would you buy a cheap home that is in need of repair (nothing structural as far as you know since a home inspection hasn't been done yet) knowing the return could be huge? Even if you were only going to live there roughly 5 years.

Problems range from;
Outside paint job needing work, or vinyl siding installed
Porch railing needs replacing
Hardwood floors needing attention; scrapping, staining
Paint on the stairs and other places
Crack in the ceiling fixed if passes inspection
Windows replaced


Wise investment? Or in over your head?

6/16/2007 8:31:26 PM

my friend in florida bought a house that turned out in need of tons of repairs. was a huge hastle, but he'll end up making money when he sells it. depends on how bad and if you dont mind the frustration.

6/16/2007 8:33:10 PM

That's what we're trying to decide. It'll be a good learning tool and give us something to do but we don't know if it's worth the money put in.

6/16/2007 8:34:33 PM

if you're not a professional dont do it


noobs like yourself get in over there heads and up losing money in the long run

6/16/2007 8:35:43 PM

We have friends that are. Their jobs are basically home improvements with a concentration in electrical work.

Plus i've painted and built things before. We'd need help finding the wood for cheap and deals on items, basically.

6/16/2007 8:40:31 PM

Go for it, but understand that everything will take three times as long as you expect and cost twice as much. Expect a lot of headaches and make sure you're getting a hell of a deal if you have to do all that work. I'm not talking $15k off.

[Edited on June 16, 2007 at 8:57 PM. Reason : l]

6/16/2007 8:55:24 PM

you can quickly end up over your head when you start doing home improvement projects. what looks like a simple exterior painting job can quickly turn into you replacing thousands of dollars in lumber and energy efficient windows frames. cracks in ceilings can turn out to be faulty floor joists or a settling foundation. you also have to pay for a lot of the repair costs up front, instead of merely increasing your monthly mortgage payments slightly for a house that is already in much better shape structurally.

If you are good with managing subcontractors and have a lot of know-how skills with home repair, I'd say go for it. If you're basing most of your assessments on repairs based on what is visible to the untrained eye and not from what a home inspector tells you, then I'd advise you to stay away from the house. Also, the return on your investment is going to be heavily dependent on the neighborhood that the house is in. If all of the other homes in the area look similar, you're not going to be able to increase the value of the property as much as you could if you were surrounded by nicer homes.

6/16/2007 8:56:56 PM

can't you use some of that as a tax writeoff?

6/16/2007 8:59:01 PM

if you have to ask this question you're already in over your head

6/16/2007 9:05:38 PM

Quote :

"can't you use some of that as a tax writeoff?"

When you sell the house...not in the year in which you pay for the materials for the project.


Karen, I'm more towards

Quote :

"if you have to ask this question you're already in over your head"

but Matt's more in agreement with

Quote :

"but understand that everything will take three times as long as you expect and cost twice as much"

And that's a starting point.

Are you all using a realtor? Is needing to devote your weekends for AGES to this something you can live with? And living with incomplete projects?

Quote :

"Crack in the ceiling fixed if passes inspection"

Make sure you get a damn good inspector to make sure this isn't structural.

Matt: "It sounds like it's mostly cosmetic, and not something like tearing a hole in the wall. How hard could it be "

6/16/2007 9:13:32 PM

We went this route recently and bought a 3bd 1ba brick ranch with unfinished walkout basement that we plan to have for about 5 years. We got it for a good bit under the average home price in the neighborhood. Key things to look for in buying something in need of repair is how you can add to the tax assessment, because those things are pretty much guaranteed to raise the value of the home. We are building a 1 car garage, finishing the basement, and adding a second full bathroom. Other things that we are doing before we sell the house are: redo roof shingles, replace windows, add a bay window to living room, remodel bathroom, remodel kitchen including adding an island, countertop bar in the wall between the kitchen and living room, refinishing the hardwood floors, redo driveway to fix cracks and be able to park 2 cars in it, landscaping, build a deck, make the attic accessible for storage, extend roof to cover aluminum carport area, and some other stuff I've missed.

We opted to go this route because the house (built in 1968) is more solidly built than new construction with vinyl siding, and most of the houses in the neighborhood have already been remodeled, and the quality of the neighborhood is pretty consistent. If you fix up a cheap home in a neighborhood of cheap homes, you'll price yourself out of the neighborhood. In our case, our house had been neglected by renters, and the owner sold it to an investor to avoid foreclosure, who then sold it to us. The majority of the houses in the neighborhood are owner occupied and in better shape than ours.

If you have the ability to do the work yourself, nothing shows up in the inspection, and you are confident that the neighborhood can absorb the upgrades you are planning to do, then go for it. Personally, we are using the opportunity to build enough equity to afford the down payment on the home we really want.

