Anyone have experience renovating absolute run down homes?

[Lex DeVille]

Since I do not have enough room to run my own business. Essentially a manufacturing business.

I will need my own home.
So either get a home in a bad neighborhood where the home is live-able or buy a home in a good neighborhood that is absolutely run down.

When I mean run down, I pretty much have to replace everything. I believe I can haggle down the home price to about $90k.
Although I can't live in this house right away to build my real business, is it worth it?

This in itself is its own business and already going through the costs and extremely expensive with all the tools/materials again and paying that mortgage. Now I will probably have room for the machines, but no money for them...sigh

How do people deal with these high capital businesses without slaving away at the job and living severely below means?

Oklahoma - $135,000

513 N Woody Guthrie St, Okemah, OK 74859 - Industrial For Sale | Cityfeet.com

www.cityfeet.com

 

[Lex DeVille]

Since I do not have enough room to run my own business. Essentially a manufacturing business.

I will need my own home.
So either get a home in a bad neighborhood where the home is live-able or buy a home in a good neighborhood that is absolutely run down.

When I mean run down, I pretty much have to replace everything. I believe I can haggle down the home price to about $90k.
Although I can't live in this house right away to build my real business, is it worth it?

This in itself is its own business and already going through the costs and extremely expensive with all the tools/materials again and paying that mortgage. Now I will probably have room for the machines, but no money for them...sigh

How do people deal with these high capital businesses without slaving away at the job and living severely below means?

If you move to the midwest you can buy a nice home for that price that you can live in immediately and won't have to renovate. Hell, you'd probably have enough left over to set up a good size warehouse in your back yard too.

 

[Ninjakid]

Can I just be blunt and say I think this is a terrible idea?

I have firsthand experience renovating homes, as I used to do it many years ago. I promise you it's a frustrating amount of work. Both expensive and time-consuming. However, many people on a budget buy homes and renovate them, so it's not a terrible idea in that sense.

But starting a manufacturing business in your home...

Now you need a sufficient electrical supply for all those machines, you have to have your home comply with local regulations, and then the fact you're running an industrial business in a residential neighbourhood... I don't see this being legal unless you buy an industrial property and are planning to live there (which actually could work if you really wanted, but I don't recommend it).

How do people deal with these high capital businesses without slaving away at the job and living severely below means?

They acquire the capital by investment, not with their job.

 

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[broswoodwork]

“Large” is relative. What I meant large in comparison to small home I was going to buy. You are telling me to keep my costs as close to 0, but your solutions are the most expensive.



What I’m doing right now is just trying to find a cheap place to run my business, but not throw that money in rent or temporary settings. If I am going to find a place to live/work, might as well put it into an asset. And my monthly will be under $1k. So what I’m doing is productive.

Like I said the solution of mixed-use is perfect, if you can afford it.

I believe you are secretly a self made billionaire who is using a near clairvoyant gift of mind-F*ckery to get us to face our own entrepreneurial demons.

This is the most rational reason for what you're doing here.

 

[broswoodwork]

When you say starter home, do you mean 10x8 feet shed with nothing else on plot of land? Or was this an actual house with a 10x8 foot work shed?

Haha. No, I meant figuratively as in my business's starter home. I had an apartment that I was going to lose if I didn't get going on something.

Listen, everything else aside, the entire world is going to tell you what you can't do, and why your ideas suck, FOREVER. If you join forces with them, you'll be chained up at the bottom of whatever ocean society decides to put you in. Life is never going to hand you $500k to buy a home/ incubator space with accompanying breakeven point presales on a product that exists in your mind.

You've got to start taking incremental steps that are uncomfortable and overcome each minor "can't" the world throws at you.

 

[Dan_Cardone]

I appreciate the generous offer!

I will probably need 1000sqft. As you know, I just recently struggled to get this job. I am like 4hrs away from Boston. Not sure if that would work lol.

I have no idea what you are trying to make but is it possible to outsource the manufacturing of it and you just sell it until you make enough to reinvest back into machinery yourself?

 

[WJK]

Since I do not have enough room to run my own business. Essentially a manufacturing business.

