Here we go…

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…
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