Looking at buying this house? Is it worth it?

[Daddy4life85]

Ok so I'm a relatively new father I have a 1.5 year old son and a 4 month old daughter. My wife and I have been renting a rather long time and would love to buy a house. So this house across the street has a sign on it 500 down 400 a month. So I call about it get some info they give me a combination for the lock on the door to take a look and what not. The total price of the house is 45,800 and it's quite close to South Side of Pittsburgh which is a pretty popular area and maybe 5 miles from down town. Frankly I'm not sure what to think? The place definitely needs some work. I used to work for my grandparents fixing their rentals and I'm quite the handy man. I can do nearly all the work my self from plumbing to framing to hanging drywall painting even cabinetry. I'm not worried about the work I'm worried about the cost of materials and what not to fix it. The upstairs is probably pretty livable as is. It's not perfect but thats something I could work on over time. The down stairs it looks like someone was trying to make some sort of apartment and then stopped 1/4 the way through. There is a bathroom they added that is nearly finished with a shower and sink and toilet but the rest of it has a few sheets of dry wall here and there. If I finished it the way I want it would probably end up being 3 bedrooms 2 baths with a big sitting area up stairs near the kitchen and a sort of theater/living room down stairs. Here is a folder with lots of pics I snapped. I want a fixer up I just want to make sure I don't end up getting something and spending to much fixing it.

Dougie085/House - Photobucket - Video and Image Hosting

Looking for others thoughts on this? I can't find much that really compares in this exact area for sale. Everything I see is around 60k or so but its further up the hill in a less desirable area. I'd imagine if the house was in good condition it would fetch closer to 80k maybe a bit more.

[Daddy4life85]

Oh also all the really bad looking stuff is that area down stairs. The upstairs really isn't that bad looking. The worst part about the upstairs is the broken windows and what not. Of course before purchasing I would have an inspector come in just to make sure there wasn't anything major wrong with the structure and what not.

[pushkins]

There is a couple of things to watch out for when buying the type of house your looking at and doing the work yourself.

1. Budget very carefully the money you want to spend and the time you want to allocate to doing the work, especially how long it will take before you can actually live in the property, because until then your paying a mortgage and rent.
Sit down with a floor plan of the house and write down exactly what you want/need to do for every room, from there you can work out what each room will cost.

2. A modest kitchen will come in at about $10K (after you add in fridge, dishwasher...etc...etc...). Kitchens by code need special wiring conditions separate lines for the fridge and microwave and 2 dedicated counter top lines (both in 12/2), so electrical needs will be a costly factor. Looking at your pictures there may be some old knob and tube wiring, most cities now will ask you to replace all that with new nm cable, especially under the whole house renovation that you need to do.
With that add on that each bathroom must have it's own dedicated outlet circuit, I bet this house doesn't have that.

3. Demolition can be expensive as well and it looks from your pictures that there is at least one dumpster to go.

4. Drywall adds up as well, each sheet might only cost $6.50 but an average room 12'x12' including the ceiling will have you at 16.5 sheets and that's if you can use full sheets, once you start cutting them down the wastage adds up as well.

5. Replacement windows average out at around $175/window depending on low E /argon etc... but $175 gets you a reasonable window.

6. Price out your HVAC and AC needs, this can add up really fast, especially if you need new ducts run.

The real secret I've found is like I mentioned in #1 above, map out the house, work out exactly what you need to do for each room, price out each room, then tally up the costs. Allow a plus of 20% for unforeseen circumstances.

Check with you local city inspection department to find out just how much you as the home owner can do work wise on your house, some places now are not allowing home owners to pull permits for electrical.

Generally speaking on the properties we have bought and renovated for resale that need HVAC/AC we work on a $30/ square foot cost ratio. So for 1,000 square feet our costs are around the $30K mark this includes new windows, a modest kitchen and bathroom.
Now a 3,000 square foot home won't cost $90K to renovate as your base costs don't increase that much, for example a HVAC unit that services a 1,000 square foot home will only be $500 cheaper than one that will do 3,000 square feet. There is not three times the windows in a 3,000 square foot home...etc...etc...

Make sure you do your homework (which it looks like your doing) check the wiring and breaker box, an old box might be a clue that new circuits need to be run...cost...cost....cost.
Not to mention plumbing....gal. pipes will most certainly need to be replaced in old homes.