6/16/2007 9:56:52 PM

we are buying the house i've rented for a few years.
the seller/my landlord is putting on a new roof and siding before purchase
but not touching the inside. We're saving money because he's cutting out the realtor and selling it to us for less than he could get for it (but he's saving money because he doesn't have to fix up the inside)
however, the house does need need flooring throughout. We're going to pull up the carpet and putt down hardwoods upstairs this summer and re-carpet the downstairs.
We're painting every wall in the house and pulling down some wallpaper.

future projects include new kitchen cabinets and counter tops. The bathrooms all need to be redone. and all the kitchen appliances are old (but still working).

we're also going to relandscape the front and side yard (which my fiance does for a living)

after everything we should be able to make a good profit if/when we decide to sell.
as long as the flooring is redone and everything is painted we can live with how it is.
the house is over 1500 sq ft, in a good appreciating neighborhood, and in good school districts.
it's a commute to my job in Durham but i've gotten used to it.

everything we looked at in our price range was too small, in a bad neighborhood or on a tiny plot of land.


but definitely do the home inspection! eventhough i've lived in this house for over 2 years and I think I know it pretty well we're having all the inspections done. It's worth a few hundred dollars.

Just include how much you're willing to allow in the bid so you're not stuck with a home that is too $$ to fix.

[Edited on June 16, 2007 at 10:42 PM. Reason : g]

6/16/2007 10:41:13 PM

We'd put in the contract that if the home inspection wasn't up to our standards we can void it.

I'm thinking we don't want to put that much money into it, I'd love to but often times I'm the unreasonable one. I have no problem starting projects and working through them waiting for that end result. This one jsut seems like there's too much to be done. tis a pity.

Maybe we'll find one that's like it, unique, gorgeous, but allows room for us to play around a little.

6/16/2007 11:29:05 PM

the things you described are all minor cosmetic repairs. totally reasonable things to either do yourself or contract a general "handyman" type person to do.

try to estimate what it would cost to make the repairs and see if they'll come down on the price by that amount.

in any event, if it's in a good market and you expect the housing prices to go up, you'd be making a mistake to turn a good deal down based on having some minor cosmetic repairs needed

(now, if its foundational problems or systemic failures like major plumbing or electrical or something, thats a different story...)

the saying goes, "buy the worst house in the best neighborhood" and then fix it up.

6/17/2007 1:39:02 AM

Quote :

"knowing the return could be huge"

Sounds like a realtor has been feeding you some BS. You could make some money, but remember that there are an assload of foreclosures in the chute and the possibility of an easy flip is decreasing daily. And if it was that great of a deal, the person who told you about it would have already jumped on it or the legions of agents on MLS would have grabbed it.

Do your due diligence.

6/17/2007 1:59:15 AM

I would not only count on things taking longer and costing more than planned, but count on finding some additional problems while doing the other things.

And remember that you are gonna have to live among the mess.

6/17/2007 10:10:09 AM

The neighborhood doesn't look that great, a few streets down and it gets better but the neighbors vary from very well kept to ratty shit hole.

The Knoxville market hasn't been hit as badly as the rest of the U.S. on the foreclosure deal everyone has been talking about. I heard this not only from my realtor but on a separate visit with my investment servant.

I think we're going to look for a house in between. I think we can deal with the inside issues but having to repair the outside of the entire hose, replace windows, and fix the porches might just be too much. It'd be fun though.

6/17/2007 11:56:22 AM

I just think it would be a little over our head with all that stuff that needs to be done to it and i agree with you Karen that we should find a house that is unique and in generally good shape but has things to play around with that we can be creative with.

6/17/2007 12:05:21 PM

you can always find a house that is structurally in good shape but has lots of room for improvement such as cleaning up brush in the yard and adding things like a carport or deck. At least with those you don't have to deal with a lot of construction inside the house.

6/17/2007 12:15:26 PM

Your best deal will always be on something that needs cosmetic improvements. Look for something with run down landscaping, maybe paint needed, carpet/flooring, appliances, etc. Try to avoid cabinet replacements if you can because that get expensive and requires carpenters and plumbers.

If you get in one that needs major work its going to be a huge inconvenience to live there during the repairs or to do repairs yourself.

6/17/2007 5:04:34 PM

Quote :

"can't you use some of that as a tax writeoff?""

you can write off up to $6k worth of home repairs each year.

6/18/2007 9:47:06 AM

Quote :

"Wise investment?"

Are you looking to buy a house primarily as an investment? I'm a fan of real estate, but for my primary investment vehicle, I prefer to stick my money in the stock market, specifically mutual funds. It's far more liquid than real estate investments, and probably a little safer and/or a higher return.

