I KNOW our Realtor thinks we're nuts!

tinker_2006April 8, 2011

Cross-post, I posted this on the Old House Forum too.

House: 1920-1930 Old Florida style home.

We have all the estimates in to repair the old house we are in negotiations to buy. It need a new roof, septic tank and drains, all new electrical, window restoration and lots, and lots of other littler items (repair dry rot, showers, ceilings, etc)

The estimate is high (as we expected), in the $390,000 dollar range. We'll end up doing some things ourself, but for all the major items, we'll hire a contractor. We're pretty sure we'll be able to get this lower, to the $290,000 range.

The home is in SW Florida, very depressed housing market, but there seems to be a little heart beat of life starting...

So here is the current issue:

House is over-priced.

The house sits on a beautiful bay-front property, and the homes that sold here in when the market was good, was in the range of 1.5 -2.5 Million. The street has a mixture of houses, 75-80% are newer, Key-West style and others, old 1920-1930 cute cottage, beach style homes, and a few just old, 1960 plain ranch style.

Currently, one of the Key-West homes is on the market at 875,000 - but it's a short sale (and has been on the market a while). Another, ugly newer home is on the market for 1.3 million (and hasn't sold yet - on the market 6 months). One old, renovated home, no charm, just a plain style ranch was purchase last year for $595,000, remodeled and is on the market for $895,000. There is also another old, not cute house in foreclosure that is just under $500,000 (they are selling for land value only).

Okay, back to our property in question... I think the house is charming, a 1920-1930 old house, with beautiful floors and a sunny layout. The contractor is not an old home lover, and thinks we should buy and knock the house down and rebuilt new. Although my Realtor didn't come out and say that in so many words, he alluded to this thought as well. The land value is prime, and holds a higher value than the other home because it is 2x's as large, and has a beautiful pool area. We are trying to get the price down (have to get the price down) to make sense in investing money into this old home, and making all the repairs needed. There is no doubt that the location will always be sought after, and when property values eventually start to grow again, this area will rebound.

HOWEVER, once the repairs are made, and the house is beautifully restored, we'll still have an old house, wood framed (people view as a BIG, big disadvantage here in FL). It's not the "normal" Florida home, doesn't have all the hurricane codes, and we most definitely will limit the future, potential buyer market when we sell someday. DH thinks that the land value and location will always make it a salable property...?? So here I am, just throwing out some concerns I have been pondering about! Please tell me I'm not crazy for wanting this old house!

Here is a link that might be useful: youtube video of house

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What the heck renovations are needed? That house is gorgeous, with gleaming hardwood and a high-end kitchen and bath. It looks move-in ready to me, other than a crappy choice in paint colours and wallpaper.

Seriously, please tell me what needs to be done that would cost $300,000-$400,000 !!!

    Bookmark   April 8, 2011 at 7:55AM
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OK, I see it needs a new roof, new wiring, (new?) windows... still, around my area, this would be under $100,000.

    Bookmark   April 8, 2011 at 7:57AM
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Oh the hidden things!!

The roof, windows, septic, electric .. the big items are over $100,000 (about $112,000). What the pictures don't reveal, is that the roof leaked, causing a lot of ceiling damage in many rooms. The exterior has many, many areas of dry rot, the porch is fallen apart and unsafe, 2 showers need to be totally redone, due to water leaking and rotten the floor joist, the list really goes on and on! The house has beautiful bones, but was neglected and needs a lot of TLC! We have restored old homes before, so the restoration is not outrageous.

So the question is.. is it worth it!

    Bookmark   April 8, 2011 at 8:13AM
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And the kitchen.. looks nice in the pictures, but the cabinets are not in great shape, cheap and doors are fallen off.

    Bookmark   April 8, 2011 at 8:14AM
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This is why I get a building inspector when I buy ;-)

Using your heart, it's probably worth it if you're going to stay there.

Using your head, it's probably NOT worth it, as a new, modern, hurricane-proof home would be of more value when selling. Especially since this is the professional advice you've received.

