I had been planning to invest in future projects. It didn’t help that I then had to live above the successful buyer.
If I’m honest I was being cheeky, getting early access to the flat and trying to get ahead of the game. It may sound simple but you can’t take your eye off the ball. It’s your money at play, even if others are advising you. There are so many things in the property world you can’t control. You can’t control interest rates, you can’t control the cost of building, you can’t often make builders go quicker.
My advice is to really focus on the bits that you can control; the choice of property, the price that you pay for it and what you choose to spend your money working on. Whether it’s an investment or a home, property deals are significant – we don’t do them often – so give it proper due care and attention. It is likely to be the biggest deal you do in your lifetime.
It’s not only deals where I have made my mistakes, I have also had my fair share of renovation horror stories. The moment that stands out is looking up from my living room and seeing the towels hanging on the towel rail in my newly refurbished first floor bathroom.
We should have had the ceiling checked first. I will spare you the details of how we managed without a bathroom in mid-winter, but there were low moments.
Here, the key is to gather as much information as possible about the property. Don’t be afraid to ask questions, although there are always elements you won’t discover until you start pulling things apart. Of course you need the views of builders, surveyors and maybe architects, but go further afield. Ask your neighbours about the issues they have experienced with their properties and what they wish they had known when they moved into the area.
If the road is made up of terraced or similar properties it is likely they will be affected by the same problems. A house I owned in Wandsworth was situated on a road with a slight decline that we later discovered used to have a river at the end, causing problems for the properties nearby. This isn’t something an estate agent is going to tell you. Ask around.
But over the thousands of properties I have helped view, buy, sell or renovate, the mistake I see the most often is when buyers choose properties based on the life they are currently living rather than the lifestyle they may like to have in years to come. Take a couple of young professionals buying their first home. They may choose somewhere with an easy commute, close to their friends and favourite local pub.
But those things can be quite temporary, whereas choosing a house needs to be as long term a decision as possible. My advice, and I know it’s not easy, is to try to think five years ahead when you’re buying property.
It may seem outlandish to buy a three-bedroom house close to good schools when there’s just two of you, but it’ll save you more than just stamp duty if you don’t have to move again as your family grows. And while it may be painful to pay a premium to be in a family-friendly area, these properties usually hold their value. It is unlikely to be a sunk investment even if your plans change.
Further down the line, buying your forever home with space for maybe your parents to move in, or for older children to return home to after university might not be something you are thinking about now, but it will give you more options later on.
However, another common mistake is to constantly think about the value of your property rather than what will increase your enjoyment of living there. I’ve done this myself. At one point I was digging a basement in a property, paying rent on one house, a mortgage on another bigger family home.
I had it all worked out but when the 2008 property crash started my business dried up; suddenly I was ploughing money into a property that was dropping in value by the day. Everything was moving in the wrong direction, I was terrified. I knew it was the right work for the right property, but I couldn’t see past the finances.
My advice here is to remember that unless you are looking to sell, the value of your house at a particular point in time isn’t important. We all know how quickly this market moves, as long as you can sit out a dip and it is the right home for you then, while it doesn’t feel nice, it doesn’t necessarily matter.
Equally if your house goes up in value by 25pc it doesn’t mean you can go on holiday or buy a fancy car, it is paper money. It is helpful to keep this in mind when making improvements to your home. If it is the right work, for the right property, it will be worth it.
But when it is time to sell, without a doubt the most common error I saw when working on my television show Secret Agent, was the failure of sellers to properly clean their homes.
I know, it sounds too basic. But time and time again I saw homes that should have been snapped up, passed over by buyers because they looked shoddy – or had a funny smell.
If you are planning on selling then spend the money on professional cleaners to make sure you are showing your home in the best possible light. Polish the windows, clean the bathroom – those can be the biggest wins. And if you want to go a little further, fresh paint and new carpet can make all the difference.
It may even be worth asking an honest friend their opinion on your home before putting it up for sale, you just need to make sure you’re ready for the answer.
You can never view your own home with an objective eye. How could you? You live there, it’s where you’ve raised children – your little bit of the world.
Getting a trusted friend to give their opinion could not only help if you’re looking to sell, but also give you ideas for how to get the most out of your property.
I can’t count the number of times on Love it or List It Kirstie and I saw how an outside perspective was able to change the way an owner saw their property and its potential.
So while they may not be interior experts, they will be able to cast a fresh eye over your property, point out overlooked areas and may even provide a spark of inspiration.
And remember – be careful about confiding your grand plans in a builder, you never know who they’ll tip off.
Phil Spencer shares his advice on his website moveiQ.co.uk
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