Well, I got houses on the brain. Yesterday the house we are interested in buying dropped another 10k in price. The owner has dropped the price $24,000 since it went on the market over 6 months ago. Good news- but I think there is still room to negotiate.
I'm sure nobody cares to hear me going on about this house...but here I go anyways. Writing out my thoughts helps me organize my thoughts.
The house is actually a duplex. Baseball boy and I have been looking at duplexes since we discovered that actively rented duplexes are counted as your income when applying for a mortgage. We have always 'talked' of owning real estate and making our income that way...but we always talked of buying a house and renting it out later when we upgraded. Now we have our sights set on first a duplex-later a single family home.
For us it seems to make sense:
The 2nd unit will pay a majority of the mortgage (helpful when I am unemployed, BB is underemployed).
Both units can be easily rented out if we decide to travel, move, whatever.
Repairs, taxes and improvements made to the rental unit is tax deductible!
The income allows us to have an income..but not have to work 9-5 everyday so BB can continue to play ball.
If we mess up the fixing-upping of one unit we can rent it out and move into the other unit and try decorating again!(mess up- as in: choose bad paint colors or ugly tiles).
Duplexes tend to cost just 50% over the cost of a SFH...so you get 2 units for 1.5x the price.
This duplex currently has the bottom floor unit rented for the next 8 months for $995 a month. We are HOPING to get the house for about $210k...leaving us to just cover the remaining taxes, insurance ect by a couple hundred dollars.
This house is one of the uglier houses on the block. There are some uglier ones...but this house is by no means the biggest or most impressive. BB is talking a lot about changing the trim paint colors from brown to white...and claims that will really help the curb appeal. I think maybe some sod will help the curb appeal. Actually, I think re-boxing in the front doors will really help the curb appeal.
The house is in a very desirable area. I'm surprised we can afford this location. It's 5 blocks from the big central park in the city, 2 blocks from a grocery store and 2 blocks to a cute shopping area, and a few blocks from the local big college.
A bit about the house:
The house has an UGLY outdated kitchen and bathroom. This way there will be no guilt from ripping out cabinets just to put in cabinets to fit my taste. And the backyard is way overgrown with weeds and junk. There is a metal garage in the backyard that basically looks like it MIGHT fall down soon. BB wants to immediately redo our kitchen and bath...but I actually explained that if we buy this place then my first priority is landscaping the backyard and securing/fixing the garage up. I want to do these things FIRST because if you dont do them when you first move in...you just never end up doing it. Until it's time to sell and you realize "Gee! That garage out back would be a real selling feature for the house if only it was not overgrown with weeds!" But I figure the kitchen and bath will eventually get redone because every time we walk into the room we will have a replaying fantasy about hardwood floors and updated fixtures. BB actually understands my thinking and agrees with me.
BB gave me hope for buying the fixer upper yesterday. I have mentioned in my blogs that though he SAYS he can sheet rock, electric, lay tile and grout...I have never actually seen him DO anything handy. Well yesterday- we went to Home Depot, rented a carpet cleaner and cleaned our rented house carpets ourselves. Maybe that's no big deal for you experienced homeowners...but for the past 3 yrs that I have lived here, I have paid a company to come in once a year and clean our carpets. This year- we are saving for a house. We don't have $120 to pay for carpet cleaning. So we decided to do it ourselves. And we did it! It was only $40 and took 2 hours! I'm so impressed with us. Yesterday gave me hope that we CAN do household handy stuff!
And now when we move out of this house...hopefully we will be leaving it in the same condition we moved into it. And I can feel good about being a good renter. Since I will maybe soon have renters myself...I am improving my renter karma this way.
In other news-the other duplex we looked at that I LOVE!! dropped $7,000 off its list price yesterday as well. This house is larger, all upgraded, has STAINED GLASS WINDOWS, and WOODEN BEAMS in the ceiling..and a RENOVATED attic featuring a half bath!! All for 10k LESS than the other duplex...but its not in a good area. The surrounding streets are crime filled and the city projects are only a few blocks away...so sadly this house is not an option for us. I am so sad about that house. The block is lovely- all updated and big houses...but it's just 2 blocks of a GREAT neighborhood surrounded by crime...so we figured that for appreciation values- it would not be a good investment. I'm still sad about that house though.
