Gutted Fixer-up Rentals and Homesteading

th_Wolverine · #1 02/24/15, 08:26 PM

Hey all. Fresh out of college, I've taken a full time position at a Tractor dealership thanks to a friend from Church who owns it, (if you need a new tractor at an affordable cost, we ship all over the country and Jody is great at cutting deals with people on getting cheap transportation, PM me if you're looking for a new tractor).

Anyways, the base rent for a small house around here is around $700-$800. I don't want another apartment, as I'm wanting to begins making steps towards homesteading as I pay of my loans. Those payments are $360 a month but my goal is to up those and get it paid off in 5 years.

So I stumbled across an ad on craigslist for a barn-style fixer upper for rent. I decided to check it out since I've grown up in a sub-contracting family and I like to build stuff. The rent he's asking is $525 a month if someone wants to live in and fix it up.

There's room for a pretty big garden, 3 bedrooms and 1 working bathroom, 1 bathroom that needs remodeling. It has a garage perfect for acting as a shop, and a separate house with an outdoor kitchen that could be turned into a guest house or a laundry room or somthing like that.

My question is this: I'm a Dave Ramsey fan, and I know I need to "Live like no one else so you can later live like no one else." Is it a good idea to take on this as a long term project if I'm willing to live in a house that's been gutted it's drywall and is pretty much concrete flooring. electric and plumming DO work, I should add. It will save me some money and I'm ok doing repairs and remodeling over time. The landlord is willing to meet me half way with getting this place the way I want it, IS THIS WISE

Please comment with any ideas, concerns, or questions for clarification, and thank you for helping me walk through this! It's a big step in my life and I want to make sure I'm not making a bad choice!

thestartupman · #2 02/24/15, 08:31 PM

Is this just to rent, and you do all this work, or is it a rent to own type of a deal? If it is a rent to own, it might not be a bad deal. If it is just you doing all this work just to rent it and get nothing from it, I think I would move on to something else.

Sawmill Jim · #3 02/24/15, 08:40 PM

I know where Paris is so a few miles out say closer to Dresden the rent is much cheaper .

poppy · #4 02/24/15, 08:44 PM

I might see it if all you're putting into it is labor in your free time. Who is going to pay for the supplies needed to fix it up? It it is you, run away fast.

Sawmill Jim · #5 02/24/15, 08:50 PM

Do what I did one time I got me a good sized travel trailer If it an't sold I know where there is one nice size for around $2,500 dirty as sin but one reason it is that price

Jennifer L. · #6 02/24/15, 09:06 PM

I think if you are really intent on paying off those college loans, this is a good way to save some money in those five years you have planned on.

I would be sure, though, that you have a sure understanding with the landlord about how much you are supposed to accomplish with the place, and I'd also want to be sure that you know what the rent level will be as you get work done on the place and get it fixed up. If he intends on raising the rent quickly as you get the work done, it's not such a good deal.

Good on you for having your head on straight with getting debt paid down.

Micknleb · #7 02/24/15, 09:09 PM

As some one asked, who is buying the material? If all you are putting in is labor, you will be getting experience in return, and that can be very valuable. On the other hand, if you are expected to pay for materials and provide labor, then I think you are being taken advantage of. The kind of person who would expect someone else to pay for and do major renovation for a small break in rent is not the kind person I think I would want to rent from.

Sawmill Jim · #8 02/24/15, 09:16 PM

Quote:

Originally Posted by Micknleb

As some one asked, who is buying the material? If all you are putting in is labor, you will be getting experience in return, and that can be very valuable. On the other hand, if you are expected to pay for materials and provide labor, then I think you are being taken advantage of. The kind of person who would expect someone else to pay for and do major renovation for a small break in rent is not the kind person I think I would want to rent from.

Only thing Pairs has going for it is the lake 30 miles away rent is half that price .

ufo_chris · #9 02/25/15, 03:36 AM

I've known a couple of people living in rentals free for fixing them up(just their labour) so i'd say this is a bad deal unless its rent to own

poppy · #10 02/25/15, 09:00 AM

Quote:

Originally Posted by ufo_chris

I've known a couple of people living in rentals free for fixing them up(just their labour) so i'd say this is a bad deal unless its rent to own

That's how it is usually done here too.

Nimrod · #11 02/25/15, 10:32 AM

This sounds like a really good deal ............ for the landlord. If you can rent a home for $700 to $800 a month, and he is asking $525 a month, you are saving between $175 and $275 a month. People who do remodeling in the big city make $25 to $30 an hour for their labor. In the country it might be $15 an hour. This works out to 11 to 18 hours a month at $15 an hour. I bet the landlord expects way more work than this.

Around here the landlord owns any improvements you make to the property. He could raise the rent really high or just boot you out the door and you would be out all your labor.

If I remember right, you live in a fairly warm area. You should rent a small piece of land and put a camper on it. Save up and buy your own small piece of land. Then move the camper and build a house as you can afford it.

The biggest expense is housing if you are renting or paying a mortgage. I would try to get a paid off place to live first and then worry about paying off your debt early.

I do think you have the right idea.

TheMartianChick · #12 02/25/15, 12:38 PM

Quote:

Originally Posted by Jennifer L.

I think if you are really intent on paying off those college loans, this is a good way to save some money in those five years you have planned on.

I would be sure, though, that you have a sure understanding with the landlord about how much you are supposed to accomplish with the place, and I'd also want to be sure that you know what the rent level will be as you get work done on the place and get it fixed up. If he intends on raising the rent quickly as you get the work done, it's not such a good deal.

Good on you for having your head on straight with getting debt paid down.

