How to Find a Killer-Steal-of-a-Deal-Old-Fixer-House
We've been looking at a lot of houses lately. I know, house shopping is totally naughty when we still have that giant backyard project to
finish start at the Ravenna House. Not to mention we've hardly even owned this house for nine months, and lord knows we don't feel moved in yet. But I just can't help myself. Old houses are always on my mind.
Somethings wrong with me...right?!
Well I thought I'd put my obsession to good use and show you guys what we look for in a house.
Beauties, right?! These are a few of the houses we've looked at lately. House number 1 was a cash-only gut-job that had the scariest bathroom I've ever seen. At $399,950, we seriously considered making an offer, but this one was a little too much work for us considering said projects at the Ravenna House. Door number two was an impeccably-finished house in a prime location just blocks from one of the best elementary schools in town. At $875,000, it was just a look-e-loo for us - but lots of good ideas. Number three was a bankruptcy-settlement that was really poorly marketed and priced at $489,000. Three bedrooms up, totally livable, and just a couple blocks from the lake. We made two low-ball offers on that one but no luck. The fourth house was a a huge fixer, ripe with potential, listed for the rock-bottom price of $350,000. There were 13 offers on the house before we could even get one in - it sold to someone else for $408,000.
Sadly, we don't own any of those houses, but each of them had elements that we look for. So let's talk about that. Exactly what we're looking for in a house. I'm going to lay it out in a list, because lists are good (and make me feel organized, even when I'm not). We'll call this the Grit and Polish's Guide to Finding a Killer-Steal-of-a-Deal-Old-Fixer-House
A Deal. I'm a girl that loves to find a deal. I plan major purchases around holiday sales, always ask about student discounts, - hey Garrett's still a student and I'm taking full advantage of that (what up West Elm!!) - and stalk sale racks like nobody's business. And when it comes to houses, finding a deal is the most important factor for us. We look for properties where we can earn at least 10% equity on the day we close. Our houses are our retirement plan, so each house needs to be a cash-positive rental or lucrative future sale. Having 10% in the bank, helps us get there. So how do you buy a house below market value? Sure there's a lot of luck involved (timing, seller, force majeure) but we have found success with some more predictable methods:
- Buy with cash - if at all possible, buy with cash. Sellers are usually willing to take less if you offer cash because all-cash deals close quicker and present less risk of a buyer backing out (here is a refresher on how we bought the Ravenna House for cash without the bank account to pull it off, and how we turned around and financed it).
- Buy off season - thunder storms help keep the buyers at bay.
- Buy something that needs a lot of work - I look for listings with phrases like "extreme fixer," "possible tear-down", and "not for the weary of heart". I've often found that someone else's tear-down is my idea of a beautiful old fixer.
- Waive contingencies - waive inspections, financing, and anything else you feel comfortable with. The less contingencies you include in an offer, the less risk to the seller that you will back out. But make sure you know what you're getting yourself into - schedule a pre-inspection and sewer scope before waiving an inspection and get pre-approved for a loan or have the cash in the bank before waiving financing.
- Be personal - submit a letter with your offer. Include family photos, or better yet, a photo of your family on the front steps of the house you're trying to buy (that worked for us on the Ravenna House).
Location, location, location. Location and getting a deal are the only criteria that are nonnegotiable for us. We do the would-we-want-to-live-here sniff test. Can we walk to a restaurant, a grocery store, or a park? How bad is the commute to downtown? Is there a view? What's the vibe of the neighborhood? We figure that if we would want to live there, potential renters or buyers would like to live there too.
Oldie. They don't make them like they used to. Really! I set my search criteria to pre-1940 but as far as I'm concerned, the older, the better. The lumber, the tile, the fixtures that were used back then were built to last. Sure you may need to do an earthquake retrofit (not as scary as it sounds) or upgrade the plumbing and electrical, but that's a small price to pay for something sound and beautiful.
Potential/Value Add. We look for properties that are easy to add value to. Is there unfinished square footage in the basement? How tall is the attic? What's the zoning? Can you split the lot into two? Can you add another bedroom? How about another unit?
School District. Even though Wilder is years away from elementary school (years and years and years as far as this mama is concerned), we try to buy houses in good school districts. Usually this correlates with prime locations, but not always. A good school district, keeps home values high and ensures a supply of eager parents wanting to move into the neighborhood.
Neighboring Home Value. This one's probably pretty self explanatory. I always scout the values of the neighboring properties before making an offer on a house. You can find all that information on Zillow. I put a lot of stock in the old adage: buy the worst house on the best block. If the neighboring houses are worth way more then yours', you can feel confident putting your hard-earned cash into the house.
Those beautiful pictures are from houses we've seen lately. The kitchen on the left is from a ginormous project that required more cash then we could scrounge up (but oh how I love that original kitchen!). The four shots on the right are from that lovely white tudor above (house #4). How about that natural light?!
Anyway, back to the topic at hand. My house hunting antics (read: Redfin addiction) often leads to frustration. We look. We like. But unless it meets our criteria (or at least most of it), then we have to say goodbye. Sometimes a teary goodbye. It's a heart-wrenching process that occasionally - every wee once in a while - is very rewarding.
That's everything we look for in a killer-steal-of-a-deal-fixer-house. What did I miss? Do you guys have any steadfast criteria you use to buy a house? Or tales of amazing deals? I'd love to hear it!
p.s. Check out this stunning attic renovation over at West Elm's blog Front + Main...seriously beautiful!
p.p.s. Why can't I find a house with wood paneling like this one? The only wood panelling I see is faux and from the 1960's and smells like stale cigarettes or cat pee.
p.p.p.s. It's official, New Orleans is amazing!