I have a choice between two houses:
1. 1000 sf ranch, built 1968, 2×4 construction, single-pane aluminum windows, electric heat via cables in ceiling, Kitchen/bath original with minor upgrade, price 200K
2. 1300 sf ranch, built 1999, 2×6 construction, thermopane vinyl windows, gas forced-air heat, modern kitchen/bath, price 325K.
I suspect that remodeling #1 to meet modern energy codes (R21 in the walls, new windows, etc.) plus gas heat and a new kitchen/bath would cost significantly more than 125K, so choosing that one is not economic.
Insights into this puzzle would be appreciated.
The more general question is this: there are lots of those older ranch houses around, some in good locations. Is there a way of bringing them up to modern standards in an economic fashion?
Replies
Given the imperative to 'Buy low and sell high' and the general rule of thumb that there are greater profits bringing the worse house on the block up to median standards instead of trying to improve a home that is, for the most part, acceptable I think the first house may be more costly but also more profitable.
Those generalities aside a lot depends on the individual house and situation. Ranch houses can have special problems. Namely access. Think of assembling a model ship. Then consider assembling the same model, piece by piece, in a bottle.
A sprawling floor plan, tight or limited access attics and, frequently, a lack of a crawl space can make upgrading utilities a pain. It amounts to having a long way to go and no easy way to get there. Which makes it much more expensive and specialized a task.
So when comparing the two houses you might be well served to consider not only what has to be done but how the availability, or lack of, easy access may multiply costs.
Large open attics, crawl spaces, chases, drop ceilings and soffets make for a much easier job. Cathedral ceilings, on ground slabs, flat roofs and open plans make for long, difficult runs for ducts, electrical cables and water lines.
The older home may require more work but more up side for profit. If it also has a structure that allows easy access this too is an up side. If it has significantly poorer accessibility it may flip the balance the other way.
Something to consider.
The access question is something I didn't think of. Thanks for the response.
Chris
I am in the process of bringing an older ranch (late 70s) up to new standards. I bought the house because we got lots of house (3600 sf with the daylight basement) and the location is great.
On the exterior, I am gonig to apply rigid foam and then new siding. I am currently replaceing all windows with new vinyl ones. I will also put an additional 10 - 12 inched of cellulose in the attic.
I'd be interested to hear how this pencils out for you - costs, unexpected hitches, etc. Are you upgrading kitchen/bath?
Chris
Yup - I moved the guest bath (now 6x9) to get more room for the master. Its done - cost 3K. The only hitch was that I could not reach the drain horizontally and meet code - so I had to drop a 3 in drain down the wall downstairs, jack hammer out the floor for about 6 feet and tie into the main drains. It took two extra days.
I completed the master closet (14x6) two months ago and it turned out great. I built all the cabinet myself - picture attached. I am now about 1/2 way through the master bath remodel. Going from a 8x7 to a 8x14 footprint. I'll post pictures.
Your closet looks great - should be in a magazine. I'd like to see the actual numbers when you're all done. I presume the bathroom cost of $3k means materials only and that you supplied the labor?
Thanks - and yes, the $3K is materials only. I do all the work myself.
The closet was just a bit over $1000, but that was building the cabinets from MDF sheet stock. A comparible purchased set of cabinetry would be $3500 to $4000
Here's a more precise statement of the problem. I sent this letter to a local contractor who's been in the business for 30 years and was highly recommended. He gave me an estimate of each of the tasks I listed in the last part of this letter. His total was $38,600. That meant I could rehab the first house, sell it, and get 100% of my costs back - meaning, in turn, that house would be worth the rehab if you were to live in it, but not worth it as an investment.
I'd be interested to know what you think.
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The photo and listing below describes a house that may be of interest as a rehab. It was built in 1958 and I don't think anything changed in there since that time. It appears to have the same interior as a lot of other similar "ranch" style houses from that era - living/dining/kitchen in the middle, 3 bedrooms and 1 bath down the hall to the left, garage on the right. I've been in it and it needs a lot of work, as I'll describe below.
View Image
Price: $200,000
Beds: 3
Baths: 1
City: Vancouver
County: Clark
Zip: 98664
Style: RANCH
Yr. Built: 1958
Status: ACT
SQFT: 1040
ML#: 5088865
Type: RESID
Area: Vancouver: E Heights
Garage: 2 / ATTACHD
Levels: 1
Acres: 0.18
Roof: COMP
Heat: FOR-AIR
Fireplaces: 1 / WOOD
Elem School: ELLSWORTH
Middle: WY EAST
High: MOUNTAIN VIEW
Lot Size: 7K-9,999SF
Lot Desc: LEVEL
Lot Dim:
REMARKS:
Cute 3 bedroom ranch with new carpet (hardwood under), New Paint, New 30 year architectural roof. Oversized lot in an area of well kept homes. 2 car garage, RV parking, Fenced backyard & Forced Air Furnace.
