ᐅ Bought a house at a good price. What now?

I think it will be difficult to answer your question in general terms because no one can assess the location and condition of the house. Therefore, it’s unclear whether your friend was simply lucky with the foreclosure sale or if there were valid reasons why no one else placed a bid. The latter is more likely, but the former is also possible. Perhaps the truth lies somewhere in between.

Reselling at a higher price will probably be challenging, as it’s safe to assume there were one or more reasons why interest in the property has been low so far. Speculation tax has already been mentioned. In general, the costs associated with buying and selling consume a large part of any profit, if there is any left at all.

Renting out would certainly be an option if the location allows. I would generally avoid leasing out a pub and instead, if possible, convert it into residential space. As for renovations, it depends on how much (urgent) work is needed, what the costs would be, and how well you can rent it out.

Some acquaintances of mine own several older houses that they renovate and maintain little by little as DIY projects. They rent these properties to people arranged through social housing agencies. So, these are not luxury residences for high-end tenants, but the rent payments are fairly reliable when managed directly through the agency. That’s not really my preference, but it’s something to consider.

"Long story short" answer: It depends.

nordanney schrieb:

Well, since the house sold at a very low price, I assume it’s due to a poor (micro)location and/or its condition. It probably isn’t worth much more than that.

I can’t say which option is correct. Go through the house with a professional and have them point out the defects. Check how renovated houses are selling.
Do you need financing?
Keep in mind the capital gains tax. It cuts the profit in half.

Thanks for the reply. According to the valuation, the market value is actually higher than the price we bought it for. Only four other parties attended the foreclosure auction in person (maybe due to COVID?). One of them was the mayor, who was probably just there out of curiosity. The others, as far as I know, were local residents... In the current condition, the house is definitely habitable, at least that was my impression on the first walkthrough. Some acquaintances who have some knowledge have already looked at the house and said it was a good price. But yes, thanks, we will definitely go through it again with a professional. I will also follow the other advice.
We will definitely need financing if we want to renovate everything at once, but beyond that, we haven’t thought much about it yet—it only became clear yesterday that he won the auction. My partner and his father can do a lot themselves (his father basically renovated our family house completely on his own back then).

Berenike schrieb:

According to the appraisal, the market value is higher than the price we paid for it.

"Market value," "appraisal"... these are very flexible terms. What you actually get, when, or under which conditions is uncertain.

Berenike schrieb:

There were only 4 other parties present at the foreclosure auction (maybe due to COVID-19?). One of them was the mayor, who was probably just there out of interest. The others, to my knowledge, were locals.

...in court hearings or other auctions, there are always people who would otherwise be bored. If they had been genuinely interested, they would probably have placed at least one bid.

Berenike schrieb:

Some acquaintances who know a bit about this have already looked at the house and said it was a good price.

...acquaintances with "little knowledge" gave a positive opinion... well then, cheers. Will they pay if it turns out differently?

Berenike schrieb:

higher than the price we paid for it

...I thought HE bought it...

pagoni2020 schrieb:

Your friend bought a house without any knowledge and without a solid plan, just because he wanted to make some quick money. Are you serious? Wow, is that bravery or is there another word for it?
Whatever he/she decides now, at least they will learn something, and maybe it will pay off.
Apparently, neither tax aspects nor construction-related issues were properly considered, but it was purely driven by profit-seeking/greed.
I think your friend needs something different than a house-building forum. And... there is usually a reason behind a price, whether it’s low or high, even if it might not be obvious to someone unfamiliar with real estate at first glance.
Your quote "Cheap house – what now?" is truly the standout of the week... right after "Child arrived, what now?" or "Money lost – what now?" Sorry—

Haha, yes, I understand that my quote raises eyebrows (which was the intention). Well, my friend is among those who take more risks (following the motto, nothing ventured, nothing gained); so far, it has worked out well. And since he only bid the land value and was aware of the house and its condition, he thought there was little risk in making the lowest offer. Of course, we don’t know how it will turn out in the end, and yes, profit-seeking was definitely part of it. But in fact, he had also already considered living in that area before.

kati1337 schrieb:

I think answering your question in general terms will be difficult because no one can assess the location and condition of the house. Therefore, it’s unclear whether your friend got lucky with the foreclosure sale, or if there were valid reasons why no one else bid. The latter is more likely, but the former is also possible. Perhaps the truth lies somewhere in between.

Selling at a higher price will be challenging since one must assume there was a reason or reasons why the property has attracted little interest so far. Capital gains tax has already been mentioned. In general, the costs associated with buying and selling consume a large part of the profit—if any profit remains at all.

Renting out would definitely be an option if the location permits. I wouldn’t lease out the pub, but if possible, convert it into residential space. Regarding renovations, it depends on how much urgent work is needed, what that would cost, and how well you can rent it out.
Friends of mine own several older houses that they renovate and maintain bit by bit on their own. They rent them exclusively to tenants arranged through local authorities. So, not exactly luxury residences for upscale clients, but the rent payments are relatively reliable when handled directly through the authorities. It wouldn’t be my preference, but it might be worth considering.

“Long story short” answer: It depends.

Thanks for the reply

pagoni2020 schrieb:

“Market value,” “appraisal”… these terms are very flexible. What you actually get, when, or after what measures is uncertain.

… in court cases or other auctions, there are always people who would otherwise be bored. If they were genuine interested buyers, they would have at least placed one bid.

… acquaintances with “little knowledge” gave a positive opinion… well then, cheers! Will they pay if it turns out differently?

… I thought HE bought it…

Yes, officially he bought it. By a little knowledge, I meant that they are not professionals (in the sense of being formally trained), but they have already renovated/restored houses themselves.