Things managed to get a bit hectic the last few days, as we’re in the last push to get the Wee House done (with an ad going in the paper next Monday as far as it being available to rent), and have since made two offers on the House with the Huge Lot and Creek I mentioned in the last post, as well as shooting off an offer this morning for yet another property.
Backing up a bit, we got to go through the Creek House on Saturday, and it does have a lot going for it. It also would be a pretty major project, as the interior was a little rougher than I expected. Below are some photos, with comments after.
As far as pluses, well, it was listed for $35,000, and it’s a ~1600 sq. ft house with some neat old features, 12 foot ceilings in many rooms, and an awesome lot and location. The exterior and roof are in good shape, so much of the work is on the interior. While it doesn’t have a furnace/air handler for central air and heat, it did at one time, and all of the ducting has already been run. Fully renovated, it’d probably sell for $120,000-$130,000, and sell fairly quickly at the price.
On the negative side, well, there’s a ton of work to be done. It’s got hardwoods but in some rooms the floors have been painted multiple times, covered with various layers of plywood, etc. New electrical needs to be run throughout, new plumbing throughout, fixtures throughout, the “kitchen” is basically non-existent, and pretty much nothing in the one existing bath is salvagable.
The layout isn’t terrible but it isn’t great, either. Of the two bedrooms, there’s not really a true master, and no easy way to expand one. Both suffer from odd closet syndrome, too, and the 12 foot ceilings make adding or moving the closets a bit awkward. There’s only the one common existing bath, so a master bathroom needs to be added.
All in all, tons of work to be done. Complicating that is the agent selling it claims they got multiple offers on the weekend. We offered $32,500 originally, but they asked for everyone to submit their best and final offers, so we bumped that up to $38,500 yesterday.
If that seems chintzy for a house that I feel will sell for $120,000-$130,000 when done, well, it is and it isn’t. It’d realistically take me at least 3-4 months to complete the rehab, with our crew, and with holding costs throw in, probably cost $40,000-$45,000 to rehab it. Back out taxes and commissions and all that other fun stuff, and we’d be looking at a net profit of around $25,000 if we could pick it up at $38,500. For a project of this size and the associated risk, that’s pretty much the limit of what I’d tackle it for, as far as a $25,000 carrot, so I didn’t feel like I could go any higher on our second offer.
So I’m not very confident that we’ll get it, as we’re likely to be outbid by a rehabber who’ll cut many corners or by someone looking to live in the house, as it’d be a good deal at even $45,000-$50,000 for someone who planned to live there and wasn’t looking to flip it.
While signing off on our second offer yesterday, our agent mentioned another property I might be interested in, which we ran over to check out. It’s a pretty standard house (2-1, 1100 sq. ft. built in the 1930s) listed at $48,500, but has intriguing long-term possibilities.
It’s on a run-down, raggedy street and is very close to a very busy intersection in town, and it’s the second house from the corner of a busy highway that cuts through town. Not great things as a primary residence obviously (and why it’s listed as low as it is), but it could actually make a nice commercial property in the future, as the layout would be great for a salon, law office, accounting office, etc. It’s very visible from the highway as is, and there’s an abandoned house adjacent to it that’s right on the corner, which if you could buy and demo and add parking instead, would greatly help with the commercial appeal of the one for sale now.
What’s nice is that it needs very little work to keep as a rental, with the main expense being adding central air and heat. Other than that, it’s just cosmetic paint and flooring type stuff, and total renovation costs would be about $7,000, and could be wrapped up in a few weeks.
Our agent had a client offer $39,000 for it, and the sellers countered at $45,000 but the buyer walked away. I could probably get it for $42,000-$43,000, but it’d work even at $45,000, as I’d be into it for about $52,000 or $53,000 after repairs, and it’d rent for $650-$700/month.
It’d cash flow a tiny bit in the short run but the main appeal is in the longer run, as far as getting it re-zoned as a commercial property and selling it as such. The other side of the same street (on the opposite side of the highway) has already been converted from residential to commercial properties, so it’s not a stretch at all to imagine the same thing occuring. With paved parking and some other touches to help the commercial appeal, it’d probably sell for around $90,000-$100,000.
We’re going to go ahead and offer $42,000 for it, even with our offer on the Creek House still floating out there, as worst case scenario is both offers get accepted and we’ll have to pick one, losing out on the $50 option fee on the other.
We’ll see how it all plays out. I’m a bit worn out from all the juggling of jobs and work of late, but hey, I do enjoy this stuff, and it’s nice to suddenly have some attractive properties pop up to get the wheels turning, as far as another project.
