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  1. #1
    Join Date
    Dec 2012
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    2

    Question Buy or Run Away?

    Hi! I need some advice from folks that have done major remodeling. My husband and I have a contract on a 5700 sq. ft. wood/stucco 1904 house in a neighborhood we like. The area can be expensive but we would be paying about $300,000 less for this house than what it would be worth if it were in average/fair condition. However, it's not.

    What we've found so far is that there is an oil tank buried under an addition on the back of the house, there is extensive termite damage that can visibly be seen up two floors, a bow window in the front of the house that appears to be cracking off (almost two inch sag with visible separation in the walls) and there are about 8 asbestos ceiling tiles in the basement....oh, and of course, chipping lead paint.

    With that said, the house seems solid with little sagging other then the window. We are aware that this could be a long and expensive project but anything else in the neighborhood would be equally old and if in better condition, much more expensive. Also want to mention that we have a toddler so we would not be moving in until most of the work is complete.....and we would only take on small projects ourselves and hire professionals for everything else.

    Basically, our only experience with construction is a small kitchen that we demoed, designed and remodeled ourselves in our current house. So, if anyone has experience remodeling large 100+ year old houses with issues, I want to ask...are we insane or could this be house awesomeness in two years? Should we move forward or run very, very far away?

    From my standpoint, the issues the house has would be the impetus to really get into the walls and not only correct things but do other things like rewiring and insulating. In addition, the house meets a lot of our buying criteria and we've been looking for two years.

    Thoughts or advice?

    Thanks!

  2. #2
    Join Date
    Dec 2010
    Location
    Houston Texas
    Posts
    2,505

    Default Re: Buy or Run Away?

    Howdy,

    My 2 cents:

    Run away. Why? Unless you are very well versed with all phases of construction, the costs to rebuild can easily escalate well beyond any budget. Many Pro's don't get this part right. I buy old houses with good shells, repair and rent them. A decent purchase is a very rare find. Usually if no one else is running in to purchase this property there is a very good reason. You didn't post your location, which may have much to do with this.

    Living outside the home for the year or so it will take to make all the repairs will be another expense to consider. Then add on the added property taxes once the improvements are made.

    Now if you have more data to the contrary, I'd be happy to hear it.

  3. #3
    Join Date
    Jul 2010
    Location
    SoCal
    Posts
    5,438

    Default Re: Buy or Run Away?

    All right, where do I begin?

    Your limited experience hints that you might be waking into deep waters. Emotions aside, is this the best "treasure" you managed to find after two long years of searching?

    What you need to do is sit down and itemize all that has to be done to bring the house to market condition. Then with the list in hand start getting bids from professional contractors.

    Add up all the best bids and see if it pencils out for you.

    Who knows? you might find out that it does. But my gut feeling is that it won't, plus with a toddler, you will grind yourselves to the ground.

    Get a new real estate agent and find a home with less things to do. Leave this one to the seasoned remodelers out there.

  4. #4
    Join Date
    Dec 2012
    Location
    Southern Ontario Canada
    Posts
    38

    Smile Re: Buy or Run Away?

    What's the saying "If I only knew then what I know now". Well then we all probably wouldn't even think about taking on the world when everyone said it would never work, ever be finished, will be the death of you, you don't know what you are getting yourself into, who do you think you are? I could go on and on. Discouragement is a powerful tool, it also has the opposite effect at times.

    For anyone to answer your question well with the little information and background would be a shot in the dark. I, or most likely anyone else here, is not in a position to answer you. If your only foray into the construction world is the reno of a small kitchen and Tom Silva isn't your father-in-law, and Bill Gates isn't your other father in law, I agree with the previous posts.

    5700 sqft, my oh my that's a big, no huge, no monster of a massive job. Baby steps folks, I would say that after 3 or more flips your might, I repeat might be prepared.

    We all started somewhere, my very first action on the first day of my first renovation a year out of high school was to drive a nail through a inch copper cold water line. I yelled to my kid brother to shut of the water supply, WHAT'S A WATER SUPPLY. We all started somewhere but not where you are planning to. It's like getting your drivers license and saying your ready to enter the Indy.

    There are so many things to discuss to determine if it's even doable is a novel alone.

    The first thought that came to mind here that I wouldn't even have thought about 40 years ago is does this 100 plus year old home fall under the watchful eye of the local, state, even federal Historical society ? That's just one of a thousand questions that need to be addressed before the first nail goes into the proverbial water line.

    Best advice I can give is start with something a bit more manageable. Without looking I wouldn't touch it.


    Good luck, let us know what your decision is.

    Experience is a lifetime of mistakes, wisdom is knowing not to make them again.

  5. #5
    Join Date
    Aug 2007
    Posts
    6,616

    Default Re: Buy or Run Away?

    I agree with the others, from your description, unless you are a seasoned tradesman, run from this property like your hair was on fire.

    I also would very much caution purchasing a "fixer-upper" and trying to live in it while doing the renovations. First and foremost, it is a messy process and having to work around occupants makes the work harder and take longer, even if you're doing it yourself.

    You will absolutely want to hire a contractor to come and assess the house for you. I am not talking about a home inspector, I am talking about a licensed general contractor that is familiar with older homes and their quirks that can assess the damage and repairs needed. With this information in hand, you can then determine if the asking price is in line with the actual value of the home, let alone worth the time, headaches, or expense of repairs.

