Would you spend $91,000 remodeling a $150,000 house?

[Brian Elfert]

I am in the process of buying a bank owned house that needs major remodeling. The house is $150,000 plus I got a remodeling bid for $91,000. The remodeling includes complete forced air heating/cooling system with duct work, All new Andersen windows and patio door, rebuild bay in kitchen, new siding, new exterior doors, new water heater, new bathroom, new flooring, and paved driveway. (City requires paved driveway.) The house is one story with 1,300 square feet on the first floor and 1,300 square feet in the basement. Lot is 3 acres. The septic system was replaced in 2011. I still have until next week to cancel the deal if I want.

I'm really conflicted on what to do here. It seems like a lot of money to spend, but the house will be practically new once it is all done. I can get a new house for the same money in the same city, but the lot is pretty bad and I don't like split level houses.

[Mike Henderson]

A lot depends on whether you expect to live there for a bunch of years. If so, I'd spend the money if the location and the finished house is what you want.

All houses require maintenance and if you spread that cost over say 20 years, it might be what you'd spend on another house over those years.

Mike

[Shawn Pixley]

So all in you're $ 241,000 on a 2,600 sf house? That's ~$92 / sf with no allowance for the land cost. If the area is reasonably good, likely to appreciate, and you're planning to live there for a while, it seem like a reasonable deal. You'd be unlikely to be able to buy the land and build new for that price.

[Greg Peterson]

What are the comps? What is the market value of the property?

[Jerome Stanek]

So all in you're $ 241,000 on a 2,600 sf house? That's ~$92 / sf with no allowance for the land cost. If the area is reasonably good, likely to appreciate, and you're planning to live there for a while, it seem like a reasonable deal. You'd be unlikely to be able to buy the land and build new for that price.

Why would you assume that prices for houses vary a whole lot through out the country. maybe Where you live it is a good deal but in other places it would be a horrible deal.

[Matt Meiser]

What are the comps? What is the market value of the property?

^^^^^ This is the real question. What would it likely sell for when you are done?

[Rich Engelhardt]

Is this the Freddie Mac house you mentioned a month or so ago?

[Raymond Fries]

I agree also that if the total package is what you want and you are planning on living there then go for it. I would do it if it made my dream home and I was not planning on moving. If you think you might ever want to sell it then it might be a different story. Sometimes remodeling costs do not raise the appraised value to match what you put in to it.

Good Luck with your decision.

[Brian Elfert]

What are the comps? What is the market value of the property?

I am getting a rehab mortgage. The bank won't move forward with the loan if the appraiser doesn't think the value of the completed house will be high enough.

A similar rambler house that is 2,100 square feet one one level (no basement) just sold for $210,000 last week. It was a 1987 house versus this one is a 1980 house. I wanted to go look at that house, but it sold before I could look at it. The windows on that house weren't as good as the replacements will be, but it was fully finished and looked great in the photos unlike the house I am buying. There is a house built in 2002 for sale that is one story with 1,750 square feet on the first floor and a mostly finished basement for $260,000. The lot is smaller at just under 1 acre. There are two new houses I can get into for around $250,00, but I really don't like split levels and they both have 1 acre lots. (I really have no need for more than one acre.)

[Jason Roehl]

About 17 years ago, I saw an elderly couple put $260,000 into a house they had bought for $150,000. The husband even went back to work (professor) to help pay for it. The initial estimate for the work was half that, but the wife got a little carried away with customizations. I don't think any room had less than 5 coats of paint on it from her changing her mind (we were the painters). When it was all said and done, they definitely did not have a $400,000+ house, but it was what they wanted to live in (even though they said it would be their kids' inheritance--I questioned the wisdom of that).

You need a place to live. Can you afford it? Will you like it? I've long not considered a house an "investment" as many do, though there are ways to make it one (but generally not if a bank is involved with a long-term mortgage).

[Mike Heidrick]

Is that one contractor subbing out everything? You should have had a dozen seperate bids with 2-3 for each IMO.

[Brian Elfert]

Is that one contractor subbing out everything? You should have had a dozen seperate bids with 2-3 for each IMO.

