Karen and I were a young married couple. We were in love and ambitious. I should correct that. She was ambitious and her ambition sort of spread to me as well. She was also very frugal, which I admired and respected. We had just moved to Knoxville for me to attend grad school. I figured that since I would be there for 5 years or so, it would be financially wise to purchase a house for us to live in rather than pay rent for that long. So we stayed in on-campus housing while we went house shopping.
We looked at several houses. Karen was really excited when we first started looking because there were houses in the $20k range. Our realtor was adventurous enough to take us to one such house, and relieved when we decided we didn't want a house in that poor of condition. (There were large holes in the floor, all the copper had been stripped, the house smelled strongly of urine, etc.) We shopped around a lot, and possibly would have looked at other areas in town if it weren't for the fact that that would have put us in a different church unit, since Mormon church units are determined geographically rather than by personal election.
After lots of looking and a little bit of compromise on our budget, we finally settled on a cute little house that we bought for $66.5k. We knew there were problems with it, but we figured they would be simple problems. We probably needed to reshingle the roof soon, some of the windows were painted shut and single-pane so they needed to be replaced. The deck was starting to rot. They had put carpet on top of hardwood floor in some areas. However, the basement leaking was not a problem we were aware of until after the purchase. Needless to say, we spent lots of money trying to fix the house up and get it to look nicer. Karen was excited to put some sweat equity into the house and sell it for more than the purchase price. She and I both had some experience doing home repairs.
We spent roughly $7k replacing all the windows in the house. We removed all the cabinets in the kitchen, as well as the floor, and we replaced the molded wall behind the sink. We put in all new IKEA cabinets and tile floor (Karen was a big fan of tile and hardwood). We refinished the hardwood floors. We completely stripped the bathroom down to the framing, redid everything in it. We tore out one of the chimneys (this house had two) and patched the roof where it was. We expanded the closet in the master suite and installed shelving and extra rods to hang more clothes.
Some time after all these repairs we had done, Karen passed away. I lost my motivation to continue to work on the house because she was nearly all of my motivation. We had done demolition on the downstairs bathroom and had the tile to start putting up again, but I just never got around to tiling the bathroom. The house sort of decayed a bit over the years as I let things go, didn't clean as often as I should have, and didn't do any repairs unless they were necessary.
I came out of the closet, Conrad moved in with me, and had been living with me for almost a year (summer 2012) when the AC unit on our house started having problems. I took out a loan to replace that and while I was at it I also had the roof replaced since it had been leaking. Together that was about $16k.
I moved out of the house in the fall of 2013 when I took my current position at Morehouse College. Conrad stayed up there because he wanted to keep his job. We also had a roommate at the time who was living up there. I got a call one night, I believe in October or November of that year. The house had caught fire. The dogs had suffocated from the smoke. Fortunately the fire put itself out because of all the smoke. The room where the fire happened was completely destroyed. Everywhere else in the house was pretty much just soot damage. I called the insurance company, the adjuster came out and looked at it, took pictures, asked me a bunch of questions, recommended a contractor and said he was the best in the business. I naively went with that contractor. I don't even know how much money that contractor made off the project because I (again, rather naively) gave him permission to sign my name on the checks, so I wouldn't have to drive up to Knoxville just to sign the check myself. I know there was a limit on how much the insurance would cover. I don't know what that limit was or whether it was met, but it would not surprise me to learn that it had been. At any rate, I can't claim that money as repairs I spent on the house since it didn't come out of my own pocket.
The saga with that particular contractor repairing the house from the fire was a long, arduous, and rather frustrating one. After over 2 years of him working on the house and me nagging him about it, we both finally decided he was done with his work.
While he had been doing work on the house, all the copper was stripped from the house. And later, the new HVAC unit I had purchased just 3 years prior was stolen--the entire unit just detached from the house. To this day, I wonder if that contractor or one of his employees was behind one or both of those thefts, although I admit it is nothing more than suspicion. (Also, I went to look this contractor up recently and discovered that his company no longer exists and his cell phone number has been changed, so I have no means of contacting him.) So I had to file a second claim for replacing the pipes and wires in the house. I didn't file a third claim for the air unit, I just ate that cost, which was $5k.
I had a tenant renting the house while I was doing some of these repairs, and he informed me that there were plumbing issues. I called a plumber and they came out to look at it, after some poking around they determined that the house was not connected to the sewer main, so they needed to dig up and replace all the piping along there. For all the work they did, I paid about $4600.
The deck had been removed with some of the work the contractor had done, but he never replaced it so I found a handyman and he installed new stairs leading to the upstairs back door for about $800. I finally decided the house was ready to sell, so I contacted a friend who I knew had recently become a realtor and asked him to be my agent. We listed the house, almost immediately there was an offer. Seemed like a very reasonable buyer. After seeing the home inspection and the long list of things the inspector said were wrong with the home, the buyer only asked me to fix one plumbing issue, which was about $400 or so.
