debating purchasing an old home

lnew52December 22, 2012

I am debating purchasing a home in will county, IL that was built in 1895. In 2006 an addition was put on the back of the home, and it seems to have possibly pulled down where it was attached. The floors have a slant in both back rooms starting two feet from the wall, along with slight cracking in the walls. The old broiler heating system also needs to be ripped out and replaced. The other repairs are relatively minor, like new carpeting and updated bathrooms. The owner is asking 35000, which seems very reasonable. The house is 3300sq ft with 5br, 1.5 bath, 2 car garage, and full limestone first floor and foundation. I am mostly concerned with the cost of repairs, and that many contractors will overcharge or understate the extent of the damage. I have about a week to make a decision before the owner lists the property. Does anyone have experience with a situation like this? I am working with two contractors on estimates but i admittedly have little experience and dont want to be taken advantage of. Any advice is greatly appreciated!

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What's the lot worth?
Subtract that from the sale price and divide by the square footage. It's already $11 per sq ft, obviously you can't build a shed for that, much less a stone and slate home. If the location is acceptable, go for it; it looks like an awesome house. The cut stonework would probably cost $50K to recreate.

    Bookmark   December 22, 2012 at 9:01PM
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Aside from the contractors, have you had an inspector in yet? That should actually be your first step.

It sounds like an incredible bargain for $35,000, even if you have to tear off the "new" wing and rebuild it. Or did you mean $350,000?

    Bookmark   December 23, 2012 at 10:38AM
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Old homes like that are only bargains if you have the funds to repair the problems. If you're not willing to invest 3x the purchase price in the first year for repairs, then it's not really doable for you at all.

    Bookmark   December 23, 2012 at 11:30AM
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First impression is - WOW. But I have to agree with GreenDesigns. Unless, like me, you love it enough to live with it "as is" and take 30yrs. to bring it around. Can you share more photos? I'm so intrigued.

    Bookmark   December 23, 2012 at 11:53AM
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lnew, before you do anything, you need to stop listening to the contractors, who mostly probably want to replace every detail with new. Get an inspection from an old house knowledgable person, and then prioritize tasks.

If the house has steam/hot water radiators, that is the BEST heating system to have--if the boiler is old, it can be replaced with a more efficient one without removing the radiators. Forced air heat is just not as comfortable or efficient as radiators, hands down. Your contractor who suggested that is trying to buffalo you into something more expensive and less comfortable than radiator heating.

Since you know almost nothing about an old house, get and LISTEN to a qualified person's advice, not the contractors. It would defeat the purpose of having an old house if all you are goiong to do is rip it apart and modernize. If that is the case, move on and learn more before buying any house.

    Bookmark   December 23, 2012 at 12:39PM
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Thanks for all the input. Just to further clarify- I am 22 years old and do not have any experience repairing these homes personally. That being said, my mother has bought and restored 4 homes and has been a member of our historic preservation committee for decades. Not to mention 30 years as a city planner with extensive experience in things such as permits required and architecture. I am being offered a private 5-year mortgage at 2.5%, which would come out to payments of roughly $580/month. He does not want any money down, so I would be able to use my 15,000 in savings to make immediate repairs. The opportunity presented to me is almost too good to be true. I have thought about the things mentioned, like keeping the current heating system. The entire system would still need to be replaced, and the cost seems to be similar to adding a central air/heat ventilation system. Depending on the cost, I could easily be convinced to keep the radiators. Tearing down the addition is not a very good option, as it has added a two car garage and 16x30 living room. It seems to be well-constructed, but further inspection will be needed to determine if it is the cause of the floor slanting. There is a good possibility that the original architect made a mistake when adding the two bedrooms, because they hang over the back by about two feet. The recent addition is built underneath the overhang. I have another picture of how it was done, the home is on a bit of a hill so the garage is level with the basement. Thanks again for all of the advice and tips.

    Bookmark   December 24, 2012 at 2:28AM
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Which room is the tower(?). A bedroom? It's lovely from the outside.

    Bookmark   December 24, 2012 at 11:41AM
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If your mom has restored four old houses, she must have a list of contractors and workmen who are familiar with antique homes. I hope the contractors you spoke with are from this list. It takes special experience and skill sets to work on older homes, because the building techniques have changed so much over the years.

If your home gets a relatively clean inspection (no major foundation issues or immediate needs, etc.), you're willing to do a lot of work yourself, and the neighborhood isn't a war zone, I'd go for it! The house has character, charm, and space, and you'll probably never see another bargain like this.