    SouthernCanuck brought up a good point about the age/history of the home and whether or not it's on a historic register or located within a historic neighborhood. This sort of thing can get very sticky and very expensive, very quickly, especially if you don't know what you're doing.
    I suffer from CDO ... Its like OCD, but in alphabetical order, LIKE IT SHOULD BE!!!

  6. #6
    Join Date
    Dec 2012
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    2

    Default Re: Buy or Run Away?

    Thanks everyone! The reason we thought it might be a good idea is that it is priced well. Since the price of admission to the neighborhood is a very old house, we were finding homes that would have a new kitchen (which we didn't like the look of) but also have push button switch plates, obvious knob and tube wiring, cracking plaster walls....but with a MUCH heftier price tag for just the kitchen update (and in a much smaller house). The rest of the work (of lack there of) told us, thought, that not much else was touched so we would end up with a lot of work anyway.

    With the major fixer-upper, we would be able to do everything right and end up with exactly what we want. We have a friend who is an architect who would run the project. I would be inspecting every step of the way (my dad is a master electrician who used to run a contracting biz) and we have a free place to stay as long as we need it. Our thought is that it would take about 2.5 years and $350,00 to complete...with yearly maintenance of course. We just wanted to get in there before our son goes to school.

    Regarding the historical society, the house is only under covenant. The covenant dictates only what we do to the outside of the home (wood windows, slate roof, etc.).

    The house is in Maryland where real estate is currently in short supply and expensive. There are others chomping at the bit to get in to see this house but we're not sure how many other people would want this kind of project.

    Does this change the recommendation?

  7. #7
    Join Date
    Aug 2007
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    6,616

    Default Re: Buy or Run Away?

    As I said before, I would recommend hiring a contractor to assess the condition of the property and to provide a cost/bid for repairs, this is the only way you will have a realistic idea of whether the property is worth the time, effort, and expense.

    I think you're a bit light in your $350,000 budget, you're likely going to be closer to $500K for a total remodel, inside and out. If the house is that much below market value, then it would be a good deal, if it isn't, well, you'll have to decide where your pain threshold is for cost vs love of the house and neighborhood.
    I suffer from CDO ... Its like OCD, but in alphabetical order, LIKE IT SHOULD BE!!!

  8. #8
    Join Date
    Oct 2012
    Location
    Houston, TX
    Posts
    249

    Default Re: Buy or Run Away?

    If you do not like those push button switches and plates, I'll be happy to take 'em off your hands.

    There is a reason the house is so "cheap" and that reason is not even a pro sees the profit in it just yet.

  9. #9
    Join Date
    Nov 2009
    Posts
    71

    Default Re: Buy or Run Away?

    Well. Here's my 2 cents.
    Are you willing to spend long days and nights with worry?

    Can your marriage survive the most trying times it is ever likely to encounter?

    You will argue,cry,worry, compromise and, give up many times only to get up the next day and try again.

    An old house has a mind and soul of its' own and you will have to hang on for the ride.

    The one thing (and there will be many) that you thought you could put off for a little while will suddenly wake you in the middle of the night and usually on a weekend or holiday to boot.

    That being said, it can be the most satisfying accomplishment you've ever had.

    Oh, and it always costs more and takes longer than you thought.

  10. #10
    Join Date
    Dec 2012
    Location
    Southern Ontario Canada
    Posts
    38

    Default Re: Buy or Run Away?

    It sounds to me that you are leaning towards taking on this project. If that's your decision great, go for it.

    This will most likely be the largest financial as well as emotional stressor that you will be undertaking at this point in your life. I take if from the age of your child you are closer to 20 years of age than 50.

    I have learned that a job without a plan is a plan for disaster.

    Treat this undertaking as one would treat any business venture.

    1) Develop a business plan. A good business plan including an executive hierarchy.

    2) As part of the business plan hire a good GC you think you can trust and have a good working relationship with. ( I don't like the idea of an architect friend doing anything more than architecture.)

    3) Determine what your budget will be and religiously stick to it. I want to know how much the fasteners will cost on a project. Your GC should be able to answer that question. If he can't keep looking.

    500K budget is 5700 FTSQ at $87.72 per square foot, a pole barn here is $60.00 per ftsq. not including labour $87.72 is probably many dollars per square foot short to complete what you describe. I don't think you come nearing completion for less than $150.00 per square foot. That's 855K.


    4) Look at creating a limited liability company for this project, a 5% saving due to taking advantage of taxation codes for a LLC vs. working only as a consumer and you are looking at 25K alone on a 500K budget.

    5) You must predetermine what hoops that historical group is going to make you jump through before you close that deal. It is not uncommon for a builder to be held up for years while the local historical society decides what the original color of the trim was. Many thousands may be spent on legal representation before the first permit is issued. A local project here was held up mainly because the historical society only met quarterly. Then it was found that the total budget for the project was
    going to the slate roof and re creating the dental work and corbels alone, that bill alone was going to be 250K.

    If you are still are not discouraged it's time to put down a retainer for legal council that is familiar with this type of real estate venture.

    Google " Cottonwood Mansion " Selkirk Ontario. This property was donated to the town for $1.00 for the 8000 ftsq building and land, it only took 1.3 million more to complete 25 years ago.

    Roll up your sleeves and get out the cheque book.
    Last edited by SouthernCanuck; 12-10-2012 at 09:06 PM. Reason: typo

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