When the closing date got closer, and the lender sent their appraiser out to look at the house, the appraisal came back with a long list of things which needed to be replaced in order to approve the loan, since it was a government backed loan. My agent contacted a contractor (who ended up being completely the opposite of my earlier contractor--very reliable, transparent, and expedient) and they decided that all the work that needed to be done could be done for $2500 and the rest they could reason with the lender didn't need to be done in order for the house to sell. Well, the lender put their foot down and insisted that absolutely everything on the list be completed prior to closing, so that was another $6800 for the remaining repairs.
So now let me total all the expenses that I paid to fix that house up. And this is just the ones I remember. I don't remember how much money we spent on the kitchen or paint or refinishing the wood floors, so this is a low estimate.
$7,000 windows
$16,000 roof and first AC unit
$5,000 second AC unit
$4,600 plumbing
$800 back steps
$400 more plumbing
$9,300 lender-required repairs
Total: $43,100 spent on repairs for this house. Probably closer to $45k or $50.
I sold the house for $64k. That's $2k less than I paid for it. Now, I do need to point out Karen and I bought the house in 2007 before the housing bubble popped, so within a year or two of purchasing the house it already had lost much of its value. But I wish to drive home the point that from a financial perspective, buying this house was a huge mistake. It has been a learning experience for me, but a very very expensive learning experience. In total, purchase price plus repairs, I paid $109k (or more) for this house and I got $64k out of it when I sold it. That is a net loss of $45k. I didn't make money on the house. I didn't even break even. I lost a lot of money. If we had stayed in an apartment during the six years I was a grad student there, we would have paid less money in rent than I lost owning that house. When we purchased the house, we were staying in an apartment for $433/mo. If we had been paying $600/mo for 6 years we would have paid a total of $43,200 in rent. I would have saved $2k and lots of huge headaches if I had gone that route. (If we had stayed at the $433 rent we would have paid a total of $31k.)
Needless to say, I am extremely relieved that I have sold that house. I cannot get back any of the money I have lost. I cannot redo any of the mistakes I made. But I can learn for the future. I know that I will never buy a fixer-upper. I will never blindly trust a contractor. I will expect to have a contract with itemized costs and a clear understanding of the work that will be done and the time frame in which it will be done. I will not try to manage a house long-distance--at least not without a property manager that I can trust.
We looked at several houses. Karen was really excited when we first started looking because there were houses in the $20k range. Our realtor was adventurous enough to take us to one such house, and relieved when we decided we didn't want a house in that poor of condition. (There were large holes in the floor, all the copper had been stripped, the house smelled strongly of urine, etc.) We shopped around a lot, and possibly would have looked at other areas in town if it weren't for the fact that that would have put us in a different church unit, since Mormon church units are determined geographically rather than by personal election.
After lots of looking and a little bit of compromise on our budget, we finally settled on a cute little house that we bought for $66.5k. We knew there were problems with it, but we figured they would be simple problems. We probably needed to reshingle the roof soon, some of the windows were painted shut and single-pane so they needed to be replaced. The deck was starting to rot. They had put carpet on top of hardwood floor in some areas. However, the basement leaking was not a problem we were aware of until after the purchase. Needless to say, we spent lots of money trying to fix the house up and get it to look nicer. Karen was excited to put some sweat equity into the house and sell it for more than the purchase price. She and I both had some experience doing home repairs.
We spent roughly $7k replacing all the windows in the house. We removed all the cabinets in the kitchen, as well as the floor, and we replaced the molded wall behind the sink. We put in all new IKEA cabinets and tile floor (Karen was a big fan of tile and hardwood). We refinished the hardwood floors. We completely stripped the bathroom down to the framing, redid everything in it. We tore out one of the chimneys (this house had two) and patched the roof where it was. We expanded the closet in the master suite and installed shelving and extra rods to hang more clothes.
Some time after all these repairs we had done, Karen passed away. I lost my motivation to continue to work on the house because she was nearly all of my motivation. We had done demolition on the downstairs bathroom and had the tile to start putting up again, but I just never got around to tiling the bathroom. The house sort of decayed a bit over the years as I let things go, didn't clean as often as I should have, and didn't do any repairs unless they were necessary.
I came out of the closet, Conrad moved in with me, and had been living with me for almost a year (summer 2012) when the AC unit on our house started having problems. I took out a loan to replace that and while I was at it I also had the roof replaced since it had been leaking. Together that was about $16k.
