The wife and I have been house shopping for about three, maybe four, years now. It's not been fun. The options in our price range are either really nice houses in not so nice neighborhoods or not so nice houses in really nice neighborhoods. I'm more worried about the quality of the house, she's more worried about the quality of the nieghborhood. We disagree, a lot. No worries though, cause the longer we take, the more we save up. Anyhow, I get a text from her this morning with a house she saw for about $40k. It has a few things going for it. Nice price. Nice neighborhood. Small yard. Small house actually. Price just dropped from $80k. Yadda. Yadda. It also has a lot of things NOT going for it. Mainly, it looks like a giant, cancer ridden ball of asbestos with God only knows what kind of ancient lighting and plumbing. Seriously, the place looks so rough, I don't even think it's fit to be turned into a meth lab. I don't know what she's thinking. Also, know what pisses me off more than anything when talking to people about buying houses? When they say "Oh, I don't know why you're looking at houses in that price range. You could easily afford something that costs twice as much." No, fucker. No we can't. If we put all of our money into a house, then we're not saving anything for retirement, and that's just stupid. Fuck off.
My parents own two rowhomes in West Baltimore, and my mom thinks she'd could maybe get 50k for one of them. But yea, cheap houses exist. Though I don't like the sound of asbestos removal rd95, it can cost hundreds of dollars an hour to get that stuff removed properly. And you want to do it properly.
There are a few things we won't touch. Asbestos (both siding and insulation), plumbing (galvanized pipes that need replacing, missing pipes altogether, etc.), electrical (cloth insulated wires for example), foundation issues, frame issues, and a few other things here and there. The one thing that we are kind of worried about is buying up a house that the seller has "neglected" to disclose was a previous meth house. What a fucking world we live in when that's a legit concern.
Foundation issues are expensive and constant but the other shit ain't bad. As a home owner you have much less strict guidelines on asbestos work than a contractor hence you can do it cheaper. Housing electrical is really simple just time consuming to run wire and pluming has been simplified a lot with crimp on pex plastic lines. I've never done plumbing drainage that seems a bit more tricky but on most houses you already have that setup unless you need a drastic layout change. Point being that you can do a lot more than you give yourself credit for and a lot of the items you listed could net you a heavy discount. That being said, in your price range the cost of materials would be a huge % of cost
Yeah. That's part of the problem I'm working with. I'm figuring, if the cost of fixing up a house that's on the level of "meh" and making it somewhat decent pretty much costs the same as a decent house, finding a decent house at a good deal seems to be a better way to go. Less hassle.That being said, in your price range the cost of materials would be a huge % of cost
I was approved fro $200K when I bought the current dump. I ended up buying a $85K house. Two days a month I work to pay off the mortgage, most of the interest is already done and everything I pay now is mostly principle. I've been thinking about a smaller house in a better area for about the same payment, but I am too busy and I hate moving.
I swear every contractor in Seattle is out to rip you off... I too tried to get someone in to do a little landscaping last week. All I wanted them to do was areate and seed my lawn... 300-600$ and they couldn't actually be bothered to show up on schedule. So I rented a aerator and ended up doing my and neghbors lawn for 65 bucks plus the cost of seed. 2 hrs of work for 300 bucks of work gotta be kidding me.
Well, the key element is a rock wall that spans the 65-foot yard, and is about 3-feet high. So there's heavy equipment needed... three-quarter-minus gravel base... tearing down the fence to get the heavy equipment and rock into the yard, and then rebuilding the fence when they leave... But all of that was only $9k. The problem was replacing the tiny decrepit front lawn with semi-permeable stone pad that I can park the RV on... And that's gonna be $23k. But still... a house for $40k... wow...
When I bought, I bought well below what banks, etc said I could afford. I think it's been good for my mental health because I have less at risk and more money in my budget for other things. It's just a little condo, nothing special. At the risk of sounding smug, I plan to have it paid off in July. Budgets are good.
Which is why I don't borrow up to my eyeballs! I want to feel like I have options if life throws a curve ball. I've been very fortunate and very lucky, but I can't be sure that will always be true. My father's mindset (and I think it's generational to an extent) was to borrow as much as you can and spend the rest of your life paying it off. That just doesn't work for me.life of course might play out differently.
This always frustrated me. I know my budget. I know what I'm comfortable spending. Yes, my credit score may tell you I'm made of money, but I am not. I have a certain dollar amount I'm comfortable with. Stop trying to make me an irresponsible borrower."Oh, I don't know why you're looking at houses in that price range. You could easily afford something that costs twice as much."
One of the more shocking moments (at least when you first heard it... It's not surprising anymore) of This American Life's hour long episode on the housing crisis, aired in 2008, was hearing about the "No Income, No Asset Verification" loans that were being made. They brought in a guy called Clarence Nathan who was given one of these loans. This is the transcript Clarence Nathan: Call it $540,000 for round figures. Alex Blumberg: You basically borrowed $540,000 from the bank, and they didn't check your income? Clarence Nathan: It's a no income verification loan. They don't call me up and say, how much money? They don't do that. I mean it's almost like you pass a guy in the street, and you say, will you lend me $540,000? He says, well what do you do? Hey, I got a job. OK. It seems as if it's that casual, even though there are a lot of papers that get filled out and stuff flies all over with the faxes and the emails, and all like that. Essentially, that's the process. Alex Blumberg: Would you have loaned you the money? Clarence Nathan:+ I wouldn't have loaned me the money. And nobody that I know would have loaned me the money. I mean, I know guys who are criminals that wouldn't lend me that money, and they'd break your kneecaps. So [LAUGHING] yeah, I don't know why the bank did it. I'm serious. $540,000, a person with bad credit.And it turns out even the people who got them found them confusing. For example, a guy I met named Clarence Nathan. He worked three part-time, not very steady jobs, and made a total of $45,000 a year, roughly. He got himself into trouble and needed money. So he took out a loan against his house, a big one.