    Bookmark   December 24, 2012 at 12:58PM
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Sophie Wheeler

Yes, if you've helped your mom out a lot and already have a good set of DIY skills, then this could be a possibility.

But, that short of a mortgage will leave you with less cash flow than a longer one would, even though $500 a month is an absurdly low house payment. That can be a critical issue with a house that absorbs cash like a sponge if you have a relatively low income. Because there's the utilities and insurance too.

The fact that you only have 15K in savings is also worrisome. That's not enough to address any major system, only minor issues. And that says that perhaps you are not really ready to purchase any house if that's all of the savings that you have. That amount isn't even enough for an emergency fund in case you lost your job.

You need to take a look at the bigger picture of your financial health before deciding if this is a good move for you at this time.

    Bookmark   December 24, 2012 at 2:38PM
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I love the house from the outside, but the price worries me that the inside is a disaster.

Let me share a couple of big ticket item costs with you to give you an idea of what you might encounter....

Our forced air heating system was original to the 1890 house, though limited in where it served, and it worked like crap. We put in a heat system (heat exchanger) which took two large exchangers and a dozen units of different types. It's a great system and makes the house so also reduced our energy costs from about 1500 per month to 400 so it's been a nice change...except the initial costs to install pushed $60M.

The cistern collapsed in the back yard developing a dangerous sink hole...about $5M

Gardens were a fence (though that one looks lovely) so another $40K

We are missing floors...we have sub floors which are painted, but the actual parquet is gone. The plaster is in pretty good shape but needs repair, lighting is a nightmare, water is the same. We have a budget of $50M per room to restore.

We have no kitchen...moving walls to put things back will put the kitchen project into $500M

The roof is a nightmare. Our second floor leaks due to issues two floors above. New roof....$50M minimum, but the siding needs work as well, the budget for that project, which must take place this year $100M

Painting is included in that price, at $40M

In all we will spend about 1.5 on this house, which we purchased for less than that. It will likely never be worth what we spend on it, and we are doing this in the same standard as the original, which adds costs, but even the basics are pricy. I can easily see you needing to spend $100M too $200M on that place which makes the initial purchase price seem not so good of a deal. Add to this that you are not experienced...what do you do in November when all of the sudden the lights go out (that cost me $10M)? If they even come on now :)

I just want to caution you on what you're walking into. That home should be saved, but can you handle regular chunks of huge cash (even at 10% of what I've had to put out for a larger house) outlays? That's the ugly part of being an old house owner...and one most overlook as they look at the low price :(

    Bookmark   December 25, 2012 at 4:36PM
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I was wondering if you meant K where you have M?
Is this the old house in the northwest? Hope it is going well, as I recall, it is indeed a gem!

    Bookmark   December 26, 2012 at 6:51PM
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1. If you decide to quit and sell at any point, including the day after you buy it, will it sell and if so for how much?

2. Is this a location in which you want to live - would you buy this lot if it had a different house on it?

3. Are you willing to make the house your hobby for the next few years? And to make compromises in how you live as you get things done?

4. Your mother sounds like a great resource, but this will be YOUR project - is it you who wants this, or is she pushing you to any extent? The flip side of this question is that she may be able to see an opportunity that others do not. But even if it could pay off in $$ down the road once rescued, it has to be something you want to do.

Karin L

    Bookmark   December 26, 2012 at 9:06PM
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Kim, I'm a banker, sorry. :) I forget to talk regular english some times!

In the world of credit, M = thousand and MM = millions. They do not use K (unless they are not credit trained).

So I meant thousand's not millions :) Though if I had a money tree I'd be sure to fertalize it with MM supliments to cover the house costs LOL

ANd yes we are in the Pacific Northwest. A lovely victorian seaport. We still love the old box, but reality is surprising sometimes. We can manage it because we planned on these costs, but I see so many who walk into these places and find the costs turn them into house poor slaves to the latest leak (ok I'm still a slave to leaks sadly LOL).

    Bookmark   December 27, 2012 at 2:03AM
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Ah... I see now. It would be nice to have the money from a mega lottery for sure - but only if we could remain anonymous winners :p

    Bookmark   December 27, 2012 at 11:11AM
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Bridget Helm

at 22, having 15K in savings is something to be proud of. i think you ARE ready to buy a house, but a MAJOR fixer upper might not be the right house for you. However, without knowing the results of a GOOD inspection, we don't know how major of a fixer upper this cool looking home is. Get yourself a thorough inspection then reevaluate the situation from there. 35K for a home that is functioning does seem like a super cool deal to me. 35K for a home that you will fall through the floors and have pipes busting in the middle of the night.....wellll you get my point. ;)

so find out how much work it needs from an inspection then make a decision. good luck! let us know what you decide!