[Daddy4life85]

Yeah I need to look into the plumbing and electrical I know that much. It doesn't have an AC system and right now uses radiators it seems for heat. Basically what I'd be looking to do is to move into the upstairs and live there doing some little things while I redo the downstairs which is that nasty looking room and the room with the water heater in it would be turned into a laundry room more then likely. After that gets done move my living room down stairs to the new room and then start working on the kitchen/dining area. In 2-3 years I would like to take that upstairs attic style room and pretty much have a contractor come out and frame up a complete 3rd floor rather then the partial it is now. This would give me room for 3 medium sized bedrooms I'd imagine which one would come out to be a master suite. Then down stairs the 2 small bedrooms would come out to make a great room sort of area as well as the walls that block off the kitchen so the great room, dining room and kitchen would be one big area. As for the kitchen I plan on building the cabinets my self and all that. Probably the biggest expense is going to be electrical and a granite/marble counter top right after the cost of lumber for the cabinets. Most of this stuff is still relatively easy in my books. The 3rd floor redo I would want framed and roofed because thats just not something I like doing a lot of . Drywalling, wiring and all that I have no issues with. I figure the downstairs would probably take something like 2-5k in materials. This project would be quite ongoing and take a long while. When I first walked in I walked into that downstairs area and I have to say I was a bit disappointed. But then I went up stairs and was happy to see it was actually livable. What does it cost to have someone come out and inspect things like the wiring and plumbing as well as things like the structural integrity of the house? Can it be done with one inspector?

[pushkins]

You can get a "good" home inspector to have a look at the property and he/she should be able to give you a basic insight to soundness of the structure of the home as well as electrical and plumbing. The real problem is they are not plumbing or electrical experts and cannot see whats going on behind walls (especially if the electrical and water are turned off). Structure is a little easier as cracked drywall is a clue and in your case most downstairs walls are open and exposed, so seeing what is happening with the walls is much easier.
Sometimes when you get some contractors out to have a look at their individual fields, for example an electrician, you might end up with a suggestion that the whole house needs new wiring, when in fact it doesn't and this job could go from $3K fix to a $15K rewire.
This is one of the hardest parts for first time renovators, trying to decide who to trust and who not to trust.

Does the second floor where you'd like to live while renovation the lower level and a kitchen and bathroom ? and if so are these wired from below at a main panel or a separate panel upstairs. Without separate electrical for upstairs living there will be difficult if even allowed by your city. Again ask your local city inspector if they would even give a certificate of occupancy for you to live there while working below. The power company will not even turn on the power to the property until they see all wiring replaced and or corrected where needed, same will go for your natural gas company.

From your pictures this isn't a quick turnaround for a DIYer and there are many areas that you need to check into, like the electrical and water issues.

[Daddy4life85]

Yeah I'm going to go take a better look here in a few. I'm also going to call the lady back and ask if they have any other properties here that I can go look at and see if maybe they have something in better condition that basically just needs remodeling even if it costs a bit more it may be worth it.

[Daddy4life85]

Ok well I just got back from looking around a bit more. It looks like whoever broke into the house before cut out some of the copper pipes that were easily accessible. The stuff under the sinks and what not looks fine but down in the utility room where the water heater and stuff is its all gone basically. Also the fuse box doesn't look horribly old. Old enough that eventually I would upgrade to breakers but it's probably at least ok for code. I'm not sure about this one but its not going anywhere for a while so I'm going to see what else they have.

[Allison1888]

house hunting

You're wise to shop around so you know that you're getting the best deal for you. Another important thing to remember is that a sales price is just an asking price. If you decide to go for the fixer upper and have an inspection, get estimates to fix the major items, then go back to the seller and look for some concessions. Once those items are out in the open, it's harder to sell the house to anyone. You've got all the bargaining power -- and don't just take his XX amount down and XX a month. Go to a bank/mortgage broker and shop for the best mortgage.

[Daddy4life85]

Well this company is a bit different. I'm not sure how negotiable the price is but they don't do a credit check and its a property sale contract. One of the reasons we were looking at it as neither of us have very good credit right now. So it was just an option and if they have something thats a little nicer it would be a good deal for us.

[Daddy4life85]

So I got the addresses of 4 more properties they have. I'm going to go look at 2 of them in the morning and snap a few pics although I won't be able to go inside. I'm going to look at all 4 and decide which ones I really want to look at and then get the keys to look inside with my wife. From the pictures I found on google map though they looked to be newer and in better shape then the one across the street. Also I asked her a little bit more about how they work and she said that all the houses are repossessed houses so the condition really varies.

[Allison1888]

credit issues

While I can understand the importance of getting credit, you want to make sure they aren't taking advantage of you. What interest rate are they charging? Don't let them tell you they can't calculate it, because they can. You just don't want to be paying 30 percent interest, even if the payments look good. It doesn't hurt to talk to a bank just to see what they would quote you. Also gives you leverage. Good luck!

[Daddy4life85]

Oh no! I would never pay that much interest for something like this. The interest rate is like 8%. It's a lot but not completely horrible. We've looked into a home loan before and we didn't qualify for much and it was a pretty high interest rate.

[pushkins]

Go to a bank again and ask for a pre approval, they will do their stuff and then tell you what you "really" qualify for (especially now a days)....8% is a horrible rate to pay, the the average going rate starts at 6.95% and goes down with better credit. Also try companies like Di-Tech and even "lending tree" ( no I'm not plugging either of these companies), you can do it all over the internet and see what you do or don't qualify for.