Fixing up a dilapidated house

I plan on moving to Detroit in the relative near future and buying a house there with the money I’ll have saved up, no loans no mortgages.
I’ve been considering buying a big, dirt cheap, run down house for the price of a used car. Detroit has plenty of those types of houses.

https://www.realtor.com/realestateandhomes-detail/4115-Lakewood-St_Detroit_MI_48215_M49064-52712#photo12

https://www.realtor.com/realestateandhomes-detail/3028-Gray-St_Detroit_MI_48215_M46402-90943

https://www.realtor.com/realestateandhomes-detail/2264-Holcomb-St_Detroit_MI_48214_M40395-80582#photo0

Houses like the above, and then taking the next year or so to renovate and fix it up. I could just buy a ‘ready to move in house,’ but I think the former option would be a far greater challenge and learning experience. One of the biggest problems is that I don’t know the first thing about home renovation.

Does anyone have any experience with this? Would it be worth the time, money, and trouble?

What are the back taxes? I think it’s possible that the $8000 house could cost you twice that amount in unpaid taxes before you even spend a dime on the renovation.

If you don’t know anything about home renevation, the odds are that you are going to badly underestimate the costs and unseen problems in a home. The first time you have to tear out old, undersized plumbing or demo an entire wall because of hidden water leaks and black mould you’ll find out about real costs. And of course, there are things you can’t fix on your own; even if you learn all about electrial wiring, you’re still going to have to pay an electrician to hook up the breaker box you are almost certainly going to have to replace on an older home for safety or if you want to upgrade.

The reasons for renovating a house for the first timeis because you a) enjoy the work, b) want to learn what mistakes not to make the next time, or c) because you have no idea about the costs and effort involved.

There are plenty of resources on renovation. I suggest reading a few and then deciding whether you still think this is a good idea for you.

Stranger

I think Stranger hit close to the mark on this. In your case my biggest concern is “that I don’t know the first thing about home renovation.” That’s a red flag statement to me.

But if you know how to read (DIY books et.al.) and are willing to put in the elbow grease I say give it a shot. Just be ready to throw in the towel if it starts becoming overwheming. Having done renovation myself I think Stranger’s best point about renovation is that a renovator "want[s] to learn what mistakes not to make the next time."

Repeat after me: “the next time.”

Here in Chicago, there have been programs where they offered properties essentially free, but did not have a surplus of takers.

Say you put the time and $ into renovation - then what? Do you want to live there? Expect to sell? Is it a neighborhood you wish to live in? What do livable properties sell for in the area?

I know very little about the specifics of Detroit residential real estate, other than a general impression that there are large swaths where it is questionable whether the city can even reliably provide basic services, and where folk have proposed essentially converting residential areas back to farmland. I realize the worst years of “Devil’s Night” are past, and I imagine there likely are possibilities for adventuresome urban pioneers, but you’ll need to do your research.

Houses deteriorate VERY quickly when neglected. Even quicker if past tenants caused damage. The first 2 show major water damage. Is that from the roof or leaking plumbing? Both expensive. If the house has been vacant, it is possible the wiring/plumbing have been stripped.

I have never tried flipping a house, but as I understand it, the practical approach is to find a structurally solid home that needs updating and limited upgrading. The 1st 2 houses you link would require multiple big-ticket investments - roof/drywall/windows/foundation/electric/plumbing/mold remediation/asbestos?/gut all baths and kitchen - before you even got to the point of painting and decorating.

The 3d house shows no interior pics - but I bet they are similar. Some things that MIGHT make a project doable is if the location is great, the underlying structure/mechanicals are decent enough, and if you could rent out a portion to defray your expenses. But even with that, not an exercise I would be eager for.

might be cheaper to tear them down and put a new house on the lot.

I’ve seen a documentary about this process.

I think you should go in assuming that you will have to take those houses back to the studs – that the plumbing and electrical will not be salvageable (or adequate for modern use even if some of it still functions). I seem to recall that old plaster-and-lath walls tend to hide any damage lurking within better than drywall, so even a wall that looks fine might be misleading. Even that is optimistic, because you will almost certainly want to frame out a new floor plan to add another bathroom, expand the kitchen, or in the one case, combine the two apartments into one single-family house. New roof and new siding almost certainly, and let’s hope the foundation is in good shape. Expect construction to be bedeviled by theft at night.

One other thing: At least some of those listings are offering quitclaim deeds only, so you might not be obtaining clear title.

That said, the Craftsman floors and wood trim in the red-white-and-green house are beautiful, and arguably worth the $8,000 price just in themselves.