I moved out of the house in the fall of 2013 when I took my current position at Morehouse College. Conrad stayed up there because he wanted to keep his job. We also had a roommate at the time who was living up there. I got a call one night, I believe in October or November of that year. The house had caught fire. The dogs had suffocated from the smoke. Fortunately the fire put itself out because of all the smoke. The room where the fire happened was completely destroyed. Everywhere else in the house was pretty much just soot damage. I called the insurance company, the adjuster came out and looked at it, took pictures, asked me a bunch of questions, recommended a contractor and said he was the best in the business. I naively went with that contractor. I don't even know how much money that contractor made off the project because I (again, rather naively) gave him permission to sign my name on the checks, so I wouldn't have to drive up to Knoxville just to sign the check myself. I know there was a limit on how much the insurance would cover. I don't know what that limit was or whether it was met, but it would not surprise me to learn that it had been. At any rate, I can't claim that money as repairs I spent on the house since it didn't come out of my own pocket.
The saga with that particular contractor repairing the house from the fire was a long, arduous, and rather frustrating one. After over 2 years of him working on the house and me nagging him about it, we both finally decided he was done with his work.
While he had been doing work on the house, all the copper was stripped from the house. And later, the new HVAC unit I had purchased just 3 years prior was stolen--the entire unit just detached from the house. To this day, I wonder if that contractor or one of his employees was behind one or both of those thefts, although I admit it is nothing more than suspicion. (Also, I went to look this contractor up recently and discovered that his company no longer exists and his cell phone number has been changed, so I have no means of contacting him.) So I had to file a second claim for replacing the pipes and wires in the house. I didn't file a third claim for the air unit, I just ate that cost, which was $5k.
I had a tenant renting the house while I was doing some of these repairs, and he informed me that there were plumbing issues. I called a plumber and they came out to look at it, after some poking around they determined that the house was not connected to the sewer main, so they needed to dig up and replace all the piping along there. For all the work they did, I paid about $4600.
The deck had been removed with some of the work the contractor had done, but he never replaced it so I found a handyman and he installed new stairs leading to the upstairs back door for about $800. I finally decided the house was ready to sell, so I contacted a friend who I knew had recently become a realtor and asked him to be my agent. We listed the house, almost immediately there was an offer. Seemed like a very reasonable buyer. After seeing the home inspection and the long list of things the inspector said were wrong with the home, the buyer only asked me to fix one plumbing issue, which was about $400 or so.
When the closing date got closer, and the lender sent their appraiser out to look at the house, the appraisal came back with a long list of things which needed to be replaced in order to approve the loan, since it was a government backed loan. My agent contacted a contractor (who ended up being completely the opposite of my earlier contractor--very reliable, transparent, and expedient) and they decided that all the work that needed to be done could be done for $2500 and the rest they could reason with the lender didn't need to be done in order for the house to sell. Well, the lender put their foot down and insisted that absolutely everything on the list be completed prior to closing, so that was another $6800 for the remaining repairs.
So now let me total all the expenses that I paid to fix that house up. And this is just the ones I remember. I don't remember how much money we spent on the kitchen or paint or refinishing the wood floors, so this is a low estimate.
$7,000 windows
$16,000 roof and first AC unit
$5,000 second AC unit
$4,600 plumbing
$800 back steps
$400 more plumbing
$9,300 lender-required repairs
Total: $43,100 spent on repairs for this house. Probably closer to $45k or $50.
I sold the house for $64k. That's $2k less than I paid for it. Now, I do need to point out Karen and I bought the house in 2007 before the housing bubble popped, so within a year or two of purchasing the house it already had lost much of its value. But I wish to drive home the point that from a financial perspective, buying this house was a huge mistake. It has been a learning experience for me, but a very very expensive learning experience. In total, purchase price plus repairs, I paid $109k (or more) for this house and I got $64k out of it when I sold it. That is a net loss of $45k. I didn't make money on the house. I didn't even break even. I lost a lot of money. If we had stayed in an apartment during the six years I was a grad student there, we would have paid less money in rent than I lost owning that house. When we purchased the house, we were staying in an apartment for $433/mo. If we had been paying $600/mo for 6 years we would have paid a total of $43,200 in rent. I would have saved $2k and lots of huge headaches if I had gone that route. (If we had stayed at the $433 rent we would have paid a total of $31k.)
Needless to say, I am extremely relieved that I have sold that house. I cannot get back any of the money I have lost. I cannot redo any of the mistakes I made. But I can learn for the future. I know that I will never buy a fixer-upper. I will never blindly trust a contractor. I will expect to have a contract with itemized costs and a clear understanding of the work that will be done and the time frame in which it will be done. I will not try to manage a house long-distance--at least not without a property manager that I can trust.
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