I really don't have time to get a dozen bids. I am getting two bids right now. I'm not even sure who I would go to for a third bid. The bank will work with, and pay, only one general contractor. They won't allow the homeowner to act as the general unless I was in the business and have a license and insurance. They also don't allow any DIY for anything the bank is paying for.

I am getting a conventional rehab loan. I have tried to find another mortgage company that will allow better terms, but I have not found anything. There are FHA 203K mortgages, but the costs are higher with the mortgage insurance requirements for an FHA loan.

[David Weaver]

I wouldn't do it if you can get something else for the same price. There's a better chance that the final value of the remodeling is higher than the bids, plus it's just a nuisance to be presiding over all of that work and trying to make sure that it's done right.

Rehabs are better for people doing the work than they are for the buyer, unless the same person is both of those.

[Matt Meiser]

Is that the HomePath thing? There are a lot of houses for sale around here advertised with that.

If the value of the finished house is inline with the costs and you will be happy with the final result and the time to complete, I say go for it.

[Erik Loza]

We did and it was one of the best moves we ever made. My wife bought the house 15 years ago for $150K. We put about $85K into a major remodel two years ago. We're in one of the most desireable neighborhoods in town and though we plan to stay here for a while, coudl turn around and sell the house for Three-quarters of a million, tomorrow, if we wanted to. So, "yes", that made sense. On the other hand, we own a tract home in the burb's (which we maintain as a rental), that I bought back in 2006 when I was single for $130K. That area is filled with houses like that, that sit on the market forever and likely will not appreciate much in value in the forseeable future. For that house, there is no way I would put another 60% of the total cost into any sort of remodel even of I actually lived there and planned to stay for a while. No matter what the economy does, you would never get any return on that investment.

I guess that's the real question to answer.

Erik Loza
Minimax USA

[Brian Elfert]

Is that the HomePath thing? There are a lot of houses for sale around here advertised with that.

If the value of the finished house is inline with the costs and you will be happy with the final result and the time to complete, I say go for it.

No, this is HomeSteps. HomePath is Fannie Mae and HomeSteps is Freddie Mac. Unfortunately, HomeSteps does not do financing in Minnesota yet.

This is the same Freddie Mac home I have been working on for a while.

[Rich Engelhardt]

I am getting a conventional rehab loan. I have tried to find another mortgage company that will allow better terms, but I have not found anythingPlent of the houses on the market in my area are second &/or third time foreclosures.
A lot of the owners took out a 203k or conventional rehab loan (Homestyle- IIRC is what they call the non-203k version).
Where they get nailed is with the deadline for work & the fact that they are really paying for a loan that their house can't cover - even with a substantial down payment.
In this case, the payments and the loan are based on the finish price of $241,000.00.
That's the amount the lender is going to come after you for if, God forbid, something happens and you can't make the monthly payments.
Meanwhile, the value of the uncompleted property is what it is.
And based on the huge losses I've seen - uncompleted work on a property is just as bad, if not worse, than something being in need of repairs.

Bottom line here is - asking for our opinion on this is pretty meaningless since it's a pretty high risk undertaking.
I'm not at the "higher risk" stage of life.

Yes - I'd buy a $150,000.00 house that needed $90,000.00 worth of work - but - only under very strict lines.
No - I'd never take out a rehab loan @ this stage of my life & with my present financial situation.

Keep in mind that - the higher the risk, the greater the potential rewards.

[Brian Elfert]

I would expect the rehab to take three months at most. The majority of the work is the heating/cooling system and the siding/windows/doors. At that time the house will be complete and fully liveable. I have no worries about the project getting half done and running into financial ruin.

If I bought another house I would still be taking out a similar size mortgage. I'm currently looking into a really nice house that is $280,000, but it has a 36x56 garage that is big enough for my motorhome. The downside is it uses propane for heat so it could cost 2.5 times as much as gas heat. It is also an additional 8 miles each way to work, but reasonably close to commuter rail.

