Author Topic: House renovation partially done, moving out of state. What to do?  (Read 9537 times)

Landor n Stella

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I'm sure many of you have been following my house renovation a little bit on my blog Heartland House ww.heartlandhouse.wordpress.com.

A brief recap if you don't know the back story: We bought a house 10 blocks from where we currently rent and 5 blocks from work in June last year for $7,200. Yes, an entire house for $7,200. I was bored and needed a project, and I wanted to do something significant. We had the money in the bank and paid cash. Obviously it was in terrible shape and needed lots of renovation work done. We've been slowly working on it for the last 8 months, just weekends mostly because of having full-time jobs and also part-time work on the side.

Then in December I unexpectedly was offered a job working for a company I have admired for a long time - a dream job - and it requires us moving across the country, from the Midwest to California. We're leaving in a couple of weeks.

The house is not done, in fact it's about halfway. It still looks like crap from the outside, and inside it's not much better if we are just talking about aesthetics. But all of the hard, unsexy things are done: new electrical service and panel, house is 90% re-wired, brand new roof with 30 year shingles, structural work is done, revising the floor plan and moving walls around is done, and I'm almost done with all new plumbing and installing a new water heater. There's a new furnace in the basement that just needs a gas line and ductwork to be functional.

We have invested $23,000 into the house so far. That includes the purchase price of $7,200; and it includes all of the materials purchased resale/salvage for finish work that we have not gotten to yet (solid hardwood doors, a hardwood floor, miles of trim that is also salvaged from 100 year old houses, a pressed tin ceiling). 

There's no more time for us to finish it. We're amateurs, everything takes us twice as long. So we have to decide what to do. Here are the feasible options that I have come up with:

1. Cut and run - try to sell it in the current condition, with the materials we have already bought, and hope to break even. I am thinking of asking $27,000 so we have room to negotiate. This house would be a gem for anyone who had the time and knowledge to finish it. The location is great, it's 1 block from the biggest employer in the city (a University) and the University offers it's employees $5,000 to buy and move into houses within a few block radius of campus, which this house qualifies for - the problem is that pickings are slim for the quality that most employees are looking for in that zone. Market value for this house, when it's completely finished, will be somewhere between $45-$65,000. A house a few blocks over sold for $109,000 this fall, but that was unusual for this area. I had initially hoped to buy this house and renovate it, live in it for a while mortgage-free, and then sell at some point in the future for a modest profit.

2. Hire the rest of the work done, finding someone we trust to oversee the work in our place, and then try to sell it from out of state. This is riskier, in my opinion. I've gotten a few quotes on finishing the drywall, installing soffit and fascia trim, and painting the exterior - and those quotes alone totaled $8,000 labor and material. If we go this route, I'm worried that we will quickly reach the point where we have invested the exact amount we can expect to get out of it, or worse.

What would your advice be, given the scenario above?

arebelspy

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Re: House renovation partially done, moving out of state. What to do?
« Reply #1 on: February 08, 2013, 07:17:42 PM »
This is what I'm getting (short version):
You have invested 23k.

Option 1: You can sell as is, try to get 23 after all selling costs and break even.
Option 2: You can invest another 8k to make the house worth "somewhere between $45-$65,000."

Option 2 seems like a no-brainer, even on the low end of those comps.  You'll naturally want to get a more accurate estimate of the ARV (after repair value - aka the market value when all fixed up), 20k spread on 40-60k is a huge difference (10k versus 30k profit).   The only way I'd bail as is if it's definitely at the low end of those comps and it's just not worth it to you to do the work for the few thousand profit.  Otherwise paying 8k to get 20k+ more seems like a no brainer to me.

Correct me if I summarized that wrong.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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arebelspy

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Re: House renovation partially done, moving out of state. What to do?
« Reply #2 on: February 08, 2013, 07:18:49 PM »
And don't you have a month left?  Hire some general contractors, oversee the work in the next month, you should easily be able to get that done in a few weeks, and list it to sell with a Realtor before you leave.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Landor n Stella

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Re: House renovation partially done, moving out of state. What to do?
« Reply #3 on: February 08, 2013, 08:12:15 PM »
Your summary is pretty close, but I guess I left out some details.

