Renovating a Decrepit House

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mathiverse
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Renovating a Decrepit House

Post by mathiverse »

I am contemplating buying a house not suitable for living and renovating it myself (EDIT: so I can live in it, not as a flip). I have very little experience with this type of work, so I'd be learning everything as I go.

Think a house in a state like this: https://www.landwatch.com/franklin-coun ... /415897649.

Thoughts on what some unknown unknowns might be for someone in my position who has very little experience building and maintaining a house?

Thoughts on how to approach such a project?

Youtube, book, etc recommendations are also welcome.
Last edited by mathiverse on Fri Mar 24, 2023 5:58 pm, edited 1 time in total.

chenda
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Re: Renovating a Decrepit House

Post by chenda »

Not in the US but I am involved with this sort of stuff professionally. Is this to live in or an investment flip ?

mathiverse
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Re: Renovating a Decrepit House

Post by mathiverse »

To live in

Kriegsspiel
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Re: Renovating a Decrepit House

Post by Kriegsspiel »

If I were you, I wouldn't get one that expensive or large for my first rehab. I'd start with a smaller 2/1 or 3/1, maybe even a condo.

Bigger Pockets has a couple books about flipping which you may find helpful.

ffj
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Re: Renovating a Decrepit House

Post by ffj »

You need to learn how to distinguish between cosmetic repairs and structural repairs. In other words, does the house have good bones? If not, more than likely you should walk away. The foundation is by far the most important aspect to inspect, because if it sucks, then everything else will suck too until it is fixed, and that is very expensive most times.

When I look at fixer-uppers I look at the big-ticket items:

the foundation
the roof
the heating and cooling system, including lack of air tightness or insulation
the windows
the wiring
the plumbing
flooding and drainage issues, including waste removal

Do not fall in love with the layout, or the woodwork, or the neighborhood, or the period built-ins until you have determined whether those 7 items above are going to break the bank for the price you would have to pay to purchase the property.

Even with lots of repairs, a property can still be worth purchasing but you have to be realistic.

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Ego
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Re: Renovating a Decrepit House

Post by Ego »

We often hear (legitimate) complaints by Millennials and Zs that Boomers had it easy with low housing prices and relatively high salaries. One thing we rarely hear is the fact that Boomers came of age in a much less regulated and less litigious era. They could just do shit without worrying about the powers that be or the repercussions. Things that would have you jailed or fined into bankruptcy today.

In college I lived in a building that was very much like 537 Paper Street and had problems with every one of ffj's big ticket items. It was owned by two Boomer friends who did the work themselves and allowed idiots like me to work for them in exchange for free rent. When they bought it, the building had been abandoned. No inspectors came out to check safety before turning on the electric, water and gas. No inspectors came out to check habitability ever. When we moved in, it was a squat. Nobody cared. Later I bought a nearby decrepit building and learned many life lessons.

Today you couldn't get utilities turned on without passing inspections. Asbestos, lead paint and mold remediation, all things we did not do, would have cost far more than the value of the building. In other words, keep in mind that it is possible for a neglected home to be worth less than $0.

All that said, the best way to learn is by doing and the best way to practice doing is on a home where mistakes can be made. There are still places in the US where you are relatively free to do as you please. Be sure to choose your location wisely.

GreenMonsta
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Re: Renovating a Decrepit House

Post by GreenMonsta »

If you can buy an ugly house, you can avoid the premium that sellers demand for desirable properties. In simple terms, ugly houses can become good deals.

With that said, strongly consider getting an inspection focusing on the items FFJ listed. If those items are bad, I wouldn’t feel comfortable tackling it on my own. Because a new AC, electrical rewiring, or foundation work will require paying for services that are unsafe or outside the scope of the novice.

Pros:
1. You may be able to decrease your lifetime cost of housing. It is possible to buy a house, add sweat equity, live in the house lets say, 5 years, and then sell for well over your cost basis. So, at the end of 5 years, you can essentially sell and recoup all or most of the dollars you allocated towards housing. Then if desired, repeat the process.

