Foreclosure Update: House Bought, Plans Made, Bathroom Destroyed
Since the last update in this series, there has been a certain amount of drama on our latest road to Real Estate Riches. There’s always drama when you buy a house, because relatively large sums of money are involved, and the sale involves a large number of people working together. A buyer and seller, real estate agents on both sides, a title company, and various inspectors, appraisers, contractors, lenders, insurance agents, and even lawyers depending on where you live. In the likely event that one or more of these people is incompetent, the whole production starts to take on a tragicomic quality, and you laugh even as you slap yourself in the forehead repeatedly and invent new swear words.
In our case, when inspecting the house, we discovered that both the roof and the plumbing system were inadequate to pass a standard lender’s appraisal. In a normal sale, the buyer requests that the seller get these items fixed before the closing. But getting stuff fixed is beyond the technical competence of most big, slow banks, so at best you can negotiate additional dollars off of the purchase price. We scored an extra $1000 towards the roof and $500 towards the plumbing, even though fixing these things was already part of our original budget when first touring the house. So that goes straight to profit. But the fact that the house was un-appraisable meant that we had to pay cash for it instead of using bank financing. Paying cash came with the added advantages of avoiding appraisal and lending fees. Also, being an enthusiastic insourcer, I always do my own home inspections, saving a few hundred extra per house. All of this just further reinforces my belief that Cash is King when it comes to running a small business.
Other minor annoyances included the unplanned disappearance of several hundred dollars of landscaping materials that were originally in the garage, courtesy of the bank’s unapologetic maintenance contractor who was “just following orders to remove construction debris”, and missed deadlines and slow email responses galore on the part of the title company. Luckily Mrs. Money Mustache is a patient and meticulous real estate pro and she compensated for it all by watching the people and deadlines like a hawk. In the end, it all worked out as it usually does, and on October 25th, the MMM Foreclosure Investment Team closed on the house.
I had already gone through the house and done a rough scale diagram as I always do for renovation projects – this forces me to think through what needs to be done in more detail, and it also allows me to plan material purchases without having to frequently re-measure everything at the site. I keep a copy of this plan on my phone and can whip it out at any time during a trip to the building supply store.
If you’re looking at the plan at left and are curious about the details: the only change we plan to make to the existing floorplan is to add a second door to the bathroom, making it a “jack and jill” arrangement that can be shared from both bedrooms, instead of only accessible from one as it currently is. This requires a full redesign of the bathroom, as it previously had a gigantic clawfoot tub jammed into the undersized room, a grotesquely squeezed-in toilet that was almost touching the side wall, and a miniature pedestal sink with nowhere to put personal belongings. All wrapped in a crooked, soggy, and mold-stained room.
And the kitchen will get some more countertop space, since it is just a big room with a single 8 foot countertop strip right now, and a lone fridge and range sitting off in the middle of nowhere across the room. One of my pet peeves in kitchen design is having fridges and stoves that look like a bulky afterthought instead of being integrated nicely to the kitchen.
Once I have a sketch, I like to walk through and make a list of what needs doing. Then I type the list into a spreadsheet, and make some conservatively high estimates on the labor and materials to figure out the total time and cost of the project. The simple spreadsheet linked above tells me that we’re going to spend about $13,700 on the carpentry and materials portion of this remodel (including new kitchen appliances), which leaves about $12k for painting, landscaping, and other tasks if we want to stick to the original $25k budget. We did score an additional $1500 off of the purchase price from the bank, which adds to the safety margin of this project. Getting good estimates is pretty important, especially for renovations larger than this one. Since I’ve done all of these tasks many times over the years and always keep spreadsheet records of how long things take, I find that my time estimates are pretty good these days.
Yesterday, with the appropriate building permits in hand, I began in earnest on the destruction of the old bathroom. It was a true pleasure, because it was such an incredibly ugly room. The first step was to strip it down to its original plaster walls and wood plank floor, then rebuild from there. This meant hauling out the clawfoot tub (which will be later restored and sold on Craigslist), the toilet, the sink, the weird vinyl wall material, and the stained vinyl floor over top of soggy particleboard. Above you can see a picture from yesterday in the thick of the action. The excellent mess and filth just makes the eventual finished product – a pristine and cozy tiled lair of comfort – all the more satisfying. The next step will be bonding a thick, level layer of structural plywood over the old plank floor, upon which we can build the new bathroom.
Part of the fun of rebuilding the bathroom is in fixing all of the haphazard plumbing in the basement. Like most old homes, this house has endured over seventy years of hacking and repairs on its plumbing system. Cast iron is smooshed together with sections of Pure Lead(!), rusty galvanized pipes join through heavily-corroded adapters to copper, rubber joints splice in various newer parts made from ABS (black plastic). All of it hung loosely from the ceiling and zigzagged at awkward angles. With great gusto, I took a sledgehammer in each hand and crashed them together from opposite directions onto the biggest piece of cast iron pipe*, and kept pounding until every bit was laying shattered on the concrete floor. I pulled out the remaining loose fittings from the ceiling, cleanly cut off all of the spaghetti of copper and galvanized supply pipe, gathered up the 120 pounds of various metals for eventual recycling, and then proudly surveyed my new blank slate. On the next day I’ll begin rebuilding everything in a tidy and easy-to-maintain way.
Work is seriously underway and I am seriously excited. I have started having Construction Dreams again, and I can’t wait to get back to the job site whenever I have free time available for work. In an upcoming article, I’ll teach anyone interested how to do their own supply and drain plumbing using PEX and ABS pipes, using the bathroom as an example. It really is easy enough to fit most of it into a single blog post – a fact that the world’s $80-per-hour plumbers will surely not be pleased to have revealed ;-)
* Remodeling tip of the day: if you’re ever removing cast iron pipes from an old house, use a sledgehammer instead of a saw or grinder – it is both speedy and satisfying.
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