Even once you’re done, though, there is a first-mover problem. Your house will be in great shape, but unless many other people are doing the same thing, as Dinsdale mentions, it’s going to be surrounded by urban wasteland. Neighborhoods like that can come back from the dead – Baltimore did it around the Inner Harbor – but it’s a leap of faith for the first arrivals.

Also, reading farther down in the listings, you will likely want to budget for private school.

If you don’t know anything about home renovation, do not take on this project under any circumstances. You will be wasting an enormous amount of time and money and the end product will not be worth it at all.

Home renovation is nothing like what you see on TV. Even experienced do-it-yourselfers find that projects often take 2x as long and cost 2x as much as they expect. Every project involves unexpected challenges that need to be solved in innovative ways. An experienced DIYer will have a few ideas on how to solve those challenges–you do not. You will make tons of mistakes and much of your work will look like crap. And doing home improvement is hard and dirty work. Do you enjoy spending all your free time doing hard labor? You will essentially be building the house from scratch.

If you instead decide to pay someone, you will likely spend way more than you expect and likely get scammed a few times along the way.

If you want to go ahead, do not buy a big house. Buy a small house that is livable but needs some cosmetic work (tile, flooring, misc upgrades, etc). By having a small house like that, it will limit the amount of work you need to do and you can likely resell it at any time. Of course, this kind of house will cost more than a used car, but you won’t be throwing away your time and money.

I don’t know anything about renovating or flipping houses. I just love old homes, but whenever I see houses like the three you linked, I feel sad. I see beautiful floors and woodwork, a fireplace with built-ins. Imagine when the houses were brand new. In 1925-ish an excited family moved into a beautiful new home.

I wish you lots of luck!

I agree, one of the big red flags here is “I don’t know the first thing about home renovation”.

Would it be worth the time, money, and trouble? Only YOU can answer that. Here are some things to consider:

  1. Cost. One rule of thumb for home renovation is that it always costs more than you think it will in time, money, effort, and materials. You’ve mentioned your nest egg in other threads, and also that you do not intend to seek a regular, full time job. Yes, the homes depicted have a lot cost to purchase. Consider that there may be a reason WHY this is so, or several reasons: back taxes, neighborhood, damage, etc. I personally know people living Detroit and the surrounding areas who have paid $20,000 cash to purchase a house. They easily spent another $20,000 in the following year on such basic things as a furnace (not a replacement/upgrade, just a furnace, the prior one having been stolen while the house stood vacant) or replacing ripped-out plumbing, as well as fixing things like the roof. Do you have sufficient funds, or a means to get sufficient funds to fix things sufficiently to keep the house habitable. I’m not talking re-sale pretty, I’m talking about not freezing to death in the winter.

  2. Skills. How many basic tool skills do you have? Yes, any able-bodied adult of normal intellect can learn how to repair a house, but there’s a learning curve. When visiting friends in Detroit I have on occasion been asked to help with drywall - not because I’m an expert but because I have at least some experience with removing/installing/repairing it. The people I’ve mentioned who did the fixer-upper routine either had skills already, or were tied into a network of friends who had various skills, or both. Since you’re intending to move into Detroit from elsewhere you won’t have such a network. You can certainly acquire one, but that takes time. How good are you at learning things out of a book or from YouTube videos? Do you have any experience working with tools like hammers and saws or are those skills you also have to acquire?

  3. Stamina. What’s your age and physical condition? Rehabbing/restoring/renovating/repairing a house takes a certain physical effort, even with power tools. I know I could do this, but I would hesitate to take on such a project because I’m getting older, I don’t have the energy or stamina I used to, and, oh yes, I work full time, too. If I was 20 or 25 I might be eager for the adventure of doing such a thing. There is also going to be a certain amount of frustration, mistakes, and back-tracking on such a project. How well do you handle those things?

  4. Replacement of Damaged or Missing Stuff. Some of the interior pictures show signs that some of the plumbing has been ripped out of one of those houses, probably copper or brass and sold for scrap to make quick money. Working for a contractor in Gary, Indiana I’ve seen some of the results of scrappers. You have to replace, at a minimum, plumbing and drywall/lath-and-plaster. Wiring and even basic supporting 2x4’s might also be damaged and/or missing, there maybe on-going leaks, mold, animals nesting in the walls… There may also be such challenges as connecting old metal plumbing bits to modern PVC piping, or combining drywall and lath-and-plaster walls, or using drywall to patch lath-and-plaster, or, if you’re really crazy, maybe learning the lath-and-plaster technique. Again, all of this CAN be repaired, you CAN learn to do this, but there is a cost in time, expense, and your energy. Are you truly ready to take this on?

