It only took 19 years to do it!
January 8, 2009 5:59 PM   Subscribe

My college roommate and I, after seeing home prices within 4 digits in some states, discussing the possibility of homeownership at the ripe age of 19.

Is this realistic or simply a pipe dream? We live in California, while most ridiculously low listings are in dire need of rehabilitation in the middle of the US.

What legal problems are expected, etc.
posted by DolorousEdd to Home & Garden (26 answers total) 6 users marked this as a favorite
Do you have any money? Age doesn't matter. Money does.
posted by nitsuj at 6:04 PM on January 8, 2009

Do you mean that you'd buy a house together? Or separately buy houses? (Just trying to narrow the number of legal problems).
posted by moxiedoll at 6:05 PM on January 8, 2009

It would help if you could be more clear about what you're considering. If you are in California and the homes are in, say, Detroit, does that mean you're going to transfer to a school in Detroit? Buy it and rent it out? Buy it just to say you have it?

Regardless, there are going to be closing costs, and ongoing property taxes that may be tied to a valuation far in excess of what you would pay for the unit.
posted by rkent at 6:06 PM on January 8, 2009

There are reasons those houses aren't selling even at such absurd firesale prices. It's not a good investment and it won't make you money. You know this to be true. If it were a remotely good investment, somebody local would have already bought them, and for a lot more than $1000.
posted by gerryblog at 6:12 PM on January 8, 2009 [2 favorites]

Response by poster: We definitely have enough money to buy houses in the low thousands and even lower. And definitely buy it to say we have it. We are both well rounded enough to fix minor rehab stuff.

To gerryblog, this is partially true. Many houses we have checked are in sale pending mode.
posted by DolorousEdd at 6:15 PM on January 8, 2009

Response by poster: Separate or together, doesn't matter I forgot to add.
posted by DolorousEdd at 6:15 PM on January 8, 2009

Many of those $5000 houses in Detriot get stripped and then the city bulldozes them.

See this map? See all the empty green lots? Those had houses a few years ago. They got so bad the city tore them down. You could buy enough empty land in that 'hood to start a farm. About 6 miles from downtown by my measure.

The major legal issue is that you're buying a worthless house that you will neither want to live in nor will you be able to sell. Beyond that, most 4-digit priced houses are uninhabitable. You will need to do a lot of work to make them fit for occupation.
posted by GuyZero at 6:17 PM on January 8, 2009

By make them fit for habitation, I mean replacing gutters, wiring and copper pipes that have been stripped out. Stuff like that.
posted by GuyZero at 6:18 PM on January 8, 2009

Best answer: Houses that are that cheap are -- almost without exception -- in places where there are effectively no jobs. Think of a town where the steelmill has closed, or some neighborhoods in Detroit.

So you can buy the house for $1000... but what do you do next? How do you earn enough money to drive to the nearest building supply store (which will be a long way away, because if there was enough housing demand that lots of people were needing building materials, the houses would be worth more) and buy expensive tools and materials for repairing that house? How do you pay the taxes?

If you are a serious self-starter, have some resources, and are willing to take a seriously entrepreneurial approach in tough places, then I suspect that there might be a lot of opportunities in places (like Detroit, Gary, Buffalo) that most people have pretty much totally written off.

But remember that schools and police departments are supported by local property taxes. When the house is worth $1000, there's no tax revenue, and then there's no public services. And those declining public services feed into the cycle of low house values, lather/rinse/repeat.

Rebecca Solnit wrote a really fascinating piece for Harpers about the transformation of Detroit from dense urbanization to something new that you should read. It's a really hopeful (if not utopian) piece, but it suggests how there are possibilities within the crisis.
posted by Forktine at 6:29 PM on January 8, 2009 [10 favorites]

You are talking about houses in Detroit. Do not buy a house in Detroit.