    Bookmark   April 8, 2011 at 8:28AM
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Is it possible to find out in advance what hurricane insurance would cost and if the house can be fully covered -- wind, flood, mold, whatever's recommended in your area?

    Bookmark   April 8, 2011 at 8:36AM
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In terms of the finances, your realtor and contractor know the local market. If they are telling you that you are buying a money pit, you probably are.

Of course, it is still your choice. A house doesn't have to be an "investment." If you have the money to spend, it is perfectly reasonable that you spend it on things you enjoy (like an old house). On the flip side, if you are borrowing the money to pay for some/most/all of this, then you have to consider the risk you are taking.

    Bookmark   April 8, 2011 at 8:38AM
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It is charming. I'm curious...do you have an idea of how much it would cost to tear down and rebuild? Or maybe a better question is what could you build on that lot for $400,000? New homes can still have character.

    Bookmark   April 8, 2011 at 8:51AM
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Bill, yes.. that makes sense. Obviously, it won't be an investment, (it's a cash purchase) I love old houses, the charm... but not everyone does. This house is solid, has good bones, and can be restored to a beautiful home, BUT.. no matter what we put into this house, it will never be a "Florida" home. That's why I love it.. it's not a cookie cutter Florida house. A little more background, we were actually planning on building a home, it would have met the hurricane codes, but our building plans were not a typical Florida home either! I was planning on building a home .. more "old fashion", so finding this house just make my heart skip a beat!

Colorful, we have a ballpark.. it's expensive, ALL insurance in FL is expensive! Just part of living here..

otta, we hired an inspector, septic, electrician, general contractor and roofer.. that's how we came upon the prices. We are under contract with a "due diligence", so basically, we can go back to the table and re-negotiate. We have 1 week left to determine what to do.

    Bookmark   April 8, 2011 at 9:09AM
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Maureen, we actually have been working on plans to build a new home - for the past 9 months. It was just so stressful, and we were still on the plan stage! We have built about 4 other homes, and restored 3 homes, so we know what we are in for.

To answer your question, the house we were going to build would be over $500,000 (excluding the land). If we build a new home right now, on this bay front lot... we'd probably lose money because of the market. However, down the road, it would be more appealing to another buyer because it would be newer, up to code, etc.. but what a shame to tear down an old historic house! The town it is in, was once very historic, and they ruined a big portion of it's charm (IMHO).

    Bookmark   April 8, 2011 at 9:15AM
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I completely understand the old house bug. We're restoring a 1912 colonial ourselves in a neighborhood on the national historic register. We certainly appreciate the charm of old buildings. It is a labor of love though - definitely not a money maker. Even doing almost all of the work ourselves, we'll probably just break even financially. In the long run, it might end up being a decent investment, but in the short term we know we are just paying for lifestyle and location. That is fine though. Some people spend money on fancy cars or expensive clothes. We spend it on sprawling front porches and the luxury of being able to walk to shops and restaurants.

    Bookmark   April 8, 2011 at 11:14AM
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Fori is not pleased

It's not a house. It's a hobby. :)

I'd do it, but then your Realtor would probably think I was nuts too.

You can't get what that house has in a new house. The property is quite amazing, too.

    Bookmark   April 8, 2011 at 11:29AM
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If it made your heart skip a beat ... you're already emotionally attached. Since it sounds like you can afford this and the changes that need to be made, go for it.

I'm not a tear down type of person ... and actually would never want to live in a new built home. Many people will think I'm nuts too ... maybe I'm am ... I don't really care!

    Bookmark   April 8, 2011 at 12:08PM
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Not being familiar with your area, cannot give adivce, but have you talked to the building dept. Many times when you update any homes, all wiring, plumbing etc must be brought up to current code, that means in your area, they may require it be brought up to hurricane codes, plus, if you do buy it can you get insurance etc.

    Bookmark   April 8, 2011 at 1:55PM
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Well, another meeting tonight, I have my fingers crossed, and want to stay nutty! I am emotionally attached to the house, and DH is to the property!

