Part 9b: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival
[30 suggestions over 10 sub parts, starting with Part 9a. -ed.]
4. Don’t mistake a tear-down for a fixer upper
As much as I dislike the notion of tearing down any house and sending its materials to a landfill, in some circumstances tearing down may make better financial sense than fixing up. Finances aside, many home buyers, with tastes and expectations formed by our culture of affluence, will judge the more mundane among older Vancouver houses completely inadequate by modern standards.
The line between a tear-down and a fixer upper is hazy, and changes with the market. In a rising market flush with ballooning home equity, speculation of various types, and large profits realized through sales, tearing down and building new becomes a more attractive and financially feasible option. In a falling market with shrinking home equity, speculation at a low ebb, people selling at a loss, and money generally tight, people are much more likely to mend and make do. But regardless of the particular market conditions, different people have different amounts of money they can bring to bear, different goals and aspirations, and different notions of what a house should be. One person’s tear-down can be another person’s fixer upper.
The key point is not to mistake what the majority of people would consider a tear-down for a fixer upper. If you plan to live in a house for twenty years, it may not matter, but resale considerations should factor in to most people’s purchase and renovation decisions. Pouring a lot of money into renovating a house of questionable value — for example, one with bad lines, a really small footprint, or small rooms that are hard to enlarge — is not a good use of renovation dollars. You may never get your money back out, or even a portion of it. And think how galling it would be to invest a lot of time, sweat, and money into renovating a place, only to have it torn down by the next buyer. I recently heard about just this scenario in a North Vancouver neighbourhood.
5. Don’t renovate
That’s right, avoid renovating or fixing up altogether, or at least keep it to a minimum. Some people enjoy renovating because they have the manual skills, the knowledge, and the time to do good quality work themselves, and they get a lot of satisfaction from the process. But for many people, renovating is a stressful, unpleasant passage they endure to get to somewhere better. Depending on the circumstances, the stress and unpleasantness can be extreme.
We bought our fixer upper in 2003 for $355K, and so far have spent another $300K renovating it. But we missed out on a well-maintained, attractive 1950s bungalow that sold in a bidding war for $402K. This bungalow is located on one of the nicest, traffic-calmed streets in the Grandview area we live in, has a big rear deck with a view of the mountains, a basement suite with a full eight-foot-high ceiling, and on the main level, well preserved oak floors, a stylish brick fireplace, and a kitchen with the original 1950s-style tiled counters. Not the ideal house for everyone, but it would have been perfect for us. And the $47K difference in purchase price now looks like a pittance compared to the amount of money we’ve spent renovating.
Of course, even a well preserved 55- or 60-year-old house is going to need some work. But I suspect the work in the case of this house would have been far less onerous, and far less expensive, than what we’ve done with our place. On the several occasions I’ve walked by this house in the intervening years, it doesn’t look like much has been changed. By all appearances, the owners just bought it, moved in, and have proceeded to live in it. Judiciously spending more up front may in fact be cheaper in the long run, and less stressful, than buying a place that seems like a deal, because the price is lower and “it only needs a bit of fixing up.”
If initially spending more isn’t an option, another way to avoid renovating is to accept less house. Instead of a detached, single family home, consider a well-built duplex, townhouse, or condo over a house, or choose a less expensive location. (For those aspiring to the West Side, know that the world doesn’t end at Main St.). You may feel that compromising in this fashion is not in the cards for you personally, but after weighing the alternatives, and costing out various scenarios, you may find that one of these compromises allows to you get into a home that doesn’t require significant work and further expense, which could be a better approach for you personally.
6. Educate yourself
So how do you know which houses warrant paying more for up front, and which are money pits masquerading as a deal? You educate yourself — before you start house hunting.
I suspect the people who won the bidding war for that 1950s bungalow had a very good idea about the relative merits of the house, and that knowledge and understanding gave them the confidence to formulate the winning bid out of nine offers. Which isn’t the same as saying that the house, in a more universal sense, was worth $402K in 2003, or is worth $800K now, in 2011. Just that the more experienced and knowledgeable you are as a buyer, the more likely you’ll be able to assess value in relation to current market conditions, and act accordingly.
