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February 11, 2009
Brownstone update cost
We are in the process of buying a four story four family brownstone in bedstuy. We put an offer on the house, which was accepted, but we are not in contract yet. We knew the elictrica system needed to be updated and had planned 25k for that. We also knew the kitchens would need to be updated and had planned for that money also. We are using a 203k loan to get the renovation funds. We had an inspection yesterday and found that there were substantially more repairs than we had thought. Specifically the plumbing is in severe need of an update, there is no hot water heater, the boiler will need to be replaced, asbestos removed, all the windows need to be replaced. I have a couple of questions:
1. Even though the contracts are drawn up (not signed), is it okay to come back and renegotiate the price. The house has been on the market for awhile and the imspector thought there had been at least 3 previous inspection.
2. Does anyone have any off the cuff idea how much this would cost. I think we would do things like sheetrocking, labor for the kitchen updates, etc. But the bigger stuff listed above is definitely out of my skill level. We need to be able to come back with a specic number, but electricians an plumbers are (understandibly) hesitant to
do estimates and are trying to charge us for an estimate. I am hesitant to sink any more money into a deal that may very well go nowhere.
Comments
10k for boiler. 15k for plumbing. 14 windows x 500 = 7k. Asbestos 8k. I am making this all up. But this house is a mess. Sounds like a 100k easy in all. More than that are you ready for a gut job?
Posted by: Putnamdenizen at February 11, 2009 8:28 PM
The kicker is that while it sucks that none of the mechanicals have been touched (and when they have it seems jerry mandered) a big chunk of the orig details are there. 100k is what I was thinking for initial Reno, but I feel like it would be better from a bargaining standpoint if I can give them a list of the costs
Posted by: byndcivilization at February 11, 2009 8:41 PM
The kicker is that while it sucks that none of the mechanicals have been touched (and when they have it seems jerry mandered) a big chunk of the orig details are there. 100k is what I was thinking for initial Reno, but I feel like it would be better from a bargaining standpoint if I can give them a list of the costs
Posted by: byndcivilization at February 11, 2009 8:41 PM
Gerrymander -- To divide (a geographic area) into voting districts so as to give unfair advantage to one party in elections.
Jerryrig -- To assemble a mechanical or electrical device in a fundamentally unsafe manner, usually in such a way that the device is doomed to failure.
Posted by: strunkandwhite at February 11, 2009 9:06 PM
- http://redwing.hutman.net/~mreed/warriorshtm/grammarian.htm
Grammarian usually has little to contribute to a discussion and possesses few effective weapons. To compensate, he will point out minor errors in spelling and grammar. Because of Grammarian's obvious weakness most Warriors ignore him.
Posted by: SnarkSlope at February 11, 2009 9:37 PM
http://redwing.hutman.net/~mreed/warriorshtm/bong.htm
And your contribution, Snark, er, Bong - Is it just you or does this guy seem to babble on and on without making any sense whatsoever? Does he lurch from one non sequitur to another? Are you baffled by his obscure metaphors? Are there so many typos you think that maybe he was typing while wearing a catcher's mit? Can he really MEAN what he just said? What in the hell is hey talking about, anyway? Is this guy smoking something? Well, yes...in fact he is, and lightly tethered in orbit high above the Earth Bong remains far beyond the grasp of the even the most powerful of Warriors.
Posted by: strunkandwhite at February 11, 2009 10:05 PM
It's not OK to renegotiate. A lot of time has gone into drawing up those contracts. I suspect there are several paralegals who downloaded those forms, filled in the blanks to "customize" them and put those little red arrows that say "sign here" to disappoint at this late date. I wouldn't back out now, it would be too uncomfortable.
Posted by: mod squad at February 11, 2009 10:49 PM
If you want real numbers pay the pros for their time if getting the job is a long shot for them. They may even pad the estimate a bit for you. A few hundred dollars will soon seem like nothing if you go through with this. And what about your inspector? If he is any good he should have some clue.
Posted by: edifice rex at February 11, 2009 10:52 PM
Yup, use that stuff to renegotiate price.
Just make sure that after it's all said and done, you're monthly mortgage payments more or less equal what you'd otherwise pay if you were renting the house.
If there's a big difference, you're overpaying.
Forget about potential price appreciation. It may not happen for twenty years.
Posted by: IronBalls at February 12, 2009 12:00 AM
This sounds exactly like the house we are buying in Bed Stuy, except it's a two-family.
We're figuring on 25 K for the electrical (three floors plus cellar) and 7 to 10 K for the boiler (we are converting from oil to gas at the same time). We also need a new water heater, forgot to look into that.
ABSOLUTELY you should renegotiate the price. That's what you have the inspection for, partly. Ask for a discount for the repairs....or ask them to fix the repairs.
Thing is, we decided we wanted them to make the repairs, since a discount off the price wouldn't translate into enough cash to make the repairs ourselves. Then our attorney advised us there's a lot of room for misunderstanding, they may not do the repairs to our satisfaction. Ai yi yi.
