I bought a house!!!!

Fullers Farmalls · Jan 13, 2013

First off I am 21 and have a semester left till i get my degree in Environmental Science-Conservation Ecology. My mom asked me if I would be interested in a house that was going up for tax sale. My grandmother and I went and bid and won. Its a cememt block house with an attached garage. The house needs a ton of work and I have no problems with that. When we got the house it had 16 inches of water in the basement. Has been empty for 6 years. But prior to that had a new furnace (thats now probably ruined) all new electric run and new plumbing. Thats the good(ish) The bad: needs a new roof, all new drywall, and the list goes on. I paid about 1/5 of what the lot alone is worth. Even if I do decide to tear down the house I can make my money back in the materials that are there. So any comments to a new home owner that has a ton of work on his shoulders. Either tear it down or remodel it top to bottom and rent it out. Thoughts? PS I will be using my tractor to remove some of the debris and level the yard.

sideconsole4020guy · Jan 13, 2013

First I will say congratulations. I am in the same boat right now and am dealing on an acreage right now ( I am 23). I guess as to wether or not to tear it down is all up to you as to how much work you are going to have to put into it. I guess I am lucky as the place I am dealing on has a 1 year old house, but I will also say that dealing with the bankers and finding financing is about as much work as totally remodeling a house I think. Any way congratulations and good luck

Earl-IL · Jan 13, 2013

Post some pictures !!!!!!!!!!!!

Fullers Farmalls · Jan 13, 2013

They are coming tomorrow. I hope so anyway.

big fred · Jan 13, 2013

First of all, congratulations! I think I'd recommend a visit to your local building office (permit office) to get acquainted with the requirements. Depending on where you live, you may need a permit if you plan on doing any plumbing, heating, structural or electrical changes. The building office will let you know. You can always proceed without permits, but if there's a fire or flood later, the insurance company might deny a claim on any work that isn't to code or done without a permit.

As for what to do with the house, I think I'd do the remodel if the house is in character with the neighborhood. Roofing is pretty straightforward and easy. Drywall is something I'd farm out, since you can generally hire it done for just a little more than the cost of materials (the pros get a good discount). And speaking of discounts, make sure you ask the lumberyard or home center for discounts. If you have a big order, you can often save 20-30%.

Good luck!

mecanik69 · Jan 13, 2013

I have been in your shoes. I decided to redo the house, been going at it for 22 years. You get one thing done two more go wrong. It is a never ending battle. I wish i would have tore it down and started over. If i would have it would probably be about paid for. There is nothing easy in these old homes!

LAA · Jan 13, 2013

How long it will take to get your investment back and make any money on a rental prospect depends on the local economy and housing demand. If you bought the place for 1/5 of what the lot alone is worth that does not sound good for the local housing market, but at the same time you have a good lot, cheap, so you win either way.

ShadetreeRet · Jan 13, 2013

Congratulations! Nothing like having a piece of real estate to call your own. Seems like you got a real deal. If you bought it for less than what the lot itself is worth, and it needs the repairs you mentioned and more, I would seriously consider just demolishing the house and just hang on to the land for a while. I say this because I spent one summer getting a house ready to live in that had been vacant for a few years. What nights I didn't have to work overtime on my job I was working on this house until midnight or later and weekends also. It was a real PITA and I wouldn't want to do it again.

JerryS · Jan 14, 2013

Depending on how your lot is laid out, I'd put a metal roof on it and use for storage and/or a workshop, and start fresh on a house. I've tried to rehab two old houses, and it just ain't worth it. As somebody else said, you fix one thing and something else pops up.

huntingreen2day · Jan 14, 2013

If the house is solid and the new electrical and plumbing are up to snuff you might be able to fix the rest up and rent it or live in it depending on what you do after you graduate. Best of luck whichever way you decide to go.

Dick2 · Jan 14, 2013

Cement block houses are especially hard to remodel and upgrade. After lots of work and expenses, you will have more $$$$ in it than it is worth.

