Author Topic: Selling older house in hot market. What fix ups/renos to do?  (Read 3258 times)

pudding

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I have a house in Vancouver B.C. its a big house with 8 bedrooms. Kitchens and bathrooms are dated, house has some 'character' but in the hot market that it is here the new owner may just take it down and build a new one, or not hard to say.

I work as a renovator, so I could do the work myself. That can be a bit dangerous as it's tempting to start ripping this and that apart and whats the point if only going to get back what I put into it.

But if it increased things by a good percentage then I could get enthusiastic about it as when I sell I can FIRE

Anyone know of good solid advice to be found on the subject of what to renovate / fix for a good return?

A google search seems to bring up a lot of generic articles that aren't based on solid fact, more just generic stuff copied from other generic stuff.

Any advice appreciated.
« Last Edit: August 13, 2016, 02:32:14 PM by pudding »

ShoulderThingThatGoesUp

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #1 on: August 13, 2016, 02:50:30 PM »
If there's a decent chance somebody would just rip it down, why not try it on the market and see if you get something that makes you glad you never starting ripping stuff up?

Weren't you posting about this house months ago?

pudding

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #2 on: August 13, 2016, 03:25:56 PM »
If there's a decent chance somebody would just rip it down, why not try it on the market and see if you get something that makes you glad you never starting ripping stuff up?

Weren't you posting about this house months ago?


I was posting before. I wasn't quite ready to sell it then as family was living in it.
Now they are moving out I'm ready to press the button.

As for what to do to it???   One thing I do know is that when I do a bathroom reno for a customer it makes a huge difference. Takes maybe 3 weeks start to finish and about 3 grand materials.

Was thinking get my helper to paint all inside to freshen it up. fix whats obviously in need of it. Minor cosmetic fixes here and there. Tidy the garden up.
« Last Edit: August 13, 2016, 03:28:40 PM by pudding »

Frankies Girl

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #3 on: August 13, 2016, 03:36:37 PM »
I would call in a few area realtors and get their professional opinions on whether a few grand in updates would be worth it or not. They know what the market is doing right now, and they'll be able to tell you one way or another.

rocketpj

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #4 on: August 14, 2016, 05:02:30 PM »
When we sold our place in Vancouver our realtor gave us a ton of excellent advice on what to fix, update and what to ignore.  That said, he made about $15K for 20 minutes work (the first people to walk in the door in the open house bought the place), so I have some resentment towards the whole profession.

I know that (before consulting him) we spent a bunch of time making the kitchen really pretty, and the first thing the new owners did was gut it completely.  So don't sweat that stuff too much - you may just be better off getting rid of the house while it is still the hottest insane real estate market going.

However, if you want I can give you his name in a PM, he might be able to give you some tips.  Hot markets attract all manner of incompetent nincompoops and crooked scum to the real estate profession, and he isn't those things.

Dicey

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #5 on: August 15, 2016, 12:42:36 PM »
Wise decision, spartana. I hope you get wa-a-a-y over asking. Can't wait to hear where you've decided to go next.

I am fairly certain you are of a minimalist bent, so this is mostly a general comment. Should you chose to follow spartana's wise example, thorough cleaning and decluttering will most likely still pay off for you. A dirty, cluttered house is likely to garner more lowball offers than a dated home that still reflects pride of ownership.


Dicey

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #6 on: August 16, 2016, 08:58:01 AM »
Spartana, if you're not trying to sell on a timeline, and you think your most likely buyer is a builder, you might try this approach if you don't get an offer you like. Hold your price and let the listing expire. You may then get approached by someone willing to make you a fair offer without commissions. We have two that we're watching right now. They're both a little overpriced and they're holding firm. If either party lets their listing expire, we're going to approach with an all-cash, no commissions offer. It's a less common approach, but it could be a winning strategy in your situation.
Also, carefully consider the wording on your listing. Emphasize that it's in original condition,  but on a large, flat, buildable lot. That way you attract people who don't care if the house is updated.

Goldielocks

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #7 on: August 16, 2016, 04:24:55 PM »
Hi OP,

I live in Vancouver area now myself.  In addition, I sold a home in a booming hot Calgary market in 2006, and then watched the overheated San Francisco market from 2006-2007 while looking for a place to buy.

