Will you do the work yourself? If not, will you take out an additional loan amount to cover the costs of the work and materials?

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If you're like we were, we would gladly do the work. You still have to cover the materials. Doesn't sound like you're changing anything other than façade, so it's doable, especially if you have the ability and the time. At this point, I'd hire someone to do the ceiling, roof, and kitchen, while doing the bathrooms one by one. That is, somethings are worth hiring someone to do.

I'm not sure how you are certain that you'll get a 2-3X return on dollars spent when you're not sure what the dollars spent will be. Be careful about believing all the HGTV hype.

What it will cost depends on where you live and how much you'll DIY vs. hire out. If you post that info, others who live near you might be able to help.

I'd do it in a heartbeat because we're DIY-ers and love the process of transformation. But if it'll bug you to have parts of the house torn up for months or years, and it will stress you out to make all the decisions required, or if you're going to hire it out and don't deal well with conflict, then this endeavor could strain your relationship.

Good points, thanks! It's true that I don't know how to evaluate how much will need to go into the home, versus how much value it would add. The realtor pointed out that updated homes on large lots routinely sell for $225-350/ft2 in that neighborhood, and we would buy this around $165-175/ft2. At the very least, I'd hope to get back 100% of a reasonable investment in upgrades. But I wouldn't be looking to flip it - we plan to live here for the long term.

I suppose the best thing to do would be to tour the property with a contractor who can advise on ball-park estimates for the necessary work. Is that something that is commonly done?

"Is that something that is commonly done?"

Yes, but if you're in a hot market, you'll want to move very fast. You can also submit an offer with a contingency that remodel costs as quoted by your contractor would not exceed $X. Then, if the costs do exceed that amount, you can walk from the contract.

I agree with weedy that you should scale back your expectations in what it will be worth after you finish. Also, be aware that it's going to cost 40-50% more to renovate than you originally figure and you won't recoup it all in increased value. Having said all this negative I say "Go for it." We did a similar project with our home 10 years ago and don't regret it at all.

BTW - where would you be living while all this renovating is going on?

Well theres no way to answer this brief post - you write "needs a ton of work - new windows, bathrooms etc." but does that mean its actually uninhabitable or does it mean that your tastes/preferences are such that you would want it updated. If the latter you could live in the house and take your time about getting the work done.

Before even making an offer .... or even deciding if you want to make an offer or not.... you can hire someone to go through the house with you and assess the house - provide ball park nos. and provide a range of options to how you might address the problems. The guy I hired a couple of times to do this was a top notch house inspector specializing in historic houses plus he did this type of consultation and advising as well. Had to pay him a couple hundred$$$ but it was well worth it (bring a tape recorder and/or take thorough notes).

You could hire a contractor but they're going to be very biased in favor of their own ways of doing things.... which may or may not be what you end up wanting to do. I

That said there could be contractors out there like the consultant guy we hired who have a more thorough knowledge about a wide range of house styles and building methods historic and current. It really pays to shop around and interview these guys before making the appointment If its a historic house then youd want to be sure its someone with that expertise as the old house is quite a different animal from a contemporary one.

Thanks for the feedback!

A good deal of this work would need to be done before move-in, or at least very early in the process. Replace doors, windows, trim work (there are gaping holes in some places), all done immediately. Probably also repairs to the roof, ceilings, and drywall (there is evidence of leaks, so I presume there are significant problems that will need to be rectified). These are only the problems that were obvious on a first walk-through. They don't appear to have maintained the home, so I suspect there are many other issues. The kitchen could wait because it's functional, though it's obviously much easier to do it before moving into the house. The bathrooms are technically functional, but they are original to the 1976 house and are pretty disgusting and I'd like to renovate before move-in.

The biggest cosmetic project would be to swap the master bedroom for the kids' bedrooms and build a master bath and closet area. Since the master bath, closet, and kids' bath need renovation anyway (tear down to studs), it should not be too much additional effort to swap the rooms. But this would have to be done before move-in.

In all, I think the kitchen remodel could wait a year or two, but we should do most of the rest of the work up front. It would be least disruptive to do the kitchen remodel at the same time before move-in, but that is a cosmetic upgrade and not strictly necessary.

We could live with my parents during renovations. Not ideal, but they have plenty of room and it's free.

There are a few red flags here. First updating can sometimes pay off, but renovating very rarely pays off. You really have to have an understanding of cost drivers in construction and sales drivers in homes, or it will not pay off.

