Should I buy this house for a rental?

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rickr

rickr

Well-known member
Joined
Mar 12, 2003
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Location
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This is a vacant house 2 lots down from my house. The owner passed on a couple years ago. The pipes froze and the water ran for 3 months. Floors are buckled, the ceilings fell in 3 rooms, and the place is a mess. The owners want rid of it. There is a empty lot between this house and mine, which is divided in half. I own one half, and the other half belongs with the vacant house. I have not looked inside yet, but I am meeting the owners on Satuday for the "grand tour"
I told the owner that I would give them $3000.00 for the house and lot, if I want it after viewing the inside. Or I would give the owner $1000.00 for their half of the empty lot that is shared with mine, if I do not want the house. It will cost $6000.00 to tear the house down, so I do not want the house, if I am not going to gut and repair it.

I already told the owner that I will take the half lot for $1000.00 for sure, and after I see the inside, if I want the house, I would give them $3000.00 for the entire property. The owner accepted my offers, so we shall see.....

10-21-2008-18-43-32--rickr.jpg
 
Another view

The only thing that is good about this house, is the fact that it is well "shaded" from the summer sun.... lol!!!

10-21-2008-18-47-56--rickr.jpg
 
Buy the whole thing, tear down the house, and resell the lot furthest from you for a tidy little sum. That is, if the real estate market in your neighborhood is healthy enough to recoup your investment in a timely manner. Just my 2cents worth.
 
Why not?

Since its next door to you, you will have control over its future, you never know what could happen to it. For the price, gutting it and renovating, I would think you could rent it. Luckily, my next door renting neighbors from hell moved out, with their barking dogs and junk all over the yard. Anyone renting it, I would think, would be better tenants knowing the landlord is next door...
 
yes indeed

Go for it Rick, you can always place a fence closer to the older house, Keep it for a rental, decrease the bedrooms to 1, to limit occupants, You might get back each year, all of your homeowners insurance, local taxes for Both of your properties. Id go for it.
 
Wow . . .

At those prices who could resist? Regarding the two half-lots, these could be most valuable if combined back into one full legal lot independant of the two outer lots. Here's why: if you doze the house, and put the half lots together, you'll then have two adjacent vacant lots. In many cities sites like these have increased in value as traffic gets worse and fuel more expensive and people have therefore become more interested in living in older neighborhoods rather than distant suburbs. However, it is often prohibitive for a builder/developer to build a new house on one lot. If he has two lots side by side, then two houses can be built at once by the same crew with one job super. Right now people might laugh at the idea, but in ten years if gas is back up to $5.00/gallon or more and the economy is good then there will be demand for new homes in older neighborhoods. And, since the prices are so low, your tax assesment shouldn't be much.

Quick way to make the house look better: park a lovely '61 Olds in the driveway - who'd look at the house?
 
Rick

More land is always desirable, it will increase the value of your home. But just weigh the cost of land taxes for 10 years against your purchase. Land alone usually doesn't increase in value against adjusted dollars unless it is waterview. So it may be worth $3000.00 today and if it appreciates a 7% (unlikely for the forseeable future) it will be worth $6000.00 in ten years time.
Now today that $3000 can be put in a money market fund for 2% but inflation will eat away that money market if it is the predicted 5% that the Feds are saying it will be over the next 10 years. So you would have to plow that $3OOO into some fund that would return 6% to beat the inflation whittling away its value.

So I would weigh together your comfort level plus what your current house may be worth in 10 years with the only double lot on the block.

That should give you your answer.
jon
 
I would have a structural engineer walk through the house, if he'll step inside at all, before you commit to buying it. It may take too much money to restore the house to current code than it's worth to you as a rental. Figure what you have going in, including repairs and weigh that against what current rental rates are in the area. The other thing to consider is that you'll always be tied to whomever lives there and likely be hyper-critical of how they take care of the house, yard, etc. I know you'll take it on yourself if the renters aren't up to your standards ;-) Do you want or need the extra work and hassle of rental property? I've been trying to give away my back yard for years and nobody seems to take me seriously. 1/2 acre of yard work is too much for this career girl!

Not trying to discourage you from something you want, just playing devil's advocate...
 
Well, consider the area of town (da hoo = East Pernt?). Would you have much resale value if you flipped it? Tear it down and put in a McMansion?
OK, if renovate and rent... Again, the area of town, can you attract a responsible, reliable tenant?