With a super hot market, you do NOT need to fix anything up that is not obviously broken.   You will be forgiven for even a few minor broken things, as people just don't want to lose the sale and will overlook much.

Especially in Vancouver -- people rip out all sorts of "just renovated" kitchens to get what they want.   You are right that you may have a 50/50 chance that it is just for tear down.   The state you want it in is what I call "Sparkling clean, maintained and rentable, if a bit dated"...

My recommendation:
1)  Fix obviously broken things -- e.g., gutters that sag down from the roof, screens or broken doors, dripping faucets, that hole in the floor.. tear out a broken fence or dangerous ground level deck.

2)  Paint the entry (entry door exterior) and common / main rooms, master bedroom.  Paint any very worn out rooms or just touch up trim paint in the halls leading to them.  Painted bathrooms are always nice!

3) Stage - remove excess items, leave bare minimum, hang art, newer looking furniture, potted plant on front step, neatly trimmed / weeded yard.  Some rooms can be empty.

4)  Clean the dickens out of everything -- hire it out.  You need to clean windows, lights, and fixtures that sparkle everywhere.

Get it listed!

pudding

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #8 on: August 17, 2016, 12:39:12 AM »
Hi OP,

I live in Vancouver area now myself.  In addition, I sold a home in a booming hot Calgary market in 2006, and then watched the overheated San Francisco market from 2006-2007 while looking for a place to buy.

With a super hot market, you do NOT need to fix anything up that is not obviously broken.   You will be forgiven for even a few minor broken things, as people just don't want to lose the sale and will overlook much.

Especially in Vancouver -- people rip out all sorts of "just renovated" kitchens to get what they want.   You are right that you may have a 50/50 chance that it is just for tear down.   The state you want it in is what I call "Sparkling clean, maintained and rentable, if a bit dated"...

My recommendation:
1)  Fix obviously broken things -- e.g., gutters that sag down from the roof, screens or broken doors, dripping faucets, that hole in the floor.. tear out a broken fence or dangerous ground level deck.

2)  Paint the entry (entry door exterior) and common / main rooms, master bedroom.  Paint any very worn out rooms or just touch up trim paint in the halls leading to them.  Painted bathrooms are always nice!

3) Stage - remove excess items, leave bare minimum, hang art, newer looking furniture, potted plant on front step, neatly trimmed / weeded yard.  Some rooms can be empty.

4)  Clean the dickens out of everything -- hire it out.  You need to clean windows, lights, and fixtures that sparkle everywhere.

Get it listed!


Thanks so much!  Thats what I'm going to do.

I'll see what happens as now of course theres the 15% tax the government has slapped on overseas investors

Sammiecakes

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #9 on: August 17, 2016, 12:45:18 AM »
Not to mention the greater lengths China is going to to try and control capital outflows lately.

Penelope Vandergast

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #10 on: August 17, 2016, 09:03:31 AM »
Following this thread, since I am going to be doing the same thing in Boston next spring. Our neighborhood is booming (prices up like 5% a year, houses sell in a few days or weeks, gut renovations everywhere and new construction anyplace they can squeeze in another house or apartment building) and I don't think I will have any trouble selling -- the question is how much work to do. I really like goldielocks' suggestions, which are totally reasonable and not difficult to carry out.

pudding

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #11 on: August 20, 2016, 03:40:17 PM »
Not sure if anyone follows this thread still, so maybe more of a rant to myself.

This one just got a bit more complicated.

I have to replace the electrical panel before the city will sign off on the basement suite. It's not as simple as it might sound, the guy from the electricity company came around to see how the feed from the power pole to the house would be done.

He says due to the height it would have to be on the house that the installer would not be able to put his ladder at a 4 to 1 angle, so I'd have to pay about 8k to have a private pole put in my garden! WTF!! 

Honestly I have to say that its like a comedy dealing with all these people that have these 'jobs' and regulations. I do renovations and painting for a living and where as I can see the need for safety, if I worked like that nothing would get done. In fact nothing is getting done, its f'ing ridiculous dealing with these people. If they were in charge of feeding the world there'd be people starving.

