Replies

1. 
   renosteinke | Apr 15, 2009 09:31pm | #1

   I looked at a house that was being sold by the bank for "only" $65,000.

   Let's see ... partial lot, access off a narrow alley, the town's worst neighborhood, sandwiched betweem a casino and the freeway (road noise / traffic). A small place, in need of a complete gut. Rubble foundation. Rickety board fence, and the carraige-size detatched garage had a noticeable lean to it.

   The spoiler was the rubble foundation. Simply put, the place needed demolition - and all those big rocks made for an expensive job.

   Property value? Not with the wrong zoning, limited alley access, and partial lot. A true instance of land being divided way too many times.

   A lot of people overlook these factors 'beyond the price tag.' A nice coat of plaster will not compensate for lack of insulation, structural failings, or other associated costs.

   Crime, for example. No sooner will you begin to remodel, when someone will break the door down and steal your tools. Secure doors (and windows), alarms, video surveilance, and solid fencing costs a lot. For this particular house, those costs could easily reach $30,000.

1. 
   davidmeiland | Apr 15, 2009 09:56pm | #2

   Casino? Last time I was in Vegas my brother pointed out an interesting situation, where a convenience store is immediately adjacent to a huge new casino. Apparently the casino has offered quite a bit of money for the property, but the store has a long lease left and is not leaving. I believe the property owner and store owner are two different people, but who knows, maybe a property that the casino will eventually want is worth $65K today.

1. 
   renosteinke | Apr 16, 2009 01:23am | #6

   That was why I stressed the overly divided lot. Not only is there a street and multiple lots between the casino and this place .... it would be nearly impossible for the casino to buy up lots without someone blocking the deal.

   Edited 4/15/2009 6:23 pm ET by renosteinke

2. 
   PedroTheMule | Apr 16, 2009 09:47pm | #7

   Hi David,

   maybe a property that the casino will eventually want is worth $65K today.

   Well, go for it....speculation can make one worth millions.....but be ready to eat it too. You could end up being stuck with it for life, paying increasing property taxes forever...

   I heard a story about a poor dirt farmer, working a couple of part time jobs in a small town to feed his family between crops. He heard of this great interstate "possibly" coming somewhere through the area so he started buying whatever cinder blocks he could afford after work each day and laying them by night right between the rows of crops in his field.

   When it came time for the interstate to pass he had all his permits and zoning in place such that it was a commercial project underway. It actually happened that they wanted to run the highway right through his new commercial project rather than around the edge. The story goes that they wanted to buy it at farm land rates rather than commercial since he'd not yet finished the building. He agreed contingent upon them moving the planned highway exit/entries a half mile back to the edge of his property so he'd have a way to cross between his split farm property. Otherwise he'd tie them up in court for as long as he could afford.....which actually would have been about 2 minutes.

   Supposedly they agreed and that split farm gave rise to a major highway interchange to which he fully developed all of the land commercially and leased all facilities such that he continued to own every bit of it. This also gave him the backing to buy and develop other areas......story has it that he's worth about 600 million today and that he's so generous it's understood he has already given away better than 20% of everything he's ever made.

   I don't know how factual the details are but I do know it's a good story that fits around everything I've ever known about the man.

   Good Luck,

   Pedro the Mule - Hmmm, plow the field for feed or develop the field and buy feed elsewhere, that's a continuing question of speculation.

2. 
   dockelly | Apr 15, 2009 09:56pm | #3

   Like getting a free puppy, after shots, food, etc, not so free.

1. 
   FastEddie | Apr 15, 2009 10:47pm | #4

   Last fall the neighbors got a beautiful Golden Retriever puppy from a spca adoption dealie on a Saturday at the local Petsmart.  really cute, cost $35.  DW was very envious.  We offered $100 for it, no deal.  3-4 days later the dog is at the vet for extensive tests.  A week later it died, vet bills way over $1,000.   Dodges that bullet."Put your creed in your deed."   Emerson

   "When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it."  T. Roosevelt

1. 
   dockelly | Apr 15, 2009 11:02pm | #5

   now that is the defintion of sucks

2. 
   migraine | Apr 17, 2009 12:52am | #8

   If, and I say if... I could find deals like that in a decent area, I'd be there.  but, my gut is always saying, "what's the catch ?"  My wife says it is the pessimism in me.

1. 
   dockelly | Apr 17, 2009 03:47am | #9

   The catch is you end up with all the other expenses a bank doesn't want.  Upkeep, taxes, etc.  For a 1000, I'd be happy to have those other things to woory about.  But if it was in a bad neighborhood, you couldn't give it to me.

1. 
   KFC | Apr 18, 2009 01:53am | #10

   You can also end up with back taxes, and the cost of bringing an abandoned, vandalized building up to code.

   There was a lengthy article in the NYT magazine a while back on the Cleveland forclosure situation.  Very surreal.

   http://www.nytimes.com/2009/03/08/magazine/08Foreclosure-t.html?pagewanted=1&sq=cleveland%20foreclosures&st=cse&scp=1

   k

   I hope that link works...

