Reply to "Dream house" needs lots of work

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]Seems like we've found a house that meets all our criteria (location, schools, commute, size). Thing is, it needs a fair amount of cosmetic work. We'd have to do things slowly over the years, so we'd be living with outdated bathrooms, basement, etc. for some time. There are also some key things that need to be done before moving in. Has anyone bought a house like this and what was your experience? Realistically, this is our best bet for getting into this neighborhood, but part of me is dreading living in a house I don't totally love from the outset. Other things to consider in a situation like this? [/quote]

In 2003, we bought a house like this in Alexandria. It wasn't our "dream" house -- but it was a starter house that met all our needs at the time. Because it was a "handyman special" we could afford a SFH instead of, say, a condo. We put an offer in for about $30,000 less than the most recent comp, and got it.

First thing we did was rip out the scalloped-shape eat-in counter in the kitchen and replace the range. We installed gas. We ripped out 1950s paneling and put in dry-wall. Eventually we installed a deck, did a cheap renos of two bathrooms. We converted basement storage space into an office. We painted cabinets, replaced kitchen counter, installed tyling.

We lived there for 9 years. When we sold in April 2011, we cleared $260,000 on it, a tiny rambler. We had four offers. It sold for the most ever on the street, in a still-difficult market.

[b]So, while some of that appreciation was due to the general increase in this area, I figure our sweat equity was worth at least $100,000.
[/b]
And while we had to live with it during the process, it was the best financial decision ever.[/quote]

I'm sorry, but ALL of the appreciation was due to the housing boom.  You bought in the right area at the right time.  I promise you if you had done one third of what you did, you still would have cleared $200k.

It is misleading to give the OP the impression that the same kind of appreciation will happen with a house they buy now.  If you would have purchased your house in 2006 instead of 2003 at 2006 prices, you would not have been able to sell in 2011 and cleared that kind of profit.

My husband bought a house in 2005.  he completely gutted it, replaced everything.  It was stunning.  He was unable to sell it in 2009 because of the housing bust.  When he did sell in 2011, he just about broke even when you factor in all of the money he spent remodeling it.  And that doesn't account for the sweat equity for his own labor.

OP, don't buy the house thinking that you're going to make a fortune.  Buy it because it works for you, even if that means you might want to upgrade bathrooms, et cetera, in the future.  The truth is, unless you buy a brand new, custom-built house, you will probably find that you will want to make changes/upgrades to any house you buy, even remodels/flips.[/quote]

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