Author Topic: Cheap crap house?  (Read 4060 times)

alyxmj

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Cheap crap house?
« on: January 01, 2016, 05:57:30 AM »
My boyfriends parents bought a second house and are selling their current one to him for a lower price than market value. He thinks this is a great idea. I think the house is falling apart and needs way more work than he realizes AND we don't have the financial ability to fix it all right away (I have no issues doing the work itself). So the general question is: Would saving a significant amount on the initial cost of the house make up for the cost of repairs + the amount lost in other things like excessive heating bills for years til we can replace the furnace and possible random breaks that would need to be fixed immediately?

Specifics on the house:
Snohomish county area, Washington. Single story 1950s house, much of the original paneling, wallpaper, doors, windows are here. Addition done in the 80s to add master bed/bath, laundry and 2nd living room. Piping redone in the 90s. Kitchen redone 2010. Single pane windows, oil furnace that has to be filled all winter. Wood stove on the far end of the house with an unused chimney/brickwork on the other end. Uninsulated garage under the house (its like sitting on an ice box all winter). Pretty sure most of the attic and rooms themselves are not properly insulated (even with a heat vent, the bedroom stays about 10 degrees colder than the living room next to it unless you keep the door open). Roof probably needs replaced as well as decking to the front door. Little room/sunlight for gardening (higher food cost if I can't grow it). Haven't got an appraisal yet and the boyfriend doesn't want to, but zillow puts it at 240k and his parents are willing to sell it to him for 180k.

Specifics on finances:
~2500 a month single source income (I'm working through medical problems and may or may not be able to work). He has army resources for down payment on the house and has been pre approved for 200k through his bank. He works about 10 min of city driving away from home but needs to drive regardless of how close we are (sometimes needs to run people the ER which is hard to do on a bicycle). 2 cars, both fully paid off but they are old and require work often (they are labors of love more than transportation). Little to no savings, but little to no debt either. We currently live here and pay 600$ rent to his parents until he actually does the paperwork for the mortgage.


My honest opinion is we shouldn't be looking to buy a house at all right now, and that this house is just a money sink, but curious if this is just my bias against the house (I hate it with a passion) or if the price is a good enough deal to make it worth it in the long run. Hard to pay off a house if you're constantly trying to fix it. :/

frugal_c

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Re: Cheap crap house?
« Reply #1 on: January 01, 2016, 06:22:43 AM »
It all comes down to the specifics so can't give a perfect answer here.  Really you need to know approximately how much it would cost to fix it up ($60k can disappear pretty quick if you need to hire contractors for some of it, but can be quite a bit if you can do it ALL yourself).  Still, I don't think you would be saving that much money compared to buying a house that doesn't need work.

However, if you are renting for only $600 per month I don't think you will improve much on that by buying.   It sounds like you are basically just covering the most basic costs (taxes, utilities, house insurance) at that rent level so are probably taking advantage of his parents a bit.  I would probably keep renting it as long as they let you.

MsPeacock

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Re: Cheap crap house?
« Reply #2 on: January 01, 2016, 10:14:05 AM »
Any bank that is making a loan is going to require an appraisal. Aside from that, a home inspection, done by a good reputable inspector, can tell you a lot about the condition of the house. Typically I think of two broad categories of house repairs/improvements. The first is aesthetic things like painting, changing out light fixtures, taking down dated paneling, etc.  These sorts of things are relatively inexpensive, can do a lot to improve the way the house appears , and are generally easy DIY. The other category is big expensive stuff: structural problems, roof, furnace, new Windows, major electrical or plumbing work, etc. these tends to be expensive to very expensive and are often outside the ability of DIY.

A realtor can also answer questions about a fair sales price for the home. Your boyfriends parents benefit in selling directly to their son because they save ~7% from the realtors fee. However, if your boyfriend overpays for the house, he is saving nothing. I think there is more research to be done to determine a fair value on the house, what needed repairs would cost, and if your boyfriend wants to take on the financial obligation of owning a home.

mozar

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Re: Cheap crap house?
« Reply #3 on: January 01, 2016, 11:41:28 AM »
You hate the house with a passion. Do you really want to be with this guy? Sounds like he loves the house and he is going to buy it no matter what. Do you want to live in this house forever?

Roland of Gilead

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Re: Cheap crap house?
« Reply #4 on: January 01, 2016, 11:51:49 AM »
We also live in Snohomish county (hopefully moving this year to go on the road) and our taxes are $4400 a year on a house the county appraises for around $310k.  I am not sure we will be able to get more than $275k for it based on similar slow sales even though Zillow used to have it for $450K.  So there is some possibility that the Zillow number is just bunk.

But consider you are paying $600 a month, and our taxes on a house not too far from your fixed up valuation would be a large fraction of that.

Also, I would not go in on a house with someone before I was married.   That is just asking for trouble.

icemodeled

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Re: Cheap crap house?
« Reply #5 on: January 01, 2016, 12:24:04 PM »
With the info given, I would not do it. The estimated values doesnt really mean much, I wouldnt go by it really. You hate the house, its a large amount of money and what your paying now isnt bad. Add in all the repairs, if its things that must be done asap, and it doesnt seem like a good enough deal. Plus, without you being married can complicate it even more down the road. Not sure how serious you and bf are, but I wouldnt get involved with the purchase. If your bf does it on his own, thats his decision but its best for you to not financialy attach yourself to the house.