^^^THIS^^^
I would want a written guarantee that the rent would not go up for a certain number of years.

Most landlords would love to have a handy tenant pay for the privilege of fixing up a dumpy place. Truthfully, any tenant who invests materially in my property deserves to have the security of knowing that the rent will not be raised. In 19 years of being a landlord, I only had one who was compelled to do so. He is still my tenant and he is still paying rent that is below market value. He earned that!

ihuntgsps · #13 02/25/15, 01:24 PM

as someone that owns a rental and has also been a renter that improved others properties I strongly suggest trying to purchase a lower priced home instead of renting.

For $525/month you should be able to make a mortgage payment/taxes/insurance for a home.

This way anything you do to the house will add value for you instead of someone else.

The only way renting make sense to me is if you have zero credit to be approved for a loan or if you don't know if you will stay in the area for more than a few years.

I would steer clear of trading my labor for the small savings on rent that you mentioned.

You could easily afford a more expensive rent payment and then do remodeling jobs on the side (as I used to do for many years) for a great second income and come out way ahead.

edcopp · #14 02/25/15, 05:56 PM

The answer is NO.

Next question please.

You could ask Dave Ramsey, and the answer would still be NO.

He would ask you how much cash you have in your emergency fund? What happens if you have an emergency? The possibility for an emergency is very strong. I could list 50 or so in a few minutes, if you do not have the funds then you do not have any of them covered.

Think about it.

You are talking about investing your time in a project that does not have a certain cash value at any given time. If you are listening to Dave, you would need to be working for cash and using the cash to eliminate debt, not fixing somebody's house for your enjoyment.

TnAndy · #15 02/25/15, 06:35 PM

Can the landlord rent the place with no fixing up in it's current condition for $525/mo ?

If so, he doesn't have much incentive to deal. Plus, he can't be sure your remodel would actually improve the place (no offense, but he can't be sure you are able to do the work).

On the other hand, IF it's currently not rented, and un-rentable due to condition, he might have more incentive to deal, and take a chance on you, and your ability to improve the place.

IF the second one is the case, I'd offer max of $200/mo, he buys all materials, and gives you a written guarantee for several years of the same rent as long as you meet some kind of mutually agreed on schedule of improvements.

Personally, I'd be more inclined to find my own place, and put the sweat equity into that, because most likely you're leaving this place eventually, right ?

claytonpiano · #16 02/26/15, 11:04 AM

My advice. Say no and run. Having bought and worked on a fixer upper, it can turn into a money pit fast.

With that said, really good friends of mine did just what you are saying in order to stay debt free. They fixed the house and made it beautiful. The landlord was thrilled. At the end of the year, he raised the rent and forced them out. He then sold the place for an incredible profit. It actually turned into a win win situation, however. They were able to save enough cash for land and move. The problem was, they had no credit and it was hard to purchase supplies for their new property. One would think that cash at a lumber mill would have been fine....but not for delivery. A credit card was required.

agmantoo · #17 02/26/15, 11:26 AM

Start with some cheap dirt, acreage if possible, and put something on it or repair what is there to live in. The dirt will be with you and increase in value over time. In the future you can always get something better to live in. This suggestion is from a man that owns a number of fixer-uppers and rents homes to others! PS....you may find a tenant to share the expense of a home on your land. That way the tenant can help pay for the entire property. At $350 from each of you per month, you would be well on your way to ownership of your desire of a farm

stef · #18 02/27/15, 11:33 AM

Quote:

Originally Posted by th_Wolverine

Hey all. Fresh out of college, I've taken a full time position at a Tractor dealership thanks to a friend from Church who owns it, (if you need a new tractor at an affordable cost, we ship all over the country and Jody is great at cutting deals with people on getting cheap transportation, PM me if you're looking for a new tractor).

Anyways, the base rent for a small house around here is around $700-$800. I don't want another apartment, as I'm wanting to begins making steps towards homesteading as I pay of my loans. Those payments are $360 a month but my goal is to up those and get it paid off in 5 years.

So I stumbled across an ad on craigslist for a barn-style fixer upper for rent. I decided to check it out since I've grown up in a sub-contracting family and I like to build stuff. The rent he's asking is $525 a month if someone wants to live in and fix it up.

There's room for a pretty big garden, 3 bedrooms and 1 working bathroom, 1 bathroom that needs remodeling. It has a garage perfect for acting as a shop, and a separate house with an outdoor kitchen that could be turned into a guest house or a laundry room or somthing like that.

My question is this: I'm a Dave Ramsey fan, and I know I need to "Live like no one else so you can later live like no one else." Is it a good idea to take on this as a long term project if I'm willing to live in a house that's been gutted it's drywall and is pretty much concrete flooring. electric and plumming DO work, I should add. It will save me some money and I'm ok doing repairs and remodeling over time. The landlord is willing to meet me half way with getting this place the way I want it, IS THIS WISE

Please comment with any ideas, concerns, or questions for clarification, and thank you for helping me walk through this! It's a big step in my life and I want to make sure I'm not making a bad choice!

th Wolverine...I read everyone else's responses and I'm inclined to agree with the majority: It might be hard to walk away because you're so READY to get GOING, but in the end you will have spent an awful lot of time and work for something that will not be yours. (there's a lot of truth in the proverb: marry in haste, repent at leisure )
As someone else suggested, find a little piece of property that you can reasonably afford at present and live in an rv for a few years. Get the feel of being responsible for your own property...see if you really and truly even LIKE it. And, as someone also said, you can get a mortgage with taxes and interest for that amount of rent.
I'm sorry...but I don't think this is a good deal for you. I sincerely wish you well. (: