Buying a home can be a tricky process. But after reading Jana’s experience, you are one awesome momma. Read her story on how she tackled a house renovation. Check out her blog on home and gardens and raising kidos and chickens on the Washington Coast.
In May 2017, I bought a new house. After two years of spending at least two hours a day commuting, I was more than ready to pack up everything and move closer to my job. Actually, I was ready after about 6 months… the problem was finding a house that was worth all the stress of buying a house, packing and unpacking, and leaving my children’s first home.
I first saw my house for sale online in late 2015. It was interesting enough that I “liked” it on the online listing service, but it was out of my price range. I could tell from the photos that some rehabilitation would be needed and I wanted to find something that was move-in ready. It sold a month later and my search continued. In early 2017, however, it came back on the market.
Looks a little creepy doesn’t it? It’s was a diamond in the rough. Built in 1985 in the National Folkstyle, all the rooms have 10-foot ceilings and original hardwood floors. There are two staircases to the 2nd floor, lots of closets and plenty of space for a library too!
Remember that I had initially crossed it off the list because of all the rehab work needed? Well, the 2015 purchasers had started rehabilitating the house and garage. It was about halfway done now. The house was ugly-ish. You could see the beauty underneath, though. A rehab in progress for sale means either the owners ran into a problem they didn’t have the money to fix, the owners are experiencing some sort of life crisis (death, illness or divorce) or both. For a lot of people that unknown can be very scary, but it can also mean a great bargain. Who doesn’t love a bargain?
Before I made an offer on the house, I had a family member who is knowledgeable about engineering and construction walk through the house with me. We checked as much as we could – basically, it was the same as a professional inspection. For the most part, the expensive projects had already been done. Foundations, electrical and plumbing, heating systems and windows are very expensive and none of it is fun.
The house had 3 of the 4 walls resided, along with major rot repairs. The front wall needed to have siding completed and along with some tiny rot repairs. Almost all the windows had been replaced with new ones, including in the garage. The foundation had been replaced. The really expensive projects. While not completely done, the costs to finish wouldn’t be extensive.
The kitchens and bathrooms had also be updated. Although I’m not a fan of wallpaper, I did love the cabinets in the kitchen. Removing wallpaper is exhausting, but it’s also cheap. Replacing cabinets is exhausting and expensive. Most of the work needed was cosmetic. I can handle painting and putting down vinyl plank floors.
I made an offer the next day and it was accepted 6 hours later!
If you are interested in purchasing a house that is the middle of a renovation, there are few things to think about. The questions fall into two categories. 1. What needs to be repaired or replaced? and 2. How can I do that?
In the first category, you need to figure out what needs to be repaired on the house. It also helps to try to find out why the owner is selling. Major issues like foundation repairs, structural problems, insect infestation, really old plumbing or electrical etc. will destroy any budget. These projects especially can be deal breakers because you can’t know the total cost until repairs begin. It could be $1000 or it could $100,000.
My initial budget for repairs on the garage was very small. When the contractor began repairs, he discovered that the entire wall needed to be replaced. That meant that several other optional projects had to be put off. It’s almost impossible to know exactly how much repairs will cost before purchasing. While putting off optional projects was disappointing, I was able to make the change painlessly.
In the second category, you have to figure out how you will pay for rehabilitation expenses. Can you pay for them out of pocket or will you need to increase your loan amount to cover those costs? If you plan to pay out of pocket, it’s possible that the lender will require you to have project funds in escrow before completing the loan. A construction loan can be rolled in with your mortgage, but it’s more paperwork and may require additional inspections.
Buying an “interrupted project” can be a risky and the purchasing process can take a bit longer than a newer home. In addition to my family member, I had the house inspected by a professional home inspector and contractor. Both documents describing the repairs needed and costs had to be submitted to the bank for the loan. All of that took extra time for processing. In the end it was worth it. But by taking the risk, I not only gained a lot of equity, I gained a house I love.
You see more of my house as I work to update the house and gardens on my blog HedgeToadCottag.com
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