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I never wanted to become a home owner, but rents are out of control in my area and when I bought, it was clear property values were going to skyrocket. I bought a nice but pretty modest house that had never been updated since its 1962 construction. I got a really good deal on it and my mortgage has a pretty low rate. Plus, although home prices are currently out of control in my area, it has a reputation for maintaining home value even during the housing crisis. In fact, part of the reason I bought my house was because a famous economist who I know personally said it was a good idea.
However, I did not realize just how much would need to be updated until I'd been living here for 6 months and stuff started to break. I need to rewire the house and probably install air conditioning, renovate the upstairs bathroom and kitchen, and landscape the front and back yards. I'm putting the costs at less than $100K and probably more than $85K. I have excellent credit and the renovation would probably double the value of my house.
I bought a home larger than I needed because I thought I would house my parents when they needed care, but my mother and I are now estranged and my father was only able to live with me for a few months before I had to move him into assisted living due to his worsening dementia. He is right down the street and I visit him almost every day, so I am not going to sell the house and move. I really have no intention of moving out of this house - I would like to stay here until I need full-time care (I'm currently in my 40s).
I'm planning to save up a cushion over the next year or so - tax rebates, bonuses and whatever I can pull together cutting back on spending in general to get about 6 months expenses stashed away. Then I will take out a loan for $100K (not sure what kind to get) and use that to make the necessary renovations to the house. Once the renovations are done, I am hoping to rent the two main floor bedrooms and (newly renovated) bathroom out to help pay for it since housing is in high demand in my area and likely to remain so even in an economic downturn. My job is pretty recession proof and I've been getting small but steady raises in addition to regular bonuses. With a 6-month cushion, I think I could untangle myself from the house with no major financial losses and simply start over if disaster befell me. But really, I want to get my house in shape, and it seems like taking out a loan and just getting it done is the best route.
The question is complicated. Paying for aesthetic upgrades should only be when you can easily afford it. But you're also talking about running a multiple-roommate situation.
If you want to do the roommate thing permanently and be tied to that, then spend money to make it work, after first understanding what roommates are paying these days in your area. If you're unsure, then keep to the really necessary repairs and other cheap upgrades. Professional landscaping sounds like terrible overkill.
If you get room mates, first get a rental real estate attorney to drawn up an allowable iron clad lease. People can take 6 months to get out on eviction, all legal. So get an iron clad lease. You might have better luck since tgey would see you and be living with you every day. (I'm a landlord, ask me how I know). If you provide furnished, keep it simple, bed, dresser, chair and desk, 2,sets linens and 4 sets bath towels. May be a clothes hamper. The less you furnish, the less they can steal, and they may try. ( we had one tenant who stole every thing, including electrical switch plates, and the toilet and vanity too!!!)
I would also suggest your lease lays ground rules for cleanliness of common areas.
I would also suggest you charge rent PLUS a utility fee, not try splitting it up. They pay you tent and the fee on or before the 1st. ( say rent$700 plus $75. [Or whatever it needs to be] utility fee. Be sure it will cover electric, heat/a.c., cable/wifi, water and sewer and garbage at minimum.
Now otherwise, a previous poster mentions crucial things. Landscaping IS overkill. Start with updating the electric, then plumbing if need be, tgen windows. Then MODERATELY update/replace the kit and bath.
But I'd do those AFTER you have cash to do the kit bath, or habe cash equity to get home equity line of credit.
If you can rent it out with it not updated, even if you charge less, ten save the money to pay it in cash.
Perhaps you can charge less than market, save for a year, and get the roommates to help with labor for kit, and hire out plumbing. Labor is your biggest uncontrollable expense.
Just don't get yourself too deep in debt. Especially if counting on room mates, they can come and go.
When I do a remodel I pay for it cash. I dont take loans. I just take my time.
The last two years we saved enough to
Fully landscape the property.
Next year we’re doing the kitchen
Year after painting the outside
I would d9 just what you need. You can probably do a lot of your own sweat equity. Only bring in a outside contractor if you need to. Get bids and stay on top of it.
Thank you all for the information and stuff to think about.
I have NO skills when it comes to home improvement. My best friends won't even let me help paint with their homes. Like I said, I never intended to become a homeowner - but I have prioritized living in my current location (I am very happy here), and it makes way more sense to own than it does to rent here. Also because I work from home, it has seemed best to have a stable location where I know I can work comfortably and no one is going to skyrocket my rent on me. Taxes doubled over the last few years, but they were negligible to begin with. My biggest fear has always been ending up in attached housing - the added noise was a huge stressor when I started working from home while living in a condo. My neighborhood now is very quiet, which I love.
I would not be going very fancy with the upgrades. In the kitchen I"m pretty adamant that I don't want new cabinets - I know diddly squat about home improvements, but those are quality handcrafted cabinets and you'll pry them out of my cold dead hands, lol. The stove also has a cool copper backsplash I want to keep. But pretty much EVERYTHING else does need to be replaced it is all nearing 60 years old. I want to do quality replacements but nothing fancy or dramatic - kitchen would be a tile floor, add in a dishwasher, new sink, new fridge, new oven, new countertops, which is STILL a lot. But nothing would be reconfigured that much. In the bathroom, things could get more complicated - my tub is currently very shallow, and I want something a little bigger and deeper but the space doesn't have a lot of wiggle room.