[Garth Sheane]

Brian, there is a "rule of thumb" that applies here (some posters have already mentioned it directly or alluded to it, so I'm just chiming in). Don't over-build for the area where the house is located. However, most of the items you listed are cosmetic and maintenance and do not result in over-building, in my view. If it is reasonable that this house would be valued at approx $250,000 if it were new in this location, then your money is probably safe. In any case, you should plan on living there for, say, 10 years, which reduces your risk. Sounds like the bank is pretty strict on priorities and standards.

[Rich Engelhardt]

If I bought another house I would still be taking out a similar size mortgage.
Yes - but the huge difference is that the other house would have it's full value.
The rehab house only has it's full value once all the work is completed.

& as I mentioned above, one of the "gotcha's" people around here ran into was with the contractors completing on time.

It's a risk but - you could end up sitting real pretty if it all works out.

[Phil Thien]

I lot would depend on the GC and quality of materials being used. Anderson windows sounds great. But if my new bathroom was going to have the cheapest flooring and if the fixtures were going to be cheap builder stuff, I'd be concerned.

[Brian Elfert]

I lot would depend on the GC and quality of materials being used. Anderson windows sounds great. But if my new bathroom was going to have the cheapest flooring and if the fixtures were going to be cheap builder stuff, I'd be concerned.

I don't plan on selling this house any time soon, but you never know. I stayed in my last (and first) house for 12+ years. The contractor talked to me about how long I was planning to stay when pricing the bathroom remodel. He basically said if I planned to live in the house long term that I should install a tile surround on the tub and tile floors.

The house has three bathrooms. The main bathroom in the house needs a full gut and redo. It appears the previous owners started a bathroom remodel, but never got beyond demo. The toilet, exhaust fan, sink, and counter are all missing. I doubt they got mad and stole the stuff because they didn't touch the other bathrooms. I was planning to redo the bathroom myself, but I was told that I might have a hard time with the appraisal if the main bathroom was in shambles. Technically, I only have to have one working bathroom.

[Wade Lippman]

Keep in mind that - the higher the risk, the greater the potential rewards.

Generally speaking the reverse is true; great potential reward requires high risk.
But high risk doesn't necessarily have great potential rewards. Often it is just foolish.

[Brian Elfert]

I am still looking at other options for a house while I wait on the other bids to remodel this house. One house that looked good has an outbuilding that isn't tall enough inside.

[Rich Engelhardt]

:confused:
Generally speaking the reverse is true; great potential reward requires high risk.:confused:

How is that the reverse of the higher the risk, the greater the potential rewards?
They both read the same to me.

If I bet on a long shot horse and it comes in, I get a higher reward.

[Jim Matthews]

Remodeling and schedules are both approximations of what you really want.

In no way would I consider living in a construction zone.
Drywall dust will be settling, long after the crews have gone.

Whenever that happens.

[Erik Loza]

....In no way would I consider living in a construction zone.
Drywall dust will be settling, long after the crews have gone....

This ^^^^

I know folks do it, see it on DIY shows, etc., but whatever someone thinks they are "saving" by not renting an apt. or whatever, I don't know how a family unit can function in a house that has a major remodel going on. At least not without contemplating divorce or something, LOL. The noise, chaos, lack of climate control, dust, etc. I just don't know how anyone can deal with it. Just my 2-cents, anyhow.

Erik Loza
Minimax USA

[Brian Elfert]

This ^^^^

I know folks do it, see it on DIY shows, etc., but whatever someone thinks they are "saving" by not renting an apt. or whatever, I don't know how a family unit can function in a house that has a major remodel going on. At least not without contemplating divorce or something, LOL. The noise, chaos, lack of climate control, dust, etc. I just don't know how anyone can deal with it. Just my 2-cents, anyhow.


I'm currently living with my parents and would remain living with my parents until the house was ready for move-in. I would not be living there during construction. The sale of my former house closed more than two months ago.

[Erik Loza]

I'm currently living with my parents and would remain living with my parents until the house was ready for move-in. I would not be living there during construction. The sale of my former house closed more than two months ago.

293989


Erik Loza
Minimax USA

[Mike Henderson]

This ^^^^

I know folks do it, see it on DIY shows, etc., but whatever someone thinks they are "saving" by not renting an apt. or whatever, I don't know how a family unit can function in a house that has a major remodel going on. At least not without contemplating divorce or something, LOL. The noise, chaos, lack of climate control, dust, etc. I just don't know how anyone can deal with it. Just my 2-cents, anyhow.