Telecaster

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Re: Cheap crap house?
« Reply #6 on: January 01, 2016, 12:56:53 PM »
(I hate it with a passion)

Says it all right there. 

Thegoblinchief

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Re: Cheap crap house?
« Reply #7 on: January 01, 2016, 03:44:26 PM »
1. Zillow estimates are worthless.

2. Even if a bank is willing to lend up to 200K, a $180K house on $30K income is a ridiculously dangerous price to income ratio. I can't believe no one has raised the red flag there.

So even if you loved the house, it would be a bad idea.

FIRE me

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Re: Cheap crap house?
« Reply #8 on: January 01, 2016, 04:39:27 PM »
My honest opinion is we shouldn't be looking to buy a house at all right now, and that this house is just a money sink, but curious if this is just my bias against the house (I hate it with a passion) or if the price is a good enough deal to make it worth it in the long run. Hard to pay off a house if you're constantly trying to fix it. :/

Sorry to be harsh, but where does the “we” come from? You're not married. If you're engaged, you didn't mention it. You don't work. It's his money, his parents, his house, his decision.

You also contradict your statement that the house is below market value by elaborating on its condition. Condition is part of its value. Even though it may need repair and updating, if it is below its actual market value, it is by definition a good deal.

RetiredAt63

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Re: Cheap crap house?
« Reply #9 on: January 02, 2016, 07:53:46 AM »
Re buying the house, FIRE me is right, this is your boyfriend's call.  If you want nothing to do with the house, and he buys it, you can treat it as a room-mate situation - you pay him rent, your share of utilities and food, and that is it.  Where couples, as opposed to room-mates, get in trouble in situations like this is that he may expect you to help with the DIY (labour and cost of materials), but you get no benefits in terms of increased house value, because you have no equity in the house.  He may not have these expectations because of your medical issues, but it is something to think about longer-term.  Of course if you help with the DIY you get the benefit of a nicer house, but that is another issue.  And really, if you BF can't handle the repairs on his own, he shouldn't be thinking of buying the house.  Probably as much sentiment as sense on his part, and if his parents sell to him they have an easy sale, so nicer for them too. 

Broader picture - You hate the house.  Would you stop hating it if all the repairs you listed were done?  Or does it have larger issues?  And what does this say about your relationship?  I get the feeling there are more issues here for you to examine than just the house.
After 3 houses bought jointly with my ex-husband, I can look back and say the two we both wanted worked out well.  When he pushed and I was reluctant, it ended badly.  To be blunt, the last house was part of why our marriage broke up.  I'm sure it has happened to others.


My honest opinion is we shouldn't be looking to buy a house at all right now, and that this house is just a money sink, but curious if this is just my bias against the house (I hate it with a passion) or if the price is a good enough deal to make it worth it in the long run. Hard to pay off a house if you're constantly trying to fix it. :/

Sorry to be harsh, but where does the “we” come from? You're not married. If you're engaged, you didn't mention it. You don't work. It's his money, his parents, his house, his decision.

You also contradict your statement that the house is below market value by elaborating on its condition. Condition is part of its value. Even though it may need repair and updating, if it is below its actual market value, it is by definition a good deal.

kathrynd

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Re: Cheap crap house?
« Reply #10 on: January 02, 2016, 08:20:38 AM »
My honest opinion is we shouldn't be looking to buy a house at all right now, and that this house is just a money sink, but curious if this is just my bias against the house (I hate it with a passion) or if the price is a good enough deal to make it worth it in the long run. Hard to pay off a house if you're constantly trying to fix it. :/

Sorry to be harsh, but where does the “we” come from? You're not married. If you're engaged, you didn't mention it. You don't work. It's his money, his parents, his house, his decision.

You also contradict your statement that the house is below market value by elaborating on its condition. Condition is part of its value. Even though it may need repair and updating, if it is below its actual market value, it is by definition a good deal.

My thoughts exactly.
What are you financially bringing to the table?...anything?
If he is supporting you financially, at least you can support him emotionally.

Jschange

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Re: Cheap crap house?
« Reply #11 on: January 02, 2016, 08:28:52 AM »
If all the serious fixes were done, and you did some cosmetic work, could it become a house you love?

Or could you do enough work living in it to make back the money in a sale?

I think the money questions are easy. The relationship questions are hard

Midcenturymater

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Re: Cheap crap house?
« Reply #12 on: January 03, 2016, 10:44:59 AM »
If you can keep renting do. A mortgage on that is going be over a 1000 plus taxes. Simple maths

Oh yeah and you hate it.
Living in a house we love makes us both very happy. I can't live in a house I hate. Life is too short for that kind of daily sacrifice to make what 30_ 50 k minus 7 percent when you have to sell it...and if you hate it it us possible there will be a big group of potential buyers down the line, who will feel that way.