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

Hello dear forum members!

Background: My boyfriend bought a house at a forced auction, quite cheaply, basically for the land value. He placed the lowest bid, assuming others would outbid him. However, no one did, and now he owns a house (which we/he do not urgently want to live in ourselves, at least not for the time being).

The house:
Overall, the house is in good condition, at least at first glance. Some renovations are necessary (e.g., the heating system). The last major refurbishment was apparently done in the 1980s. I can’t say much more about it at the moment.

My question:
Based on your experience, what is the best course of action? What makes sense financially?

For example:
1. Simply sell the house again (possibly after partial renovation and definitely at a higher price)
2. Renovate the house and rent it out as soon as possible? (The house could accommodate two tenants, and a part of it used to be a restaurant, which might be leased out again)
3. Renovate the house completely and then sell it.

What other options do you see from your experience? Where is the return on investment best?

I look forward to your answers and advice!

Best regards
Berenike

Is it still occupied by the previous owner or even rented out?

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

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

That depends on the location. The more attractive it is, the less I would invest financially before reselling. I wouldn’t do too much anyway, since a buyer usually has completely different ideas.

The same applies to renting. What is the maximum realistic net rent? If only 5–6 euros per square meter (approximately $5–$6 per square foot) are common, then a renovation is not worthwhile. If the building also includes a restaurant that might be leased out, this tends to have a negative effect on tenant interest, as most people prefer peace and quiet.

I would only consider a major renovation if a) I can rent it out well and/or b) I plan to move in myself later.

When reselling, you need to keep an eye on the capital gains tax, which can apply for up to 10 years after purchase.

LordNibbler schrieb:

Is it still occupied by the previous owner or even rented out?

No, no one lives there anymore. But until about 1 to 2 years ago, someone was still living there.

Your friend bought a house without any real knowledge and without a solid plan, just because they thought they could make some quick money. Are you serious? Wow, is that bravery or is there another word for it?
Whatever they decide to do now, at least they will learn something from the experience, and maybe it will even pay off.
Apparently, neither tax considerations nor building regulations were properly taken into account, but instead the decision was driven purely by profit-seeking or greed.
I think your friend needs something other than a house building forum. And... there is usually a reason behind a price—whether it’s low or high—even if a real estate novice might not notice that right away.
Your quote “House cheap – what now” is really the highlight of the week... right after “Child, what now?” or “Money lost – what now?” Sorry.