Should we buy this house (1940 Tudor on 3 acres)??
paddyro
September 30, 2012 in Design Dilemma
This is a 1940 Tudor on 3 acres for $77k. 3/1. Thinking of buying it, but needs lots of work (new kitchen and bath for sure). Thumbs up or down and suggestions on where to start??
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decoenthusiaste
The price looks right and I see some charm. Start with repairs to anything that doesn't function properly. Get everything working so you can live there. Living there will show you what your priorities should be.
0 Likes   September 30, 2012 at 5:08PM
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amr9
the price & the 3 acres sound enticing,but what it comes down to is the size of the house. You can renovate,even knock down some walls to open the space up but footprint will not change. Otherwise i think it's a great price for a brick home. Have it inspected so you know what your getting into.
0 Likes   September 30, 2012 at 5:09PM
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charleee
I see some charm, too. Are you prepared to take care of 3 acres? It sounds intimidating to me. I really believe you need to live in the home before you even start thinking about making improvements or changes. It's really the only way you're going to find out exactly what you want, as opposed to what you need.
0 Likes   September 30, 2012 at 5:16PM
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Aja Mazin
I agree with decoenthusiaste and amr9.

Where is it?
1 Like   September 30, 2012 at 5:18PM
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paddyro
In rural Texas. We have 400 acres nearby, so 3 acres is no problem! We can't afford to build right now, but thought be able to purchase this one for cash, then sell it in a year or two.
2 Likes   September 30, 2012 at 5:51PM
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treeseachanger
This house could become a real gem. However kitchen and bathroom renos are the most expensive and the most inconvenient. Will your budget stretch, and are you able to carry out any of the work yourself? Also how will you cope with the inconvenience of making do with a "temporary" kitchen and bathroom while work is going on?

The interior also appears very cluttered, perhaps there is not a lot of storage space in the home itself. Factor in the cost of adding some clever storage solutions.

Could you subdivide the 3 acres and sell part of it if you wanted later on? What are the upkeep costs on the land? (larger rates bills, repairs to fencing etc etc)

Make an informed decision, and you will be happy with your choice.
1 Like   September 30, 2012 at 5:59PM
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wandap2958
I think it is a cute house. If you are prepared to do a lot of the renovation yourself, go for it. If not, check to see how much you will have to invest in the improvements. Is it in a good location so that, in time you will get your money back?
1 Like   September 30, 2012 at 6:02PM
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judianna20
Here comes devil's advocate!

What will you have left after you spend the $77,000.00?

What are your taxes on the 400 acres? What will it cost you to live in this home...taxes, insurance, heat, utilities, etc? Where are you living now? Are you renting? How much is your rent vs the cost to live in this house?

Most importantly, you will have to sell this house to build.

You have to live in your primary residence for two years from date of occupancy in order not to pay capital gains on any profit.

Where will you live while that is going on?

Are you both working? Could that change?
1 Like   September 30, 2012 at 6:21PM
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paddyro
We ranch the 400 acres so have ag exemption. I'll be teaching at a college nearby, and my husband works as well. Right now our mortgage is $3000/ mo, so the idea of downsizing and buying outright is very attractive. That money saved could be spent on the upgrading. Or so we think! Could turn out to be the money pit!!
1 Like   September 30, 2012 at 6:29PM
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Aja Mazin
Do you have access to water?

If so, BUY!
0 Likes   September 30, 2012 at 6:37PM
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judianna20
I understand. $3,000.00 is a lot of money, plus other expenses that home ownership entails. First, sell the home you are living in. Then, don't put all the 77 toward the house. Figure out a mortgage number you would be very comfortable paying. You are too young not to have a mortgage. You can use that write-off at tax time. And you need cash to fall back on should either/both lose jobs. Sadly, it happens.
Then go for this one if it is still available or another will come along. "Too many houses, not enough time".
0 Likes   September 30, 2012 at 8:48PM
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Aja Mazin
Texas Rural Land Value Trends can be useful in making your decision.
http://recenter.tamu.edu/data/rland/trends/ASFMRA_2011.pdf

Rural land values are stable or increasing in all 7 regions.

I think the home you found has great possibilities not readily evident due to the clutter of the present owners
furnishings.

The home has charm!

Depending on your personal income and tax position, a mortgage could be beneficial.
1 Like   October 1, 2012 at 12:16AM
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PRO
Dytecture
Depending how far this land is from city centers, even If you just buy this piece of land and hold until a developer is interested then it would be a good investment.
1 Like   October 1, 2012 at 5:53AM
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PRO
Roots and Rafters
It's very pretty. I'd hate to see you knock it all through to make a "modern" house out of it, however. The architectural details are too gorgeous to lose.

Here are some questions to answer:

How does this house fit into your long-term plans?
Are you sure that you'll be able to sell it off once you save enough money to build your dream house?
Are you sure that you will be able to save enough money to build your dream house if you're doing expensive renos to this house?
Will the total cost of ownership for this house be lower than the one you're in now?