Those repairs include windows (15 x 450 or 500), asbestos (uh, not much, maybe certify ourselves or let the contractor take care of it but for the legal 203K requirement we thought $3,000 and I don't remember how we came up with that number), and plumbing leaks. We decided to fix only the leaks, not anything else even though the inspector recommended it. (But actually the pipe is pretty new, none of the supply is lead or anything like that.) I think we estimated $7,000 for our three leaks. The inspector said maybe $20,000 to replace most of the supply lines and some waste lines but not the main stack, if I remember correctly. He didn't include the heating plumbing. We're not changing the kitchens or baths. There are lots of other things - main beam, termites.
Also I got kind of scared reading about 203K online and we decided to make the seller do most of the repairs instead of us.
But now we're wondering if we should back out because there are likely to be more repairs than we have money to pay for. Like yours, it's also a gorgeous house with lots of original detail.
Ours is near the Halsey and Chauncey J in Ocean Hill. Where's yours?
Posted by: mopar at February 12, 2009 12:07 AM
IronBalls is totally right.
BTW, the 203K loan costs more -- something like 6.5 percent if you would otherwise pay 5.5 and higher closing costs. But I also get the impression no one will refuse you PMI and you can put down as little as 3 percent. (Not sure about PMI.)
Posted by: mopar at February 12, 2009 12:09 AM
Ours is stuyvesant an halsey. Yes the 203k is a bit more in the way of closing, but there isn't that much difference in rates. Last we checked it was somewhere around 5.8. Plus you can get away with 5%down and not totally blow all of your nest egg on repairs. It is also the only way we found to be able to count rental income as income in a vacant house, FHA recently changed the underwriting guidlines I think. Also I don't think having them do the repairs is an option. The place was roofed a year or so ago, and that's a total mess. I was also wondering If we would need a GC or if we could coordinate all of the various people (I.e. Electrician, plumber, architect, permits) ourselves. And how much does a GC cost?
Posted by: byndcivilization at February 12, 2009 7:45 AM
I think I've seen the house. It's on Stuyvesant just north of Halsey and has been listed for maybe 6 months now? It's certainly a good location although sometimes the music from the Porch can be loud. It has no retail space, correct?
To your point, you can still negotiate if you haven't signed. Make sure that the contract allows for inspection (additional inspections) and a lawyers approval contingencies.
Yes, it can be difficult getting plumbers & electricians to give estimates from an inspection like this and without drawings. That said, $200 here, $500 there is money well spent before you go into contract to know whether you're talking about $100k or $200k.
If the house were at least livable on a few of the floors you could do the renovations somewhat more piecemeal but that's no fun oftentimes.
Posted by: daveinbedstuy at February 12, 2009 8:51 AM
Twenty years ago we bought a house with tons of detail and not much else. We didn't have much money for renovations and we did things as we could afford them. It also gave us time to figure out what we were doing and we got smarter about our decisions and had better results as we went along. We were young, energetic and it worked out. We didn't have kids till much later. I think that was key. I would never have the previous owner "fix" problems if they haven't proved themselves capable up to this point. Good luck with your calculations.
Posted by: Schultz at February 12, 2009 9:55 AM
I'm an architect and I've worked on a number of brownstone renovations. Some of the contractors that I've worked with would be happy, especially now, to walk through the house with you and me, and provide a rough estimate of the work for no charge if they felt it would give them a better chance of getting to do the renovation work.
Jim Hill
Urban Pioneering Architecture
Posted by: JimHill at February 12, 2009 10:19 AM
If you're doing the electrical and plumbing and the plumbing is inside the walls, doesn't that imply a gut renovation? Which is more expensive but also something where you do it all at once? I don't know.
Anyway, OP, are you also aware of the additional red tape with 203K loans? The administrators need to send their own contractors out to do estimates of repair costs after you are in contract, the loan will take longer than normal to close (I think it was at least 45 days), and I believe you have to use 203K loan approved contractors. That last bit scared me. Would the list be sufficiently long, would they be good, would they be too expensive? If you google 203K it sounds like a lot of people have used them for scams -- but of course not homeowners such as yourself.
Posted by: mopar at February 12, 2009 12:01 PM
You do need to get an estimate from someone who is actually capable of doing the work. We can all sit here and say "oh, that's a $25K job" which is kind of useful to you, but until you find the plumber who can say "yeah, I could fix this for $25K" you don't have much.
PS. strunkandwhite, I'll meet your distinction between gerrymandering and jury-rigging and raise you a "jerry-rig" v. "jury-rig"
http://en.wiktionary.org/wiki/jury-rig
Posted by: serpentor at February 12, 2009 3:23 PM
Thanks for the penny poker, Serp. Even though a derivation of jury-rig (from the nautical term jury mast), I opted for "jerry" to contrast with "gerrymander."
As to OP, what sage advice can be offered to those seeking off-the-cuff estimates while contemplating responsibility for the lives of four families at 5% down?