I know one guy that did what you are talking about and pretty much broke even in the end. I know another guy who wants to do this, but the places he looked at keep appraising for under value so he could not get a mortgage.

6/18/2007 11:07:34 AM

Quote :

"Even if you were only going to live there roughly 5 years."

i would say go for it if you're planning on living there for at least 10 years, but unless you make some major improvements it's going to be tough to come out much more than even (if that) in 5 years in the real estate market right now (unless you get a killer deal, or get lucky with area growth). Of course, you could get lucky.......

6/18/2007 11:43:38 AM

Quote :

"would you buy a cheap home that is in need of repair (nothing structural as far as you know since a home inspection hasn't been done yet) knowing the return could be huge? Even if you were only going to live there roughly 5 years."

If it really has such a high potential, somebody who flips for a living probably would have bought it already.

6/18/2007 3:31:10 PM

Me and my girlfriend have been fixing up our new place recently, and whoever said it above was right, things take a lot longer than you thought they would. Just make sure that there's not WAY too much work to be done.

Also, this store is cheap as heck and has some good stuff:
http://www.habitat.org/cd/frame/frameset.aspx?url=www.habitatwake.org%2frestore

6/18/2007 4:19:30 PM

http://www.newsobserver.com/news/wake/story/598617.html

6/18/2007 4:46:59 PM

I find it very hard to believe that any homeowner is going to have any luck with managing a subcontractor of any worth.

Any subcontractor with decent skills is going to be gone at the phone call of a bulk home builder.

6/18/2007 6:34:44 PM

Quote :

"I find it very hard to believe that any homeowner is going to have any luck with managing a subcontractor of any worth. Any subcontractor with decent skills is going to be gone at the phone call of a bulk home builder."

^please no one listen to this guy. that is completely ignorant and entirely untrue.

6/19/2007 7:53:24 AM

1) i have no idea where you are or what the market is like there
2) i don't know if you know anything about home improvement

BUT

everything you described sounds purely cosmetic. get a good home inspector to do a thorough review, b/c as said above cracks can = major foundation issues, which is something you don't even want to touch. depending on the age of the home, obviously, some cracks are going to be normal. please don't pay for vinyl siding. either paint whats there (wood?) or pay the money for fiber-cement siding. it looks better (and less cheap/plastic) and has a much longer life.

if you find a good GC that specializes in finishes work like this, ya'll should be done in no more than a month. hell this could be an easy flip if you know what you're doing.

6/19/2007 8:23:32 AM

Any subcontractor with decent skills cut-rate prices is going to be gone at the phone call of a bulk home builder.

6/19/2007 8:24:17 AM

95% of homeowners looking to subcontract home repair will contract the cheapest group of fuckups they can find in the phonebook. they don't hire good subcontractors until the first one has either walked off the job or completely FUBARed the original project.

6/19/2007 8:32:23 AM

that's true as well.

6/19/2007 8:44:43 AM

How difficult and expensive would it be to put in a bathroom, plumbing and all?

I bet it's ridiculous.

6/19/2007 10:16:15 AM

Quote :

"please don't pay for vinyl siding. either paint whats there (wood?) or pay the money for fiber-cement siding. it looks better (and less cheap/plastic) and has a much longer life."

Vinyl siding has its place. The stuff they are putting on now looks much more real than what they were using just a decade ago. From the street it is hard to tell. It's cheap and when it gets dirty you can just pressure wash it. I can think of one house that has had it for about 15 years and it still looks new, so I don't know why you think it has a short lifespan.

Wood rots. Hardiplank is very expensive, very heavy, and still requires painting every decade or so just like wood. For a normal single family home in an average neighborhood I don't see anything wrong with today's vinyl siding.

^Thousands of dollars unless you learn to sweat copper for the plumbing, frame it in, lay tile, hang doors, hang sheetrock, install baseboards, and install the cabinetry. None of that is particularly difficult to do, but it's not a good project for a beginner.

[Edited on June 19, 2007 at 10:21 AM. Reason : .]

6/19/2007 10:19:10 AM

Pain in the ass but I be the value of the house would go up like crazy, especially if there's only one bathroom now.

6/19/2007 10:32:24 AM

Quote :

"I can think of one house that has had it for about 15 years and it still looks new"

i can think of one that has had it for about 10 and its starting to look like shit

fiber-cement isn't as expensive as it used to be. there's a reason its becoming much more widespread - its simply a better product. it may be heavy, but its not like she's going to be lifting it anyway. vinyl siding makes your house look like a pre-fab home (yes, even from the street).

6/19/2007 11:12:34 AM