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Monthly Archives: September 2011

Well, the numbers are in (kind of), and it seems feasible. The home inspector concluded that there were no structural problems, and that the roof did not leak (but that pretty much everything else was a disaster!)  I am clearly deranged for contemplating this, but at least the simple math works.  It appears that my guesstimates of renovation costs (see prior scintillating post) were not far off, and it will take about $55,000 to renovate.  If I do much of the work myself, that amount could be significantly less. As such, with a purchase price of $50,000, and a maximum of $55,000 additional into it, I should have a total investment of $105,000.  If I can sell if for at least $140,000, or clear at least $5000 a year in rent, then it works, right? 

old attic

Who knows?  On the one hand, the simple math works.  On the other hand, it seems like a spectacularly speculative guesstimate by a rank amateur that could be hideously off the mark.  But the simple math works.  Have I said that already? Perhaps it is me that is simple.  I am obviously conflicted.  I want to do it.  I am intrigued by the challenge of doing it.  However, I can’t help but think that I am like the person atop a steep drop-off, 200 years ago, encased in a contraption of feathers and light weight wood, somehow naively thinking, convincing myself, that this will work!  

Lilienthal's Glider in Flight

“When early humans attempted to fly, they mimicked birds — often with disastrous results.”  That’s what I am afraid of – disastrous results!  

I spoke with one of my brother’s about it (who lives in N.C.).  Although sympathetic to the decision dilemma, he rightly pointed out that only I can make the decision.  He also intriguingly suggested that since my 19 y.o. nephew was looking for temporary work, if I did buy it, he could help me out for a couple of weeks.  My nephew and I don’t spend nearly enough time together, only getting together for a few days twice a year.  The opportunity to spend some good quality time with ‘the boy’ would be reason enough to embark on the crazy project.

sleeping teen/ renovation helper?

Well, I have to make a decision. Since an Agreement of Sale has been signed, it is now a matter of me having to cancel the contract if I don’t want to buy the house. If I simply remain stuck in indecision, this real fixer upper will be all mine!

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bathroom (w/ radiator in vanity)

kitchen

The asking price was $55,000. Of course one has to haggle, so I put in an offer of $45,000. After some haggling …

BRIAN: How much? Quick!
HARRY: What?
BRIAN: It’s for the wife.
HARRY: Oh. Twenty shekels.
BRIAN: Right.
HARRY: What?
BRIAN: (as he puts down 20 shekels) There you are.
HARRY: Wait a moment.
BRIAN: What?
HARRY: We’re supposed to haggle.
BRIAN: No, no, I’ve got to …
HARRY: What do you mean, no?
BRIAN: I haven’t time, I’ve got to get …
HARRY: Give it back then.
BRIAN: No, no, I paid you.
HARRY: Burt! (BURT appears. He is very big.)
BURT: Yeah!
HARRY: This bloke won’t haggle.
(Monty Python – Life of Brian)

… we arrived at $50,000.

moldy basement beam/science experiment

I now have to get inspections and estimates to see how much all of this is really going to cost!  I also have to figure out when these inspections have to be done by. According to the contracts, although the bank has agreed on a price of $50,000, they have up to 10 days to confirm this in writing. However, it appears that my time for inspections starts now, not when the contract is actually signed. From the best I can tell, I have 15 days from now to figure out whether the structure is sound, and how much all of the potential repairs will actually cost (windows, siding, plumbing and heating, electrical, mold remediation, etc). The banks don’t make it easy!

Upstairs enclosed porch

I can’t believe I am still thinking about this. I have now looked at it twice. The realtor says that they have received a couple of offers. Obviously they haven’t been accepted (I wish I knew what they were!). I can’t imagine at $55,000 this house will stay on the market long. There are quite a few houses in this town that I have looked at previously and wish, in hindsight, that I had bought.

I realize it is an inordinate amount of work, but I also love a challenge, and I think I can do it. Not only that, and more importantly, hopefully I can sell it for a profit when it is done, or at least have a decent rental property. I have looked at other properties in the area, all of which don’t require nearly as much work.  However, it seems like even the most modest houses that are habitable cost at least $100,000.

 Considering the size of this house, its location, and that if completely redone it will be practically new, I can’t help but think that this house would be worth considerably more (perhaps $140,000?). I guess the issue is how much a renovation will cost.

I can guesstimate some of the costs on my own. While daydreaming at work I have come up with the following list of work that needs to be done, and my estimates as to how much it will cost.