The 8k is the just first of the quotes that I've gotten, there is more work beyond the 8k to get it sellable. Here's the list of what still needs to be done after the 8k:

Hang drywall
Final electrical connections in panel and at outlets
Purchase and install lights
Paint and install interior trim
Purchase and install bathroom fixtures
Purchase and install kitchen cabinets, counter, and sink
Sand, stain, and install interior doors
Install new gas line and ductwork for the furnace, and thermostat
Build front stoop and rear stoop
Flooring - sand hardwood floors in some rooms, purchase and install carpet in other rooms, install tile or vinyl in kitchen, bath, and laundry room
Landscaping?

With all of that to go beyond the 8k, I am thinking we are going to be approaching what we can sell it for, or cutting it really close. It makes me nervous, since this was never supposed to be a true flip, just a house we wanted to live in and maybe sell at some point.

arebelspy

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Re: House renovation partially done, moving out of state. What to do?
« Reply #4 on: February 08, 2013, 08:42:16 PM »
Okay so your two immediate jobs are:
- Figure out the actual ARV.  What will it sell for, repaired?  Get this number nailed down.
- Figure out the total costs to get it finished.  Write up all items to do, meet with and get bids from 3 contractors, giving them the assumption that they have a month to do it.

You have to have those two numbers, IMO, to make the best decision.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Landor n Stella

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Re: House renovation partially done, moving out of state. What to do?
« Reply #5 on: February 08, 2013, 09:19:14 PM »
Yessir!

We're actually driving out of town on Feb 25. Have to be in California on March 1, it's at least a 3 day drive from Indiana. 17 days and counting...

kendallf

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Re: House renovation partially done, moving out of state. What to do?
« Reply #6 on: February 08, 2013, 09:28:29 PM »
Can your husband stay for a couple of months, or come back after settling you in at the new job?  Camp out in the house and work on it full time.. seems like the potential payoff is high.

Landor n Stella

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Re: House renovation partially done, moving out of state. What to do?
« Reply #7 on: February 11, 2013, 11:17:19 AM »
You mentioned it is near a college...

Have you thought about offering to let a student(s) live there for free in return for slowly fixing up the property? You provide the materials (since it's already bought). The time frame would be probably in the years since student would be doing this in their free time between study/work. But for a free place to stay (minus utilities that they would pay themselves), it isn't too bad of a way to get the house fixed up. Then after the student is graduated/or past the time agreed upon, you can turn it into rental/sale.

I mean if you aren't depending on the income right away.

I only offer this suggestion as it was done for one of my college buddies. They knew nothing about being "handy" but they learned how to be and for being a free place to live, they figured it was worth it, plus all the materials/tools were provided.

Granted this takes a lot of trust in the student... but I'd consider it at least. If it was close to Kansas City, I'd probably buy it off you and do that lol. But I'd also be in the area to actually stop by and oversee the work progress (slow as it would be, at least I'd know if anything was broken)

I actually have talked with a few senior students who are interested in doing this with us. I trust them, but my biggest hesitation is that it will take a long time and we will be very far away if there are problems. Otherwise, it's a good idea.

I had someone look at the house this morning to potentially buy it. I'm also working on gathering data and numbers to meet arebelspy's suggestions. Either way it ends up going, I've calmed down a bit from the anxiety I was having when I posted the original thread. I was in a mood and feeling very nervous about it; now I'm thinking more rationally and realizing that we have options and it will be fine.

richschmidt

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Re: House renovation partially done, moving out of state. What to do?
« Reply #8 on: February 12, 2013, 01:17:35 PM »
I hope your "All Hands on Deck!" weekend went well!  I've appreciated your sharing the experience on your blog, though I've not kept up with it lately.  Congrats on the new job! I look forward to some "final updates" on the blog as the project gets wrapped up.

jawisco

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Re: House renovation partially done, moving out of state. What to do?
« Reply #9 on: February 12, 2013, 07:20:57 PM »
I would cut your losses and move on.  Maybe spend a little more to pretty it up, but either way I vote for putting it up for sale and if you take a loss, it is not the end of the world.  You will be free of it and can get on with your new life in California - trying to do anything from afar is just going to take a lot of energy and the more you put into it, the greater your chances of bigger losses...