Unfortunately, for first time buyers, the best teacher is experience. Having owned a house for seven years, and having gone through reno hell, we are now far more experienced and knowledgeable than we were in 2003. When Marco, the lead on the concrete crew that installed our new basement slab, was considering the house he eventually bought, he got the owner’s permission to dig a hole beside the foundation, so he could check if the foundation walls had a footing. No footing, no offer to purchase. How many first time buyers even know what a footing is, or why it’s important? How many would have the moxie to show up at someone’s house with a shovel?
What can you do to educate yourself? Talk to people who’ve bought, owned, sold, and enjoyed houses, and suffered through home ownership and renovation. Family members, friends, builders and tradespeople, architects, co-workers. Talk to landlords, and tenants in basement suites (who live closer to the heart of the matter). Most people enjoy talking about their houses, and you’ll learn a lot. Also, read. The Web has some fantastic resources, but ultimately books are a better bet. Information can be fragmented on the Web, and hard to find. Well-written, well-illustrated books about houses, renovation, and construction, are worth the money and the investment of time because they’ll be comprehensive, do a good job of explaining the technicalities, and organize the information in a logical manner.
[Further resources/reading, general]
Make It Right: Inside Home Renovation with Canada’s Most Trusted Contractor, by Mike Holmes. Toronto: Collins, 2006.
The Holmes Inspection: Everything You Need to Know before You Buy or Sell your Home, by Mike Holmes. Toronto: Collins, 2008.
I realize Holmes is a TV-star-contractor with a certain on-screen persona and shtick. White knight rides in and outs the bad guys, or at least their sorry handiwork. It makes for entertaining TV. Holmes also has his detractors and there’s some anti-Holmes backlash out there. None of that really matters when it comes to the books. I feel the books are pretty good, especially for the price, have solid information, are very well illustrated, and are written at a general level without dumbing things down too much or omitting important details. Whether Holmes wrote every word himself, or whether they were ghost written, or committee written, again doesn’t really matter. All that matters is whether or not they are good information sources for someone getting into the home-buying, home-fixing game.
[Further resources/reading, advanced]
Home Renovation, by Francis D.K. Ching and Dale E. Miller. New York: Wiley, 1983.
Canadian Wood-Frame House Construction. Ottawa: Canada Mortgage and Housing Corporation, 2006.
7. Bottom up, inside out
Think about houses from the bottom up and the inside out, not from the top down and the outside in.
What you can see when you look at a house online, or tour it in person, is relatively unimportant — at least from a financial standpoint — because it’s easy to get at and easy to change or fix. You’re looking at décor and finishings, and these are not the things on which you should primarily base your purchase decision. Typically, house flippers looking for quick profit are all about décor and finishings, because they can be quick and cheap to replace, and the shiny replacements can dazzle the inexperienced or the unwary. A new IKEA kitchen, fancy-looking countertops, and lower end stainless steel appliances can probably be installed for $25K, and will look good for a couple of years. How many flippers would spend that $25K on badly needed drainage and foundation work? They’d just sell the house in the summer, when it’s dry, and the unwary buyer is unlikely to encounter problems like a damp basement.
What you can’t see is typically the important stuff, the stuff that can do your personal finances grievous harm: the foundation, the drainage, the sewer pipe, the water service, the plumbing, the wiring, the gas lines, the furnace and heating duct system, the building envelope, the insulation, the attic ventilation, the frame, the roof. In other words, all the systems that in combination make a house habitable and comfortable to live in — or, if they’re compromised, less comfortable or even miserable.
Learn the basics of these systems. A damp basement, if not dealt with at the source, will rot any framing, drywall, or flooring installed over top of the concrete substrate. Old galvanized steel water pipes will be full of corrosion on the inside, and will progressively choke off the water pressure in a plumbing system. Before we replumbed, if a tenant turned on the water in the old rental suite, our upstairs shower dropped to a trickle. Do-it-yourself modifications and extensions to the electrical system may have created a fire hazard. After we’d gutted our basement in preparation for rebuilding the rental suite, I found a scorched patch on a stud beneath a wire that had obviously been overheating. I saw the same thing in my sister and her husband’s former house.
Beware of surfaces. Look deeper. Which isn’t bad advice for life in general. Metaphorically speaking, show up with a shovel.
Coming soon: Part 9c: So You Want to Buy a House and Fix It Up? Thirty Suggestions for Survival – Suggestions 8 & 9
Part 9 subsections are posted every Tuesday and Friday.
Our advice is to leave the tools in the garage until you’ve read them all. -ed.