Posted by: strunkandwhite at February 12, 2009 5:41 PM
I wasn't aware that renting a place conferred parental resposibilities.
Posted by: byndcivilization at February 12, 2009 7:25 PM
Do I have to breastfeed also, because I don't think I can do that.
Posted by: byndcivilization at February 12, 2009 7:29 PM
If you don't know your responsibilities as a landlord, you don't know squat about purchasing a 4-family (which, btw, your post already established). Hope your mother has some milk left for you. You'll be crying in it and crying for it.
Posted by: strunkandwhite at February 12, 2009 7:54 PM
Touchy, touchy. Let me get this straight. Someone who trolls a real estate blog message board to harp on grammer offers a snarky comment about being resposible for the lives of tenents (not being a resposible landlord mind you). One might be a bit skeptical as to the usefulness of that persons comments, might one not. Point taken...words have meanings. Part of asking questions on this board is to get advice so one does not become a clichéd NYC landlord. Or do I sense some class resentment.
Posted by: byndcivilization at February 12, 2009 8:17 PM
Touchy, touchy. Let me get this straight. Someone who trolls a real estate blog message board to harp on grammer offers a snarky comment about being resposible for the lives of tenents (not being a resposible landlord mind you). One might be a bit skeptical as to the usefulness of that persons comments, might one not. Point taken...words have meanings. Part of asking questions on this board is to get advice so one does not become a clichéd NYC landlord. Or do I sense some class resentment.
Posted by: byndcivilization at February 12, 2009 8:17 PM
Touchy, touchy. Let me get this straight. Someone who trolls a real estate blog message board to harp on grammer offers a snarky comment about being resposible for the lives of tenents (not being a resposible landlord mind you). One might be a bit skeptical as to the usefulness of that persons comments, might one not. Point taken...words have meanings. Part of asking questions on this board is to get advice so one does not become a clichéd NYC landlord. Or do I sense some class resentment.
Posted by: byndcivilization at February 12, 2009 8:44 PM
Touchy, touchy. Let me get this straight. Someone who trolls a real estate blog message board to harp on grammer offers a snarky comment about being resposible for the lives of tenents (not being a resposible landlord mind you). One might be a bit skeptical as to the usefulness of that persons comments, might one not. Point taken...words have meanings. Part of asking questions on this board is to get advice so one does not become a clichéd NYC landlord. Or do I sense some class anxiety.
Posted by: byndcivilization at February 12, 2009 8:45 PM
Touchy, touchy. Let me get this straight. Someone who trolls a real estate blog message board to harp on grammer offers a snarky comment about being resposible for the lives of tenents (not being a resposible landlord mind you). One might be a bit skeptical as to the usefulness of that persons comments, might one not. Point taken...words have meanings. Part of asking questions on this board is to get advice so one does not become a clichéd NYC landlord. Or do I sense some class anxiety.
Posted by: byndcivilization at February 12, 2009 8:48 PM
Touchy, touchy. Let me get this straight. Someone who trolls a real estate blog message board to harp on grammer offers a snarky comment about being resposible for the lives of tenents (not being a resposible landlord mind you). One might be a bit skeptical as to the usefulness of that persons comments, might one not. Point taken...words have meanings. Part of asking questions on this board is to get advice so one does not become a clichéd NYC landlord. Or do I sense some class anxiety.
Posted by: byndcivilization at February 12, 2009 8:49 PM
strunkandwhite can't read. The original post did not touch on the subject of landlord responsibilities.
Posted by: mopar at February 12, 2009 11:02 PM
back to the subject at hand...
i've looked pretty extensively into 203k loans, and you don't need to use FHA approved contractors. They just need to be licensed and insured for workman's comp. You do need to use a GC when going through FHA and you won't actually control your construction escrow account. It will doled out to contractor by a HUD consultant (who you pay $1000 to make periodic inspections) on a predetermined schedule.
Can I ask who gave you a quote of 5.8? Are you sure that didn't include a lot of points? The best we could find with only one point was 6% from Wells Fargo, and that was yesterday.
lucy
Posted by: lucybb at February 13, 2009 3:34 PM
Hello there we live on Halsey and Throop. Bought our place back in August. The seller actually wanted us to do the inspection before we signed the contract as they didn't want us to come back with price negotiations after the contract was signed. As you haven't signed the contract you totally have the right to go back in asking for a lower price as I did.
We actually did similar work to what you need to get done.
-Replacing boiler and hwh cost $10K
-New windows 18 total cost $8K
-Minor plumbing work $8K
-We had the seller remove the asbestos
We got the price lowered by $25K.
Best of luck in your negotiations,
Faye
Posted by: feelyng at February 13, 2009 11:44 PM
Lucy, your comment is incredibly helpful. Thank you so much.
Posted by: mopar at February 14, 2009 9:50 AM
I'm writing this all late, but I'm going thru the process with a 203k loan also. Can you please e-mail me with and assistant with a contractor that you may have used. Thanks
Posted by: flawlessphoto06 at August 5, 2009 7:14 PM
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