So to build the small house in the back is the way to go as the electrical feed will come into there and then by way off underground to the house. So that kind of sets things back.

It's a quality problem owning that house, but boy does it ever take up a lot of bandwidth! 

humbleMouse

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #12 on: August 21, 2016, 09:18:38 PM »
I am following along pudding!  I find it interesting hearing about the issues you are going through.

FrugalFan

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #13 on: August 22, 2016, 08:11:40 AM »
I'd try to get a second opinion about that pole. If you want to FIRE with Vancouver money, sell now at great prices while you still can. There are some signs the market is shifting there. Even if you have to pay 8K, how much is that really affecting your bottom line? It's way cheaper and easier than building another house!

pudding

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #14 on: August 22, 2016, 11:48:53 AM »
I'd try to get a second opinion about that pole. If you want to FIRE with Vancouver money, sell now at great prices while you still can. There are some signs the market is shifting there. Even if you have to pay 8K, how much is that really affecting your bottom line? It's way cheaper and easier than building another house!


That is a good point!  I kind of got stubborn on having to maybe pay that, but as you say its not a lot of money in the grand scheme of things.

It ends up I have quite a few options, difficult to know which one to follow.

The provincial government here brought in a controversial tax.

The tax is an extra 15% on foreign investors, was only brought in a few of weeks ago and with only 5 days notice.

So far it has slowed sales down but prices have remained steady. I think in September when market usually picks up again after summer will tell just where things are going.

 http://www.theglobeandmail.com/report-on-business/rob-commentary/vancouvers-new-foreign-buyer-tax-beware-of-unintended-consequences/article31347447/

My daughter and her kids were living there, they have now moved to Toronto, so I don't have that desire to keep it and have family living close by.

I signed up for a newsletter from a local real estate investor 'guru' Ozzy Jurock. He's been around for years and his predictions of where Vancouver real estate is headed have been pretty accurate over the years.

It's my belief that if things here do go down some, they'll go back up again.

A house on it's own 33 x110 foot lot in Vancouver is a bit like gold, and there's no land left here, so they just increase the density, and the value goes up with it. The rents I get can cover the bills plus a bit left over. Plus the mortgage is paid down about 13k a year and I have a place to run by renovation business out of.

If I did build the small house I can rent it for about 1600 to 1800 a month and only have to pay about $500 to 650 a month interest only on the money borrowed to build it. So then I'd have positive cash flow. Maybe even $1500 a month in positive cash flow.

In the past I rented rooms to students as a way to get more revenue, but it was a pain in the neck. Rents have gone up enough now that I could just rent to 2 families and pay my expenses. I think it would be less hassle that way and I could do some of the travelling I keep saying I want to do.

I'm not totally against building the small house, construction is my trade and to build a house would be interesting. My friend is building one down the street and it looks good.

If I don't build one, I still have to meet the city requirements to;

1. take down my workshop 

2. address the garage/ carport that they say I have to either take down or get a structural engineer to look at and say what has to be done to keep it.

3. the electrical panel has to be replaced, so either A/ new pole in garden for 8k   B/ laneway house and lay cable in trench to house  C/ second opinion on options   D/ would be to keep existing panel and just say forget basement suite and they will say existing panel is enough.

The thing is I don't want to just panic and run for the hills. I've had this place 9 years and I almost ran for the hills 6 years back and if I had I would have left about 750K on the table !!!! Shocking! I can only imagine how I would have felt today had I done that.

I looked at the prices in my area again last night and it looks to be a bit of a case of what used to be considered a 'cheaper' area has now become quite a sought after area. The areas that were once 'sought after' have become way out of most peoples reach.

I think it gets to a point where even if prices soften, the area has changed so much that it's not going back to how it was.

Now I could be missing an important point here too.... How to say it?   OK, I've just had a few days off from a gruelling summer of busting my azz as usual. Painting houses, renovating places.... elbows ached, knees still ache, neck aches, missed a lot of the summer fun stuff.  On the one hand there's a kind of satisfaction I get from working and then chilling out.   A bit like going to yoga, you can only enjoy the chill out at the end when you put the work in first. If you just went in there and laid on the floor hoping to get that buzz! It's not going to happen.