Erik Loza
Minimax USA
I did it twice. Really no choice. I wanted to do the remodel and absolutely could not afford to go live some place else. One remodel was a kitchen - but pretty major. Added on to the house to make the kitchen larger. We used the microwave and washed dishes in the bathroom sink.

The other was a complete renovation of the second floor. Basically took down all the walls and reconfigured the upstairs, All the bathrooms were reconfigured and, of course, all new fixtures. Used the downstairs bathroom which luckily had a shower.

It was a mess but I was able to monitor the work pretty well. I didn't feel it was a real problem for our marriage.

Mike

[Myk Rian]

With 3 acres, make sure you can build an outbuilding.

[Wade Lippman]

:confused::confused:

How is that the reverse of the higher the risk, the greater the potential rewards?
They both read the same to me.

If I bet on a long shot horse and it comes in, I get a higher reward.

Because the track sets the odds to reward long shots. Life doesn't. You don't get a chance to make a lot of money by doing something really foolish that has little chance of success; no track to set the odds.
Just because putting $90k into a $150k house is risky, doesn't have anything at all to do with the potential reward.
The reward has to do with how shrewd he is about buying the house, how well he designs the improvements and how good a deal he gets with the contractors.
Putting $10M into the house would be extremely risky, yet there would be no chance of a reward.
Using a comparison to a horse race is silly.

(Of course I am, as I assume you are also, using the common definition of risk. If instead we use the technical definition (the expected variability of the return), there is no risk to putting $10M into the house; we know with certainty he will lose his money)

[Rich Riddle]

Only if the house was worth about $450,000 when completed, seriously. Why spend that kind of money on a house that has it at full market value? Too many houses on the market for less than value to spend all the agony involved in this process.

[Shawn Pixley]

It is difficult but we did it. I am lucky as my wife helps and is a full partner in the work. It takes tolerance, patience and a willingness to let things go. Washing dishes in the bathtub gets old fast. I will say that this is not for everyone. I worked full time and my wife took care of our son. A little work would get done daily. Big progress was achieved on the weekends. I was younger then and needed less sleep. People get testy when stressed.

We worked one room at a time. We had the electric panel replaced before we moved in. I set up a temporary kitchen in the basement. The bath was funtional and i needed only to paint and do a days worth of work to make it livable. I re-did the room for our son before they moved in. We'd move from room to room as I finished one room and started another. I was pretty well done in about 15 months. We did all the labor, but had to budget materials. Such is life when you are young.

[Rich Engelhardt]

Of course I am, as I assume you are also, using the common definition of riskI literally have no clue what you're using.

To me, going $241,000.00 in debt to buy a $150,000.00 house - with the hope that:
- The contractors will all complete the work on time
- The final value of the house is at least $241,000.00
- There isn't something serious that surfaces once the property changes hands - I believe Freddie Mac is 100% "as is" with no disclosures.
- Something - anything - happens in the allotted time period that can divert funds away from the mortgage - injury, job loss, heck a rich relative could die and will the family farm to the OP and he'd have to come up with ~ $300,000.00 immediately (that happened to a good friend of mine and nearly financially destroyed him).
all spell risk to me.

OTOH - buying a house that has a market value of $241,000.00 for $241,000.00 spells lowered risk to me.

[Jim Matthews]

OTOH - buying a house that has a market value of $241,000.00 for $241,000.00 spells lowered risk to me.

D'accord avec vous.

I no longer consider any home I own, or will own an investment.
It's where I live. My wife and I saw 30% of the current home
"value" vanish just after we bought it, with no changes to
the tangible asset; no damage, no disrepair, no external changes in the neighborhood.

That "value" was based on something other than the house itself.

Unless your investment returns you something that you can't buy anywhere else,
it's time and money expended for delayed returns in utility.

As to whether it returns as equity at the point of sale (somewhere in the future)
it's no longer possible to predict. For one, I don't believe houses appreciate in value.

Remodeling is a stressful process, and rife with variables.