  5. Some things you can’t do yourself. Even if you did successfully re-wire/repair/replace infrastructure you’ll still need to pass various inspections. Some things, like major foundation repair, requires equipment and/or skills an isolated individual is unlikely to have. How will you get things done where either you lack the skills, the resources, or the proper credentials to accomplish them? You can certain hire such expertise (you may have to do that) but that costs money - which gets back to #1.

  6. Security. While Detroit is certainly improved over earlier conditions in the 70’s, 80’s, and 90’s it’s far from a crime-free zone. How are you going to keep your materials and tools safe and secure from looters and scrappers? How are you going to keep YOU safe and secure if you’re essentially camping out in these homes while you’re repairing them?

Given your lack of knowledge/experience I recommend against doing this. The failure rate for that sort of project is high. Regardless of what you decide I wish you the best. Good luck and be careful.

Yeah, house renovation isn’t, if you’ll pardon the expression, rocket science, but there are so many things to overlook or that can go wrong that it is certain to cost much more than you’ve estimated your first time around. With experience and contacts with plumbers and electricians to get good service at a reasonable price you can make money on renovation, but you’re not going to get that experience by just reading a book, and it is easy to get so wrapped up in the details of renovation and not realize how much more it is costing. It sounds like the o.p.’s plan is to buy a house and renovate it as a way of saving money, which is likely to be counterproductive.

My only other observations are that buying a house in a rundown neighborhood not only bears the risk that the value will continue to drop but also that crime and vandalism will increase and access to goods and services will decline. There is a reason that neighborhoods develop or decay in unison. The other is that any house that shows roof or foundation damage should be considered highly suspect as a target for renovation, especially in a region like Michigan with seasonal freeze and frost cycles. There is so much potential for unseen damage that will only be revealed after you start renovating that unless you really have confidence in your ability to identify critical problems it just isn’t worth the risk. Taking a house down to the studs is nothing compared to having to replace rotted structure damaged by extensive roof leakage or jacking up a house to excavate and pour a new foundation, especially it is going to cost more to do that one job than the house and property is worth.

I haven’t purchased a house intended for renovation but I’ve helped a few people with theirs, and I’ve worked in new construction and roof replacement, and quite frankly I think you are better off building new or buying prefab to control costs versus renovation unless the house is really nice or you have some sentimental attachment. It’s a larger upfront cost, but you’ll save money in the end in having a well-insulated, up-to-code structure with inherent resale value (less in the case of prefab or nontraditional construction, but you have to factor that into your decision) versus an inexpensive foreclosure or abandoned house that will require a complete build out and still not be worth the money you put into it. For most people, their house is their single biggest asset they have to borrow against in need, and to have a moneypit with no inherent value is just a big property tax liability.

Stranger

My husband and I renovated a 1926 craftsman in similar condition. Here’s roughly what’s involved:

Fix the roof. Replace rotted boards, reshingle.
Replace broken windows.
Pull all the trim, trying not to screw it up.
Get a dumpster. Tear out all the plaster. This part is NO FUN.
Tear out all the old plumbing. Your drain pipes will be cast iron. They will be rotted. The supply lines will not be usable.
Tear out damaged areas of the floor. Harder than it sounds, old wood is much harder than new wood.
Reconfigure walls as needed.
Rewire the house.
Replumb the house.
Drywall the house.
Install a kitchen and bathrooms.
Fix damaged floors.
Reinstall trim and doors.
Refinish floors.
Paint, tile, etc.

Move in.

This is NOT going to be a livable house while you’re working on it. You’ll need a pickup truck and an enclosed trailer for the enormous amount of tools you’ll need. The house may well get broken into while you’re working on it, copper may be stolen.

We enjoyed the process, made money, and would do it again, maybe. But only in a good neighborhood. The cost of the house is a fraction of the cost of this project.

As a contractor, I’d suggest you really need to your research before you even think of taking this on. It’s quite possible the cost of repairs may far exceed whatever returns the house may bring. It’s also possible that it may be less expensive to tear down and rebuild.

The listings you’ve linked to all require extensive repairs before they could even be inhabitable, in other words, you could not immediately live in them while you make the renovations. You’re looking at pretty substantial water damage so mould and rot will most likely be present. Drywall, plaster, insulation, etc… will need to be removed and replaced which will require testing for asbestos, lead, and air quality (due to the mould). These abatements could run into tens of thousands of dollars.

