For the love of God, talk me out of this house!

hickchick · Post by **hickchick** » Thu Feb 17, 2011 5:45 am

I have found a house that I love in the worst neighborhood in town. Probably has squatters, broken pipes, the works. Even worse: a poorly installed pool in the back yard.
On the up side, it's brick with a slate roof. Stained glass windows and intricate woodwork throughout. Sits on 1/3 acre in the middle of town between college campuses. Has been converted into 4 apartments and is appropriately zoned.
It's been foreclosed and will probably hit the auction block in 6 months. I'm hoping someone here will be able to talk me out of drooling over this 100 year old money pit.
Any takers?

dragoncar · Post by **dragoncar** » Thu Feb 17, 2011 6:37 am

MLS? I think we need more info to talk you out of it (location, cost, etc.) I imagine many here would relish the challenge of a fixer-upper with income potential.
If I had tenants, though, I might relocate the stained glass.

dot_com_vet · Post by **dot_com_vet** » Thu Feb 17, 2011 6:46 am

Location, location, location. It's so true. You might sink a ton of cash into the renovation, and never get it out when you sell it. Unlesss the neighborhood improves. That might take 20 years. (We have a similar neighborhood here. It's improving, but it's got another decade or two.)
Or are you planning on being a slumlord? Then I might say do it.

Surio · Post by **Surio** » Thu Feb 17, 2011 6:48 am

Ah, come on.... Again, these are all to be taken in context. Here's Dmitri Orlov's take on community vs. "community"

hickchick · Post by **hickchick** » Thu Feb 17, 2011 7:19 am

I'm probably least concerned with the neighborhood. It's the worst part of Lincoln, NE. So we're talking people breaking into your house, not drive by shootings.
I would set it up as an owner occupied situation and probably try to keep some chickens and rabbits in the yard. I'm mostly concerned with the lack of flexibility with home-ownership. And the money pit aspect.
The county has is assessed at $200K for tax purposes, but I imagine it will bring considerably less at auction. The last home auction I was at went for 25% below the tax appraised value and that was a well kept home in a better neighborhood.
More details...4,000 sq ft with 2.5 stories and full basement. Two car garage with a brick driveway. I'm tempted to just try squatting in it myself and I hope I can get away with it for 10 years

HSpencer · Post by **HSpencer** » Thu Feb 17, 2011 8:05 am

I wish I still had the energy and optimism to even THINK about doing something like that.

C40 · Post by **C40** » Thu Feb 17, 2011 4:08 pm

Hickchick - what is the address, or at least what part of town specifically?
I'm pretty familiar with Lincoln. I lived there for 10 years, in many different parts of the city, including one of the worst areas.

Marius · Post by **Marius** » Thu Feb 17, 2011 8:04 pm

College campuses nearby are a plus.
100 yo money pit in dire shape is something else.

If you can't put it out of your head, I'd visit it with a couple of people who can give you an expert opinion on its state of disrepair.

George the original one · Thu Feb 17, 2011 11:02 pm

Consider other aspects of the location that might be negative (or positive):

Is there a busy fire station within 5-10 blocks that's likely to disrupt your sleep?

Where is the airport approach?

Is there a grade school or high school within 1-5 blocks?

How far away is shopping?

How far away is the bus service?

Is there a railroad within 2 miles?

Is there a freeway within 1 mile?

Are the neighbor homes kept up or should they be torn down because the roofs are collapsing?

Does the neighborhood have sidewalks and/or bike paths?

AlexK · Post by **AlexK** » Fri Feb 18, 2011 4:28 am

I'm about to close on a 4-plex in bad shape so I'd be the last one to talk you out of it. Banks won't loan on a property in poor condition so you will need cash. The best advice I can give is to ignore your emotions and go by the numbers only.
The place I'm buying will generate 18% return on investment once it's fixed up (in about a month) so I don't really care if it's a dump. I would literally own an actual dump if it made me money.

