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redpoint5 03-24-2019 04:50 PM

Considering Unfinished Home
 
Here's the awful house.

https://www.redfin.com/OR/Silverton/.../home/26337191

I don't particularly love the layout, how it doesn't fit in with the neighborhood, or the location. That said, I like having that much space, a shop to work on things, an ADU for renting out (perhaps $1,300/mo income), and space for a game room above the garage.

If there's a decent amount of equity to be gained by finishing the place, I'd be interested. I can put in a limited amount of sweat equity by finishing the siding, pouring concrete pad in garage, and putting in fixtures myself. Probably everything else I would contract out.

What I know:
  • Duct work is completed
  • Electrical wiring is completed but not connected to service. No outlets/fixtures
  • New gas hot water heaters are purchased but not installed
  • Plumbing is completed but not connected to fixtures
  • No flooring installed
  • No trim installed

Any very rough estimates for finishing everything with mid grade materials? How about estimates for landscaping? The 2 bed ADU is currently finished enough to be occupied.

What all should I be aware of, or what tips / advice do you have? The lease on our apartment is up at the end of June, then it goes month to month at a much higher rate.

slowmover 03-24-2019 06:35 PM

Always ALWAYS figure you’ll be there 25-years. Things in life can change and just hanging onto a house becomes what matters. Etc.

If you can mail in the keys and walk away almost unscathed, that’s different.

IOW, this is it: The End of the Road.

.

redpoint5 03-24-2019 08:07 PM

I donít follow any of that. Iíve got another house that Iím renting out and am cash positive all expenses considered. Iíll never be short on a mortgage payment because I would bring in roommates if I hit hard times. I might bring in rooommates even if I donít hit hard times. Thatís how I have so much cash after purchasing my previous house.

Stubby79 03-25-2019 08:40 AM

For something that I would live in, I'd want something unfinished like that...I could make it "my own" without having to gut it first.

For something I'm going to rent out or flip, I'd want to put the least amount of effort/$$ in to, as whoever rents it or buys it is going to either trash it or remodel it anyway.

slowmover 03-25-2019 10:36 AM

I bought & sold houses for a number of years. “Cash positive” doesn’t mean much, only sounds like it. It’s in evaluating the risk of loss that an emotional boundary be set. No easy way out (no one else able to afford rent you need, etc). What then?

THAT is how to look at the risk.

Finish-out is the most labor intensive. What deadline can you set?

Indeterminate schedule (ready for sale), and wishful thinking about today’s economy continuing indefinitely, aren’t solid.

If others passed on it, there’s reasons why.

The spur to action is what matters.

I made my money the day I bought them. The plan was already in place including dates and dollars. It does not matter, does not change anything — necessity of boundaries & plans — if one intends to keep it.

Part of the “plan” is always landscape. Almost always ignored. Boobus Americanus thinks only of video screens. Take some estimates BEFORE you buy: A plan itself, then what’s necessary to implement that.

Dollars are just value markers. Any market can collapse. So where’s the value? (Unlikely to be the air-conditioned spaces).

Go to the Appraisal District Office and find the appraised value circa 1992. THAT is the likely “real” price. Can you live with it?

.

Piotrsko 03-25-2019 11:44 AM

That's my typical modus operandi.

Get a realtor of your own that has flip / contractor/ rental manager expertise.

Be sure you can and are capable of doing the work by yourself. Does not mean you do the work. Figure a minimum of 5 years to complete. See what the county building department has and things they don't like about the project. I once bought a house that should have been condemmed. I made money on all but one houses I have owned, to the tune of approx $20k a year. Suprisingy, made the most $ on the condemned one, but that was market timing.

Decide your end game before hand. Living there forever has different results from flip

Be the best looking house from the street. As slowmover said boobus americanus determines everything from curbside.

Finally. DONT PAINT IT FUSCHIA PINK. Neutrals is the key.

redpoint5 03-25-2019 12:56 PM

Gonna be tough to be the nicest looking from the street as all the other homes are old single story, and this is new double story. Doesn't fit in at all. The neighbors already tried to fight the project at City Hall.

Oh, and get this, the owner is a general contractor. Makes me wonder how everything was started and nothing was finished, and the money ran out. Shouldn't a GC know what it's going to take to finish something? Hopefully the fact that the owner is a GC means it was built properly. Most of the work was hired out and not completed by the owner.

I'm sure the house has little interest because construction loans are different than a regular mortgage. Then it has no curb appeal and people want move-in ready. I find it a bonus that I wouldn't have to tear anything out, and can finish it the way I like. For instance, I only like undermount sinks. Way easier to keep the countertop clean that way.

