I found a house that needed extensive cosmetic work (the carpet was saturated with cat pee and I got splashed in the face when I pulled it up) on the quietest street of the worst area. The roof and foundation were fine.
I paid $115,000 about ten years ago.the house is now worth about 150. I replaced all floors and most plumbing and painted everything, but that’s it, so most of the increase is market increases.
I repeated this strategy 2 years ago. Bought a former drug house on a lovely street in a bad area. The house was in really terrible condition, but with a good roof and foundation. I paid $160k but it’s worth 50% more than that.
I know this area really well and know where the good and bad spots are. My realtor is a contractor who gives me really great advice. With bad advice things could have gone very differently.
That’s really impressive! As usual you are braver than I am. I feel like I know nothing about house construction and would be so easy to rip off. Were these older homes as well? My biggest concern is thinking it’s all cosmetic, getting a good inspection, and then we go to do something minor and it’s like, “oh this isn’t up to current code you need all new pipes now” or something.
I voted, but we bought our house long ago, so another perspective is that it was 14-15 years after graduating university (bachelors degree). It was 8-9 years after Spouse got a PhD (I worked FT after getting my BS). Those years I worked in academia, so low paying. Spouse got a stipend in grad school and as a post-doc, but that was even less than I was making.
I haven’t worried about codes, just safety. If something is old school but safe, I leave it. The exception to that is wiring.
With the first house I didn’t feel like I had a choice. Rent in my city is disproportionate to property values. My landlords had been giving me an amazing deal on rent, but were selling the property. I had been putting cash in the rafters of the basement every time I had a little extra, so I collected it up and bought a house.
Technically this could be an answer to a random question so I will post it here
Have you been to any of those PowerPoint parties, where everyone puts together a PowerPoint about something fun/not work related, and you take turns presenting? Favorites I’ve seen include an explanation of how the Golden State Warriors got so good, or why asparagus makes your pee smell. Again, I’m fun.
My friends hosted one, and I presented on “Taylor Swift is going to come out as bisexual in the next year.” That absolutely did not happen, so when the same friends hosted another PowerPoint party a year or so later, I presented on “things I’ve been wrong about.” Highlights include:
Twitch and Airtable are bad ideas as companies
Bitcoin is stupid
My college boyfriend is not that smart and it’s weird that he’s going to work on atomic clocks in grad school (the head of his lab won the Nobel prize in physics a few years later)
The frat boy I met on a party bus is boring (he was arrested in a high profile felony in a Vegas casino a few years later)
Regarding house prices rising, the house I bought in 2015 has more than doubled in value in the past 6.5 years. I bought it for $218k. I sold it in 2017 for $268k, and the zestimate today is $446k.
I work with appraisers and their point of view is that a “crash” in the 2008 sense where a house that was worth $200k is suddenly worth $150k isn’t going to happen. The general opinion is that the slope of the cost curve will level out, so houses won’t increase in value as fast as they have been, but they don’t think it is actually going to dip down.
You’re not required to obey codes? I know someone from my last city who bought a place and then the remodeler found something not to code and had to report it. The city banned anyone living in the house until it was fixed but the cost of the repair was more than the total house value.
Technically, yes. But I live in the 'hood and pay my tradespeople in cash and it’s understood that the City doesn’t have to know that I had an outlet installed too close to a faucet on purpose. (which I did)
It is SUPER complicated and depends on where you live. Down to the city level even. But Basically, contractors are required to bring things up to code if they’re working on some thing adjacent in most places. So, like they can’t just change one receptacle if the wiring around it isn’t up to code. But they in most places aren’t gonna have to look in the closet where your boiler is and make sure the exhaust fan is up to code if they’re there looking at a junction box you know? And The rules are different a lot of places for work you’re doing yourself. And when and whether they require you to pull permits for what work. It all completely depends on where you live. County, city, state, federal all have their different guidelines the different people have to follow in different situations. A huge part of my husband’s work is just wading through that for people’s claims.
I think that if you decided to hold off on retirement savings for 18 months and prioritize a down payment, that would be a fine choice.
If you decide to stretch your window to 2-3 years of savings, that would be a fine choice!
Buying a house is so much more than just optimizing the numbers and once you already have a good handle on your finances (like you do), you don’t have to follow ‘the rules’ all the time.
FWIW I am not a handy person, despite my aptitude for it, so we bought a newer condo ('70s) in good condition with a strong but expensive HOA. Do I wish I had @Smacky’s grit? Yes. Am I much happier in our expensive little condo than a cheaper but larger fixer upper? So much happier.
I voted, but probably shouldn’t have. I bought my first house so long ago the answers are hardly relevant, but since I looked up the numbers for fun I’ll report them here. Anyway, I was 3 years out of school, making about $37k/year, when I bought my first house for $138k (plus about 4k closing costs I rolled into my loan). I didn’t actually make a down payment (thanks, VA loan!), but I could have. I’d saved about 35k at that point, not including the measly bit I’d put into the only retirement savings available to me at the time (the IRA contribution limit was about $2k/year then).
I ALSO had $30k I’d received as a sort of inheritance for the express purpose of either grad school or house down payment. Which I never needed to use for either and became (along with my savings I didn’t need for a down payment) the seed of my early retirement nest egg.
I think you are right and I needed to read that it will be ok if I extend my savings timeline. I really don’t want a fixer upper and I think your comment helped me see that. I’ve had such poor experiences in my city dealing with service people (for even the most basic tasks) and I think it would be an absolute nightmare to get work done here. I also just…like new stuff?
Maybe I will do some little math and see what type of down payment I could have at 18 months, 2 years, and 3 years at different savings rates. Thank you!
My big dream (well, one of them) is to one day live in a house that isn’t a fixer upper. My back room is full of snow right now and that wouldn’t be happening in a new house.
Maybe having a new construction house would be more up your alley then? That’s with looking into, but I say that from a state that has a continually growing population so there’s always new developments somewhere.
This is something our real estate agent was actually really helpful about!
In the city where we bought, nobody really cares if anything is up to code, and you can sell houses that have all sorts of unpermitted, not up-to-code stuff, and it happens all the time.
In the “unincorporated region” (2 miles to the east) next to me, people care even less
In an area two cities over (20 min drive), you can’t sell a house if there are unpermitted additions.
That’s way out of our price range but a nice thought! There are definitely a lot of new buildings here, but starting prices are like $600k+. Also coming from where I am I consider new just, well maintained and updated. It doesn’t really have to be new new.
Omg. New-new is not that pricey here. If you’re in no rush maybe you’ll luck out like someone I know who bought a house that had just been renovated when the husband’s job got relocated to California.