Second, you are looking at renovating all of the most expensive things in a house. I suspect you are overestimating the value or underestimating the cost, also some of the things you noted add little real value and lots of expense. Take a look at Cost vs value before you decide, there are a few biases in the data, so I personally find it a bit high, especially if you understand cost and sales drivers.

Finally, watch out for hidden repairs, water damage, for example, can mean a leaking window A/C 15 years ago with no residual damage, or massive mold remediation, roof replacement and/or foundation work.

In short, make the offer but put throw about 10 parachutes in it. Be ready to throw away a thousand dollars investigating, because you need to be emotionally ready to throw in the towel.

Things like new windows, new roofs, new/updated plumbing, new HVAC, updated electrical, and drywall repairs won't add value. Those are maintenance costs. The link above should help you see this. In general an oversized lot such as you mentioned in a typical suburban neighborhood adds little $ value.

Good points relating to maintenance costs. Certainly all of these things need to be done to make the home habitable. I'm also equally concerned that there are plenty of hidden repairs that need to be done that are not obvious at first glance. The presence of water leak stains makes me worried for mold or rot, or major plumbing or roofing repairs.

This is what is keeping my husband from getting on board. I, on the other hand, keep imaging how wonderful the house could be in good condition with upgrades and renovations done to our specifications. It is the perfect house to raise our kids in long-term.

It sounds like we should be considering this house purchase from two fronts. First, how much of a discount should we demand to make up for all of the maintenance costs that must be incurred up front? Second, how much cosmetic/upgrade work will we want to do, and how will that increase the value of the house? Does that sound about right?

So, how do you evaluate whether a home is a reasonable purchase when so many maintenance repairs need to be undertaken? Does it make sense to sit down with both an inspector (identify potential repairs and costs) as well as a realtor (evaluate what home would be worth in the market in good condition)?

The norm in my neighborhood of fixers:

Cost as-is is $650-800,000. Cost to fix up if you hire contractors is around $300-400,000. Value when done is $750-900,000.

I can do all the work myself and still don't expect to break even financially.

Bry911, I completely agree with you point. I want to live in this home a long time. It fits our family's needs, is close to our childrens' school, and is in the neighborhood we want to live in. However, I don't want to dramatically over-pay for a house, either. I evaluate that by whether we would recoup our investment if we have to sell.

I will focus on the personal aspect rather than the financial impact: You have "fallen in love with" this house, but your husband "doesn't think it's worthwhile." I see that as a HUGE drawback when added to the other comments about time, mess, and cost vs. profit. And add in the fact that you would live with your parents while the work would be done. This may put a tremendous strain on your personal relationships with your DH, your children, and your parents. DH already doesn't want to do it. And what if everyone is right about the cost/benefit? What will be DH's reaction then?

Not worth it, in my mind.

If the sellers have listened to their agent, and if the agent is smart, the house is already priced to reflect the needed work. I would not anticipate much of a further discount on price. It sounds as if it is priced to reflect the needed work as you said this, "The realtor pointed out that updated homes on large lots routinely sell
for $225-350/ft2 in that neighborhood, and we would buy this around
$165-175/ft2."

So, with the home priced as is and a 400K remodel looming, what would that total figure buy elsewhere that wouldn't need a ton of mystery work?

Make sure you don't end up with the most expensive house in the neighborhood.

One other thing is you don't want the biggest house in the neighborhood. You will not get significantly more for having more land or more square footage. If all the neighbors are living in 2500 square foot houses on 1/2 acre and the house you are contemplating is a 3000 square foot home on 1 acre, you will not get the equivalent in value added.

If all the bathrooms need to be torn down to studs. You are looking at

10,000 a bathroom.

your master because you are moving locations. About 40,000

your kitchen when you finally do it. 50,000-75,000

Windows will run you roughly 25,000

new A/C 4,000-10,000

We haven't discussed light fixtures or flooring. Or a roof. Oh a and a new front door.

The only way my husband would agree to this, is a neighborhood called Indian Hills located in East Cobb (Atlanta). I am assuming you have the cash for this project. On the soo offbeat chance this is the neighborhood you are looking at. I say do it!

Two years ago we were in your same position. The cost to repair and upgrade everything was $165,000. We had the cash, sold some stocks to get it (good thing since the market has fallen so badly), and now have an almost "new" home in a very desirable neighborhood. The purchase price was $290,000 on a short sale, so it was already worth more the day we purchased it. Did we DIY? Nope. Hired a contractor. Absolutely, we could sell it for what we have in it if we sold today, but we intend to keep it for a long time, so the investment was worth it for us. You just have to weigh everything and expect it to cost more and take more time than you thought.