I will need my own home.
So either get a home in a bad neighborhood where the home is live-able or buy a home in a good neighborhood that is absolutely run down.

When I mean run down, I pretty much have to replace everything. I believe I can haggle down the home price to about $90k.
Although I can't live in this house right away to build my real business, is it worth it?

This in itself is its own business and already going through the costs and extremely expensive with all the tools/materials again and paying that mortgage. Now I will probably have room for the machines, but no money for them...sigh

How do people deal with these high capital businesses without slaving away at the job and living severely below means?

I've read this entire thread and you've got this all backward. Rent a light industrial space and put your bed in the corner with a microwave, a bar-sized fridge, and a hot plate. Use small appliances for cooking like a "hot pot". If you're worried about privacy, hang a curtain. You could even use a Murphy bed that looks like a cabinet and pulls down at night. It's instant house hacking. You can pull your car into your space at night through the roll-up loading door. Some zoning codes do not allow people to live on-site, but I have inspected buildings where I can see that the owner has lived there for years. Some have mezzanines with small kitchens and bath/laundry facilities. The owners call them "break rooms" rather than living spaces. If you can buy the space rather than rent it, you are better off over time. Build yourself a "self-contained" life that is cheap to maintain.

 

[WJK]

Don’t get me wrong I have considered industrial spaces. But as you stated, they don’t allow you to live there. I so would if I could.

What you are pretty much saying is to hope on no one finding out that I’m living there. One wrong move and it is over. I have not ever seen an industrial space for purchase that would be cheaper than a small home. If you do buy, it is the whole lot. Aka half a million dollars? How is your method cheaper?

They are going to find out eventually especially if your car is there if there is no roll up door.

So live my life like an animal sneaking in and out. If I’m there at night, then I’m stuck there until daytime?

Don't so dramatic. I was a commercial appraiser in Los Angeles and a broker for 30 years. I saw many people living in those spaces. Yes, they chose spaces where they could put their cars away at night. No, they didn't sneak in and out. They just quietly lived there. It would hard to do it without people noticing in most industrial complexes, BUT there are a lot of light industrial spaces that are free-standing. I've also seen a lot of them with houses on the same property.

Some cities are crazy about enforcement. Others really don't care. Talk to people who know. Stop stressing! There are actual zoning codes with mixed uses that allow residential uses as well as light industrial uses. And there are some properties that are "grandfathered". That means that they have been used that way for years before the city made their rules. You know you can ask the Building and Safety Department about their rules and enforcement policies. There's usually one person in those departments who is assigned to an area. Find that person and ask.

Now I'm in Alaska. One of my businesses is renting a mixed-use property like that right now in a nearby city. The property includes 2 free-standing shops and a single-family house. My partner and his family live in the house. He has his auto repair business and a paint booth in the shops. Then, we use the highway frontage of the 2 acres for selling our used vehicles. The neat part is that he is on-site. We use one of the repair bays and the paint booth for preparing our vehicles for sale.

Start thinking outside the box. There are solutions to everything.

 

[broswoodwork]

How much space do you need @MoreValue ? If this is the only thing holding you back, and you're near Boston, I can try help you out. I'm moving into a place that's a little too big, and I'll trade you space for a few hours of week of work. Don't know if that type of barter deal is on your radar?

 

[broswoodwork]

Oklahoma - $135,000

513 N Woody Guthrie St, Okemah, OK 74859 - Industrial For Sale | Cityfeet.com

www.cityfeet.com

Oklahoma - $135,000

513 N Woody Guthrie St, Okemah, OK 74859 - Industrial For Sale | Cityfeet.com

www.cityfeet.com

All of that open work space for almost no $$$ is taking me on a drug like psychedelic journey... I'd start a F*cking hobby aircraft company or something.

 

[GoodluckChuck]

As a long-time remodeler and home builder I can tell you that it always takes more work, time, and money than you expect in the beginning, even for seasoned professionals.

I've known a lot of people who have bought houses to fix up and/or flip and ended up in a huge uphill struggle because they got in over their head. A lot of them ended up underwater financially.