Marie, we are very familiar with what the building/county requires, as we renovated another house here about 10 years ago. They have a 50/50 rule.. if you change more or improve more than 50% of the value, they would make you bring it up to code, and that could mean taking the house down. The septic and windows won't count, and I'm not sure even replacing and repairing the roof would count.. and the other stuff, I'd do a little at a time if required, and we'd get under the rule.

    Bookmark   April 8, 2011 at 2:58PM
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Why wouldn't you want to bring the home up to current high wind standards? If you're going to be sinking that much money into a reno, wouldn't you want to make sure that your home is more likely to withstand a storm? Yes, it'll be a LOT more money to do this rather than do a teardown and rebuild, but the home would still be standing if another Hugo came ashore. If, on the other hand, you cringe at the expense of bringing it up to code, then in your heart and in your head, you're leaning towards rebuilding a new old house. Use some salvage items from the present home and rebuild it exactly as it stands, or as you envision it could be after your reno. You'll be wisely investing your money instead of putting it into a money pit, and you'll get something old and something new at the same time.

    Bookmark   April 8, 2011 at 3:18PM
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There really is no way to bring this wood frame house up to current codes, the roof and windows will be up to code, but the structure is built, and the rods that go into new builds can't be retrofitted into this old house.

Building new... hummm.. really don't want to go that route! That is what brought me to this house, as I WAS in the building mode. Just wasn't able to get the house started! I never thought I'd find a house I liked, and I actually I wasn't looking. I found it online through the MLS, and it is THE ONLY house I reconsidered building for. If it doesn't work out, I will have to go back to building, however, building an new old house would be very, very expensive.

    Bookmark   April 8, 2011 at 3:47PM
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I stand corrected on the roof, as I just spoke to DH and no, the entire roof would have to come off to bring it to code, which means all the ceilings would have to be replaced. If it rained during this time, I hate to think of damage. The house has stood for almost 100 years, and living in Florida is a risk everyone takes, new or old construction.. guess that's why our insurance rates are so disgustingly high!

    Bookmark   April 8, 2011 at 4:35PM
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You would have a heart attack if you saw the old house we're trying to buy.

That house is adorable. I would fix it. And I'd do it cheaper. Those prices are way too high.

    Bookmark   April 8, 2011 at 11:59PM
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I just showed my husband the video. He said, "Is this a joke?" That's how nice that house looks.

    Bookmark   April 9, 2011 at 12:04AM
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Love, no I wouldn't have a heart attach, trust me.. the one house we bought 10 years ago, I'm surprised they didn't lock us up in a mental hospital.. it really was that back! It should have been condemned, but I don't think the county knew how bad it was. This house IS absolutely livable after a good cleaning, (and bug tenting to remove termites and cockroaches!) It really just has been neglected on major issues, and need some TLC. I hope we get it.

    Bookmark   April 9, 2011 at 7:45AM
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Good luck tinker, that is one of the nicest FL homes I have ever seen. I love "old" and feel preservation is important.

    Bookmark   April 9, 2011 at 9:47AM
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You are always going to have folks who THINK new is better. It's the way they are wired. A good many of those folks are in the real estate profession. They are looking at things from the point of the bottomline. Not always the best place to measure success from.
I'd start by finding a different contractor. When it comes to contractors you generally have two types the one ones who like new because it's fast and easy and it fattens their wallets with a quick turn around and the the ones who are masters and will work with you to save what they can. Generally speaking the latter is more costly but they also have the advantage of being better problem solvers and better at their craft. There seems to be a point of pride they carry which the gut and build guys just don't have.
That house has character. It has a good location and if you can afford to fix it up so it maintains that charm then I'd go for it. You fell in love with it as it is. Fixed up and maintained somebody else in the future will love it just as much if not more.
My biggest rule in home ownership is go with your gut. If your gut tells you it's better to save it than flatten it them do it.