But it's too much! I don't like to miss out on things and I don't like to be too tired to enjoy other things. Perpetually tired from working.

So I think now it comes down to these 3 choices. 

Do I (drum roll) .....

1. Hustle it up, get that place ready for sale ASAP, be it a private pole in the garden etc...  sell it and be happy with my  'freedom' ?  and go see my lovely grandkids in Toronto. A lump of cash in hand (maybe 750k or a bit more?) Go to Bali in winter, forget about sh*tty grey and rainy winter here.

2. Rent it out to 2 families and build this small house and rent it all out. It would be a solid cash flowing investment that would be worth around 1.85 million. 

I'd have around 18k positive pre tax cash flow a year from rents (but would have to pay capital gains if I rented and sold!)  , mortgage paid down about 13k a year, and if it averaged a modest 3% value increase on 1.85 million is 55,500  and a place to run my business out of which if I had to rent would be another 3k a year.   

A total of $89,000 a **** year!       

Now prices could drop for a prolonged period, maybe prices drop and stay flat for 5 years, interest rates go up and the cash flow evaporates, a tenant starts a fire and the insurance decide somethings up and wont pay out, could get an illness or in an accident... all these kid of uncertainties could happen... then I wouldn't be smiling quite as much.

3. Build the small house out the back, cosmetic fix ups in the main house, see where market is at in spring 2017 and if it looks OK, sell it and maybe walk away with x amount.    The only problem with this scenario is that the market is changing, no one knows which way and that 'X' amount could be ???

Since I've been writing about this problem over last few months that house went up about 200k.... it could go down 200k... I might build the small house and find its not worth what it is today without a small house!   But then again I might find its gone up even more.

So to recap...
1. Fix up ASAP, sell 750k in pocket and live happily ever after.

2. Build small house and rent it all out as solid investment and weather what may come and also get any gains that may come. Still travel and see the grandkids etc.

3. Build the small house and see where market is at next spring. If OK then sell, if not OK then rent it all out until/ if market picks up.

And then it gets a bit like playing at the casino, is it house buying/selling or roulette that I'm doing. And it takes up so much of my thinking time.



« Last Edit: August 22, 2016, 11:58:10 AM by pudding »

FrugalFan

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #15 on: August 22, 2016, 12:15:56 PM »
It comes down to the meaning of "enough". If that 750k is enough for you to retire on, who cares if the house increases in value in the future by x amount? It sounds like you think you could afford a nice life on 750 k and it seems like you don't hate your work, so you could still do a few jobs of your choosing on your own schedule. All the other scenarios have a lot of unknowns and much more hassle with tenants, etc. Yes, you might leave some money on the table. Or the house could drop in value you and you might have to work for several more years. It's also possible that adding a small house on the lot might not increase the value that much if the prospective buyer wants to level the house and build a big new house instead.


pudding

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Re: Selling older house in hot market. What fix ups/renos to do?
« Reply #16 on: August 22, 2016, 12:38:05 PM »
It comes down to the meaning of "enough". If that 750k is enough for you to retire on, who cares if the house increases in value in the future by x amount? It sounds like you think you could afford a nice life on 750 k and it seems like you don't hate your work, so you could still do a few jobs of your choosing on your own schedule. All the other scenarios have a lot of unknowns and much more hassle with tenants, etc. Yes, you might leave some money on the table. Or the house could drop in value you and you might have to work for several more years. It's also possible that adding a small house on the lot might not increase the value that much if the prospective buyer wants to level the house and build a big new house instead.

Thanks for your reply.

I agree, if it gets to the point where you can live a nice life off the amount you can get from selling then let it go and be content.

750K would do that for me. I don't hate my work, I could pick my jobs and be free of the constant responsibility of owning/running that house.

To be free of that responsibility I think would be a healthy thing. Last holiday I had was 2 years ago, and always had this stuff about the house rolling through my mind.

After writing my previous post I called up the electricity pole/panel guy that I met with and left him a voice mail asking him to call me back to discuss another option.