When buying an investment house that is run down with the intention to fix I would focus on the "bones" of the house. That means the foundation, framing, electrical, and plumbing. In an old house you will often find issues with all four of these things. You want to know what you're up against before you spend a dime. Do you have to fix a bunch of rot? Does the house need to be rewired? Re-plumbed?

House inspectors usually won't give you a full picture either because they aren't in the business of killing deals. Also, they might not want to crawl around under a house to check the entire foundation. Best to get an unbiased third party. My dad who has been building houses for 40 years offers house inspections. I think it's smart to hire someone that actually works on homes for inspections.

Location is key too. I'm not super experienced with real estate investing so I don't want to talk too much about it, but I would want to know that after I fixed up the house to be really nice that it will sell for an amount that makes me the profit I want. Don't want to have a house that is 2x as expensive as the rest of the houses on the block.

 

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[broswoodwork]

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Set the whole thing up in a $100/mo landscaper lot parking spot. (Zoned industrial, so do whatever you want with owner permission)

Sell from a ups store address, so you don't look like a guy who sews things in a shipping container.

 

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[WJK]

Yes, there are other solutions, but they are just expensive. Mixed-use is the perfect solution, too bad rent is more than double. The mixed use was what I was looking at from the very beginning. Didn’t even count the utilities to heat large warehouses...

"Large"? Why? You're a start-up company. Today you need a hole in the wall with power, a place to sleep and bathroom. Like I said, use a Murphy bed that can be pulled down at night. Use that space for floor space during the day for your business. Land lightly. This is not a life-time decision -- although it might make or break your business. 9 out of 10 businesses fail in the first 10 years. The primary reason is a lack of money. Right now you don't the finances to have it all. That's still down the road from you. What are you going to do when your receivables aren't paid in a timely manner? What happens if you create a style that doesn't work? And on and on... Keep your overhead expenses as low as possible to keep your options open. Living expenses are part of your overhead. Keep them as close to 0 as possible. And yes, for your information, I learned these lessons in the school of hard knocks!

 

[broswoodwork]

Time to move on.
I want to hear how @broswoodwork got started in a toolshed in a city building his first furniture pieces by the light of a grease candle with the skunk for companionship, come on, it's time. You've had enough tea.

Here's a visual sneak peak of my 10x8 starter home, with my home made table saw. I couldn't afford real equipment, so i had to invent it. I also didn't know how to build furniture, but YouTube fixed that.

 

[broswoodwork]

I’m kinda confused, don’t know where you built this.

I didn't build the shed. I built the business in the shed. My monthly rent was cutting the lawn and shoveling snow.

I'm going to dip out now. I feel like I've over contributed here relative to my business accomplishments thus far, and I'm uncomfortable with a bunch of attention.

I don't know anything compared to most of the people here, but I know you never get where you want to be if you never start.

 

[MTEE1985]

Here we go again...

Dude, you need to help us out here. People are googling and searching and making recommendations but nobody really knows where to begin because you have this paranoia of divulging anything even remotely personal.

Ok, I gather you are in NE. 4 hours from Boston means you’re either western border of Mass, VT or Northern ME. Can you at least tell us that much? I’m ruling out northern NH because if you were from NH you would know that Berlin is simply a mill town that lost its mill so has been going through a transformation, hence the similarities to Detroit.

Like @Bertram said, there are little towns sprinkled everywhere up there that might have exactly what you’re looking for. Also, a “bad neighborhood” in any of thse states is a comparatively great neighborhood in many states. A bad neighborhood is Roxbury (no offense, just statistically) not Berlin.

 

[broswoodwork]

Pretty resourceful

You should see how I jump started my gig after a layoff.

The two options I hit @MoreValue with look absolutely class A Manhattan compared to my inner city tool shed with a skunk living under it.

 

[Dan_Cardone]

Yes, there are other solutions, but they are just expensive. Mixed-use is the perfect solution, too bad rent is more than double. The mixed use was what I was looking at from the very beginning. Didn’t even count the utilities to heat large warehouses...

People here have more patience than I do.

All I ever hear from you are excuses. I mean this in the nicest way possible: Is what your doing right now going to make you successful?

Is it more productive to make excuses or to use that energy to be resourceful?

 

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[Bertram]

Since I do not have enough room to run my own business. Essentially a manufacturing business.

I will need my own home.
So either get a home in a bad neighborhood where the home is live-able or buy a home in a good neighborhood that is absolutely run down.

When I mean run down, I pretty much have to replace everything. I believe I can haggle down the home price to about $90k.
Although I can't live in this house right away to build my real business, is it worth it?

This in itself is its own business and already going through the costs and extremely expensive with all the tools/materials again and paying that mortgage. Now I will probably have room for the machines, but no money for them...sigh

How do people deal with these high capital businesses without slaving away at the job and living severely below means?

Oklahoma - $135,000

513 N Woody Guthrie St, Okemah, OK 74859 - Industrial For Sale | Cityfeet.com

www.cityfeet.com

That's Tornado Alley and your 5000 SF steel building is going to fly off like a frisbee.

And that price, @Lex DeVille Lex! What will he do with all that acreage? Snowmobile wheelies? John Deere riding mower anyone?

Bro, you need to move to Berlin, NH. $35K for a good house.
You can pick up a real home in a sleepy milltown next to the hopping town, for around for $35K or as low as $16K if you are willing to clean out mildew. Average in this price category is 56K and they're in good shape but just forgotten. Look in rural NH and Maine.
You can find perfectly good 1500 SF hip roof Sears & Roebucks wood framed homes for 40-60K and throw your own steel frame up on site.

 

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[Bertram]

Damn those are cheap. I gotta stay near my job unfortunately. I just got it.

Maybe I will just make money at this job for several years and jump ship somewhere else. Several years is a long time though.

Did some research on Berlin, NH. Apparently it is the “Detroit of NH” Low prices and good condition homes typically means bad neighborhood

You've just lost the game.
Look, if you're going to dream up some nationwide fantasy definition of a "bad neighborhood" you've lost the game before you ever played. It's not a bad neighborhood, just not in style. That's all.
For me, any manufacturing space on site in a residential area means this is a "bad neighborhood." I love 'em. Boatyard full of shrink-wrapped vessels? Bring it. Five greenhouses? Yes maam. Distillery? Oh yeah.
But for the "typical" home buyer that's a bad place to live.

 

[GoodluckChuck]

Aren’t all home inspectors third parties?
Can’t imagine if one wasn’t

A home inspector referred to you by your realtor is going to want to keep those referrals coming and is incentivized to not kill the deal.

 

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[Lex DeVille]

That's Tornado Alley and your 5000 SF steel building is going to fly off like a frisbee.

Disasters happen everywhere, and it's not like tornadoes drop out of the sky daily. Even when they do they usually don't last long and have a limited path of damage.

And that price, @Lex DeVille Lex! What will he do with all that acreage? Snowmobile wheelies? John Deere riding mower anyone?

Well, if it were me, it would get used for something. Christmas tree farm. Rented to hunters. Snowmobile park. John Deere races. Haunted woods. Camp grounds. Secret underground fallout shelter that you can pre-purchase access to for $3,000,000 like this one in Kansas... But mostly for the space, peace and quiet!

 

[broswoodwork]

Interested

You get your thing going any way you can and we'll share war stories and pictures of our humble beginnings at the 2021 Fastlane Summit.

 

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[broswoodwork]

Monthly is quite high, I am trying to get my rent under $1000

You're lucky my psychic brain melting powers only reach to Bridgeport.

 

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[broswoodwork]

I'm having fun overcoming all of your objections on this Tuesday afternoon anyways... it's good practice for when I get stuck.

The Craigslist one above is a two bed. Get a roommate who also is starting a business. Bam! $950/mo.

Your ball!

 

[WJK]

“Large” is relative. What I meant large in comparison to small home I was going to buy. You are telling me to keep my costs as close to 0, but your solutions are the most expensive.



