Considering Unfinished Home

[redpoint5]

Good points, thanks for responding Ecky.

Financing shouldn't be a problem since I can take out a HELOC on my current home equity and cover the cost of purchase and finishing.

Your concern about the house being misplaced in the neighborhood is among my biggest concerns too. The average home value on that street is $322k. I don't know what this home would be valued at when finished (something else I need to look into), but it would certainly be higher than the average, and you don't want the nicest/biggest house on the street. It will be tough to blend in with the other homes, but I'd consider hiring a professional to give me some ideas. Landscaping and neutral colors can go a long way to helping.

Long term I'd probably rent the place out, so I don't need instant profit in a flip. Perhaps over the next decade or so the other homes will be remodelled. I looked at this house which is 3 doors down, and it's been fairly nicely updated:

https://www.zillow.com/homedetails/3...53000630_zpid/

Finally, the neighborhood isn't super nice because it's one of the few in the town without an HOA/CC&R, and it's old. But, it's very close to downtown, like 8 blocks.

Good point in there being more value in renovating smaller homes. This one has dual rental potential due to the ADU. Probably somewhere around $2,300/mo for the house, and $1,300 for the ADU.

[Ecky]

Around here a 5BR starts around $3500-4000 per month rent, buy/sell price seems similar. 6 and 8 BR seem to be going for $5-6,000.

And, believe it or not, these places actually rent out, in a "city" with a population of 40,000 and 2-3 hours' drive from the nearest major airport.

[redpoint5]

Silverton is close to the state capital, Salem. It's also on the way to Silver Falls State park, and the location of the Oregon Garden. Finally, I imagine there are quite a few people living in Silverton and commuting to Portland, especially if their work is near the 205. It's about a 45 minute drive on scenic backcountry roads. I don't quite know why Silverton prices are as high as they are for being out in the country with plenty of space.

[JSH]

I would not buy a 6 bedroom house in Silverton with the intention of renting it out. I can't image that area has many renters looking for a house that big. If zoning allowed it I would split main house into a duplex.

Silverton, OR: Population 9K, no industry, median household income of only $60K and 45 miles from Portland.

[rmay635703]

Originally Posted by JSH

I would not buy a 6 bedroom house in Silverton with the intention of renting it out. I can't image that area has many renters looking for a house that big. If zoning allowed it I would split main house into a duplex.

Silverton, OR: Population 9K, no industry, median household income of only $60K and 45 miles from Portland.

Historically an average house cost an average person one year of income

Used housing values follow income, just goes to show how messed up things are today.

Median incomes in Wisconsin communities vary from 35,000-85,000 a year
Experience says I would not want to live anywhere near either of the extremes

Good example of why below
https://www.rareddit.com/r/legaladvi...a_please_help/

[JSH]

Originally Posted by rmay635703

Historically an average house cost an average person one year of income

Used housing values follow income, just goes to show how messed up things are today.

Median incomes in Wisconsin communities vary from 35,000-85,000 a year
Experience says I would not want to live anywhere near either of the extremes

Good example of why below
https://www.rareddit.com/r/legaladvi...a_please_help/

How far back do you have to go to get to that 1 to 1 ratio between income and home prices? It hasn't been true in my lifetime.

I bought my first house in 2001. 3 bed / 2 bath - 1300 sq ft in Morristown, TN. It cost 2.5 times my income and I made almost 50% more than the median income in the county.

2nd house was a 3 bed / 2 bath - 1500 sq ft in Birmingham, AL. It cost 2.5 times my income and again I had an above average income.

3rd house is 3 bed / 1 bath - 1,000 sq ft in Hillsboro, OR. It cost 3 times my income and again my income is above average.

All of these house have been in middle class neighborhoods and would be considered "starter" homes. Jump to the average size new construction (2700 sq ft) in a trendier neighborhood and you can double those prices.

[redpoint5]

The rule of thumb is that banks won't lend more than about 5x combined annual income on a house. My first house was right about 5x my income. I had 20% down and excellent credit though, and a plan to rent out the spare rooms, which I'm still doing.

I like the idea of renting to others on the same property because it's nice to have company and easy to work out any issues should they arise.

Originally Posted by JSH

I would not buy a 6 bedroom house in Silverton with the intention of renting it out. I can't image that area has many renters looking for a house that big. If zoning allowed it I would split main house into a duplex.

Silverton, OR: Population 9K, no industry, median household income of only $60K and 45 miles from Portland.

I should look into the zoning rules. As it is, the house is only 4 bedroom 2.5 bath with the ADU containing 2 more bedrooms and a bath. It is effectively a duplex.

[Piotrsko]

Silly question: are you pre-approved for a loan yet?

Not that it matters to me. However the market is strange lately. I recently had offers from people that were contingent of the buyer getting a loan approved.

[redpoint5]

No, haven't done anything on the financial side other than save up a sizable downpayment. Between cash and the equity in my current house, I could likely cover the cost of purchasing this project and finish it.

Applying for pre-approval goes pretty quick online, as far as I know. The approval process is automated, and I think I can get approval in as little as a day. That said, I probably should start the process now. I've got 90 days left on this apt lease, and approvals last about that long.

Last night we found a move-in ready home we like, so I'll have to pursue this option now too, which involves applying for a conventional mortgage.

[dwtaylorpdx]

15K to do a kitchen appropriate to that size home MINIMUM..
8K per bathroom.

I'm currently shopping in the TIgard area,, looking at a 440K repo,
its going to need 60K to get it up to snuff with its layout and neighborhood.
New kitchen, 1 full bathroom redo and 2 smaller bathroom updates.
Roof treatment, a sidewalk repair and a new deck in the back yard..
NO real electrical work required, plumbing for the kitchen.

Just a comparison..