I also say go for it, sounds like the ideal house for you.

I do disagree with those who say some of the improvements will not increase value. People do pay more for new roof, plumbing, electrical. Of course people pay more (in my area) for an updated house versus the fifty year old with no improvements. Tasteful improvements add monetary value. How else would a flipper buy a tired house, update it and resell in a short time for a profit? You aren't even looking at the short term, of course if you update today, then wait twenty five years to sell, people won't care. But in a good neighborhood, quality improvements with a good floor plan certainly adds financial value. It is always good to consider resell even if you don't plan to sell now, it is good not to over improve or get under water, none of know our future, it is better to be prepared.

Most houses sell for less than the cost of improvements because most people don't want to do the work or can't see the vision of the improved house.

What is the land value?

I see a possible teardown -- unless you'd then have the nicest house in the neighborhood. Run the numbers.

"Almost new" will never be as valuable as NEW.

Building an all new home on a great lot in a great location will be much less stressful. It will be faster and easier. You will start enjoying an all new home within a year and have ten years of largely maintenance free living. You will have more value in the end.

My DH and I looked for two years for a small single story home with a few good-sized rooms in a desirable neighborhood. We finally bought the first house I'd looked at, planning to renovate that 1950's ranch. We really bought it for the lot, an acre with mature landscaping among large homes on 1 - 5 acres, some historic. Our challenge was 'fitting in' the single story 2900 sq ft house we wanted on a lot zoned for 5000 sq ft houses. (That's another story!)

I'm so grateful to have listened to a neighbor who is an assessor. We followed his advice on the financial wisdom of building all-new and have reaped the benefits of living in an all new home for the last 14 years. Building is challenging, but less so than putting your family's life 'on hold' during years of 'surprises' as you tear out and rebuild bit by bit -- all the while living in the mess.

bry was right when he said: Really it is not a matter of how much the home will be worth unless you
are planning on selling it. The questions really are - (1) Can you
afford to pay for the renovations? (2) How much would it cost to buy a
house with similar features, or even dissimilar features that would net
the same value for your family?

You might "get your money back" 10 years down the road just because of normal appreciation.In the meantime, if you had bought an already-updated house (for less than the remodeled one), you would have more equity. Illustration:

Buy this one for $400K, put $200K into it, sell it in 10 years for $600K.

Buy a finished one for $550K now, sell it in 10 years for $600K.

So what's the cost of a same-sized, fully-finished house in that neighborhood? Subtract the cost of remodeling the fixer, and you shouldn't pay more than that. And factor in the mortgage carrying costs and wear-and-tear on you as well.

People do pay more for new roof, plumbing, electrical. - This is more complicated than you would think. A new roof will not simply increase the value of the house but it can. When an appraisal is done, or any type of value analysis is done, things are expected to be in good working order. So when those things are very near the end of their useful life or are in disrepair a reduction of value is taken from the value analysis. In other words a 10 year old roof in good repair is worth substantially the same thing as a new roof. The same goes for plumbing, drywall, etc. Now if those things happen to be in disrepair then repairing them will remove the discount that was taken. But even repairing them will very rarely net you a value increase that even approaches the cost.

Tasteful improvements add monetary value. How else would a flipper buy a tired house, update it and resell in a short time for a profit? - Are you a flipper? Flippers make money the same way everyone makes money. They have some skill or knowledge that is valued and they apply that skill or knowledge to a house to make profit. This is known as specialization and trade. For example, a lawyer may have specialized knowledge of the law which he uses to make money which he gives to a flipper for a house who has specialized knowledge of flipping houses. It doesn't mean the flipper can handle his own divorce or that the attorney can remodel his own house and get the same results.

In short, just because someone makes money doing something for their job doesn't mean you will. Remodeling costs are very rarely recovered for homeowners. It doesn't mean you shouldn't do it, it just means you normally have to take other factors into consideration.

I also wouldn't be so quick to assume that the outdoor features have been well maintained based on the description of the house. You might need to budget another $50K++ for repairs and/or rebuilding of the pool, hot tub, tennis court and outdoor kitchen. What about irrigation system, drainage, driveway, septic/sewer, etc. Make sure you get all those inspected too. Make sure you also budget for the ongoing maintenance of these fun outdoor features and larger lot (gardener, pool & hot tub cleaning, tree trimming, etc)

We are close to reaching 7 figures on the additions, improvements and remodelling (both functional and cosmetic) to our house over the last 4 years, but we have been able to pay cash to make the house exactly the way we want it. In our market, if we sold today, we would certainly recoup the money spent and quite a bit more, but that was never the focus of the updates, as they will all be "old" again by the time we sell.