Seems to me Steve Gyrofoam is looking to move back. I know he misses the multi-cultural benefits. I think you could get him to move in, but reinfoce the floors for all the machines...
 
Some really good points here guys, Thank you for the input!

I am "on the fence" about buying this property. I do want the other half lot for sure though. The owner is cool with me, so I think about it for awhile. She will have the house torn down and sell me the half lot if that is what I want to do. Or I can even let her pay for the tear down, and buy the lot and a half if I want. Now that would mean I would have 3 city lots to maintain. Not what I want to do. As far as selling the lot for someone to build on, I doubt it. We are talking the hood here, and there is usually no new construction, unless the renew an entire area, or at least a block or so.



I already figured on taking care of the lawn, ect. Budder likes to mow with the old Lawn-Boy, anyway, and I don't mind outside yardwork either. Most people that rent around here, don't own the equiptment to maintain a lawn anyway. I figured right away that I would maintain the outside

BTW: I would LOVE to have your back yard Greg! I think it is just beautiful with the terraced landscape and all. I know it must be alot of work though.
 
Rickr good lot!

I would not worry about the house so much.
My partner and I have two houses, that are great in the Grant Park area of Atlanta. We have very stable renters, and the houses are in good, very livable shape. What is of value is are the lot's.
On the investment side. We had tons of offers about 1 to 2 years ago that I could shoot my foot off for not accepting. The market has gone done big time. We still get offers, but it is insulting.
The amount of money that you are looking to invest, is not all that bad if it okay with your pocket book. The market will turn, and in time, you will get your investment back. In time, keep that in mind. (and who knows how long this will take)
Where are you located?
Peter keeps mentioning East Point, but I thought you were in New York or something..... Are you my neighbor?
And Peter dear, there is the hood everywhere you live. Even in your neck of the woods.
For instance, we had our home appraised here in East Point 8 months ago to refinance. We wanted to do this, and were very happy with the results. It had doubled in price in only under three years due to homes being sold in our "hood". that got us 3.5%.
Rick, let us know what you decide to do. We only wish you the best.
Brent
 
THIS IS NOT AN APPRAISAL.

Commercial properties sell for a multiple of their income or "Rent Roll".

Also used is a "Capitalization Rate" which is the Net Operating Income divided by the sales/asking price. N.O.I is derived by taking P.G.I (potential gross income), subtracting from that a vacancy allowance (a percentage of PGI) then deducting expenses.

A residential property is most likley appraised on a price-per square-foot basis with adjustmens for price-infuencing factors.

There is an emotional component to private homes that brings their prices higher than one would derive by analyzing them as commerical (i.e. income-producing) properties. Pvt homes are not usually bought for their income-producing abilities.

Rick, a good appraiser in your area (who is familiar with your area) can help you find its estimate of value:

1- As an owner-occupied unit.
2- As a commercial (income-producing) property
3- As a redevelopment property (LAND, basically less cost of tearing down).

In your shoes I would get a basic form [i.e. inexpensive] appraisal. Tell the appriaser that it is intended as an investment property. Be sure the sales and rent comparbles are as "FRESH" as possible (no more than one year old; 6 to 9 mos or less is even better) as this market is "a-rapidly changin'"

A form appraisal is probably $500+/- or less.

BTW: Is there any way a good homeowner's policy would pay for the damage? How would a pre-fab (i.e. not "stick-built")home work for you?

THIS IS NOT AN APPRAISAL, NOR ANY TYPE OF ESTIMATE OF VALUE, it is NOT TO BE DEEMED AS "PROFESSIONAL" ADVICE.

Best regards,
Steve

http://www.appraisalinstitute.org/findappraiser/
 
Rick,

I'd definitely do a very thorough title check and make sure the city has no secret surprises waiting for the new owner before buying.
Fort Collins, Colorado, for instance can't force many updates and costly repairs on current home owners, the 'grandfather' clauses prohibit them. But the moment someone new moves in, whamo! They really fcuk you over, big time. Saw a house down the street from my parents change hands not too long ago. Sold for $145,000, very cheap.
The new folks weren't even there for one week when the neighborhood nazi sicked the SS on them. Fort Collins has extra personnel who drive through the city looking for violations, citizens who turn in neighbors are rewarded...and since even little things like your grass being 1" too long in the summer are felonies and not misdemeanors... well, to make a long story short, the new owners got hit with so many required updates and code violations that they their property is now worth less than they will have to put into it...
OK, Fort Collins is an extreme example and most US states don't suffer from "Home Rule" like Colorado...but still, I'd be very cautious. Usually, when something looks that good, there's a catch in it, somewhere.
Umm, asbestos? Adds several ten thousand to tearing out property in Colorado (my parent's house in Fort Collins would cost $50,000 more to rip out than a non-asbestos house.)
 