What I’m doing right now is just trying to find a cheap place to run my business, but not throw that money in rent or temporary settings. If I am going to find a place to live/work, might as well put it into an asset. And my monthly will be under $1k. So what I’m doing is productive.

Like I said the solution of mixed-use is perfect, if you can afford it.

Sorry I couldn't help you. I was telling you what I would do in your situation. Maybe you're the exception. Maybe you can run before you learn to walk. So, good luck to you. I must get back to work...

 

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[Bertram]

I believe you are secretly a self made billionaire who is using a near clairvoyant gift of mind-F*ckery to get us to face our own entrepreneurial demons.

This is the most rational reason for what you're doing here.

Time to move on.
I want to hear how @broswoodwork got started in a toolshed in a city, building his first furniture pieces by the light of a grease candle with the skunk for companionship.

 

[WJK]

Dear @WJK,
I adore your posts, they're the best. You go deep into your expertise. I was entirely joking!
As someone with a bit of background related to what you do and some of the issues related to economic development in Alaska (which was the reason I dropped a hint with reference to sacred herd animal migrations) I'm really interested in what you're up to. I bet others could use the info as well. I hope you make a thread about this journey. The Kenai Peninsula is a world apart. I considered working up in Homer some years ago when I a visited a few times because of people like you and because it's like a completely separate American country. But it would have redirected my young daughter's own plans for her life too much. The long, dark winters were just too formidable for me. And I had become fed up with so many unexpected bear encounters. Good grief, not another brown bear? Bite me.
You might note that I was lighthandedly teasing @MoreValaue as well with my predictions that he'll never leave Stamford, CT, now that we've discussed everything from old wiring igniting to consulting with utility companies, to being investigated by the police upon running a high water bill, to wastewater disposal laws, and so on.
He's taking it all with a barrel of salt.
Really, I'm sorry if my joke misfired and came off as disparagement. It was the furthest thing I intended. You'd never come off as an industrialist.
I'm sincerely sorry for the misunderstanding.
I have a mild chronic disturbance called comic humor.
Please post that journey through the Alaskan wilderness and bureaucratic red tape sometime.
I really wish you well.

Peace and happiness to you too. I guess I was confused by your reply.

This thread started with a guy who wanted to buy a house and move his manufacturing machines into it to marry his living needs and his business in the same space in order to save money. I started in the real estate business in 1976 -- a day or two ago.

Yes, I can take a joke, but this subject can be pretty serious. I've seen a lot of disasters over the years. Some are funny and some have killed people who didn't know the hows and whys.

Like I knew two young guys who contracted to tear down a little old house for an an elder homeowner. The two guys decided they had signed on for too much work and they bid the job too low. So they decided to burn it down without telling anyone what they were doing. They threw a home-made bomb through the front window. Except they hadn't counted on the sewer gas in the pipes. They not only blew up the house but also blew up the city's sewer system for two blocks around the house. The blast blew through the sewer system shattering pipes. and it went into a bunch of other houses through their sewer pipes. These two hapless guys did millions and millions worth of damages in their quest to tear down one little house and clear a small residential lot. No, no one died except a few pipes and most of the toilets in the neighborhood.

My own father, when he was alive, had two of his wood shops burn down -- which were located in metal buildings -- and a third shop burned down in a mobile home he had converted. All the fires happened with years between them. Dad was manufacturing wooden items for sale with all the woodworking equipment. Dad always cut corners and did things his way. I ended up dealing with one of his houses. Mom was awarded it during their divorce. He had built a large addition on the back. The Building & Safety Department for Los Angeles County made me tear down that addition due to safety concerns. It was so poorly built that I couldn't even do corrections and repairs on it. No one died. It just cost Mom & me thousands of dollars in lost equity and demolition costs. The total costs were more than the property was worth. Thanks, Dad.

But I have seen people die in other fires and building collapses.
I have seen a neighborhood overrun with rats from one homeowner who decided to slaughter animals and butcher them in his backyard.
I have seen a large percentage of a condo project be burned down due to one homeowner using his BBQ under his porch roof.
I have seen industrial complexes blown up and burned down due to the mishandling of hazardous materials.
I was involved in a legal case where I was on a legal team against a furniture manufacturer who polluted the groundwater for thousands of homes. The owner did this by allowing his paint booth to put their waste down into the ground under their factory.
And these are just a few examples...