If you have a good answer to the first question, and can answer "yes" to the others, then consider buying it. If not, then stay where you are or keep looking.
1 Like   October 1, 2012 at 6:04AM
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michigammemom
If this is rural Texas, make sure you have a handle on what kind of home is selling in the area. Make sure you do not over improve beyond what the local market will bear.
0 Likes   October 1, 2012 at 7:03AM
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Aja Mazin
Last year's historic drought has broken in parts of Texas.

Despite the worst drought in recorded history, ag land values in Texas followed the national trend upward, with some classes of ag land posting double-digit gains in value in 2011, according to the Federal Reserve Bank of Dallas.

However, ranchland values didn’t enjoy quite the jump seen in farmland.

For ranchers, 2011 was very much a year of mixed emotions. Bankers across Texas universally report significant liquidation due to drought, but a strong cattle market throughout the year allowed ranchers to remain financially healthy.

The value is in the land.

They both have good jobs, in addition to a working 400 acre ranch plus a minimum of $77,000 cash.

I think paddyro and her husband have it going on and are seeking remodeling advice - ideas, feasibility, and cost.
0 Likes   October 1, 2012 at 10:20AM
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Aja Mazin
Since the home has only 1 bathroom that needs work, I would stay in my present residence and redo the bathroom in the new home before moving in.

Perhaps that woud also provide an excellent opportunity to paint and address the flooring before moving your own furniture to your new home.

Once the previous owners have removed their clutter, you will have a better idea as to redecorating.
0 Likes   October 1, 2012 at 10:31AM
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Nancy Hehmann
I used to flip houses so I know that location is everything. If this house is in a rural area, they take longer to sell than houses in urban areas ( you do not really say if it is totally rural). One bathroom houses usually do not sell as easily as those with 2 bathrooms and adding on a bathroom is very expensive. You need to make sure you have a great inspector b/c termites can really wreck a house and older homes will frequently need electrical and plumbing. Is it on a septic tank and if so when was the last time it was pumped- if it does not get pumped often enough it can ruin it. You also need to look at the schools in the area; most families will research where their children are going to school these days before buying. Also, what do the neighbors houses look like. If you upgrade this one and the others in the are are not nice, you will have a hard time selling it. What about the pipes? Are they lead? Some areas have enacted legislation so lead pipes have to be removed. This house will also have asbestos used in it and will have to be removed properly. Lead paint was used in early days so if you are doing the reno yourself, you will need to use precautions if sanding etc. Lots to think about. Not trying to be pessimistic; but, you do have to be aware of everything before you decide.

Good luck!
2 Likes   October 1, 2012 at 10:45AM
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judianna20
I think I am missing something here, probably because I don't know Texas nor property values there. What I do know is that banks are reluctant to loan on land, but paddyro has $77,000.00 which, used as a 20% down-payment, would give her more than enough money to build the house they want on the 400 acres. (Assuming their credit is good), two jobs, 400 acres of working farmland, other equity in the house they are living in, should give them plenty of credibility with their lending institution.

Why take a chance on buying a piece of property they must live in for two years; needs an undetermined amount of renovation and has no guarantee of providing a good return on their investment. Listen to Carolina Photo.

That being said, I would not, nor would I encourage my daughter, in this economy and real-estate market, to take on any additional risks involving financial security unless the guarantee was 100% that the plan will work.

Paddyro, you and your husband should go to your bank, speak to the lending advisor and/or your personal financial officer and make your decision with their help.

I'm very wary.

Should it be a go, you will find all sorts of great ideas from houzzers, presented with a whole lot of enthusiasm.
0 Likes   October 1, 2012 at 10:56AM
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cypress
You need professional advice on purchasing this or any property. I don't believe the Houzz community is versed in financial matters.
0 Likes   October 1, 2012 at 11:40AM
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judianna20
I agree wholeheartedly that professional advice is necessary before this transaction occurs.

However, I do think that houzzers are acquainted with financial matters, some very proficiently. Once paddyro shared some financial information with us she received valid responses for consideration and this thread segued into something not exclusively about design.
0 Likes   October 1, 2012 at 12:02PM
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Aja Mazin
I am feeling very uncomfortable with the questions into paddyro's financial affairs.

Look at it this way:

Eliminate the $3,000 a month mortgage payment.

Pay $77,000 cash for the house and live in it for 2 years.

The result is $72,000 cash in savings before the expense of remodeling.
[hmmmm...... $5,000 for 2 years or $2,500 for 1 year

Also, downsizing will result in additional savings on taxes, electricity, gas, etc.
1 Like   October 1, 2012 at 12:46PM
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judianna20
Aja, even though you say you are uncomfortable with the discussion it has not kept you from commenting on it because whether in support of the purchase or not there are vital concerns about this decision.

To succeed with your above proposal the present home needs to be sold; no renovations can be made that will reduce the $3,000.00 per month savings.

So, no improvements, no sale, no profit; the $77,000 is tied up and no longer fluid. And this is not addressing the interest and potential growth lost.

To make a projection you have to start with measurable numbers that work. I just don't see that here.
0 Likes   October 1, 2012 at 6:24PM
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