    Bookmark   April 9, 2011 at 3:20PM
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carol, I think you're right, 100%! Right now, a new offer is on the table, the seller is away for 2 weeks, and I'm leaving tomorrow.. so just keeping my fingers crossed. This house has been on the market over 1 year, NO offers have been made, except ours... so we'll see. *IF* we end up getting this house, we already know that we would seek out a different contractor, one who appreciates older homes AND the quality!

    Bookmark   April 9, 2011 at 9:26PM
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I was thinking my husband and I will come down and do that work for half the price you were quoted! And we'll still come out with a pretty penny for ourselves! lol

You ever watch that show, I think it's called Rehab Addict on the DYI channel? This chick buys old houses and renovates them into what they were when they were first built. She specializes in the old houses. She does a beautiful job. Then she sells them. Speaking of which, whenever I've sold a house, the old ones that I fixed up are the ones I made the most money on.

Hey, I'm just wondering. How do you know there were "NO offers" on the house? Did her agent actually spill the beans on that?

    Bookmark   April 9, 2011 at 11:11PM
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I commented on your other thread and can't believe it needs all that work. The images are beautiful. My contractor friend has a saying. "They don't build them like they used to, and thank god for that." I suggest getting an estimate to build the same home. Is the slab/basement reusable? Waterfront is a safe investment in my opinion. The only place they are creating more waterfront is in Dubai and who wants to live there.

Here is a link that might be useful: Sell your home in Andover MA

    Bookmark   April 11, 2011 at 9:40AM
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beachlily z9a

NA, I know of no waterfront home in FL that has a basement. Basements are very rare here.

    Bookmark   April 13, 2011 at 3:01PM
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Circus Peanut

Tinker, did the sale ever materialize? I'd buy that gorgeous bungalow in a heartbeat. It's crying out to be spiffed up and loved.

Re. the rain, I had to smile -- "the entire roof would have to come off to bring it to code, which means all the ceilings would have to be replaced. If it rained during this time, I hate to think of damage" -- I'm on a very different coast (Maine) and it would be a miracle to get re-roofing done without a few showers. If a roofing/ceiling contractor can't deal with a little rain, you've got the wrong guy. :-)

Crossing fingers for you!

    Bookmark   May 24, 2011 at 8:51AM
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circuspeanut, YES! We closed May 6th, and after closing we had lunch and headed to the new/old house.. and it started pouring and the roof was leaking! So within 60 minutes of handing over a VERY BIG check (Bay Front property).. we were leaking! We've been there everyday, and the list of things keep growing, but when the day is done, I STILL see a very charming, beautiful and unique home.. it's just going to take a lot of time and $$.

Thanks for thinking of me and asking.. heading there now.. have a great day!

    Bookmark   May 24, 2011 at 9:06AM
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Tinker....I just read your post....and CONGRATULATIONS!!!

I absolutely love whatever you do to your homes...you have a talent that few have...you have a vision!! The pictures of your new/old home are beautiful...and I know you will whip this house into a show place in no time :-) You will indeed make it a charming and unique home. I hope no storms ever come your way...but you kinda take the chance like we do here in the with the tornadoes.

I know you were having a struggle in getting your plans just right for your new build....I felt your pain. I certainly hope that I find that house that makes my heart skip a beat, so we don't have to build again...but I am really attached to the land/lake that we bought over 3 years ago...sort of like your DH.

I'd love to have the house you just sold...I followed you through all of your building and decorating dilemmas...even the returning of all of those lamps~~~LOL

Please keep us posted on your progress and don't forget to post pictures.

    Bookmark   May 28, 2011 at 3:03PM
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phoggie, thank you, you're sooo sweet! You actually have more confidence in my decorating ability than I do, I always 2nd, 3rd, 4th guess every decision! LOL

I'm thrilled to end the building process, it was a long 9 months of getting no where! I just found this house on a day of frustration, and it was the ONLY house we even looked at.

You really have a great memory.. I'm chuckling, remembering how many lamps I returned! We are still living in this house, and will put it on the market once our new/old house is ready for occupancy! I'm making my way around on the forums.. old house, kitchen and I'll eventually end up on my favorite one, the decorating!

    Bookmark   May 28, 2011 at 8:29PM
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