So You Can’t Afford a House, Eh?
So, everyone says they want a house, but they can’t afford one. Various explanations for this unaffordability are proffered. Interest rates are higher than they were for a short period a few years ago. That isn’t helping, although anyone who lived through the 1980s would snicker at you if you mentioned it. Wages haven’t kept up with inflation very well. But in general, what I hear, no matter what is being said about the topic, is that everyone thinks they should be able to live exactly where they prefer, and the houses should be cheap there. Uh-huh.
Good luck with that. I’d like to roll a different ball out onto the field. If you’re modestly intrepid, you can find a house for a relative pittance and live in it while you fix it. Then sell it, take the dough, and live where you want, or maybe do it more than once if you’re young and nimble. I’m living proof that it can be done. All you have to do is adjust your way of thinking about owning a home.
Everyone from realtors to talking heads on teevee refer to a home as “an investment.” It isn’t, at least in the way they’re blabbing about a roof over your head. A home is an expense. It may or may not be worth the money you spend on it, but it’s not an investment. For the most part, all the money you’ll gain if your house rises in value is just inflation rearing its actuarial head. Money is worth less, so the house eventually sells for more. You’re going to have to have an amazing nose for real estate to find a place where property goes from worthless to expensive without relying on inflation. You could have bought some bombed out property in many places in New York City back in the early 80s, and made a killing on it later. However, you’d also have to avoid someone making a killing on you in the interim, in a more direct way.
So, you’ll get no advice to buy rock-bottom real estate in murder capitals from me. But you can still find interesting and potentially valuable houses out in the sticks. And you can turn them into real investments, if you turn them into a part time job for yourself. I did it recently, and made a 900-percent profit on the deal. Tax-free, too, because as long as you live in it for at least two years before you sell it, you can make $250,000 before capital gains taxes kick in. Or $500,000, if you’re married, which I highly recommend. One of you can make peanut butter sandwiches while the other holds up the kitchen floor with a post jammed under the floor beams.
How about an example, Sippican? Sure thing.
Here’s a little number in Sangerville, Maine, that you can pick up for around $50,000:
Someone already thought they could make a killing with no effort on this place. They bought it four years ago for fifty grand, never touched it, and the town took it away from them this year because the house was unlocked and unattended, and they never paid their taxes on it.
It’s a 2,500 square foot, 5-bedroom, 2-bath Shingle Style wonder. Big old barn, too,
It needs some serious work, but so what? The more work it needs, the more money it will bring when you’re done. Unlike a lot of houses this age, the entire fabric of the place hasn’t been defaced with vinyl siding and gray plastic floors. Viz:
Sand the floor, replace the wallpaper, and put a fresh coat of clear on the wood work and you’ll be dining in style in no time.
The kitchen and baths won’t make it into Architectural Digest or anything, but so what? I’ve seen people ripping out ten-year old kitchens because they watched Better Homes Than Yours on teevee and noticed that everyone had quartz countertops instead of granite. Might as well plan on replacing everything in there. But I’ll bet those appliances still work. You can use them while you’re banging on the place.
Everyone is looking at this sort of project with the wrong idea. House flippers would love to wreck this place in their inimitable gray everything style, but the numbers won’t work. Not many people want to move to Sangerville, Maine from places where the trolleys run. It’s a tiny town in unfashionable Piscataquis County. You’ll have to be your own first customer. Buy it from yourself, as it were. When you’re done working on it, you can sell it to someone else in Sangerville whose house is still a mess, and doesn’t want to put in the work. Banks will lend them the money to give you a big return on your sweat and purple thumbs.
The smartest way to look at a house like this is to add up what it would cost to produce the same mess you see in the pictures. You’d have to find a 3/4 acre lot, then get town water and town sewer and electrical service to the place, and basically build a half-million dollar, partially completed structure to get the same value. Taxes? A hundred bucks a month. Crime? Well, there really isn’t any anywhere in Maine. If you’re willing to live in any city in the US, this place should hold no terrors for you.
There’s nothing to do in Sangerville. On Yelp!, the first two things to do and see are a farm stand, and sled dog excursions. The town’s only claim to fame is that the man who invented the machine gun once lived there. But then again, why would you need something to do in Sangerfield? Your house will be the biggest something to do in Sangerfield. If you need a hobby, you can stop trying to fix the wallpaper in the living room and fix the floor in this room for a change of pace:
So, you want a house. Sangerville is over there. It’s only a matter of going.
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