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Sensible Pricing In Edinburgh


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I listed these properties some time ago as ones to watch. They were auctioned by Allsop and must be a BTL portfolio gone wrong.

Guide £150K.....made £150K, three bedroom

1st lot

Guide £150K.... made £140K double ensuite bedrooms.

2nd lot

The fact they only made guide or less is significant. These flats must be large considering the outside shot. Very close to the city centre also but I am not familiar with the area. What do you all think....

Edited by geed
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I listed these properties some time ago as ones to watch. They were auctioned by Allsop and must be a BTL portfolio gone wrong.

Guide £150K.....made £150K, three bedroom

1st lot

Guide £150K.... made £140K double ensuite bedrooms.

2nd lot

The fact they only made guide or less is significant. These flats must be large considering the outside shot. Very close to the city centre also but I am not familiar with the area. What do you all think....

This is a desirable area and flats normally fetch far more than this. Difficult to comment on these specific flats as we don't know the full story but it could be someone bagged a bargain. I note that they are sold with a tenant in place under 'terms unknown' which could put people off to put it mildly.

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2 beds in the west end usually go for £250k+. So someone snagged a bargain alright, though Douglas Crescent does teeter on the edge of the embankment to Dean Valley and I believe some of those properties have structural problems. Nevertheless, dude could flip those in 6 months for a 200k profit. I've always assumed that auction properties were sub-standard rubbish, I should keep a closer eye on them.

Edited by kenzdawg
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2 beds in the west end usually go for £250k+. So someone snagged a bargain alright, though Douglas Crescent does teeter on the edge of the embankment to Dean Valley and I believe some of those properties have structural problems. Nevertheless, dude could flip those in 6 months for a 200k profit. I've always assumed that auction properties were sub-standard rubbish, I should keep a closer eye on them.

Whilst that is a possibility, if it were that easy would they not have sold for more....:rolleyes:

Def in a nice area but there are some strange aspects of this. Both bedrooms en suite ? Very strange. Perhaps part of an old hotel/hostel or something ? As you say could also have structural issues. Tenant issue is a another thing to consider.

They sold at auction and they sold for what they are worth. So they are not in any way a bargain IMO, they just point out, dependent on details - how overpriced everything else is in the area. :D

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Whilst that is a possibility, if it were that easy would they not have sold for more....:rolleyes:

Def in a nice area but there are some strange aspects of this. Both bedrooms en suite ? Very strange. Perhaps part of an old hotel/hostel or something ? As you say could also have structural issues. Tenant issue is a another thing to consider.

They sold at auction and they sold for what they are worth. So they are not in any way a bargain IMO, they just point out, dependent on details - how overpriced everything else is in the area. :D

Oh it didn't say it was easy. The trouble with auctions is that you're buying blind, hence the discount. I see there's no home report for it either (so that's how you get round those!) But there are no stat. nots. against them or warrant, so on the face of they're a pretty good buy. As for it selling for what they're worth, that's assuming perfect efficiency in the marketplace which with restrictive capital supply and information asymmetry doesn't apply here. Actually, I'm convinced now that there are bargains to be had out there.

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Oh it didn't say it was easy. The trouble with auctions is that you're buying blind, hence the discount. I see there's no home report for it either (so that's how you get round those!) But there are no stat. nots. against them or warrant, so on the face of they're a pretty good buy. As for it selling for what they're worth, that's assuming perfect efficiency in the marketplace which with restrictive capital supply and information asymmetry doesn't apply here. Actually, I'm convinced now that there are bargains to be had out there.

Yep - but depends on your definition of a bargain. Compared to 2007 prices these are a 'bargain'.

However compared to 2003 probably not.

Which one is more relevant to compare too ? All depends on context.

Based on the facts, and potential issues - i think for the location and probably size the price they sold for appears pretty reasonable. Not a bargain IMO - but not expensive.

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Yep - but depends on your definition of a bargain. Compared to 2007 prices these are a 'bargain'.

However compared to 2003 probably not.

Which one is more relevant to compare too ? All depends on context.

Based on the facts, and potential issues - i think for the location and probably size the price they sold for appears pretty reasonable. Not a bargain IMO - but not expensive.

I think kenzdawg was defining "bargain" as something that a developer could make a substantial profit on at today's prices, not relating to prices at another point in history. Of course there are risks to this-such as prices sliding quicker than the property can be flipped thus wiping out profit, unforseen structural issues, sitting tenant issues, possibiity that the property is not mortgage-able in current state and so on. All these "issues" carry a negative premium that due to buyer psychology is often actually greater than the *real* risk and can allow a more experienced (or foolhardy!) investor bag a bargain if he's happy to swallow these risks

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I think kenzdawg was defining "bargain" as something that a developer could make a substantial profit on at today's prices, not relating to prices at another point in history. Of course there are risks to this-such as prices sliding quicker than the property can be flipped thus wiping out profit, unforseen structural issues, sitting tenant issues, possibiity that the property is not mortgage-able in current state and so on. All these "issues" carry a negative premium that due to buyer psychology is often actually greater than the *real* risk and can allow a more experienced (or foolhardy!) investor bag a bargain if he's happy to swallow these risks

Yep. Hence something can only be desribed as a bargain IMO once it is clear that this is the case. For these places it would be a hefty profit for little work in the next few months. Whether that happens remains to be seen. The benefits need to be realised prior to any 'bargain' chat. I am sure a lot of 'bargains' have been bought in all aspects of life throughout the ages. A lot won't actually turn out that way.

