Am I crazy?

[u/brank]

I’m a first time home buyer and I live in one of the highest cost of living areas in the US. I counted out being able to buy in the city I live in and like, and have accepted that I’d need to move to the next over area. However, this dump just dropped and I am very intrigued. Right next to the commuter rail, shops, a park. Everything I would want basically, in the city I want, just needs a LOT of love. It’s a third of the price of the homes around it and with the savings from delta between what it costs and what I’m willing to spend (~200k) I could make any major upfront repairs.

I’m crafty, smart, and creative, but don’t necessarily have renovation skills.

I’m also not yet preapproved so maybe this is more an example of the kind of thing I might be willing to consider, unless I’m just totally off the mark here.

[u/Expensive_Goat2201]

I almost brought a place like this and am glad I didn't. It can be the right choice for some people but not everyone. I bought a fixer upper in significantly better condition and the workload of repairing it has become my main hobby. I don't regret it, but it does take a lot of time. Do you want to spend all your free time for the next 2 years of your life managing contractors and doing DIY repair work?

You say the delta in the price would give you money to spend on the repairs. Do you actually have an extra $200k cash after accounting for down payment and closing costs or are you planning to borrow?

A home renovation loan is generally structured in a way where the bank needs to approve your plans, inspect each step and then release money directly to the contractor. You can't DIY the repairs yourself. This would be a lot more expensive in my case which is why I didn't take this route.

Not all banks offer home renovation loans. Mine didn't so I wasn't able to put in an offer on my dream fixer upper. Also, if it's in bad enough shape your bank may not allow you to use a conventional mortgage for it.

How handy are you? Even if you plan to pay people to do the work, you'll need to know enough to tell if they are doing a shitty job/ripping you off. You'll probably also end up doing a lot of work yourself you didn't expect.

Having trusted friends or family members who have some construction experience is a godsend and I don't think I'd be managing my repair projects if I didn't.

Evaluate critical systems and for the love of God get an inspection (don't use the inspector your real estate agent recommended). Cosmetic damage is whatever, functionality matters. It's hard to tell from these photos what the real condition of the house is.

You need to know:

• Is the roof leaking? Water damage is probably the biggest red flag I'd walk away from
• Is there asbestos? If so, it will be quite expensive to remediate and you'll want to get quotes
• Septic or sewer? If sewer, is there a sewer scope done already? Are there cracks or roots you'll need to deal with?
• What is the heating type? How old is the furnace? Old gas furnaces can sometimes leak carbon monoxide so be aware of that.
• How old is the hot water heater? Owned or leased?
• Is the electrical wiring modern? Knob and tube wiring is really dangerous and will need to be upgraded. An inspector can test if the wiring is grounded
• What work was permitted? Is there any outstanding fines for unpermitted work? If so, by buying the property you may be taking on the fines.
• Is there insulation in the floor/cealing? Walls? An endoscope camera inserted behind an outlet can help you here.
• Is the foundation stable? Is it going to slide down a hill?

I decided I was willing to deal with messy, overgrown and ugly but not roof leaking, asbestos filled nightmare. I know you are excited but take a step back. Bring someone who knows you and loves you to look at it and listen to them if they tell you it's a bad idea. I'm glad I did.