Since I'm in Colorado, I want the landscaping professionally done. I tried to do this on my own and it's just been a disaster - the ground is always hard so it's physically exhausting to try and get anything done and it takes forever. I'm from New Jersey - gardening and landscaping was EASY there. Here, not so much. Growing up, I don't know anyone who ever used a professional landscaper unless it was a guy to mow the lawn. Gardening here works best with raised beds. I like raising veggies and flowers - I just want to get the lawn done away with (I hate wasting water on grass), a few beds put in and a fence for the front yard. I could do the beds myself (though the ones I put in over the last few years just have not been that great), but I've been thinking about what kind would work best for a while now. It's the lowest priority, but I really just want a nice outdoor space. Right now, my yard just stresses me out. I can maintain it just fine, but getting it done right the first time around is kind of my intention.
I was thinking just one roommate (not multiple) but rent the two bedrooms to them as a kind of bedroom/office suite. So basically they'd have the upstairs of the house and I'd have the downstairs. Given all the professionals moving into the area, I was thinking I'd look for someone else who works from home maybe - as long as they don't like to play death metal at top volume while they work, it would be nice to have another person in the house during the day. Sometimes I feel a bit too hermit-y.
On the loan issue, it would take me forever to save up the money to get this all done, and really given my work situation, getting it done all at once is important. Last year, I had to get a new bathroom downstairs after a leak did serious damage as well as a new roof after a hailstorm. The disruption during all that work was awful and had a bad effect on my work productivity.
I pay for upgrades out of income, taking my time. Structural stuff that might damage the house gets done first: new roof if the roof leaks, exterior paint to protect the siding, safe wiring.
Hint, if housing is hard to come by, you won't need an updated kitchen. Clean, good paint, clean newer carpet will be plenty good enough to secure the best tenants.
If it gets hot there, air conditioning is a plus if you want tenants. Tenants like AC, dishwashers, garage door openers. They do not expect to get brand new carpet, state of the art bathrooms, granite kitchens. If you put in AC, you should be the only one to be able to access the thermostat for heating and cooling and temperature settings should be stated in the lease.
I bought a nice but pretty modest house that had never been updated since its 1962 construction.
I got a really good deal on it and my mortgage has a pretty low rate.
Was that 'good deal' $40-50,000 less than other similar properties nearby?
You know, the ones that HAD been updated?
Quote:
However, I did not realize just how much would need to be updated until ...
You didn't have it inspected when you bought?
No contractor estimates at all?
Quote:
I'm putting the costs at less than $100K and probably more than $85K.
Wow. That is a LOT of work.
Quote:
...I am not going to sell the house and move. I really have no intention of moving out
of this house - I would like to stay here until I need full-time care (I'm currently in my 40s).
...I will take out a loan for $100K (not sure what kind to get) and use that to make the necessary renovations to the house.
Is this insane?
You've already painted yourself into a corner.
The best advice is to stop doing more of that.
SELL. Now. Get the best price you can AS IS and move on unencumbered.
Don't ever volunteer to be a landlord ina property that wasn't bought with that in mind.
Buy something else, probably much smaller, that will meet your housing needs. Or rent.
This time... buy something that doesn't need work ... or buy at a price that allows for the needed work.
I never wanted to become a home owner, but rents are out of control in my area and when I bought, it was clear property values were going to skyrocket. I bought a nice but pretty modest house that had never been updated since its 1962 construction. I got a really good deal on it and my mortgage has a pretty low rate. Plus, although home prices are currently out of control in my area, it has a reputation for maintaining home value even during the housing crisis. In fact, part of the reason I bought my house was because a famous economist who I know personally said it was a good idea.
However, I did not realize just how much would need to be updated until I'd been living here for 6 months and stuff started to break. I need to rewire the house and probably install air conditioning, renovate the upstairs bathroom and kitchen, and landscape the front and back yards. I'm putting the costs at less than $100K and probably more than $85K. I have excellent credit and the renovation would probably double the value of my house.
I bought a home larger than I needed because I thought I would house my parents when they needed care, but my mother and I are now estranged and my father was only able to live with me for a few months before I had to move him into assisted living due to his worsening dementia. He is right down the street and I visit him almost every day, so I am not going to sell the house and move. I really have no intention of moving out of this house - I would like to stay here until I need full-time care (I'm currently in my 40s).
I'm planning to save up a cushion over the next year or so - tax rebates, bonuses and whatever I can pull together cutting back on spending in general to get about 6 months expenses stashed away. Then I will take out a loan for $100K (not sure what kind to get) and use that to make the necessary renovations to the house. Once the renovations are done, I am hoping to rent the two main floor bedrooms and (newly renovated) bathroom out to help pay for it since housing is in high demand in my area and likely to remain so even in an economic downturn. My job is pretty recession proof and I've been getting small but steady raises in addition to regular bonuses. With a 6-month cushion, I think I could untangle myself from the house with no major financial losses and simply start over if disaster befell me. But really, I want to get my house in shape, and it seems like taking out a loan and just getting it done is the best route.
Is this insane?
HELOC. Interest only payments for ten years (obviously pay more).
At least three bids for everything.
Avoid large sums upfront for work. Never pay them before they show up.
Since you want to stay where you are, there is no real rush to do most of the updates. Do the renovations in increments as you accumulate the funds to pay cash. I'd start with the rewiring as it could be a safety issue, then the air conditioning as that is a quality-of-life issue.
Once those are done, the rest is basically cosmetic, so you can take your time deciding what and how much to do for those items.
HELOC. Interest only payments for ten years (obviously pay more).
At least three bids for everything.
Avoid large sums upfront for work. Never pay them before they show up.
Thanks! Helpful information!
The roofing company I went with was awesome - very thorough, ethical and did excellent work. Do you think there would be value in asking them for references for contractors? I mean they don't know anything about kitchens but maybe they would have an inside scoop from projects they've worked on?
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