You can see which house I like huh? Crime area house- I LOVE. This nice area house- eh. I like the area. And I like the unfinished attic potential (though a finished attic would be nicer)...and I like the potential for the backyard, the garage, the kitchen, bathroom...but that's a lot of work. And $$.
But I think this puts me in a better position for the negotiating..because I don't love the property. If I was negotiating for the crime area house- I would get really emotional about it. This place- I am more objective and it keeps me a little smarter. I hope.
And I have to keep telling myself that we are NOT BUYING A HOUSE right now!! I keep thinking about it and planning for it. But I need my patience right now. I want to see if this government first time home buyer package changes before we start making offers.
thinking about houses
November 9th, 2008 at 10:16 pm
November 9th, 2008 at 10:25 pm 1226269543
Did you put an offer in on the first duplex that had the price drop? My DH is not a DIY Weekend Warrior, but he did redo our 1970s bad bathroom and it turned out fine (lots of hours online reading how to do it - had to replace bad underlayment and did ceramic tile and installed new fixtures and cabinets - and he knocked out a soffit and patched the walls to perfection). If your DH is out of work or inbetween seasons, I'd encourage him to try his hand.
November 9th, 2008 at 10:30 pm 1226269818
BB is ASSURING me that his job in between seasons will be fixing up this fixer upper.
November 10th, 2008 at 01:11 pm 1226322666
It's something to think about. If I was in your situation (and I know I'm not), I'd probably find something that I like enough to actually buy, and then make offers so low that I would think they're crazy if they accept... and then see what happens.
If they do accept, you've got yourself a great deal that may never come around again. If they don't, well you lose nothing.
November 10th, 2008 at 03:35 pm 1226331329
When I was young, I had the idea of buying small houses and renting them to cover the payments. What a bad mistake that was for us. Then tenants trashed the three houses we bought, and we sold them for far, far less than what we paid for them. Plus my husband was on call 24 hours a day to fix anything that went wrong and lots went wrong.
Sorry to pour cold water on your ideas, but be forewarned. Plus, don't ever plan to move away. We did, and some one broke into one of the houses and lived there for months. They trashed the house and we had to go thru a lot to get them out, plus pay their water bill for all those months.
November 10th, 2008 at 04:54 pm 1226336091
I started our finish the basement project thinking DH could easily handle it with my help. DH wasn't working full time so figured this was a great use of that extra free time, and since I had done repair type things before I thought Too Easy. Well I learned we do not work well together on that sort of thing and he gets frustrated easily.
My suggestion before you buy a fixer upper, find a friend who has a fixer upper and see if it is something you/he enjoys to do. Or else you may end up in my situation where you planned to do it yourself and ended up hiring someone to do every other small thing.
Good Luck.
November 10th, 2008 at 08:20 pm 1226348451
Next, GO GO GO on the fixer upper in the great area. ARE you kidding??? The best thing is to buy the worst (or almost worst) place in the best area!!
That said, yes, we are major major do it yourselfers. But even we started somewhere. My husband (young 46) learned to lay tile 10 years ago in our home. The point is he learns alot by doing. We ask neighbors and co-workers for much advice (like the disabled electrician across the street). He puts in water heaters, fixes garage doors, a little plumbing. OK, the important thing is we are very disciplined people and finish what we start.
LOCATION LOCATION LOCATION
It is hard to explain the sense of pride and accomplishment you will feel doing it yourself.
Take Before and After pictures, you won't believe it.
November 10th, 2008 at 09:08 pm 1226351336
If you do pick the fixer upper, perhaps the landscaping, etc can wait until the spring and perhaps you can test yourself out on the bathroom.
Or, you also have the option of WAITING until exactly what you want comes on the market. I settled for a "good enough" house, but even after 5 years, I still don't love it! Have a realtor check out foreclosures too! You are in a unique and very desirable spot of being a first time home buyer with no contingencies. Use it to your advantage! And if your realtor tries to push you into buying something because they want to get a property closed... get a new realtor!
November 10th, 2008 at 09:25 pm 1226352312
November 11th, 2008 at 04:02 pm 1226419345