Good Point Keven

Asbestos rears its ugly head and whamo you are in debtcity not the prior owner.
Check that out Rick wether you're restoring or tearing down.

I was lucky I do alot of work for an Asbestos firm and so I had them remove my asbestos insulation on my steam pipes. My bill $700 very cheap, it would normally have been $2000.
 
Keven that sounds ridiculous. Has anyone in Ft Collins ever been arrested and charged with felony lawn length? Come on.
 
Steve, email me because I have something to send to you.

Hint: Its purdy!! <:
 
Um, the price of this house is less than that of most used cars... I'd just buy the whole thing, tear down the house if it's no good, and be done with it. A big yard is a joyous thing.
 
Jeff,

Yup, my the old lady down the street from my parents' was. Dying of cancer, alone and broke (neighbors, including my parents did for her what they could), she was not able to keep her lawn up. The neighborhood nazi turned her in and because the 'cease and desist' warning got lost in the shuffle, the City actually did charge her. Yes, the court threw it out.
Every community has laws which are on the books because of a few difficult people who will not otherwise cooperate. Fort Collins has an unusually large number of city laws which in other places would either be simple ordinances or empty threats.
Until the mid 1960s, the city was a small enclave of extremely right-wing Russian-German immigrants. My mother, for instance, was only the third ever registered democrat in the city when she registered in 1967. Took a court order for the city clerk to register her, they had refused...
By 1972, the local university had expanded to 25,000 students and the city was in trouble. There were more students (and this was in the days of student protesting) then permanent residents. About the time some whack jobs on the far edges of the SDS movement burned down two buildings in town, the city administration panicked. Lots of new laws were passed and, Colorado being a home-rule state, the city was able to put some teeth into them which another municipality in a non-home-rule state could not.
A few other examples, and yes, there are documented cases for each of these:
-More than three people who are not blood relatives may not live together in the same house. Obviously, the cops turn a blind eye on student dorms and apartment buildings.
-If the smoke from your chimney is considered too dark (this is decided by a city employee, not by any specific measurement), it is a minor felony...big whopping fine and jail time.
-Pissing in the bushes is not a misdemeanor, but a sex-crime and mandatory felony conviction with permanent listing on the sex-offenders' registry for the state.
-Walking your dog in some parks was, until recently also a low-level felony. That one got taken off the books after the cops nailed a guy who had the money to push that one to a higher court. Seems the city had never bothered to post just which parks permitted and which forbade walking one's dogs.
So, yup, Jeff, I didn't make it up and it can all be checked in the records.
It might help to also check up on who the local Congressperson is...and just what bills she has sponsored and supported in this Congress...
As far as the asbestos costs go, if anybody things I'm making that up, suggest they have a little talk with their insurance agent.
Sigh, some of the queens around here have been sniffing their finger-nail polish a mite bit too much. Look, bitches, I don't like you, you don't like me...but do I go around ruining other member's threads attacking you? Nope. I just ignore you. Give it a try dahlinks - those of us who have real lives discovered years ago there are more pleasant ways to spend our time.
 
bitches

"There's a name for women like you, but it's rarely heard outside of a kennel." (Joan Crawford as 'Crystal Allen' in The Women)

NOT directed at anyone!!! I just love the quote!!

Rick- I would definitely look into it more, like with an inspection as Steve pointed out, because there may even be lead paint to consider if the house is old enough.

I do agree that a large yard is a wonderful thing, though, so I hope it works out for you!

Chuck
 
You guys just don't get it. In the 'hood ANYTHING goes. NOBODY gives a s*#t about lead paint or asbestos. Unless someone says something about it----and no one would---- no one would even think about it because in the 'hood no one cares. You could drop it, load by load, into the regular trash pick-up and no one would be the wiser. It's just the way it is.

