Where to start?
Good morning, My husband and I are just starting to consider what we’ll do longterm. My ideal is an estate brownstone in PS, CH, CG or PH that we could fix up over time. Dh feels we can’t afford that and prefers a move to the burbs. My question to you all: how do I…
Good morning,
My husband and I are just starting to consider what we’ll do longterm. My ideal is an estate brownstone in PS, CH, CG or PH that we could fix up over time. Dh feels we can’t afford that and prefers a move to the burbs.
My question to you all: how do I begin to get enough information to compare the scenarios? I’ve been reading the forums and looking at listings, but for instance do I contact a mortgage broker to see what we can afford here? Speak with a broker, or does that lock us in to them? Go to an open house? And how to account for differences in taxes in/out of the city?
Y’all have tons of great info on here, but much of it is so detailed that I’m finding my head swimming. Any pointers on where to jump in to the process to start choosing a path? Thanks for any insight.
Thanks so much for all your thoughts, everyone; they’ve helped me clarify my own thinking and plan some next steps, too. For those who asked: Our preference is a Brooklyn home. It is only finances/school costs for our children that make the suburbs seem perhaps a more viable option. I have some numbers to run there.
As far as what we’d like here, I don’t have the background or fortitude to take on a gut reno. Neither do I want to pay a lot for someone else’s idea of a nice home, though, so our ideal would be something that needed considerable updating but that we could live in however uncomfortably right away or after only a couple months’ work. I’d prefer not to get into major mechanical updates. Lastly, while we obviously would hope for appreciation over time, we’re primarily looking for a home that we can love, not an investment. Thanks again!
If we’re factoring in DIY, I have to disagree. I bought the worst house on the best block I could afford in 1999. It was selling for $200k less than similar houses on the street, which was relevant for the fact that they’re identical row houses. Since then I’ve gone out of pocket for about $100k, with the rest being sweat equity. Without going into the details of the period restoration, real estate agents who have seen it say it will fetch $200k over my neighbors’ homes to select buyers willing to pay for the detail and amenities.
That’s $300k for my effort — not great for ten years’ effort but it’s a hobby that more than paid for itself.
Slopegirl, that’s wonderful. So the plumbing and electric had already been upgraded? Did you have to do anything to the walls after you pulled off the panelling?
We had fake wood paneling all over our kitchens and baths. Unfortunately, they used some kind of glue we can’t get off, so I think eventually we’re going to have to replicate and replace all the existing bead board with new. But for now we’re just living with it. Maybe we should have just left it in place and painted it white. If we knew then what we know now….
Biggest problem is determining in which group a house belongs.
Ultimately, the house that is sold at a premium as completely renovated, itself has expensive problems. Papa bear’s is too hot.
The “shell”, in which you are purchasing the walls and location costs you, the inexperienced, a fortune to build from scratch. Too cold.
And baby bear’s porridge is “just right”. Except the deftness required to navigate amidst the features you want to keep, to upgrade the features you want to upgrade, is possibly just as expensive as the “shell”.
If an exit strategy is in your heart, enjoy the suburbs. Houses there are liquid assets, with a market to determine value. Brownstone Brooklyn is more of a hobby, or part-time job. Like collecting glass paperweights. You are attracted to them, and you collect them, but you don’t actually buy and sell them as a business. Don’t get a city house because you want to fix it up as a route to financial security.
That train left the station 15 years ago.
We bought an estate condition brownstone in brooklyn for a substantial discount and we are living in it without major renovation. It had lots of ugly stuff in it–gross wall to wall carpeting, nasty “wood” paneling, and outdated kitchen and baths. But once we tore out the carpets and paneling, painted, it is fine to live in.
We’ve spent maybe $20,000 on improvements. (best buy: $10 for new cabinet hardware at build it green in astoria).
You can easily do the same if you take your time looking. In two years I only saw two houses that were true bargains.
I would advise you resetrict your search to affordable houses that you can move into, even if they may not be in tip top shape. Then you can gradually make your improvements as time and budget allow.
We decided not to take on a major renovation as novices, and I’m really glad we didn’t. There is a LOT to know, and you only learn most of it when you’re finished.
It’s usually the case that you need MORE money, not less, to buy a house in bad condition vs. one in move-in condition. You need the cash to make the repairs.
True, if you don’t have cash for repairs, you can get a 203K loan, which means the cost of renovation is part of your mortgage, but this comes with a variety of limitations and is more costly and can be more risky than a regular mortgage or paying for a renovation with cash. (You will probably not have your pick of contractors, for example.)
We bought an estate-condition brownstone 11 years ago and the reno took 18 months — with a GC and his small team. It was incredibly stressful and cost more than we thought we could afford. Infact, a couple years later we refinanced and cashed-out some equity to pay down our reno debts. With both of us working full-time, there’s no way we could have handled the reno ourselves (even if we’d had the skills). And our house was such a mess that living there in its original condition was not an option. We actually lived in the rental apt (which was done in 3-4 months) and moved upstairs 15 months later.
Also bear in mind what BHS and mopar are saying: the “discount” for buying a house in crappy condition is NEVER as much as the cost of the renovation. Yes, you get to determine the priorities, design kitchens and bathrooms, choose all the finishes etc. — but you will not come out ahead financially.
If, otoh, you’re thinking of buying a well-maintained house that’s out-dated (ugly kitchen, bathrooms) but with good heating, electrical, roof, windows etc. then it’s a bit of a different equation. But you still need to know what you can live with — aesthetic issues don’t compare to wind howling through old windows, smelly, leaky plumbing, and dodgy wiring! In my 20s, living in London, I did live like that and did do a lot of work on a house myself. But I’m too old and too busy for that now.
All in all, you’ll probably get a better deal in the burbs.
Generally estate sales or other renovation-needed-condition sales in Brooklyn don’t fully factor in the cost of a renovation if you include all costs. They may factor in a best-case-scenario renovation but not the cost of your time, higher-end options you might choose, the cost of unforeseen items common in old houses and poorly maintained properties, permitting headaches, properly preserving historical details, the risk of a bad contractor, or the cost of rent at another location while the fixer-upper is being renovated.
I second Mopar’s warning about realistically assessing how much work you’ll have time to do yourself. Even if you need construction skills, tools, time, and a vehicle to haul materials. The best way to incorporate DIY is to arrange it so that if your work takes a lot longer than you expect you won’t be prevented from living in your new place. Managing a renovation even with a GC and doing none of the work yourself is like taking on a second job.
Start looking at houses in good condition in the various neighborhoods you’re considering to help you decide what qualities are most important since any purchase will call for tradeoffs (cost/commute/location/amenities/condition/schools/attractiveness/taxes/transportation/parking). Once you have a good idea of what finished houses cost in the neighborhoods you’re interested in, figure out what you can afford to pay conservatively in monthly costs.
A good way to think (conservatively) about what you can afford with a renovation is whether you could afford the cost of a renovated house. So if the properties you’re looking at would be worth ~$900k after a good renovation, houses in need of work cost $600k, and reno costs would be ~$300k including safety cushion, you should be able to afford the monthly costs of the $900k house in order to be able to carry the risk that you need to borrow more money or costs are higher than expected. Of course, what you’ll find is that those same houses needing work will be listed for $700k instead of $600k and you’ll have to bet on price appreciation for the reno costs to make sense. And of course this presumes you have the money set aside both for the down payment and the renovation.
Jackson Heights has very attractive family size prewar apts for $450,000 to $600,000. Most require 30 percent down payments. The elementary schools are good. It’s not “hip” in any way, though, if that is a factor.