Saturday, April 12, 2008

to fix or not to fix...

I have a quazi-theorhetical question for you. If you find the right-sized house in the perfect location for a lot less money than the surrounding homes, do you buy it even if it will talk LOTS of work to make it habitable? At what point is the steal of a house not much of a steal? Is replacing the roof and some of the windows the cut off line? What about peeling wallpaper and pulling up carpet? Replacing the kitchen? Patching holes and repainting the entire house? Fixing a leak in the basement? Where do you draw the line?
Or is your dream home worth any amount of work?

This is not it, by the way.

5 comments:

Rebecca said...

That's a good hypothetical question.

Part of the point of buying a well-priced home that needs work is quickly gaining equity in that home. Once you do the necessary updates, the property will be worth significantly more than the mortgage you've taken on it.

As long as you're not foolish and don't take out a secondary mortgage to a) do the updates or b) "cash in" on the equity you gain, I think it's a reasonable thing to do.

In terms of where to draw the line, I think it depends on how much of the work you, John, and any available friends/family can do yourselves. Sweat equity is better than equity you've bought at market value.

So, you can do your own painting and pull up carpet on your own... that's easy.

Roofing, etc? Obviously, you have to pay someone else to do that, but you want to wait as long as possible. Like until something actually starts leaking. No point in replacing it if it's still functional.

I think the kitchen is what can kill you. Everyone wants a gourmet kitchen with granite countertops, fine wood cabinetry, etc.--and when all's said and done, lots of folks have sunk upwards of $20,000. Into a KITCHEN. Overkill much?

So if you can live with a kitchen from, say, IKEA--and, better yet, install the cabinets yourselves--I would say even a kitchen in need of updates is fair game. But if you are dying for a gourmet style kitchen, then unless the house you're looking at is WAY underpriced, you should probably look for a home that's "move-in" quality. That extra $20,000 or more--plus the time and messiness and inconvenience of having contractors in to redo your kitchen--is SO not worth it.

That's my opinion, at least. :)

Katie said...

It was sooooo important for us that the house we purchased was move-in quality. With a baby, as you know, do-it-yourself jobs become 100x the hassle, and much less fun. We had a list of "must haves," "would like to haves," and "don't need to have" that we looked for.

Must haves included anything that would have necessitated that we fix it before we moved in. These things included: it had to be structural sound (i.e., roof maybe needed re-sealing, but not new roofing), hardwood flooring (I'm allergic to cats, and we didn't want to have to redo all the flooring before moving in), etc.

It was also vital that the house had decent painting we could live with. The reason for that was that we knew that we wouldn't have time right away with a baby to get any painting done, and I didn't want to cry my eyes out every day because of my eyesore walls until it was done.

We wanted a nice kitchen, but the house we bought had a really small one. That was ok, because it had potential. Same thing with the basement. We would have liked a finished basement, but the house we have doesn't have one. But that was ok, because again - it has great potential. We also knew both the kitchen and basment upgrades would give us great resell value. So, we are planning major upgrades for both of these parts of the house.

Heather said...

Basically, it's comes down to your choice...If it's worth it to you...pulling up carpet is kind of...empowering. I would say that if you have to do the work on it, then one, you shouldn't have to redo it again for awhile, you'll know it's been done to your expectations...and it'll look how you want it to. It also depends on your time and cash you have to put into it. We couldn't get a house that needed too much work, because Adam was a baby, and Korde was 4 & 1/2...what we have done, not much I know, has taken alot of time to plan out how to do amongst the kids. Also, if you have a place to go to relax while you are working on it, would depend on how much I would take on. :) Good Luck... also, something we learned from someone who "flips" houses that need work...add up everything that needs done, including Labor as necessary and subtract it from the current price of other homes in the neighborhood. Meaning if a normal home would go for $300,000 but it needs $50,000 worth of work then put in an offer around $230,000, so you still have a profit and some room to work with.

echecchio said...

I don't have a lengthy answer. But I do think that making the house even more perfect for your family...via all that hard work, is not only a great experience, but seems like it would be well worth it in the end.

yamsey said...

I am so luck to have such wise friends and family. Thanks for the comments, they are taken under advisement.