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Saw the house

February 29th, 2016 at 06:34 am

We met the kid's girlfriend yesterday and she is freaking adorable and smart and nice. After she left he asked us what we thought about her and if we liked her, which is the first time he's asked our opinion about a girlfriend.

We went to see the house after lunch yesterday and told the kid that he and the gf could come. He goes "oh yeah, I'll just say 'hey, do you want to come see a house my parents are going to buy?" (first time he's referred to me as part of his parental group-made me smile) and N goes "well, one day we'll die and it might be yours...and hers if you're still together." And kid goes "Dad. This is a high school girlfriend. We're not getting married."

So...the house. It is ROUGH. Honestly, I am not sure how it is rented out other than it is rented for WAAAY under market price.

The good: There are two structures on one plot, grandfathered in to current zoning policy. This doesn't happen now and they don't go on the market often.

-GREAT neighborhood, one that most people in our town want to move into.

-Potential for rents is HIGH.

-BRAND NEW roof (2 months old)

-ANY upgrade or fix will significantly improve the value of the house.

-rents will only be going up (unless our university some how decides to leave our town. It's been here for about 200 years so I don't think that's likely) while the mortgage (not including property taxes) will basically stay the same.


-The back structure will have to be completely gutted and re-done.

-Rental permits expire next August (2017) and will have to be renewed-which means a lot of expense to bring it up to code.

- We wouldn't feel comfortable renting structures out in the condition they're in...unless current tenants want to resign lease.

-Both structures have been extremely neglected.

First thoughts: Even though it would be a TON of work, and money, we don't mind the idea of fixing up the houses. Our contractor for our basement renovation originally began his company to teach people how to do their own upgrades, but most people just wanted him to do the work. We're going to ask him (the next time we use him) if N can "apprentice" and learn how to do some of the more basic things so that we can do more of the work ourselves.

The biggest problem with going through is the price of the house. It's too expensive for us to then have to put $50k into it in the immediate future. What we would offer (so that we could afford the renovations and mortgage) is significantly lower than the asking price and I am pretty sure that the owner will laugh at it. However, I absolutely don't think he'll be getting anywhere near the asking price, and since the property has never gotten far enough to have an inspection I am betting there are even bigger issues than the owner thinks.

We've roughly estimated what needs to be done and tried to plan phases. For example-best case scenario is tenants want to renew leases and we can have year to save up some cash. When the back tenant leaves, we start planning on gutting the house-and that takes as long as it takes (estimating a year without rent because of how long it will take and the rental market here is dictated by the university schedule). The front house we have the minimum we would do to it before we rented it out-update the kitchen and bathroom and fix one of the walls. Then we could up the rent. THEN once the back house is finished and rented out (for a much higher rent) we would go back to the front house and finish up the "extra" stuff that needs to be done, but not necessarily immediately.

We're going to talk to our realtor to see if she can feel out how low of an offer will be entertained and go from there. It is an exciting project that will definitely pay off in the next 5-10 years-but we still have to be able to afford our living expenses until then. Of course, I have several spreadsheets for all the different scenarios. When we estimated the costs we estimated high and then I almost doubled it.

We have much to think about and discuss and sleep on.

4 Responses to “Saw the house”

  1. Ima saver Says:

    Have you ever owned a rental. I thought it would be a wonderful idea to buy a house and let the tenants (rental) make the payments. I bought three (40 years ago). They were a lot of work and I sold all 3 for less than I paid for them. (renters also trashed the houses.) It was not a good plan for me.

  2. CB in the City Says:

    Students in particular can be very rough tenants. I lived next door to a house that was rented to students. It went through two rounds of tenants with no (visible) problem, but the third set did so much damage that the whole house had to be gutted and done over. Just a warning to be sure you get references.

  3. jokeabee Says:

    Ima-I do currently own a rental, one several states away. There was one really tough period when I had to evict a tenant but overall it has been a positive experience. I know there will be more of those in my future if we continue on this path.

    CB- Our preferred tenants would be grad students/professors/visiting professors. This isn't a neighborhood where undergraduate students typically rent, not that there aren't any. We'll have a credit check and references be part of the rental application. We live about 3 blocks away, so I think that will also help knowing that "eyes" will be on the place.

  4. ceejay74 Says:

    That is very exciting, though sounds like a difficult decision either way. Good luck thinking it through!

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