2. Such an endeavor would provide an opportunity to learn new skills. Also, fixing up your own house provides a creative outlet and has a similar “business feel” in that you are the sole beneficiary of the fruit of your labor.


Cons:
1. Even though you provide your time/labor, there will be ongoing monetary cost until the entire house is finished. For someone who is naturally frugal and also non consumer leaning, there may be some discomfort in the frequent trips to the home store.

2. There is the risk of buying a house and then discovering you aren’t well suited to the task. If this is the case, you are left paying a premium to a contractor for the needed work.

3. There are market risks. This can be negated by checking your local census data to establish the growth direction of local population.

As already mentioned: Bigger Pockets is a good resource for flipping homes. It seems it would be appropriate to research “house flipping” as that is very relevant to what you are considering.

jacob
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Re: Renovating a Decrepit House

Post by jacob »

mathiverse wrote:
Fri Mar 24, 2023 5:13 pm
Thoughts on what some unknown unknowns might be for someone in my position who has very little experience building and maintaining a house?
Give some serious thought whether you actually like it (#process) or just just like the idea of it (#result).

Fixing up one's home hits very many notes when it comes to ERE WOGs. You're literally in charge of one of the main expenses of your web of life or goals. (Same comments apply to messing with cars or cooking.) However, with a fixer-upper you'll also be responsible for getting things done on time or suffering the consequences. (This gets worse if the city gets involved.)

I think it's best thought of in the framework of a second job. Does this kind of work appeal to you? Like, would you volunteer for Habitat for Humanity and the likes for the fun of it? Actually, a better question is whether you want a new hobby as a general contractor? IOW, is "general contractor" your dream vocation? Your goal when achieving freedom-to? If not, thread carefully.

Don't get me wrong, these are super useful and valuable lifeskills, but there's a reason that most "professionals" are willing to spend a lot to avoid having to deal with these details. The learning curve is exponential. It's way way harder at the noob-end than the advanced end. Not only do you have to know something, you also often have to know someone.

I also say this coming from the angle of a fellow screen-worker. Doing real work is very different. If you make a programming mistake, you eventually find the bug and hit rerun. In reality, if you make a mistake, you have to remake the whole solution all over again.

AxelHeyst
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Re: Renovating a Decrepit House

Post by AxelHeyst »

Depending on your timeline, best first move is probably figure out how to get time IRL swinging a hammer in a home without any risk. Actually volunteer for Habitat for Humanity, find friends who want a small job done on their house and are willing to let you take a crack at it, etc. Get as many hours as you can Doing it.

And as others have said, research all the ways to screw up / make mistakes (Munger/Buffer advice: collect stupidities and then avoid them). I had a friend buy property in the mountains and he didn't know that you couldn't just build whatever you wanted until the building inspector showed up for a chat. In California!!

7Wannabe5
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Re: Renovating a Decrepit House

Post by 7Wannabe5 »

Probably not an issue for you, but it is the type of project that also requires a good deal of youthful vigor and also some measure of the positive version of whatever it is that makes some humans lose their nut when somebody else's dog poops on their lawn. I literally ended up selling both of the last projects I purchased to a man who arbitrarily decided it was his job to mow my lawn. Two different projects located in two different cities. Two different men, and I only knocked boots with the first, so it's definitely just the mowing tendency.

loutfard
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Re: Renovating a Decrepit House

Post by loutfard »

A few comments, mostly reinforcing what others have said:
- A townhouse is often more difficult to renovate. You have to take the neighbours into account. Where do you park a car? Where do you store your stuff?
- Size matters. Don't underestimate the renovation of a large object. Don't overestimate building something small and livable.
- Construction job efficiency often requires one to work in pairs.
- Experience. If you want to renovate, try to gain experience on the cheap.
- Health risk. You're unable to work on the project because of physical or mental health issues. What now?
- Timing risk. An example. You're a teacher and work on a renovation during the summer. Delays happen, and the school year starts. What now.
- Cost risk. An example. Crucial building materials triple in price. What now?
- Financial risk. You've hedged your investment without a clear way out. Are you dead if interest rates triple?

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