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Under Contract (again) for a House...

By joshuatrio following x   2016 Aug 1, 7:12am 2,327 views   12 comments   watch   nsfw   quote     share    


Alright, so I think we found a place that pencils out. We're in our 10 day due diligence period and I'd like to get some objective feedback.

The house: two story, 2900 sq. ft. with a full finished basement (totals 3800 sq. ft). List price was $265k, and we settled on $250k cash offer. Construction is brick and siding. House was built 15-20 years ago. Nice subdivision, 1/2 acre lot, roof is 4 years old, dual a/c units which are 6 years old and under warranty. Siding was replaced in the last 5 years and house was double wrapped for efficiency. Exterior has fresh paint on trim where needed.

Inside the kitchen was completely remodeled with high end materials within the last 2 years. The entire inside has fresh paint. Carpet is in good shape - but will need replaced in the next 3 years. Partial original hardwoods in great shape. Bathrooms are all in great shape (slightly updated) and really don't need anything.

Minor details: The house has been owned by one family over the past 10 years (grandparents sold it to children). It sold during the last peak in 2006 for $276k, and sold at the bottom of the last bust (2011) for $202k. It was 187-200ish in 2000. Middle and High school are highly rated, the elementary is not so great.

What we like: it's in an established neighborhood. There is nothing else for sale in the subdivision. The price is below last peak, and the family has literally kept up with all of the maintenance. It has a large lot, unlike the new cookie cutter subdivisions. Considering it has a completely new kitchen and all of the expensive items have been replaced, this seems like a good deal even if housing drops to pre-bust levels. The owners even have a 6 inch binder with all of the documents on the house, and all maintenance completed over the last 10 years.

Other: The owners have great taste in furniture and don't want to move a lot of it. They are older and downsizing. We are picking up the fridge, washer/dryer, leather living room set/recliner, patio furniture, pool/ping pong table, and several desks for $1300. All pieces have been taken care of and are in great shape.

I really think this place could sell for $270-280k now - we just happened to look at the house within the first hour it hit the market and made an offer. Similar homes in the area with all the upgrades are going in this range.

A similar home without the basement and no upgrades sold for $230-240k, while a very similar home (with the upgrades) sold for $340k in the same subdivision within the last 12 months.

Thoughts?

1   Strategist   ignore (2)   2016 Aug 1, 7:21am   ↑ like (0)   ↓ dislike (0)   quote   flag        

So what are the negatives?

2   joshuatrio   ignore (0)   2016 Aug 1, 8:12am   ↑ like (1)   ↓ dislike (0)   quote   flag        

Strategist says

So what are the negatives?

Negatives? Well, the only real one I can think of - is that I think we are at/near the top of the market - and I believe has a very high probability of tanking again. Election season etc...

3   Blurtman   ignore (1)   2016 Aug 1, 8:57am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Up where I live (Eastside Seattle), with the renovations described, assuming it is a 3/2, that home would list in the $500's, but wouldn't be brick and siding.

4   NuttBoxer   ignore (2)   2016 Aug 1, 9:02am   ↑ like (0)   ↓ dislike (0)   quote   flag        

joshuatrio says

Negatives? Well, the only real one I can think of - is that I think we are at/near the top of the market - and I believe has a very high probability of tanking again.

Exactly, but as you mentioned you're ok if the value drops back down below 200k. And also as you mentioned, if you have to buy now, and can't wait for the bust, you very likely will not find a better deal.
The only additional negatives I can think of is if you believe a serious financial collapse is at hand, and aren't yet stocked up on basic food stuffs, water, guns and ammo. Or if you are interested in catching the next gold/silver leg up, or some other business investment. That 50k you will lose with a collapse would go a long way toward meeting any of those ends. But if you just plan on leaving it in a bank, the property is probably a better use.

5   Tenpoundbass   ignore (15)   2016 Aug 1, 9:40am   ↑ like (0)   ↓ dislike (0)   quote   flag        

What's the bubble range from 2000 to 2008 and what did it do after 2008?

And looking at those numbers, it looks like it only played a $50K swing in either direction throughout the whole timeline.

I would call that a solid investment compared to how wildly housing prices swung in say Vegas or Miami.

It sounds like one of those Money's worth houses, it hasn't been flipped and driven through the stratosphere.
It don't sound like a money maker but it doesn't sound like a bank breaker either.

I would do it.

6   joshuatrio   ignore (0)   2016 Aug 1, 9:56am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Tenpoundbass says

And looking at those numbers, it looks like it only played a $50K swing in either direction throughout the whole timeline.

That's kinda what I'm thinking. Even if it lost $50k over 2-3 years, Then we still break even renting.

Tenpoundbass says

It sounds like one of those Money's worth houses, it hasn't been flipped and driven through the stratosphere.

It don't sound like a money maker but it doesn't sound like a bank breaker either.

I would do it.

Never flipped. Stayed in one family mostly, and there should be zero maintenance for a few years, since they were really diligent about keeping everything up to date and under warranty.

It wasn't like walking into one of those shitty flips with paint drips everywhere, musty odors, half upgraded bathrooms and gold trimmed bathrooms - it's one of the first legit places that we've looked at that was really taken care of - that wasn't $30-40k higher.

Thanks - I think we're gonna do it - inspector scheduled for Wed.

7   joshuatrio   ignore (0)   2016 Aug 1, 10:04am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Blurtman says

Up where I live (Eastside Seattle), with the renovations described, assuming it is a 3/2, that home would list in the $500's, but wouldn't be brick and siding.

Part of why we left CA last year. A 1500 sq. ft. dump would run $500-600k.

8   FortWayne   ignore (4)   2016 Aug 1, 10:05am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Living in CA big city I can't relate, our prices here are just too high compared to that. I'd only say nothing new, run comps... if it seems reasonable that's all you can go off from.

9   joshuatrio   ignore (0)   2016 Aug 1, 11:22am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Ironman says

That's the best way to look at it - consider it SHELTER first, and an investment second. You have to pay to live somewhere, and if the numbers for "shelter" work for you, do it, unless you're planning on moving only after a few years.

I don't look at housing as an investment at all - at least not in our situation. We'll probably be here 11 years since we have a great setup for the kids and school.

The pro, is since the house will be paid in full, if I had to relocate, I can always rent it out and it will pay itself off in 10-12 years. Not to bad IMO.

10   HEY YOU   ignore (7)   2016 Aug 1, 11:51am   ↑ like (0)   ↓ dislike (0)   quote   flag        

$ 26,500 would have been a better cash offer & it wouldn't matter what the market does.

Cash buyers always have control.
Plenty of houses on the market but how many have cash
& can walk away.

But that's the only shack that I can live in
that satisfies my need for immediate gratification
& keeping up with the Joneses.

It's your money. It's your decision.

11   Strategist   ignore (2)   2016 Aug 1, 5:40pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

joshuatrio says

Strategist says

So what are the negatives?

Negatives? Well, the only real one I can think of - is that I think we are at/near the top of the market - and I believe has a very high probability of tanking again. Election season etc...

The fact that you are making an offer tells me you have overcome that one so called negative. As everything else is positive, you should go for it.

12   P N Dr Lo R   ignore (0)   2016 Aug 1, 6:54pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Don't fritter away an opportunity, go ahead and buy it.


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