Got a couple friends. They sold their half-million-dollar condo in Playa Del Rey and with a little help from their folx, bought an $800k SFR in Manhattan Beach. It's across from the cemetery, on a busy road, with a postage-stamp yard and 900 square feet of space. THEY'RE SCHOOLTEACHERS. Also lovely people. Also with three kids. It's super-awesome that their eldest now gets his own bedroom and it's grrrreat that they have a yard big enough for a swing set (just) but it's a true mark of the insanity at play that (A) this house rounds up to a million dollars (B) our financial system puts schoolteachers in it (C) schoolteachers have to take on that kind of debt to live within an hour of where they work. It cannot continue.
I would like to see the mortgage interest deduction destroyed. If they want to replace it with a home ownership tax credit, fine. But the fact that we all subsidize the realty and mortgage industries via this ridiculous deduction is immoral and leads to all of us taking on way more debt than a sane person otherwise would. And I say this having paid $16,000 in mortgage interest last year, which roughly translates to a $5000 gift from the renters of America to my wife and I, who really don't need the money.
We have a similar freeze here in MI, although it's a little higher than 1%, if I'm not mistaken. One downside is that it's really difficult to know what your taxes will be the year following the year in which you purchased a home. If the owner has owned for a long time, you can bet they'll be a lot higher.
"It cannot continue" is an accurate way of describing it, but what do you think the way out is?
Raising interest rates back up to 3%, enacting zoning laws that allow for more density and mass transit options, pushing home ownership back down to about 60% and encouraging more rentals, all the while not killing the job market, not pushing poor people out of their homes and preserving the character and style of the city/area in question. I'll get right on that. /s The suburbs are in trouble and not at all sustainable; the only people really having that conversation are people like us on the fringes.
It is depressing to me that reasonable housing in my neighborhood has a zero more than reasonable housing in your neighborhood. $40k won't buy a hole in a ground on which to build a house around here. I'm watching a couple quarter-acre plots and the cheapest one is $300k.
Yeah I'm my part of town 200k buys you 3000sf of tear down facing a school parking lot on one side and a drug house on the other. Builder bought it built a new 2200sf house and flipped it for 800k! Crazy times in Seattle real estate. Also in your price range I don't recommend that you buy a fixer upper. Even if you have to spend 120k to get the house you want it's a better deal than the 80k fixer. Reason being that material cost and labor costs are pretty much the same everywhere. Kitchen remodel will run you 10-12, roof will cost you 5 heat will cost you 3-5 depending on how much work. And the unknown unknowns are killer. You start tearing shit up and you find wiring mold or other problems and you are in for some unexpected serious costs. You need 20-30 k of buffer cash to deal with renovation costs. For a 80k house that's the entire down payment. We ended up getting a fixer because there was no inventory in our area. 2 years later it's finnally livable but we lived without a kitchen for 6 month no ceiling drywall for 8, cold as balls dust everywhere wife hated it drove her nuts. We came out ahead because houses cost more here but on a cheaper house it wouldn't be worth it.
Well, reasonable here is actually about $80-140k. There are of course houses that are much more expensive, and then the trailer parks. The $40k house is, in my opinion, less of a house and more of a thing. It's like a box of nightmares you can walk inside. I really don't know why she texted it to me, because she must know I'd be opposed to it from the get go. We did though, almost luck out and tried to get our hands on a really nice house for about $55k a year or so back. The person who owned it was underwater and was trying to sell it quick. We were very impressed by it. Unfortunately, the bank he owed to seized it and turned around to put it back on the market for over twice that price. That sucked, for him and us.
Yes, no rush. We got in because of the crash, and were lucky because we had been saving for a few years before that. We got a fixer-upper. The shitty house in the good neighborhood option. I've touched every inch of the house. It has an amazing lot though. Because of sweat equity and market/interest rates timing, it actually has been a net positive investment. I don't think you are going to see substantially higher rates or prices for the next couple of years, so I would be picky.
Yeah. The only problem on our end, I don't think we'd ever actually get anything done if we got a fixer upper unless we hired people to do it. So buying a rough house in a good neighborhood would still be more expensive than the initial investment. :/
the truth is that, as a homeowner, You're going to be throwing money at the house whether it's a fixer-upper now, or a fixer-upper later when you've not done the maintenance. At least with a fixer-upper, you can do the repairs or have them done, and be confident that they're up to new code and your standards (and also that they'll be good for a few years). Just include the cost of potential fix ups in what you're willing to spend for the house. I mean, a house in great shape is basically a lie - I've certainly never seen one. If it looks good, you have to wonder what you're not seeing.
Indeed. I think a lot of hesitance, on my part at least, to pull the trigger on a house is that I know that there will just be so much additional cost and work involved. They kind of strike me as money pits.I mean, a house in great shape is basically a lie - I've certainly never seen one. If it looks good, you have to wonder what you're not seeing.
Well, really any large purchase that will last a long time is a money pit. Look at it this way - At least you are not buying a boat.
Bought my house almost 2.5 years ago for $270k, estimate now is almost 400k. I know a lady who just listed a house for $270k and got 10 offers the day it went on sale. Best offer was for $350k. It's not an exceptional tale. This was an undesirable neighborhood five years ago. Real estate agents say that they have no idea what to list at or what to offer. It's a difficult time to buy.