It would be better to clear the site and put up an energy efficient home - IMHO.

Wile E · Jan 14, 2013

How big of a lot? How big is the cinderblock house?
Dick2 may be right, just doze it down and start over with a wood house.
What did you pay for it?

MarkB_MI · Jan 14, 2013

Before you knock it down, check with your building department to see if you're going to have any problems on the lot with new construction. Have you ever seen where someone knocks down a house, but leaves one wall standing, then builds a new house around that wall? If your existing house doesn't conform to setback requirements, you might not be able to build a new one in the same location; the existing house is grandfathered in.

Make sure and do a title search on the property to make sure there are no outstanding liens. A tax sale doesn't necessarily convey a clear title, and laws vary by state. You can hire a title company to do your title search, but there's no reason you can't do it yourself. You can go to the courthouse and do the search, but many counties now have their records on-line. You may want the help of a lawyer to clear the title if there are existing liens.

You need to be realistic about your budget and timetable. Are you sure you're going to stay in the area after you get your degree? Building or remodeling a house is expensive and time-consuming; I'm guessing you'll have problems getting a construction loan fresh out of college. If you end up taking a job even a couple of hours away from the house, it's going to be tough to work at your job full time and still work on the house.

Good luck with your project.

VADAVE · Jan 14, 2013

First question Fuller--Who paid the 4+% external_linkcare tax? The seller or you?

It's a block house why knock it down? As long as the water is not coming THROUGH the walls you're fine. And I'll bet the water problem is the roof.

larry@stinescorners · Jan 14, 2013

yes,post some pictures,and congrats to you ,best of luck

glennster · Jan 14, 2013

If the basic structure is sound, id roof it first, remodel it and rent it out. Form an s corp or llc to manage the rental, it has many tax advantages. Rental market is strong now. I have a number of rental properties. Email is open if any questions.

Dick2 · Jan 14, 2013

Check the state laws regarding tax forfeited property. I bought houses at tax sales in ND and received a clear title 2-3 weeks later. I resold the property without any improvements and made a reasonable profit.

I will not buy a tax forfeited property in AZ as the previous owner can re-claim it anytime in the next 6 years by paying you the amount that you paid for it. The buyer will lose the taxes that he has paid during that 6 years, PLUS any improvements that have been made to the house or property - and the buyer can not resell it in those 6 years.

Son is remodelling a cement block house and it is turning into a nightmare money pit!

showcrop · Jan 14, 2013

Not enough info to give very specific advice but I will 2nd a few things already said. Check zoning laws with building inspector before knocking it down. Sometimes zoning prohibits, or makes new construction prohibitively expensive, on a particular lot. Making it necessary to first add on, then live in addition, and tear down original and then add on again. Required set backs is one example. Before starting anything find out how much it will cost to bring the block walls up yo the "R" value that you need.

Greg K · Jan 14, 2013

With 18" of water in the basement I will warn you to watch out for mold! ALWAYS wear a dust mask down there so you don't get sick.

If the house is still straight and square I would roof it first and then remodel the rest and either sell or rent it. Make sure you check your local codes and building inspection programs just to cover your but.

Traditional Farmer · Jan 14, 2013

It might be the bargain you think it is and it might not be as there are lots of real estate experts in every area that check out such sales if they quit bidding you can bet that was about the true market.In my state the orginal owner has
1 year to come back and pay up to reclaim the property any $$$ you'd of put in it will be lost.
I expect you'll find that you get more $$$ into fixing the house than its worth in the end.A house just down the road from me was sold several years ago and totally remodeled they have about $600,000 into it and on a good day it might bring $325,000.

MFPoor · Jan 14, 2013

Most states, previous owner can come back and reclaim their property for what was paid, but will owe you INTEREST. In Ky, they owe you 12%. Darn near impossible to earn that sort of interest on monies in bank, ect.

More of a long term investment than a get rich quick/get cheap price on valuable property plan.

At any rate, I'd investigate before investing money in property.