3. 
   CapnMac | Apr 18, 2009 02:25am | #11

   That was am interesting read.

   This bit bothered me: 

   These houses are almost always small fixer-uppers. Wiring, plumbing and heating systems have to be replaced, walls and ceilings sheet-rocked, plumbing and light fixtures installed and new kitchen cabinets and counters put in. Few come with working appliances.

   Often buyers are legally required to rehab these homes to bring them up to code

   ...

   Most of these $1,000 homes can be renovated relatively inexpensively, and buyers can actually get government help to finance these repairs. The U.S. Department of Housing and Urban Development (HUD) has a special loan program for just such purchases

   So, a "bargain hunter" up to speed from watching flipping shows, gets one of these bargains, and thinks, that $3-5000 is inexpensive, and not the $30 to 60,000 it might cost.

   Gets kind of scary thinking what might be found not to code with what is now a gut-level rehab.  Wonder if the HUD programs will loan you 80-90% of sale price and leave a person trying to sell for a dime or to over the sales commission?

   This list starts getting a tad worrisome:

   • Light fixture replacement means rewiring to code
   • Plumbing fixtures replacement leads to replumbing
   • Register/radiator replacement/repair leads to mechanica system replacement
   • Drywall repair leads to reinsulation on the "might as well as" having ripped all the drywall down to rewire and replumb and remechanical.
   • Oh, and you need to replace all of the "fixed" appliances in the kitchen, too.

   Kind of puts a lie to "renovated cheaply."

   Occupational hazard of my occupation not being around (sorry Bubba)
1. 
   dockelly | Apr 18, 2009 02:46am | #12

   Here in Jersey, it costs about 10,000 to have a house taken down.  What if you bought the place, demolished it, and just sat on the land till times improve, then sell it.

1. 
   CapnMac | Apr 18, 2009 05:44am | #14

   What if you bought the place, demolished it, and just sat on the land till times improve, then sell it.

   Have to find a way to pay what the City will want in improved property taxes (getting the property re-evaluated as unimproved being expensive as well).

   Which then leaves you with an "infill" lot, which can get you tp some "interesting" economics, too.  Like, if all the surrounding houses wer built at $40-50/sf and the cheapest you can get is $140-150/sf--you either wind up with a smaller house, or one lopsided in cost.  Then, there's that whole lending tning where the lot is supposed to be 1/10 the cost of the house--which makes for those McHouses we all love so well. <sigh>.

   If the City would let you buy the house to prevent it falling into decay, and they'd give you a tax break, then, that might be something.Occupational hazard of my occupation not being around (sorry Bubba)

2. 
   KFC | Apr 18, 2009 02:52am | #13

   You're exactly right.  I don't know if you checked out that (too long) NYT article in my last post, but they go over a few examples of just that- buyers finding out a home needs $30k in repairs to come up to code or it'll be condemned, if it hasn't already.

   The City of Cleveland is actually using something like $13 million of its HUD stimulus money to simply raze abandoned homes.

   k

1. 
   CapnMac | Apr 18, 2009 07:19am | #15

   don't know if you checked out that (too long) NYT article in my last post

   No, only the short one linked above.Occupational hazard of my occupation not being around (sorry Bubba)

3. 
   BillHartmann | Apr 18, 2009 04:28pm | #17

   Those repair mortgages will are figured on the appraised price of a the repaired house. Much like new home construction. And with all of the payment schedules and inspections of each phase..
   William the Geezer, the sequel to Billy the Kid - Shoe

1. 
   CapnMac | Apr 18, 2009 08:10pm | #19

   on the appraised price of a the repaired house. Much like new home construction. And with all of the payment schedules and inspections of each phase

   Ah, good.  That ought to keep some of the flippers out, then.Occupational hazard of my occupation not being around (sorry Bubba)

4. 
   bobbys | Apr 18, 2009 07:35am | #16

   good thread, One thing i would like to add is that it took me years to assemble all the skills needed to redo a whole house, Not just the carpentry but the Plumbing , Electrical.

   Then it takes gumption to crawl under a house, get filthy dirty like another thread here, Climb on the roof, Go without so you can buy all sorts of tools, Read plumbing books rather then watch Oprah.

   Theres just not many people like this forum with the skills or attitude..

   Then one may do all this work and have renters rip it up again

1. 
   dockelly | Apr 18, 2009 05:41pm | #18

   "Then it takes gumption to crawl under a house, get filthy dirty like another thread here, Climb on the roof, Go without so you can buy all sorts of tools, Read plumbing books rather then watch Oprah."

    

   Know what you mean.

    

   BTW, gumption is not a word you see much, adds some nostalgia to your post:)

2. 
   jimAKAblue | Apr 19, 2009 05:16pm | #20

   Read plumbing books rather then watch Oprah.

   Oops...now I know why I don't know how to do plumbing!