The contract should read, "Rough road ahead".

[David Weaver]

The land is an (sometimes decent, but sometimes just a tax burden) appreciating asset, the structure depreciating. I agree with your sentiment, Jim, and always have (before any crash) - investments are investments, buildings are buildings. When you live in a building, unless you move from house to house and only live in one long enough to do one of those paint and rental grade fix-up jobs, it's not an investment.

In this state, the taxing authorities make sure that's the case, too. You get to "own" it and "rent" it from the local school district at the same time.

[Brian Elfert]

With 3 acres, make sure you can build an outbuilding.

The city allows a garage up to 2,000 square feet with no height limit other than 45 feet. I made darn sure of that before moving forward. This particular city allows a 2,000 square foot garage on any size lot, even the older .4 acre lots. The city currently requires lots to be minimum 1 acre.

[Brian Elfert]

I literally have no clue what you're using.

To me, going $241,000.00 in debt to buy a $150,000.00 house - with the hope that:
- The contractors will all complete the work on time
- The final value of the house is at least $241,000.00
- There isn't something serious that surfaces once the property changes hands - I believe Freddie Mac is 100% "as is" with no disclosures.
- Something - anything - happens in the allotted time period that can divert funds away from the mortgage - injury, job loss, heck a rich relative could die and will the family farm to the OP and he'd have to come up with ~ $300,000.00 immediately (that happened to a good friend of mine and nearly financially destroyed him).
all spell risk to me.

OTOH - buying a house that has a market value of $241,000.00 for $241,000.00 spells lowered risk to me.

With that kind of attitude nobody would build a new house either because something could happen financially during the three months to a year it takes to build a new house. The really big national/regional builders might finance construction of the house themselves, but a lot of builders will require that a construction loan be taken out if the house is being built for you specifically.

I am going to talk to a builder about what it would cost to build the house I want on the lot they own. I don't think the lot is as nice as the other house, but it would be a completely new house for almost the same cost.

[Matt Day]

I'd try to get at least another GC bid, and make sure they are apples to apples. How do they know what materials to price so they are all the same? Did you give them a list of products you want?
Request they give you their sub quotes along with the bid so you can dig dealer.

[Rich Engelhardt]

With that kind of attitude nobody would build a new house either because something could happen financially during the three months to a year it takes to build a new house.When we had our house built in 1986, the builder was on the hook for all the expenses right up until the very instant we signed the closing papers.
However - in a way you are somewhat correct & again, that's where risk and reward come in.
And - truth be told, very few people go the "build route" vs buying an existing house.
I'd never build again. We overlooked far too many details that you just don't think about until it's too late.

Yes - the builder could have come back at us for damages because we breeched the contract & we'd lose our down payment - but in all likelihood, nothing more.
The suppliers wouldn't come after us for the materials & the subs wouldn't come after us for wages. All that was on the builder.

OTOH - we could have gone a different route and hired a GC and not gone the "builder" route.
For that, we'd have more of a "custom" house instead of the "cookie cutter" design we have.

Risk/rewards - that's the way of things.



The really big national/regional builders might finance construction of the house themselves, but a lot of builders will require that a construction loan be taken out if the house is being built for you specifically.
That's something you in your position are closer to than I am.
It's been a lot of years since we built and it's been well over 30 years since I did business with builders

[Brian Elfert]

I had two contractors come out to bid the job. I got one budgetary bid back in two days and I haven't heard back from the other contractor at all yet. Things like flooring and tile for the bathroom are just allowances of so much per square yard or per square foot. It will be impossible to know for sure that the bids are identical material wise. The brand of furnace and air conditioner won't be the same most likely as each mechanical contractor has certain brands they sell. The contractors are only giving me budgetary numbers for now until I decide to move forward for sure or not. The one contractor said his detailed bid will probably come down a bit.

My last house I had built was custom for me. I had to get a construction loan and I think that technically I owned the house even during construction since I had bought the lot for cash before selecting a builder. There were allowances in the project even for lumber and such. If it took more lumber than planned I had to pay for it. Original cost was $179,000, and the final bill was right at $190,000 because I upgraded the flooring and the siding plus some other things. There were one or two screw-ups along the way the builder paid for.

