Buying Next to Commercial

[tcrabb]

I am interested in a 2 bed terraced house next to a laundrette, it has been on the market over 1 year. It is also next to a Chinese restaurant next one down, although this building is detatched from it and its owners live above it. The houses on opposite side and further up the hill are all decent residential. It is on a main road in quiet Welsh market town. So the area is clearly mixed use, there is a health food shop and cafe further down again.

I saw it twice last summer and came close to buying it, with a view to living in it or possibly renting it out. At the time I did not realise the issues with mortgage companies being very fussy about lending on residential properties next to, or above commercial ones. When I found out I backed out as even though I could buy outright I thought it might be difficult to sell on. Also unsure what price to go in at. I did run it past a whole of market mortgage broker and they did find a few lenders that were OK with it.

So my question is - how does one calculate the market value of residential property that is next to commercial building in comparison to an identical one that is not next to any commercial activity (assuming all other factors are the same)?

Thanks for any advice.

 

[Veronica]

If it is for your own residence and you are happy living there then go ahead and buy it. However if it is for investment purposes think very carefully about how difficult it would be to rent out for a decent rent or to sell in the future.

 

[Barny]

Another question would be to ask why has it been on the market for a year? Is it that potential buyers have raised the concerns you have, ie, it may be hard to resell, will the appeal be lost if used as an investment property for potential tenants or if financial, has it just been tricky to find a lender?

Despite listing the obvious above, could it also be that it's actually overpriced and that is also the stumbling block with the seller holding out for top dollar. You could probably do some of your own checks on Zoopla / Rightmove or any Welsh equivalents to see how similar properties in non-commercial locations sell for.

If you're looking at it as a potential investment property then no harm in calling afew other local letting agents and see what their views are of it as a potential rental property and what kind of income.

Finally, if you were seriously interested then although you've said you could buy it outright, for peace of mind, I'd suggest getting a mortgage on it because then you only need to pay in 20% / 25% of your own cash as a deposit rather than ALL of your cash as you could then potentially use the remainder for another investment property. I'd rather have my cash split between various properties rather than just one, especially if that one was also a bit of a concern for you.

 

[tcrabb]

Thanks for all your replies.

I will mull things over then make a decision!

Similar properties are about £90k, and on at £69k at present, deeds show he paid £94k for it back at height of market.

 

[Barny]

A +£20k reduction in price compared to others in non-commercial areas would appear to show that this point has been addressed.

Therefore, the question is why isn't it selling?

The price has been addressed so can't imagine that is the biggest put-off so maybe it is down to the mortgage-ability of the property? Or is it is an area that is a trouble spot, near nightclubs, any pubs, etc? Have you spoken to the agent about why it's been on for so long?

Also, to go back to your original post, you put "I saw it twice last summer", so is that you viewed the property or saw it online a couple of times? I was just wondering if you haven't seen the property itself, are there visual, physical issues that could be putting people off?

Sounds like a bit of a strange one but something to note is that if everything does seem to be 'legit' but not selling, the buyer is also likely to face this issue if/when they were to sell it.

 

[tcrabb]

Thanks for you reply Barny.

Yes, went to see it twice last year. All good inside, no real issues.

I think everything legit, but the mortgage issues probably putting many buyers off.

That plus the thought that the quiet laundrette next door changes at some point to a curry house, keebab shop, or even a Spar with kids hanging around all hours. I did get as far as checking with local council on whether they could do this and they said laundrette has "use class" of its own and to change to anything else would require planning permission. The laundrette was a public house when first built end 19th of century.

If you are interested it is on Zoopla, can't post link as under 5 posts right now but if paste "/for-sale/details/31765096" (without quotes) after the zoopla dot co dot uk domain you can see it. Streetview feature shows its predicament well.

 

[Jonathan Rolande]

The fact you are worried answers the question. Personally, I would want it 10 to 15% less than a similar property not near commercial. Also be aware the use could change and the take Away opens very late or the Launderette becomes an Undertaker for example.

 

[Donquick]

Interesting reading. I had no idea that mortgage companies would wince at a property just because it was in a town centre, assuming that the price is reflective. It is an interesting, and possibly depressing, situation where an otherwise standard property becomes a problem buy just because it is within the functional part of the town rather than stuck out on a purpose made dormitory limb where people 'should' be living these days. In London and many other places the competition for land is so fierce that developers are forced to deploy special construction methods to insulate new homes from surrounding nuisances, but in Wales, it seems, a simple home becomes a mortgage problem just because it is in a high street. In my youth, I lived in a small town and people had homes on the high street in amongst the shops and the library and the dentist and the pubs and nobody thought anything of it. Now it seems that it is so undesirable that you can't even borrow against a house in a high street - quite sad in my view.

My main comment to the OP, which has been mentioned by others, is that night time disturbances might be an issue. This said, as one neighbour is already a restaurant; unless the town is likely to grow significantly or there is the likelihood of a pub or nightclub opening nearby, it probably won't get any worse. You may find that if the restaurant ceases to trade for any reason the building there may become residential - it wouldn't be the first time. Conversely, if the town is likely to grow and flourish, be wary that it may become a target for chain brand restaurants or a pub or a club. I have no idea how likely that is as I don't know the town, but something like that could very well spoil your day.