However if you have a spare £300k sitting around in cash and are bored looking for an investment - they look like a potentially good deal.

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At almost 9% yield (assuming walk-in condition and a rent of £1kpcm and £1.2k respectively) you needn't bother flipping them. But even so flipping still makes sense in this market if you have the margin, you just have to price in the time-cost of your capital. After all computer chips are a wasting asset too, that doesn't stop intel invest in them.

Oh, and a lot of those known unknowns culled be answered with some basic homework.

I don't know why I'm trying to persuade you though, you are the Eeyore of HPC, CCC!

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At almost 9% yield (assuming walk-in condition and a rent of £1kpcm and £1.2k respectively) you needn't bother flipping them. But even so flipping still makes sense in this market if you have the margin, you just have to price in the time-cost of your capital. After all computer chips are a wasting asset too, that doesn't stop intel invest in them.

Oh, and a lot of those known unknowns culled be answered with some basic homework.

I don't know why I'm trying to persuade you though, you are the Eeyore of HPC, CCC!

Don't get me wrong - I see the price of these are far lower than you would expect to see. Now this could point to a few things. They were available to view prior to the sale. That is an important point. Perhaps things are not quite as they seem - or the place is a complete hole in a state ? Who knows.

Or if they are in good nick - when credit is not available this is all these sort of flats are worth.

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2 bedder 315k

Just round the corner.

Now this one is very interesting.

17 bedder 850k

Yes - 17 bedrooms !!

Have a look at the plans. it has 'boutique' hotel written all over it. Although it has a plan for 5 flats. That would value each flat, prior to any work required, at circa 170k. Would imagine a good whack of room would be lost by splitting it all up. So perhaps a couple of 2 and 3 bedders in there ?

Similar prices to the ones that went to auction as noted.

Are we finally starting to see what fair value is for Edinburgh property...

£~1350 per sq metre for central Edinburgh. Now that seems cheap for the location - compared to everything else you see. Who knows what problems may lurk under the surface though.

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Similar prices to the ones that went to auction as noted.

Are we finally starting to see what fair value is for Edinburgh property...

£~1350 per sq metre for central Edinburgh. Now that seems cheap for the location - compared to everything else you see. Who knows what problems may lurk under the surface though.

Auction values don't represent the end-user market value of a property because the uncertainty of the risk is priced in: it's Akerlof's lemons and all that.

As for the hotel, there's five "luxury" kitchens and bathrooms to buy, all the plumbing and wiring, VAT on the new build sale price, marketing and the outrageous developer's premium to figure. Using the discount cash flow method with a negative beta (i.e. falling market) it's probably still too expensive for a developer at 1.35k psqm. Having said that I see a 3 bedder new build conversion at one grosvenor crescent sold last year for OA 750K ! And someone bought it ffs!

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Auction values don't represent the end-user market value of a property because the uncertainty of the risk is priced in: it's Akerlof's lemons and all that.

As for the hotel, there's five "luxury" kitchens and bathrooms to buy, all the plumbing and wiring, VAT on the new build sale price, marketing and the outrageous developer's premium to figure. Using the discount cash flow method with a negative beta (i.e. falling market) it's probably still too expensive for a developer at 1.35k psqm. Having said that I see a 3 bedder new build conversion at one grosvenor crescent sold last year for OA 750K ! And someone bought it ffs!

The big one is not an auction. Normal sale.

As you say would cost a fortune to do up and finish off as whatever you had in mind. However when compared to other flats etc.. in the City centre ? It is pretty amazing value - if you could be arsed with the hassle. Oh - and had the spare cash !

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The big one is not an auction. Normal sale.

As you say would cost a fortune to do up and finish off as whatever you had in mind. However when compared to other flats etc.. in the City centre ? It is pretty amazing value - if you could be arsed with the hassle. Oh - and had the spare cash !

Amazing value? As you said yourself ccc the benefits need to be realised prior to any 'bargain' chat ;-) I have no idea of costs associated with a commercial venture like converting to a hotel so cannot comment. However conversion to 5 flats would lead to some very awkward layouts and a loss of a lot of square footage due to the huge central stairwell. I mean, theres no way the ground floor could be made into a self contained flat as its cut in 2 by the stair and hall which would be communal. You'd have to have 2 ground/garden flats on the back and front of the properties AND add in extra staircases which would in itself be wierd.

Add in 5 bathrooms, 5 kitchens, separating off the utilities and doing everything within listed building regs could lead to a very expensive development to end up with 5 * 1000 sq ft flats. If you bought for 850k I reckon it could easily cost £300k-400k to develop as a ballpark figure which brings you up to a £225-250k break-even cost for the flats in a falling market, before stamp duty or finance costs are even factored in.