FEATURES:
Kitchen: DISHWAS / DISPOSL / FS-RANG
Interior: CEILFAN / GAR-OPN / HARDWOD / WW-CARP <!--CEILFAN / GAR-OPN / HARDWOD / WW-CARP -->
Exterior: COVPATI / FENCED / PATIO
Accessibility: 1LEVEL
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This second listing is an example of what I think is a good house. I haven't been in this one, but I'm using it as a model of what I'd like to achieve in a rehab.
View Image
Click here to view more photos
Price: $289,900
Beds: 3
Baths: 2
City: Vancouver
County: Clark
Zip: 98682
Style: RANCH
Yr. Built: 1999
Status: ACT
SQFT: 1642
ML#: 5086996
Type: RESID
Area: Clark Co: E Orchards
Garage: 2 / ATTACHD
Levels: 1
Acres: 0.14
Roof: COMP
Heat: FOR-AIR
Fireplaces: 1 / GAS
Elem School: HARMONY
Middle: PACIFIC
High: EVERGREEN
Lot Size: 5K-6,999SF
Lot Desc: CORNER / LEVEL
Lot Dim:
REMARKS:
Original owner,New Tradition home in outstanding location!Ranch style home with lots of extras,and upgrades.9 ft.ceilings,maple floors in kitchen,tall maple cabinets,two bay windows,large upgrd windows,rock frplace w/maple mantle.Fully shelved garage,fully landscaped yard.Much more!
FEATURES:
Kitchen: BI-MICO / BI-RANG / BI-REFR / DISHWAS / DISPOSL / BI-OVEN / PLB-ICE / FS-RANG
Interior: CEILFAN / GAR-OPN / HARDWOD / WW-CARP / WOODFLR <!--CEILFAN / GAR-OPN / HARDWOD / WW-CARP / WOODFLR -->
Exterior: FENCED / PATIO
Accessibility:
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
In order to bring house # 1 closer to the quality of house # 2, I think the following would need to happen:
1. Insulate the walls, ceiling, and floors to modern code.
2. Remove old doors and windows, install new.
3. Remove old kitchen cabinets, fixtures, and appliances, install new.
4. Remove old bathroom cabinets and fixtures, install new.
5. Add new half bath.
6. Remove carpet and refinish hardwood floors.
7. Tile kitchen and bathroom floors.
8. Remove oil furnace, replace with gas furnace.
9. Remove electric hot water heater, replace with gas.
10. Decommission or remove oil tank.
Similar houses in the neighborhood sell for about $240,000 at bes, according to my real estate agent.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Professional estimate of rehab costs:
Add insulation
2,500
Replace sheet rock
2,000
Replace doors and windows
9,000
Renovate kitchen
8,000
Renovate bath
3,000
Add half bath
3,000
Refiinish hardwood floors
2,000
Tile kitchen and bath floors
1,500
Replace furnace
5,000
Replace water heater
1,000
Rent drop box
1,600
TOTAL
38,600
You seem to have looked over things from the numbers perspective pretty closely. I noted that the two homes have different sale prices even with the new amenities in the older one. Why? Different neighborhoods?
My inclination if I were in your position and had to pick one, would be to go with the older home and redo it. Why? Because it's less expensive and leaves more money (75K) for other things AND because it gives you the opportunity to do it exactly as you want it when it's done. If it's going to be your home for a long time, you should have what you want, if reasonably possible.
If you want to save money on the fix-up, that might be tough. Frankly the figures quoted by the professional for the work seemed kind of low. Of course, if you did some of it yourself, then it would cost even less. Do you enjoy the work and are you capable of that?
Don K.
EJG Homes Renovations - New Construction - Rentals
The newer one is in a neighborhood of newer houses, somewhat bigger houses, and I think that accounts for the difference. As you said, perhaps the rehab numbers are a little low - I was surprised by them, but I'm a rank amateur - and that would enter into the comparison.
I enjoy the work but I'm less capable of it as age sneaks up on me so I'd have to hand off the heavy stuff - I might be able to save half the labor cost by doing the baby stuff myself though.
Thanks for the response.
Beautiful closet! You can be proud!
This is a real estate investment question, more so than a construction one. With that being said...Some points to consider....
What are the neighborhoods like? Are they comparable? School districts?
Are the surrounding homes in the older area fixed up?
Is the older neighborhood getting nicer or more run-down?
Is there mature landscaping that adds to the homes' curb appeal?
Are there any homes in the older area selling for 300 +?
If the older ranch was retrofitted to match the newer one, would it sell for 325k?
You have a great point here - the real question is evaluating the potential of the property.
Before we bought our house, I discussed the "improvement plan" with the real estate agent, and got a comparative market anaysis for the house as it would look after the work was done. Most of the houses in our area are newer, and any house with some land is a huge advantage. The numbers came out that we could add at least a net $100K in two years, giving about 1 out of 3 weekends to it.