When you fall asleep to the sound of automatic weapon fire and screams all the time-----having to fend off intruders,dealers,fences, runners, etc. ----the least of anyone's worries is the f*#king paint or asbestos!

So, when it all comes down to it, its all about the property because the structure just isn't worth anything. They should throw it in for free with the sale of the land.
Since the banks are no longer paying any interest to speak of, might as well invest the money in land.And it has the extra benefit of creating another barrier from the rest of the 'hood.
 
plywood cost, drywall cost

Could you describe the water damage more, it looks like a 1 story, but you mention ceilings being damaged.

usually pipes are damaged when the end fittings come loose. mid pipe expanding water creates 10,000 or higher psi liquid water in other areas, so the crimp collets can't hold together at the sinks stool etc. But the pipes are still good in the walls etc.

If there isn't mold, just floors buckled and ceilings caved...I'd imagine one could cost out the materials to repair.

Best case, a box of nails, some drywall and throw rugs.

For me, windows, roof reconstruction, foundation reconstruction, these are the costly things.

The comparative cost of that good roof good basement structure vs a new garage/workshop, has got to be favorable to keeping it.
 
The real question here is how bad does the city think the house is? If the city is aware that the pipes burst and floors buckled then they might rake you over the coals to rehab in to current code. If so, the house might not be worth the investment.

It looks like a fine house. I'd keep it and work on it over time or as money allowed. It's next door and easy to watch. I see it has a garage so you can at least collect more stuff and fill that up!
 
NOBODY gives a s*#t about lead paint or asbestos.

So, your advice to Rich would be to just tear it down and take the chance that someone, ANYONE, in local gov't doesn't see it and say something about it to the local boards???

Don't take the chance Rick. If you're getting the house with the property, get it looked at first. If she's having the house taken down, then it's her problem if anyone says anything.

2 cents.

Chuck
 
Just got back from the "grand tour" WOW!! What a mess that house is inside! The ceilings fell in the bedrooms, and the weight crushed the beds down to the floor. Wet plaster must be VERY heavy! The ceilings also fell in the bathroom, and it looks to be a total gut out also.
The good part of the house, is that the plaster damage was only on the right side of the house. The left side of the house would not need to be gutted. The floors are buckled throughout the house however, and I think they may be able to be repaired. They boards are narrow strips, and here and there, they buckled up. Perhaps they could be nailed back down again.
The house also has hot water heat, via boiler and baseboard units. The boiler and hot water heater look to be newer. I wonder if the heat system could have beeen damaged also? Like the hot water pipes may have frozen? Anything is possible I guess.
There is a very old (1930's) gas range in the kitchen, and I am sure it is original to the house. It is dirty, but it could be cleaned and restored to use. The fridge looks to be about 20 years old.
Another chapter to this story, is that the house next to this one is also going up for sale by the same owners.
The house is in very good condition, and is a Cape Cod style. I toured this other house also. The Cape Cod has central air, newer furnace, new roof, and three bedrooms, one bath. Also has a semi finished basement, and finished upstairs. Also has two car garage. The house could use some interior painting, but is about all that would make this 2nd house a very nice home. I told the owner that I was interested in buying both houses. She asked me to think about what they were worth to me, and get back with her next week.
 
Rick,

I wish you luck with this. It sounds promising. Here in Germany, you can hire an independent appraiser who will go through the property carefully, knows the community regulations (and oddities, Fort Collins got its weirdness from the German population on city regulations) and finally give you a detailed cost/benefit breakdown with a bracket of values for the property.
Bet you folks have something like that, too. Be worth it, especially as you are going to be throwing a lot out.
Hydronic systems, in general, are built to withstand enormous variations in pressure and volume so this one might still be ok. Of course, there are limits to everything and it sounds like this place more than reached them in some areas.
Buckled floors are repairable, however the work involved is not just nailing things down. You can find very good books on hardwood floor restoration at Amazon.com...and most begin with: Remove the hardwood planking carefully. Now, rip out the sub-floor... With proper care, it should be possible to restore those floors, but it is time consuming and not cheap. Not cheap as in, new hardwood floors might be cheaper. Of course, if you have free labor, it might be worth it.
Pictures would be kinda neat, if you get a chance.
 

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