JohnnyH · Post by **JohnnyH** » Fri Feb 18, 2011 4:38 pm

How's the foundation and the roof?... 100 year old houses are sometimes built with beams on stacked rocks. A house without a foundation is a losing battle and not worth much.
How much are the taxes? Even if it auctions for $1,000 the taxes will not be adjusted... Auctions can actually drum up a lot of interest. You'll get an ego bidding war between a couple cowboys with novelty hats.

What's the zip?

hickchick · Post by **hickchick** » Sat Feb 19, 2011 7:25 am

@ HSpencer - a constant low level of insanity helps!

The zip is 68503. On the wrong side of 27th and O, specifically tmiller. Two houses away from a fairly large apartment complex.
Walk score of 72. Foundation and roof solid as of 2005. It did have a fireplace removed after being condemned by the fire department.
Taxes run $4K a year. Max rents on 3 units would be $1,350/month combined and you might have to include heat in that too...I have absolutely no idea what insurance would run in this area.
Fire station 7 blocks away. Grade school is a similiar distance. Plenty of public transit, such as it is. Not close to airport or trains. 5 in the car minutes from the freeway. Neighboring houses are pretty dumpy, but the overall neighborhood has started showing signs of gentrification.
This has been a wonderful exercise you all. Thanks for your input and continuing help.
As for auction psychology, I have 6 months to plan my strategy. *cue evil laughter*

C40 · Post by **C40** » Sat Feb 19, 2011 7:57 am

I think maybe I know the one (looking at google maps) - is it the one on 25th st with the nice looking porch?
Yeah that area is not the greatest. I lived for a year or two on Y st, between city campus and 27th. (one house down from a small junk yard!)
I don't see that part of town getting better quickly.

hickchick · Post by **hickchick** » Sat Feb 19, 2011 8:08 am

That's it. The Antelope Valley thing has spurred a lot of improvements close to there lately, but I don't know how sustainable all that is.
The city and state and university are all raising taxes and tuitions while touting the low unemployment rate. But they had a hard time selling tickets to that bowl game, so I guess there are a few people who haven't heard the economy has improved.

C40 · Post by **C40** » Sat Feb 19, 2011 4:10 pm

ohhh yeah, that Antelope Valley project was getting started when I moved away a few years ago.
I guess with all that was said about the area not being nice, it's not really all that bad. It's nowhere near as bad as the bad parts of bigger cities like Chicago or St Louis. I never saw any serious crimes there. The worst thing that happened to me was someone broke into my car to steal my (Aftermarket) stereo. And the cops would be by once a month or so to deal with our neighbors' domestic problems.
That house is huge. And as you've said, it's old and probably in disrepair. I'd say don't buy it unless:

- You have a lot of extra money you're willing to spend on repairs (even just to make it livable)

- You have a lot of free time that you're willing to spend on repairs

- You can buy it at a really really low price, even considering the two items above

C40 · Post by **C40** » Sat Feb 19, 2011 4:12 pm

And just make sure that you make your decision based on objective things - not on your emotions!

An8el · Post by **An8el** » Tue Mar 22, 2011 11:04 am

I bought a house at auction for $4800. (in 1975) and gave it to my ADD ex because I figured he'd be homeless his entire life if he didn't have it.

Most people wouldn't do this because they would want to resell, but my ex (10 years after that) had the same home devalued to what we had paid for it. He did this with the goal of not having to pay taxes on the going rate of the houses next door, which was around $35,000 at th time - big difference. Even bigger difference now that he's had the house for the last 30 years. But because of his ADHD, the county is about to repossess for taxes. There is no way he can sell it because he has accumulated pathways through the interior of the house and is not capable of cleaning it up to make it look appealing. Besides, he doesn't know where else he would go.

Part of the reason I gave it to him. It's a shame that he's screwed up having it up so badly. He's lived without electricity for the last 10 years because he wasn't able to pay the bill regularly.

So devaluing can be done after a public auction - but it takes time and would only be of value if you were going to live in it. It's a problem if someone else ever wanted to buy it or get a bank loan on it.