Since the ADU is nearly complete, and the easiest to complete, the fallback plan would be to live in it until the house is finished. I'd want to live in the house a minimum of 2 years to improve it and save up for building/buying the home we really want. I'd probably keep it as a rental since that's what I did with my home in Vancouver WA, and that's working out very well. Probably better as a rental than to flip since it's going to be tough to give it curb appeal.

My dad is retired and can help out too, so I've got lots of options on how to finish the place.

rmay635703 03-25-2019 09:54 PM

Quote:

Originally Posted by slowmover (Post 594588)
I bought & sold houses for a number of years. ďCash positiveĒ

If others passed on it, thereís reasons why.

The spur to action is what matters.

I made my money the day I bought them. The plan was already in place including dates and dollars. It does not matter, does not change anything ó necessity of boundaries & plans ó if one intends to keep it.

.

Itís amazing what people will pay for old dives when there is work

Equally amazing how much their value drops when the labor market stagnates

redpoint5 03-25-2019 11:09 PM

My hunch is there will be an economic downturn not too far off, and when that happens housing will stagnate at best, and decline a bit at worse. I've never hired a contractor before, but I imagine bids for jobs are priced lower when people don't have enough work to stay busy.

So, if my hunch about the economy is correct (probably not since predicting the future is difficult), then I'd like to not be in too much on a house now so that I can start another project later on; perhaps our long-term home. The price on this project is negotiable, so if the numbers look favorable, I'd like to pick it up.

Not too many homes show up on the market in this small town, and when they do they go fairly quickly and sell for a bit more than other towns in Oregon.

Today I also asked for soil and engineering info on the hillside property that I'm interested in. Gotta start taking first steps in the various housing options that appeal to me so I can quickly determine to either forget about them, or proceed to next steps.

Ecky 03-26-2019 12:58 PM

My two points of concern:

1) Actually getting financing for the place, and

2) How to sell a huge house in a not particularly great neighborhood.

I don't know how the market is in Oregon. Vermont's real estate market is hot hot hot in Chittenden County, but even here that place would be a tough sell. Nobody wants a 6 bedroom mansion in a crummy neighborhood unless it's going for a fraction of its worth. I expect the places to be able to renovate and then make a profit on are going to be the smaller houses with some convenience in their location.

redpoint5 03-26-2019 01:14 PM

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 03-26-2019 01:36 PM

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 03-26-2019 01:52 PM

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.

https://farm4.staticflickr.com/3437/...66c7b550_b.jpg

JSH 03-26-2019 10:37 PM

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 03-27-2019 08:56 AM

Quote:

Originally Posted by JSH (Post 594730)
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 03-27-2019 10:58 AM

Quote:

Originally Posted by rmay635703 (Post 594739)
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 03-27-2019 12:06 PM

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.

Quote:

Originally Posted by JSH (Post 594730)
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 03-28-2019 11:46 AM

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 03-28-2019 01:28 PM

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 08-10-2019 04:43 PM

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..

freebeard 08-11-2019 03:38 AM

I believe the thread went dormant in March because of what he says "Last night we found a move-in ready home we like, so I'll have to pursue this option now too".

The earliest mention I find is https://ecomodder.com/forum/showthre...tml#post604065.

redpoint5 08-11-2019 04:44 PM

The buyer negotiated to have the seller finish the home as part of the sales agreement, which is probably a wise move. I'll have to see if it actually was finished, as the seller was originally the one building the house but couldn't finish for some (probably financial) reason. The crazy thing is the sellers occupation is general contractor, so you'd think he'd know exactly what it takes to finish a house on budget and in time (and not be a sore thumb in the surrounding neighborhood).

Had to make the wife happy, so we moved into a house that needed nothing. It's still my preference to find value in something others don't desire and then make it into something desirable. Maybe next house.

freebeard 08-11-2019 06:38 PM

Else you could build something better than anything on the market. It's not rocket surgery.

https://ecomodder.com/forum/member-f...h-overview.jpg

JSH 08-11-2019 06:48 PM

Quote:

Originally Posted by redpoint5 (Post 604330)
Had to make the wife happy, so we moved into a house that needed nothing....

Smart man. Happy wife happy life.

redpoint5 08-11-2019 07:05 PM

I am self-conscious to some degree about the monstrous size of the house we bought, but we've got someone living with us who needs a place to stay for now, and I will work towards more fully occupying the space; perhaps renting out the downstairs entirely if I can get the wife on board.

As it is I'm a miser when it comes to running the AC or heat, generally any wasteful thing. I've just been running the AC briefly in the evening before bed to help get the baby to sleep... and I need to fix the bedroom fan. I think the RC controller is not functioning correctly (pressing the remote buttons doesn't operate the light or fan).

robincooper 08-27-2019 07:19 AM

Sounds hard-selling


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