If the lot/house you describe was in my area, we would probably have done a teardown, since our land values are very high. If you can afford the updates/repairs it sounds like a good project and there are always people (like us) who want a bit more land/space than the average lot.

Even if you did a teardown/new build now and didn't sell for many years, you'd be selling something 'all of a piece' that dated from 2015, not a 1976 ranch with some improvements. I'd have to think there have been a lot of improvements in home construction since 1976. You'd also be *living* in an all new home and enjoying it NOW rather than living in chaos for years.

I don't know if teardown is feasible in this situation, but it was for us. I'm wondering if the seller may believe the property will become a teardown, since they've let the structure go while maintaining the setting.

Another possibility for a buyer might be to subdivide the lot, if rezoning is permitted for it. (You say most lots there are quarter-acre.)

"Tasteful improvements add monetary value. How else would a flipper
buy a tired house, update it and resell in a short time for a profit?
- Are you a flipper? Flippers make money the same way everyone makes
money. They have some skill or knowledge that is valued and they apply
that skill or knowledge to a house to make profit. This is known as
specialization and trade. For example, a lawyer may have specialized
knowledge of the law which he uses to make money which he gives to a
flipper for a house who has specialized knowledge of flipping houses.
It doesn't mean the flipper can handle his own divorce or that the
attorney can remodel his own house and get the same results.

In short, just because someone makes money doing something for their
job doesn't mean you will. Remodeling costs are very rarely recovered
for homeowners. It doesn't mean you shouldn't do it, it just means you
normally have to take other factors into consideration."

I guess you are using a lot of words to say not everyone can successfully flip a house? If that was your point, I agree. But my point was/is one can add improvement updates without adding square footage and add monetary value to property. I do see flippers doing it in short order. Many on this forum make blanket statements that one cannot recoup their remodel expenses. This is simply not true, I know from personal experience one can remodel/update houses and make profits.

You also used a lot of words to discuss an appraisal, I don't find them complicated, I understand them, but I was addressing the property buyer in the marketplace and marketplace price competition.

I dont think the OP wants to flip. She wants the house, but it needs work and hubby aint on the page.

All improvements add value. The question is do they add more value than they cost. Your assumption is that they do. My assertion is that they rarely do. Is that few enough words for you?

I was excited by the sound of the project BUT that was until I kept reading.

Husband isn't keen.

Living with the out-laws for some months...

I do not believe ALL improvements add value (regardless of cost), just as I don't believe NO improvements add value.

Suzi - I know the OP doesn't want to flip, I was making the point that one can remodel and add market value, as I see flipper to it all the time. I know the potential buyer wants to stay, but I think it wise to also consider future market value when considering buying and improving.

I do agree DH needs to be on board or it isn't workable, house sounds ideal to me with a large lot and very desirable neighborhood, at the right price I'd do it.

In our area, we could see remodeling and tear down everywhere. It means it is difficult to get on reputable contractors' appointment book, let alone doing actual analysis, design, plan and work. It also means the cost of project would be very high, for example, it is likely to cost you $20k plus for ONE nice, not necessary upscale bathroom.

This could be a meaningful project if you have plenty cash, a husband is as enthusiastic about the remodeling as you are, both of you are very knowledgeable and experienced in remodeling and do not need much learning curve, and you have already established relationships with good contractors that they would treat you as priority.

I do not believe ALL improvements add value (regardless of cost), just as I don't believe NO improvements add value. - No one said that no improvements add value, many people have said improvements rarely add more than they cost. Some have even said that repairs don't add value. ALL improvements add value - thus the name improvement, if it didn't add value then it would just be construction.

Flippers have nothing to do with the conversation, the OP is not flipping the house. Flippers generally put lipstick on a pig. They don't renovate houses so much as pretty them up, to make them look more appealing. Go to a flipped home 10 years later, they are very often back in the same state that they were to begin with. If you and your family plan on living in a home long term, and you are not in the construction industry then the things flippers do are not relevant at all.

Again, I don't think it is wise at all to consider future value. It is either a good deal now or not a good deal now. Estimate the relevant costs (purchase + improvements) then see if you can buy a house that will make you just as happy somewhere else for that amount. Some chance roll of the dice may increase (or decrease) the value later, but you can't know those things. Time will not do anything to help it, a bad deal + time = a long time bad deal.

The people who can profitably tackle a house like you describe are already experienced at DIY and rehab and have a cash reserve big enough to get the house done and sold quickly.