Larry NEIL · Jan 14, 2013

Good luck with your new house! Bought mine back in 1962 two months before UI was 21. Dad co-signed. Kinda same situation.

Tony in Mass. · Jan 14, 2013

Everything everyone said so far is based on experiences where THEY live. No one tears down a house arond here, cause you will need a tenth the permits as a demo and rebuild. You got to start with the roof, patch repair, look for leaks and bad spots. Don't worry about pretty yet, just get it water tight.
Once that is done, you slowly work under it one job at a time till it's livable, then finshed. Water in the basement ain't the end of the world, but you got to know how it got there, abandoned house? They let the pipes freeze? Had a sump pump, but no one paid the power bill? Furnace might be shot, but nowdays, a new efficent system might be a good move anyway.
Don't go nuts over wiring, I got knob and tube from the 1880's, re-do that stuff as you see problems. If the plaster is rotten, take the time and money to super insulate under it, sheetrock can be last on your list, not pretty, but who you impressing right? And when you have a $100 bill laying around, get a new double glazed window from Home Depot. I did that to 3 houses, and must have saved a 1000 in heating from each one over the years. As you trash the sheetrock is a good time to do that room's windows, one at a time, no rush...
BTW, I don't don't how some real estate laws get by in some states, but if the county gave you a deed, and you get- even a free public lawyer- to read it over, get to work! and congradulations!

Rick Kr · Jan 14, 2013

Congratulations.

Lots of good advice. I dont think anyone is trying to scare you just cautioning you.

Take your time, estimate carefully, and stick to your budget. If you do, you'll have a house you can make a little profit on or live in and enjoy.

In the end, you want a house you can sell for $50k, that you have $40k in it. You can determine a rough budget by what other housees in the area are worth.

Good luck you'll do fine,
Rick

ss55 · Jan 14, 2013

Congratulations! First houses are a source of pride, fun, troubles and they are a real education. Post some pictures when you can.

As others have said - give it a good inspection and evaluate what you have before you stick any money into it. You didn't say what area of the country you live in or if the house is rural or in town. Sixteen inches of water in the basement during a severe drought would signal a major ground water problem around here. Take a good look at the foundation, the basement floor, drainage around the house, the well and the septic system as repairs to these can cost a lot more than a new roof.

Renting could be a mixed bag. Rent for a home on a gravel road can be pretty low and they are also harder to resell. Some states have a "homestead deduction" for owners who live in a house. If you rent it out you loose the deduction until you have lived in the house for a full year again.

The people I know that make any real money renting out houses buy them cheap, they don't make any repairs until the law says they have to, and they are pretty ruthless with their tenants.

Take good stock of what you have. You have a very short amount of time that you can still back-out and cut your losses if you need to go that way.

Good luck!

Paul from MI · Jan 14, 2013

First, make sure you have clear title to the place before you do anything. Then I'd find someone who knows what needs to be done to re-hab the place to advise you about what to do. It'll save you a lot of work and be the best money you will spend, especially if you have limited construction experience. With a lot of sweat-equity you could end up with a valuable piec e of property at a very reasonable cost.

Rich_WI · Jan 14, 2013

Block houses are a landlords dream.... roof it, skim coat some plaster on the walls and throw in some cabinets and appliances - done. Ever have to fix the drywall behind a door where the animals.... I mean.... tenants slammed open a door and put the knob into the wall? Of course you have, but not in a block house. Ever fix the drywall where some 22yo UFC wannabe pounded a hole in the wall? Of course you have, on almost every turnover. Not in your block house though. Ever have a call on Sunday morning to go replace a wood door jamb because some drunk locked his keys in the house so he kicked in the door? Sure but not in your block house. I could go on and on but I think you get the point. The thought of tearing down a perfect rental makes me cringe. Do it right, do it smart and your money tree will be very generous to you for years to come. Just dont get wound up in the "Im the landlord and its my house" kind of thing, its a rental which means its just a bank account that you do a little different kind of work to get interest on every month.

I bought a house!!!!

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