Self-employed-swami

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Re: House renovation partially done, moving out of state. What to do?
« Reply #10 on: February 12, 2013, 07:33:03 PM »
Do you have a friend or family member you could sell it to, who might be interested in finishing it?


Zaga

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Re: House renovation partially done, moving out of state. What to do?
« Reply #11 on: February 12, 2013, 09:10:06 PM »
I also say cut your losses.  Not  just your money, but your time.  You are starting your dream job, don't be trapped back east by a house that's half finished!

arebelspy

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Re: House renovation partially done, moving out of state. What to do?
« Reply #12 on: February 12, 2013, 10:05:32 PM »
I also say cut your losses.  Not  just your money, but your time.  You are starting your dream job, don't be trapped back east by a house that's half finished!

Honestly, that may not be terrible advice, painful as it may be.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Zaga

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Re: House renovation partially done, moving out of state. What to do?
« Reply #13 on: February 13, 2013, 08:01:09 AM »
I also say cut your losses.  Not  just your money, but your time.  You are starting your dream job, don't be trapped back east by a house that's half finished!

Honestly, that may not be terrible advice, painful as it may be.
Easy to give, hard to take!

DoubleDown

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Re: House renovation partially done, moving out of state. What to do?
« Reply #14 on: February 13, 2013, 09:12:45 AM »
And without knowing what the final math will work out to on finishing renovations vs. leaving it unfinished, another risk in finishing the work is actually getting it done within budget. Almost invariably something crops up during renovations -- you discover a previously unknown problem, contractors don't finish on time or bail, scope creeps up, prices drop in your area while renovations are ongoing, etc. At least with cutting out, you have a better defined idea of what your gain or loss will be and can limit your risks, especially since you think you can just about break even.

By the way, if you still can (or can have someone local help you out), I would list the house on Craigslist and sell it yourself ASAP and avoid the broker costs! I don't know your market, but I'd bet there are some people in your area who follow listings on Craigslist and would be willing to take on this project.

jeepbraah

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Re: House renovation partially done, moving out of state. What to do?
« Reply #15 on: February 22, 2013, 08:05:41 AM »
- Figure out the actual ARV.  What will it sell for, repaired?  Get this number nailed down.

Who would you talk with to figure out this number? a contractor/realtor?

arebelspy

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Re: House renovation partially done, moving out of state. What to do?
« Reply #16 on: February 22, 2013, 08:55:31 AM »
- Figure out the actual ARV.  What will it sell for, repaired?  Get this number nailed down.

Who would you talk with to figure out this number? a contractor/realtor?

A contractor will be able to help you with the repair costs, but for the after repair value (ARV) aka the fair market value (FMV), a Realtor is probably best.  Have them run comps on the neighborhood to see what houses in that area of that size/age/etc. are selling for.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

TheDude

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Re: House renovation partially done, moving out of state. What to do?
« Reply #17 on: January 09, 2014, 10:30:19 AM »
Whatever happened to the house? Landor n Stella come back give us an update. Good, bad I need closure!

anastrophe

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Re: House renovation partially done, moving out of state. What to do?
« Reply #18 on: January 09, 2014, 12:25:17 PM »
Whatever happened to the house? Landor n Stella come back give us an update. Good, bad I need closure!

Seriously. Meg, Dan, please tell us--what happened?!

Cinder

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Re: House renovation partially done, moving out of state. What to do?
« Reply #19 on: January 12, 2014, 05:16:26 AM »
Whatever happened to the house? Landor n Stella come back give us an update. Good, bad I need closure!

Seriously. Meg, Dan, please tell us--what happened?!