I will ask this builder how things work if there are unforeseen issues. There is another builder I would prefer to work with, but he has no lot and this builder has a lot. (I like the builder who did my previous house, but he retired. I would like to use his brother in-law if I had a lot to build on.)

[David Weaver]

I had two contractors come out to bid the job. I got one budgetary bid back in two days and I haven't heard back from the other contractor at all yet. Things like flooring and tile for the bathroom are just allowances of so much per square yard or per square foot. It will be impossible to know for sure that the bids are identical material wise. The brand of furnace and air conditioner won't be the same most likely as each mechanical contractor has certain brands they sell. The contractors are only giving me budgetary numbers for now until I decide to move forward for sure or not. The one contractor said his detailed bid will probably come down a bit.

My last house I had built was custom for me. I had to get a construction loan and I think that technically I owned the house even during construction since I had bought the lot for cash before selecting a builder. There were allowances in the project even for lumber and such. If it took more lumber than planned I had to pay for it. Original cost was $179,000, and the final bill was right at $190,000 because I upgraded the flooring and the siding plus some other things. There were one or two screw-ups along the way the builder paid for.

I will ask this builder how things work if there are unforeseen issues. There is another builder I would prefer to work with, but he has no lot and this builder has a lot.

I think anything that you're selecting the grade, it takes a lot of discipline to stay within the budget. When I had a porch on my house finished, the contractor allowed $2k for HVAC just for that room. When we got down to the details, I wanted a split, and by the time electrical was done and I bought the split myself, as well as the line set, and paid someone to hook it up, it was $3300. I did the paint and floor, or the same would've happened with those, too. I had an urge to upgrade the windows, but didn't because I wanted to have some discipline (HVAC was a drop dead issue because the in-laws sleep in that room with it closed off to the rest of the house and it's not uncommon to have sub zero temps - the slide in units that I saw quit at 15 degrees).

I personally would rather let someone else make decisions that involve selecting low quality stuff than do it myself. It costs you the same or less as a buyer to do that in houses like you're looking at (which is the class my house is in, so I have the same issue with renovations - going premium every time as a default doesn't make money sense).

[Chris Padilla]

Interesting stuff, Brian. I think I would lean towards having the MINIMAL done (i.e. pay the contractor as little as possible) such that you are happy (enough) and the bank is happy (enough) to minimize your loan and then you can take your time to do the other things you want or need. In my own finances, cash flow is king. I want as much coming in monthly as possible and I've taken steps to increase that as much as possible over time. I've mostly done it with refinancing the house but also cashing in investments and paying off other loans and whatnot. The house is the only major cash hog right now (no car loan...and I only pay cash for new cars) and of course the regular bills and such. It stinks that you cannot contribute ANY sweat equity towards this venture. Could you at least HELP with the demo or something? It takes no skills to demo a house after all. Good luck and I hope things work out. Maybe the PERFECT house will suddenly pop up for you as time winds down. :)

[Brian Elfert]

I got the second bid finally. It is quite a bit more than the other bid. I am leaning towards moving forward with this project. I looked at a lot for a new house, but the builder was proposing a really cheap house. By the time I added in all the stuff I would want to upgrade the price goes up by a good $15,000 and I still don't really like the lot that much. I am going to potentially look at one more house before I decide for sure.

Part of the reason for moving is to improve my finances. I'll save $200 a month just on property taxes. The only thing on my project list I could really do myself would be the bathroom. I can't install the heating/cooling system and it would be hard for me to replace the windows, doors, and siding. I might see about dropping the bathroom from the project, but the house might not appraise for enough without it. The basement bathroom is totally gross.

I plan to do the demo myself as I would be allowed to do that.

[Shawn Pixley]

Why would you assume that prices for houses vary a whole lot through out the country. maybe Where you live it is a good deal but in other places it would be a horrible deal.

I took that into account. Median price for house building in Minneapolis is ~120$/sf. In upscale suburban Southern California the cost per sf is over 200$/sf. Of course here the median house price is over $650K. Wages are commenserally higher as well.

