Buying a house that needs repairs

schlarmaNovember 14, 2010

My wife and I are really close to putting a contract on a 2nd home. It is a double lot, both are lakefront, with a boat house. The house is small and needs lots of work.

The floors are basically plywood and some of the walls are not intact but the house is livable.

That is ok because we really jsut want the lots and will try to rehab the house temporarily but when we are ready to build we might just demolish it.

I know the seller will not do any major repairs but what things do i need to think about when preparing a contract offer?

My main concern is getting a mortgage which would be a second home for my wife and I. Is the house in too bad a shape. The real money is the land on the lake. That is the only contigency i think i may need. Financing.

What else should i say? Will get an inspection just to see what i am getting.

Any input would be appreciated.

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I would look into what the town/state/lake association will allow you to do with the house/property. Where I can you cannot expand a waterfront home more than 30% if it is within the "protected area", which varies from 75-100' from the water. Since most older houses (here at least) were built much closer than that to the water, there isn't much that can be done with these "camps" to make them larger.

Will a septic system be required? Make sure the land can handle it if it does.

A realtor experienced with lake front properties should be able to walk you through all the issues.

    Bookmark   November 14, 2010 at 10:03PM
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It sounds as though you are buying a double lot that has an 'encumbrance' (the house). LOL Can you get financing for just the lots?

Be careful about sinking money into something you are going to tear down. You may find that whatever government has jurisdiction there will not issue a permit for occupancy to a new owner. It may have been grandfathered in 'as is', but a new title could mean it would have to be brought up to code.

    Bookmark   November 15, 2010 at 12:34PM
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"The floors are basically plywood and some of the walls are not intact but the house is livable."

A house that needs a lot of work is going to have a problem being mortgaged.

    Bookmark   November 15, 2010 at 12:46PM
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I think you want to talk to a local RE lawyer to be sure you get the right answers to your questions.

    Bookmark   November 15, 2010 at 3:54PM
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Don't forget to find out if there are right of ways for the properties behind you or on the other side of the road. Very often lake property has such clauses to allow others in the area to use the waterway.

You need to know if you can put up a fence, regrade your property without major problems or permits and if the lake is going thru any kind of major clean up where you might be expected to put in a grinder pump.

Also find out if there's a lake group you have to pay fees to.....if you rebuild your dock do you have to have a permit? Floating docks here have to be registered and a ten dollar yearly fee paid. How big of a boat can you have do they have regs about that? Where's the boat launch and is there a fee or a key that needs to be fetched when you want to take your boat in and out.
Are there quiet times on the lake?
Pay careful attention to who your neighbors are and if they rent out or use their place themselves.
Does your drinking water come from the lake or a well and when was the last time it was tested professional?
Check your insurance too. Some won't insure a seasonal place that is heated with a wood stove or if they do they will soak you but good for it.
How close to the house can you park? Is there room for guest? Is it going to be a long haul to bring stuff in and out of the house?

    Bookmark   November 15, 2010 at 4:53PM
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If it cannot be repaired I wouldn't bother, one would have to estimate the costs of repairing everything if it is possible to see if it is worth the investment... just my 2 cents

    Bookmark   November 22, 2010 at 4:04AM
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This sounds like it needs to be a cash transaction rather than a mortgage situation. It's already difficult in this lending climate to get a mortage for a second residence, and one in this condition might nix that possibility entirely. Add in the endless red tape regulations of any wetlands situation, and this could quickly become your worst nightmare instead of a relaxing vacation home. You need a LOT more information on hand to even decide if you want to make an offer, and you need to be prepared to go it without a morgage, because that may be the only way it can happen.

    Bookmark   November 22, 2010 at 10:17AM
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Is it a natural lake, or one formed by a dam. If there is a dam, who is responsible for it? We, and dozens of others, got assessed by the county for $10,000 each because they rebuilt our dam.

Are you looking forward to a peaceful place, or one where you can party outoors? You may want to check around and see if you can learn if others have blaring music on their back patio, dock, etc. when they have people over.


    Bookmark   November 22, 2010 at 3:44PM
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We just sold our riverfront house which was a second home. One of the contingencies of the buyers was that the house had to appraise at or more than the selling price. Most offers on houses now have that stipulation. We never knew what the appraisal was, but the offer stood, so I guess it was on target. Our lot was also the valuable part of the parcel. The house was just a cottage, livable and with all mod cons, but had 2 small bedrooms and no closets except a broom closet.

Also, the inspection turned up termite damage and the brown water went under the house into the river (we had no idea that this was the case), so we left credits at the closing to repair these problems. (They had gotten estimates.)

So all in all we were lucky to sell it in this market. We were asking $250,000 and they offered $240,000 which we were glad to accept. But it is a lot of work to own a second home. We sold it because every time we went there, we had work to do, garden work and regular maintenance. We are senior citizens and it just became too much for us.

    Bookmark   November 22, 2010 at 6:45PM
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Blueheron -- Congratulations on closing on your property -- and in this market! I can commiserate about the upkeep. I'm already making my list for maintenance on our Maui condo. We're there for a bit more than a month and love the place, but I estimate half the time will be maintenance-involved! We would never have bought this if it didn't nearly pay for itself as a vacation rental -- nor if we didn't have a good management team on island.

I learned some of the negatives about 'second homes' when my aunt and uncle had a both a city and a country house in New England and a winter home in Florida. Hard to keep track of what is where, and a lot of car, pet and 'help' shuffling.

    Bookmark   November 23, 2010 at 11:37AM
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