  • Siding $10,000
  • New windows $3,000
  • Roof $5,000
  • New bathrooms (1 and ½) $5000
  • New kitchen (plumbing, cabinets, appliances, etc.) $7000
  • Furnace, baseboard heating and plumbing $10,000
  • New electrical service, wiring, receptacles and fixtures $8,000
  • Framing, sheet rock and painting $4,000
  • Mold remediation $3000

gas furnace and old oil tank

It seems, at least on paper, that it is financially viable. If the purchase price is around $55,000, and the renovation costs approximately $55,000 as well, then a selling price in the neighborhood of $140,000 might make it worthwhile. The return may be modest (considering all the work), but the low purchase price means that my initial investment will be low, and if I can do much of the work myself, once the dust settles I should be on the plus side. Plus, my risk is lower if I don’t overextend myself. If I were to buy a house for $140,000, the rent wouldn’t cover the mortgage and taxes. However, if my total out-of-pocket investment is around $110,000 (not including labor), the rent may be a good return.

Playing with these numbers, and really just making an semi-educated guess on several variables, seems no more certain than a clown juggling bowling pins, on a barrel, balancing on a wire.

Since I seem to be getting myself into this deeper, I should get some real estimates, from people who actually know what they are doing. If I am going to invest this kind of effort (estimates, planning, listing), I should put in an offer. At least if the house is under contract, it won’t get sold out from under me while I nervously try to figure out if I might actually be able to make this work. I can’t believe I am saying this – ‘put in an offer.’
 
Here we go…

The price is alluring.  As for all the work needed,  I can do this – I can be quite handy at times. And my current job situation leaves me with a lot of time on my hands. Am I serious?  I’d have to quit my job, and live another 100 years to somehow fix this place up.  But seriously, I have enough do-it-yourself knowledge to kid myself that I could do this.

As I wended my way through many jobs before and during college,  I found myself working as a laborer for a general contractor.  My only qualification was that I was willing to do what was asked of me, which was primarily anything the more experienced guys didn’t want to do.  I was the schlub who carried all the tools and heavy materials, did the jobs that required a respirator, tyvek suit and goggles, and cleaned up at the end of the day.  After several years, and some modest gains in skill, I found that I enjoyed general construction work as much as anything else.

My many years of formal education have ended up putting me behind a desk most days of the week.  However, I find myself gravitating toward projects that require tools and building materials in my hands.  Essentially, I am like many of us who find ourselves, when not working our day job, in over our heads working on our own home, or someone else’s.  There are myriad reasons for this – saving money, helping out friends, enjoyment, satisfaction, or proving (to whom I’m not sure) that I can do it.

Over the years, while not at my day job, I have continued to do construction work.   I have helped several contractors renovate many different houses, in a few different towns.  I essentially have become a skilled laborer.  I have also been able to work on projects involving almost every aspect of general construction – jacking up houses and rebuilding foundations, enclosing porches into sunrooms and cutting out exterior walls into them, and gutting old houses back to the studs and building it back.

But do I really want to try to do something like this on my own? The fact that I am considering it affirms the adage “A little knowledge is a dangerous thing.”

A real fixer upper.

I work with a woman who also works part-time as a realtor.  The other day she told me about a house that was on the market – “a real fixer upper.”  In my area, as in many places, real-estate prices have been through the roof.  This made buying an investment property difficult, not only because the prices seemed to be more than they were worth, but they were way more than I could afford!  But prices are on the way down, and this place is in my price range.  

The asking price is $55,000.  We went to take a look at it.

To say that this place is “a real fixer upper” is an understatement!  It needs a LOT of work.  And by a lot of work, I mean that it needs major renovation in every conceivable way – electrical, plumbing, heating, roof, bathrooms, kitchen, mold in the basement, and floor to ceiling wear, cracks, holes and collapse.  My initial reaction is that one would have to be crazy to buy this place, unless they were going to tear it down and start over.  Or use it as a haunted house once a year. The price is alluring, but it just needs too much darn work, not including the hidden or unforeseen problems.

I love a challenge, and don’t like to think I would walk away from something just because it would be hard.   But trying to renovate this place wouldn’t just be hard … it would be insane!  Or would it?  I can’t help thinking about it.  It’s in a good location.  And it has some charm.  It is listed as being built in 1902, and has an immediate feel of solid ‘oldness.’  No, this is ridiculous.  ‘Biting off more than one could chew’ comes to mind.  However, it’s a decent size, with three bedrooms, enclosed porches on the first and second floor (creating some interesting spaces), and a few rooms downstairs.  It has potential. Too much potential!  And a basement full of mold.  Why am I still thinking about this?!