In 1984, some friends and I built two houses in the midwest (similar metropolitan area) for 135$/sf with us doing about 75% of the labor. By most US standards, 90$/sf is cheap for a functional house today. The 90$/sf does not account for the cost of the three acres. Acounting for the cost of the land just lowers the cost/sf.

My price does not assume that it would be worth that on the market, merely what it might cost to build. The question is, "is this a place to live or an investment?"

[Brian W Smith]

I generally should stay out of certain discussions,houses(not homes),holding a ranking on that list.

My only advice is to try,above all,to develop a working relationship with your contractor.This is over any budget constraint.It is impossible for someone,not in the biz to understand the complexities in building from a design standpoint.You've been burdened with aggressive marketing campaigns as long as "most" here have been alive.The contractor you want to work with,should have a vast knowlege of not only the period of house but any local established "stds".These are simply things he works with everyday,not something he read on an XY scale.You're looking for,paid insight.........The very best of luck(I'd skip the shop,build an addition on the house and use it for my studio....but thats me).

[David Weaver]

.........The very best of luck(I'd skip the shop,build an addition on the house and use it for my studio....but thats me).

Would you park a bus with an 8v-92 detroit diesel in that (or 6v-92 or 8v-71, ....)?

[Brian Elfert]

I took that into account. Median price for house building in Minneapolis is ~120$/sf. In upscale suburban Southern California the cost per sf is over 200$/sf. Of course here the median house price is over $650K. Wages are commenserally higher as well.


I wish I could get a house built for $120 per SF here in Minneapolis. I paid close to $120 per SF in 2001! Going rate now is at least $150 per SF based on bids from several builders and looking at what new houses are selling for minus the lot. The $150 per SF does not include well and septic required where I want to build.

One fly in the ointment on my project could be that the city could require the electrical and other stuff brought to current code. The contractor brought that up. I can't get in touch with anyone at the city to check on this.

[Shawn Pixley]

I wish I could get a house built for $120 per SF here in Minneapolis. I paid close to $120 per SF in 2001! Going rate now is at least $150 per SF based on bids from several builders and looking at what new houses are selling for minus the lot. The $150 per SF does not include well and septic required where I want to build.

One fly in the ointment on my project could be that the city could require the electrical and other stuff brought to current code. The contractor brought that up. I can't get in touch with anyone at the city to check on this.

I intentionally noted that the house is cheaper than what you can build it for. If you're buying a house to live in, it is a decent deal. If you are buying as an investment and the area won't support that type of home price, not a good deal. Only you can determine your calculus here.

[Brian Elfert]

I don't think I could even have that house built for $150/square foot if you include the septic. I have a bid right now for a new 1,100 square foot house at $209,000 including septic and well. I figure the rehab house with lot would be pushing $300,000 to replace. A high and dry 3 acre lot is $95,000 or better in the area. I would be at least $275,000 into it to completely finish the house with new kitchen. I have my doubts that the finished house would ever appraise for the replacement cost.

I found a lot today for $50,000 I could build a new house on for $260,000 total. Tempting to go with a brand new house for slightly more money. This would include an attached garage as well as that city requires it. I could build a pole barn for housing my motorhome so that would save money in the long run. The lot is pretty nice, but I don't really like the location. Harder to get to, and not as centrally located. There is also a large softball/baseball complex with lights across the street. There is a bar in the center of the complex.

I'm buying a house to live in. I'm certainly not going to build a huge garage for my motorhome and not plan to stay long term.

[Brian Elfert]

I decided to go with the $150,000 house that needs nearly $100,000 in work. The decision literally came down to the last five minutes of the business day today. Today was the last day of the 10 day contingency period the bank offers.

I was really, really close to going with a new house on a lot I found Friday, but the uncertainty of exactly how much the project would cost at the end pushed me to continue with the other house. The price of the new house would have been $20,000 more than this house, but it would have been new and it would have included an attached garage. The city zoning rules for the house I am buying are such that I really can't have an attached garage unless I want to attach a 2,000 square foot garage.

[Chris Padilla]

Sweet! Time to move forward and refocus...finally. Best wishes in the remodeling effort, Brian!