You’ll want to start with the outside building envelope roof, siding, windows/doors, (in that order) before even doing anything inside.
You’ll need to bring all electrical up to today’s standard code. i.e. panel upgrade, new wiring, receptacles, switches, fixtures, etc…
Similarly, with plumbing i.e. removal of lead pipes/solder, proper venting, resize drainage, etc…
The HVAC will probably also require replacement and upgrading to its distribution.

Now, you’re in 100-150K range without even touching any renovation or remodelling.

I thought you said elsewhere that your savings amounted to $50,000?

You can spend all of that on a nice kitchen and a bathroom, maybe two bathrooms. Those are the most expensive rooms in a house and can quickly absorb your budget.

This would be how I’d approach it. Get the foundation and roof inspected. If you can live with what turns up, gut the place to the studs. Hoses that old won’t have up-to-snuff insulation, the wiring and plumbing are likely to be sketchy, and vermin & bugs within the walls will be well-established and tough to root out any other way.

I’d say (and might do if these kinds of opportunities exist this time next year), gut it, scrub it, rewire, repipe, fit it with all the smart-phone accessible tech available (for security, monitoring, access and lighting control, etc.), and button it all up with modern fixtures. And then live in it, take care of it, help revitalize the neighborhood. That’ll make it a nice place to live, and hopefully encourage neighbors to do the same–that protects the value of your investment. But restoring it, swapping “like for like” and sticking band-aids on the visible problems is going to be a waste of money and you’ll be chasing your tail.

Like Sparky notes: this is gonna be pricey, and at the end of it all you may end up with the same debt as you would if you’d just bought a house in good order.

I know someone going broke doing that, they can’t see the thing - no one will buy it, broken into 2x where the copper pipes were taken.

Shortly after the wife and I got married, we did just that. Bought a little place for 60K, fixed it up for about 30-40K, and sold it for 125K about three years later.

How did we do it? Well, my dad is a general contractor, so he helped out for free. My father-in-law was a professional drywaller, and he helped out for free too. I’ve worked as an apprentice electrician, so I could pull my own wires and do all the work outside the panel. My mother-in-law was a former house flipper who now worked at a plumbing shop, and her advice was priceless, as was her employee discount. Me and the wife hadn’t had any kids yet, and my wife worked as hard as I did on the reno. It was effectively a second job for two years, and during that time, I found that I never really felt comfortable relaxing in my own house. There’s always some work to be done.

I did the math when all was said and done, and based on the hours we worked on this project, I could have gotten a second job at McDonalds and made more money in that two years than I earned in sweat equity. This doesn’t even include all the help we got from the extended family or the discounts we abused. If we had paid market rates for their labor, we absolutely would have lost money. So if your only reason for doing this is saving money, don’t. Houses are like cars, the individual parts for them cost more than the house does as a whole.

Now, I actually don’t regret doing this. It was a very educational experience, and there was definitely some pride in turning a place around like we did. But I had a lot of resources that made it far easier than what you are planning. There’s not enough money in the world that would convince me to do it alone. This is one of those things that is so much easier to pay with money.

I’ve renovated/flipped 3 houses, but none were as bad the one with all the pictures. Stranger and others have provided good advice. I started with little knowledge (mostly shop class and my dad and eventually my FIL helping), and with watching all these flipping shows and having paid tradesmen show me exactly whats wrong, I still miss a lot. Doing it yourself is going to require a lot of tools (most of my tools are cheap, but I do pick up some nice ones on ebay and craigslist on occasion). I also suggest you hire a general contractor. In every area I have flipped, I have had trouble finding a reliable general contractor. In my experience, you have to stay on top of them all of the time. Also, if you’re going to be like me and try to shop lowest price, expect to piss off your GC from time to time.

As others have said, if your house is old, you will have to replace a lot of stuff, especially wiring and plumbing. I thought wiring was easy, it was plumbing that was really trying my patience (and disgusting). Run tests for radon, carbon, lead and asbestos. My last GC advised that if the rest of the house is going to be difficult, move on to another house if there needs to be abatement. Otherwise, knock it out first.

The first thing you should think about is the cost. Have your GC run an estimate on what the whole house is going to cost. Overruns can run as high as 20%. The point is to compare your final cost versus the cost of other houses in the neighborhood. Financially speaking, if your renovated house is going to be the most expensive house in the neighborhood, find another project. You would be better off buying a move-in ready in a nicer neighborhood. Oh and last thing, if you want to try your hand at renovating, maybe pick something smaller, like a condo, and move stuff around/reconfigure the layout. That should give you a good idea of what to expect.