    Bookmark   January 3, 2013 at 8:55PM
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Sophie Wheeler

At 22, I had college debt and no savings. And no DIY skills. So yes, you are head and shoulders above most 22 year olds. But, in the scheme of things, that's still not a lot of money when you're dealing with old house problems.

By the time I was 25 though, I had 30K for a downpayment for a house, a goodly amount of DIY skills, and so I bought my first house. Which only needed everything. I ended up loosing my shirt on it and every bit of money that I put into it---just to get out from underneath the burden of the home. Don't make that same mistake. Don't underestimate how a home like this can devour every bit of money that you make. And then some. It's always hungry.

    Bookmark   January 4, 2013 at 11:15AM
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If the home is located somewhere you will be happy and have a job for the next 10 years, and you are willing to learn everything, get really dirty, give up frivolous shopping and eating out, and getting really sore muscles, then I'd say you are a very mature young adult, and this home purchase will likely be a very wise decision.

    Bookmark   January 4, 2013 at 11:30AM
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Don't buy it - so that I can get my hands on it!

Seriously, if it's something you love there's ways to make almost anything work but you do need to keep your head on your shoulders and know when or if to walk away.

I would suggest interviewing by phone a bunch of home inspectors and get one whose passion and speciality is old houses and is someone you can trust and talk to easily and answers your questions to your satisfaction. You'll know him/or her when you find him/her. That's the person who will talk to you at length on the phone because they're excited and passionate. If everyone you ask keeps referring you to the same guy, that's another clue that they're good.

Make offer contingent on the inspection, or if you want to spend the money you can even have it inspected prior to making an offer - a knowledgeable and skilled inspector should be able to give you good ball park #s you can use to either write an offer or come up with a budget. I would not mess around with the contractors just yet...unless they know and love old houses and can give you the BIG PICTURE and know all the houses systems incl plumbing, heat, electrical, structural, etc. The problem with calling in contractors at this point is that a lot of them might push their way of doing things and not tell you about other options, or even know about them - maybe theyd push new windows for example whereas a good inspector would give you the whole range of options including just repairing the old ones. At this point I would want just a good overview and ball park nuymbers and not detailed quotes for every little job. Hope that helps! Have fun!

    Bookmark   January 4, 2013 at 12:50PM
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I know you've already thought of this, but you will have property taxes to pay annually, too. You can get an idea of your tax base from county records so you can budget monthly for it. If you were getting a conventional mtg through a bank, you would probably pay the tax amount divided by 12 (which the bank would hold for you in escrow) in addition to the principal and interest every month. The tax man won't wait come next January.

This post was edited by mimi1947 on Sat, Jan 5, 13 at 10:08

    Bookmark   January 4, 2013 at 8:52PM
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If it is all original (AKA very old and not improved) and you intend to bring it to its former glory it may run you around $100 per square foot for the work. This is what a typical gut job to moderately high end remodel costs in Baltimore(I did construction for several real estate investors and it generally came out to 50K-70K per floor with the typical floor being 600sq ft).

That said, I have remodeled my own "old house" (1904 and still used gas lighting). When all is said and done it will have cost me $50K to do the whole job, but that is with every last bit of the labor coming from my own two hands and taking three years to acquire the materials/ salvage as much materials as possible. (2000 sq ft house).

    Bookmark   January 5, 2013 at 5:48PM
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So, lnew52, what did you decide to do?

    Bookmark   March 31, 2013 at 10:42AM
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I LOVE the house you are considering but I've lived in IL since 1986. If I was 22 yo, like you are, I would never put down roots in IL. The property taxes are ridiculously high and with IL's financial situation which is in the toilet, the taxes are only going up, up and up.

I can buy a house in NC/SC, same size as my present home, 5,000 sf, 5 acres with outbuildings, excellent schools and pay less then 25% of what I am paying in IL and my utilities are cheaper too!

    Bookmark   April 11, 2013 at 3:55PM
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"If it is all original (AKA very old and not improved) and you intend to bring it to its former glory it may run you around $100 per square foot for the work."

Not if you do the work yourself.

It is called 'sweat equity.'

"This is what a typical gut job to moderately high end remodel costs in Baltimore"

That is actually about the worst thing you can do to an old house with plaster walls and hardwood floors that may not even be possible to replace.

Drywall (or even veneer plaster) and old hardwoods are still not as good as 2 & 3 coat plaster walls and old slow growth wood floors.

Woods we now consider 'to soft' for flooring use in old slow growth are more than hard enough.

    Bookmark   April 11, 2013 at 4:45PM
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