Got an email from someone who wants to sell his Mother’s home. It’s a big two story house, and it’s not only expensive to keep up, it’s too much house for one person, she is beginning to need to live with assistance, and the house itself is slowly falling into disrepair.
Never the most fun scenario, but it’s a task that needs to be done.
As is common in this situation, the house is not only mildly in disrepair, but it is outdated as well. And in a market like this, we’ve got to take care of that before we can sell it.
The trick is balancing the money you put into repairs with the potential increase in selling price. We could easily spend $20k-$30k on this home, but we’d never get it all back out. There’s a point where the return on extra improvements starts getting smaller and smaller, so we’re aiming to come right up to that line.
Musts for this home? Fresh paint, new carpet, a thorough cleaning, and moving all the stuff out. New sinks and faucets all around, new kitchen counters, and a couple landscape improvements.
Really want to have done? New light fixtures. New range. Exterior painting. Staging. Some accent paint colors, perhaps.
Big cost items for this house will be the roof repairs and the polybutylene repipe - those two alone can eat $15k without blinking an eye. The owners are going to have to decide if they will go ahead and fix those things now or wait for a Buyer to request them. If it were me, I’d fix them right away, but it’s not my money to spend.
We’re getting estimates for the various items; they’ll start chipping away at their task list. In the meantime, I’ll be checking out the competition so we can figure out when we’ve reached the stopping point for our improvements.
Photo via Flickr, courtesy of Sunfrog1.
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March 19th, 2008 at 7:49 am
If it were me I fix the roof, paint and clean the carpet and rent the house as a single family rental. This will allow income and profit to do the necessary repairs and sell it in a better market in 5-7 years. Many people lost houses due to foreclosure and are looking for house rentals. They are still a viable option for rental they just choose a loan option that did not allow them to afford. Just my opinion!
March 19th, 2008 at 10:00 am
Being a rental won’t necessarily provide income! And then someone must manage the tenant and the property as well. Our rental market is starting to flood as well with people that couldn’t sell, which puts downward pressure on rent amounts.
But I see your point, especially if the house doesn’t have or has a very low mortgage balance.
March 20th, 2008 at 8:16 am
I think renting it sounds good as well till a better market. Hopefully you can find a great tenent and rent or consider the rent to own option. This will get the right kind of tennent in there one who cares about the property and you raise rent 200-300 a month towards deposit in two years and add a clause if they change there mind the extra money is forfeited and this can be the extra income to rehab and sell or continue to lease to own again. It is not uncommon for about 50% of all lease to own never to follow thru to a closing.
March 21st, 2008 at 8:39 am
I see parents homes not needing so much structual repairs like roof, furnace as they need cosmetic repairs paint, carpet and yard work. One thing are elders did was take care of there investment and maintained there homes well. Both my grandparents when they sold there homes were in excellant condiiton struturally and needed just sprucing up and sold well. Bringing that same home into today market is something different adding granite and new fixtures. I kind of like to keep the character of an older house.
March 22nd, 2008 at 8:57 am
I think preping the house to sell is always best and you may after an inspection have to lower the cost of the house to offset any issues that need to be repaired. Best to move everything out and take down the curtains and get fresh paint and clean the carpets or remove them.
March 23rd, 2008 at 8:25 am
These often make a great starter home for someone and offered as a distressed property and a better sale price. Make sure to have the house inspected and know the work you will be taking on is in your immediate plans and budget.
March 26th, 2008 at 11:15 am
It is always difficult telling someone that they much change the lifestyle that they are so used to in order to sell their home. We have to explain to them that it is no longer their home, but is now just a house for someone else to buy, like a product on a store shelf. There are professional elderly moving services that ease the transition by setting up the new home much like the old one for familiarity and comfort.