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Amazing value? As you said yourself ccc the benefits need to be realised prior to any 'bargain' chat ;-) I have no idea of costs associated with a commercial venture like converting to a hotel so cannot comment. However conversion to 5 flats would lead to some very awkward layouts and a loss of a lot of square footage due to the huge central stairwell. I mean, theres no way the ground floor could be made into a self contained flat as its cut in 2 by the stair and hall which would be communal. You'd have to have 2 ground/garden flats on the back and front of the properties AND add in extra staircases which would in itself be wierd.

Add in 5 bathrooms, 5 kitchens, separating off the utilities and doing everything within listed building regs could lead to a very expensive development to end up with 5 * 1000 sq ft flats. If you bought for 850k I reckon it could easily cost £300k-400k to develop as a ballpark figure which brings you up to a £225-250k break-even cost for the flats in a falling market, before stamp duty or finance costs are even factored in.

I was simply talking in comparison to most else around that area. A lot of building for your money compared to others.

What (and how) you do with it is another matter as you say !

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I was simply talking in comparison to most else around that area. A lot of building for your money compared to others.

Point taken-but it is possible to be overly simplistic. You said its amazing value and I was just pointing out that if you look more carefully maybe it is not such amazing value after all.

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Hi guys,

this gem in a nearly perfect condition was originally purchased in Spetember 2007 at £1.2 million. Home report value of £900K, went for £775K fixed price: http://www.ckdgalbraith.co.uk/property/EDI080041/Dick%20Place

It was not a distressed sale. They had 4 offers, at least two at that fixed price and they could have gotten a much higher price if they went to a closing date. It is just that the sellers bought a smaller property and just did not want to be greedy.

Cheers to the sellers - they seem to be the most incredibly fantastic couple :)

Edited by curious
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I'm not sure I'd call this "sensible pricing"

My link

but at almost 2/3 of the value psqm for the area (west end really) it was only on the market for 6 weeks and closed today. It would be interesting to know how much it went for and what the story behind it was.

The schedule is amazing !! Especially the last statement for every room:

Flat Hallway: Red carpet, yellow walls

Drawing Room: Striking original cornice work

Bedroom one: Egg and dart cornicing

Bedroom two: Shelved Press

Bathroom: Pine panelled ceiling

-------------------------------------------------------------------------------

As for why this is selling for a seeminlgy semi-reasonable price ? "The sellers have been in the flat for nigh on 33 years"

Nothing else needs to be said.

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It looks to me that the owners of that got screwed. Smaller 2 beds in the area go for circa 275k. A shitty kitchen and tired carpets can't be that bad.

Or...they have lived a long life, they know the score - and they appreciate 200k is a huge amount of money for a 2 bed flat, even in Central Edinburgh.

Also - Maybe they didn't want to wait 3 years to sell their flat for what it is worth like all their neighbours do.

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Hi guys,

this gem in a nearly perfect condition was originally purchased in Spetember 2007 at £1.2 million. Home report value of £900K, went for £775K fixed price: http://www.ckdgalbraith.co.uk/property/EDI080041/Dick%20Place

It was not a distressed sale. They had 4 offers, at least two at that fixed price and they could have gotten a much higher price if they went to a closing date. It is just that the sellers bought a smaller property and just did not want to be greedy.

Cheers to the sellers - they seem to be the most incredibly fantastic couple :)

Sounds like they have more money than sense. Why are you so effusive with praise-were you the lucky buyer? :D

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It looks to me that the owners of that got screwed. Smaller 2 beds in the area go for circa 275k. A shitty kitchen and tired carpets can't be that bad.

Agreed, that place would be amazing with a bit of effort. If only it had been on the market (and I'd had twice as much money) when I was looking at flats earlier in the year.

Compare it to a new build flat you would get for a quarter million in central Edinburgh...

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Sounds like they have more money than sense. Why are you so effusive with praise-were you the lucky buyer? :D

Come on, if I were the lucky buyer, would I be on this forum? No, it is simply that if people behave nicely why not praise them for their nice behavior?

The point is that the sellers could have sold the place for more then what they asked. Do I relly need to go in details why they could have sold it at a higher price even in this market? (As it happens I am sufficiently informed about this case - but no I am not an agent and not a relative.) These people were not greedy. Really. Really. Their actions speak for their intentions - a very rare property these days.

To tell the truth, I am still perplexed at their behavior. The only theory that I have why they are willing to take a loss of £1.2 million - £775K = £425K (!) is that they perhaps sold their previous property for above a million. So perhaps for them all this house price money is a silly money, and a house price game is a game which they do not want to play. So perhaps they sold their property at about 35% (!) loss simply because the price that they were asking was about the same as the price they are paying for their new property.

I just wish that there would be more people around who do not see their house as a source of wealth but rather a source of happiness. Then there would be more "sensible pricing" around. This is why cheers to the rare people who willingly contribute the prices falling to "sensible" levels.

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