No, do NOT put heavy equipment in your living room plugged into your residential outlet! Not only will it fall through the floor while it shakes the walls down -- you'll also probably burn your house down!

That's all I was trying to tell the guy who started this thread. Thanks for your post.

 

[WJK]

And, and, and?

Great post. I'm learning a lot here. Sewer gas - that's the kind of stuff they don't put in movies that we need to know about! What if they would have done a "normal" burn? Would that have just burnt the house to the ground without an explosion? How about having the fire dept. burn it down - I heard they do this type of thing.

So what happened as a result of these stories? Did the guys with the bomb go to jail? How could they pay millions for the damage they caused? Same with the condo BBQ story?

I gotta get to Alaska and squeeze some stories out of you! This is movie material!

Well, the guys that blew up the sewer system had a way out. One of their dads was the mayor of the city. The city didn't prosecute them under a settlement agreement. But, both worked for the city for free for a couple of years in the deal. This happened in California a long time ago.

To answer your question, yes. Sewer gas can be flammable. Yes, if you improperly burn down a house without disconnecting the sewer pipes, it can happen. And natural gas is also a problem. We had a 7.2 earthquake here 2 winters ago. Three houses up the road from us blew up. We assume it was a broken natural gas line, but no one knows for sure. They literally blew up so it's still just "one of those things".

The guy with the BBQ problem was also in California and that was an interesting problem. The homeowners association is responsible for the buildings, but not the personal contents. That made every owner responsible for one dumb guy's behavior for the damage to the buildings and destroying their homes. There was a lot of hard feeling on the neighbor's part. Each owner was responsible for his own contents. The guy with the BBQ had nothing left to go get.

Another interesting story -- I knew an appraiser friend who did a "drive-by report" on a "house". He took a picture from the street as required. Then he found out that the house was fake. It was the front of a movie set that had been placed on the lot after the original house that had been torn down. The movie set looked like a beautiful house. Oops! I never did hear how he came out on that one. He was still litigating the last time we talked.

Another one was with someone else that I knew. He did a VA appraisal on a house. The report had to be turned in within a limited number of hours. He changed the date on the appraisal to a couple of days after he did the inspection to meet the requirements. Except -- during those two days -- the house burned down. Last I talked to him, he was making monthly payments on the loan amount for the following 30 years. The VA cut a deal where he had to pay the full face amount of the mortgage, plus interest, in order not to go to jail for fraud.

I was broker, investor, commercial appraiser, mediator, JD, and expert witness for real estate matters in Federal and State court for years and years. I've seen and been involved in some amazing legal cases and real estate deals. I played with the "big boys" in Los Angeles. Amazing for a small-town girl like me! Sorry to be bragging...

But, you should hear some of the stories concerning my mobile home park tenants. I own most of the mobile homes and I have about 150 people who live on my property year around. Plus I have my summer people who show up through the summer season. And, of course, some other business interests. Here in the park, I'm the owner, the cop, the social worker and the mediator.

I've been thinking about writing a book, but no one would believe me that it's real situations. I just couldn't make up this stuff up. It's way too rich!

I'm full of off-of-the-wall stories of a well-lived life.

 

[broswoodwork]

Since I do not have enough room to run my own business. Essentially a manufacturing business.

I will need my own home.
So either get a home in a bad neighborhood where the home is live-able or buy a home in a good neighborhood that is absolutely run down.

When I mean run down, I pretty much have to replace everything. I believe I can haggle down the home price to about $90k.
Although I can't live in this house right away to build my real business, is it worth it?

This in itself is its own business and already going through the costs and extremely expensive with all the tools/materials again and paying that mortgage. Now I will probably have room for the machines, but no money for them...sigh

How do people deal with these high capital businesses without slaving away at the job and living severely below means?

Depending upon how run down you're talking, it may become very difficult to find financing. I love fixing up places though.