We are on our 2nd major fixer upper. We got a new construction loan for both. We did not have to have a downpayment, so we used our would be down payment we saved to start the reno process. You may want to look into that with a local bank. Our bank requires that we spend no more than 80% of finished value TOTAL. So, cost of reno + cost to purchase. I'd use the same model to see if the house is a good buy for you. If you are a DIYer than cost of reno is significantly lower. Our current reno for instance, we purchased for 77k and we are putting a total of 75k into it doing it ourselves, but quotes from 3 contractors ranged from 85k-150k! If you can tackle most yourselves, you will benefit way more if you go to sell in the future.

If you've never done any remodeling, it's hard to imagine the stress and expense. I think you could get a very rough ballpark estimate for repairs by adding the price of mid-range materials to 1.5 x price of materials (labor). This is not going to be highly accurate, but you can begin to imagine the costs. For example, if the house needs 10 windows and a sliding door, then you might be looking at $250 x 10 windows + $2000 for the door + $6750 for labor = $11,250.

I was in the same situation a few yrs ago. The house I purchased was a total gut job. But I loved the midcentury lines and it was built by an architect I admire. The house has 5 bedrooms, 4 full baths. It is in very high priced neighborhood.

I had cash to start the renovation process and owned a condo that I could live in meanwhile. Before I moved in, I tore out all the plaster and put in new drywall. Rewired most of the house. Tore down EVERY wall I could to open the rooms up. New kitchen (by custom cabinet maker) and redid two guest bathrooms. Added recessed lights. The master bath was hideous but liveable (I am still using it today and will need to replace soon). I had to replace the HVAC system which was around 12k (2 units). New double paned glass throughout plus glass front doors. Because of the neighborhood, I put in high end appliances.

I staggered everything according to necessity. First, make the house liveable and move in. Second, after a couple years, tear off roof and put on new roof. Third, repaint and restucco exterior. Fourth, tear out old nonfunctional pool and put in lap pool. Next, landscaping, new fencing, and new patios.

Questions to ask yourself: Do you love the architecture of the home? Can you afford (with cash or loan) to make the house liveable? Are you planning to live long term at the residence? What shape is the pool in? The tennis court? Is the area appreciating? Is this a location you are really want to live in, but cant afford to get into otherwise?

If you go through with it: Get the best architect you can afford. Possibly live in the house for awhile. Now that I have lived in the house for awhile, I will have to redo things. Beware of high taxes in more expensive homes. If you remodel, your taxes may go up. Before you put down flooring, make sure you have torn down all the walls you want. If you need to have in floor elec. sockets in the middle of large rooms, do it first. Also, beware of landscaping costs.

I will definitely get all the money I have put into the house back out of it. If I sold, I should make a profit. But even then, I could not afford to buy in this neighborhood as prices have gone up so much. Despite the tribulations of the remodel, I am still glad that I did it. It has become sort of a hobby now.

I was in a similar situation that you are in. I looked at two houses (same street) in a great location with more land than was the norm. The first one did not have good "bones" so I took a pass. The second one (the one I bought) needed new windows, and a ton of updating. However the bones were excellent and the roof, AC, furnace, were relatively new.

Now for reality. This stuff get's expensive. We replaced the kitchen and upstairs bathroom with porcelain tile floors ( we have one full and two half baths). We refinished all the hardwood floors on the first floor and went with luxury vinyl plank floors on the second floor. We spent a lot of money on fixing plumbing issues that were not discovered on the inspection. We had to remove asbestos ceiling tiles (not caught on the inspection as asbestos) on the second floor and drywall the ceilings. We had to repaint everything and fix lots of minor issues. The kitchen that I planned to gut will have to wait. We refinished the 60 year old cabinets and IMHO they are amazing. We had things break such as one of the springs for one of the garage doors and three storm windows. The windows I planned to replace will have to wait a bit longer so until then I fix what breaks. My neighbors in the back decided to clutter their yards where they abut mine. So we bought and placed expensive privacy fencing.

I have lived here just over one year. It is amazing. The outdoor living (in which I have a much shorter season than you of good weather) is fantastic. I enjoyed every season. One acre may not seem a lot to many people but for us it has been great, and the fact that the street ends at a park is even better. We have lots of space and had our first vegetable garden this year. So yummy! We can have bonfires. We have plenty of room for whatever we want. We can make our land as private as we want. My house is not as modern as I want but it is solid, the layout works well, and is clean and charming. The neighborhood keeps appreciating, and I am thrilled with our choice to buy this house. One day it will be all updated and will make us money. Until then we enjoy the heck out of it.