(srsly. They need work that will cost you tens of thousands of dollars to do to be habitable in any conventional sense, you'll have to live in them while you do the work because otherwise your materials will get stolen, and at the end you'll have a house in Detroit. Those houses are cheap because every negative force in American society, from petty street criminals all the way up to the auto insurance industry, has conspired to make them worthless. Do not buy a house in Detroit.)
posted by You Can't Tip a Buick at 6:30 PM on January 8, 2009 [1 favorite]

Umm, have you ever actually been in a ~$1000 house? The rehab typically involved isn't minor. Houses in that price range were not well-cared for suburban havens just a few months back. They'll be old and uninsulated, cost a fortune to heat. The roof will have been leaking off-and-on for years, ceilings will be falling in from water damage, the wiring will still be knob-and-tube, the pipes rusty iron, the toilet will have fallen through the floor and the back yard will be an unholy mix of gravel and broken concrete. On top of that it will either be in a bad neighborhood or the middle of nowhere. If you've got a little money then yes, you can own a house, but chances are you won't be better off for having acquired it. You can't do this based on ads. Fly out and look at some of these places.
posted by jon1270 at 6:31 PM on January 8, 2009

Why is everyone seizing onto (and basing their advice around) Detroit? I'm pretty sure I've seen listings for similarly cheap houses in other places - generally much smaller towns in states a bit farther west than Michigan.
posted by needs more cowbell at 6:55 PM on January 8, 2009

Response by poster: Pipe dream realized. I can see how the vicious cycle would work in any city. Funny answers, an interesting article and thousands of dollars saved!
posted by DolorousEdd at 7:03 PM on January 8, 2009

You are talking about houses in Detroit. Do not buy a house in Detroit.

Could also mean a house in Buffalo! Of course (and I can't find it right now) there was a very interesting article about these super cheap houses for sale in Buffalo, with beautiful pictures etc etc, and then the buyer (after buying, of course) finds out that the place is a craphole, violates all sorts of laws, etc. And they end up owing the city more money than they even paid for the place.
posted by inigo2 at 7:09 PM on January 8, 2009

Best answer: Regardless of where it is, property value is directly influenced by the value of surrounding properties and the accompanying ameneties (proximity to grocery store, public transport, schools, etc.).

As a homeowner, I can tell you that if my house was worth a million dollars and every other house around it was worth $100k, my property value would be disproportionate and therefore skew the entire area's value in such a way that would make it impossible to sell to another person. There is a half-million dollar house less than three miles from where I'm sitting that sat unsold from 2003 on until the bank finally foreclosed on it... and in my area, 2005 is when property values peaked. It is unlikely I would even find a willing lender if I wanted to build it or buy such a property right now with 20% down in cash and a very high credit rating. (feel free to correct me on this if you are a mortgage lender or Realtor and I'm off-base about credit availability here...)

So if you buy a house, and everything around it is either torn down by the city or condemned, your property value will be affected. So will the sustainability of that home's surroundings.

DolorousEdd, imagine that you only have to put in central heating and air and pay a contractor to do it because you're not HVAC certified (~$3-10,000), pay for inspections and permits (several hundred dollars), pay closing costs (a grand or less), pay homeowner's insurance (at least $100/month), and pay property taxes (a percentage of the final value of the home after improvements, so let's be nice and say $200). You've already spent more than double what you paid for the place just completing one major repair and being able to get the place insured.

If you don't live there, you'll have to hire someone to do things like water the foundation, keep the outside in good repair, care for the lawn, a security system...

There are a shit ton of things that come with owning property you will never know about until you're crying over it when it's already happening.

Beyond the responsibility part, a serious question: At 19, do you have a good credit score? Do you have the money in cash? Can you show a year's worth of paychecks, tax forms, that sort of thing? Banks aren't throwing out loans like AOL discs in the mail anymore. We're talking months of paperwork and documentation the likes of which I promise you've never seen (unless you were a child actor and are independently wealthy or something).

One day, yes, buy a house. But don't do it just for the fuck of it. That's the kind of thinking that leads people into life-altering decisions that get in the way of achieving realistic dreams.

Use that money for college instead... you're ambitious. Buy yourself a good education.
posted by Unicorn on the cob at 7:24 PM on January 8, 2009 [1 favorite]

Just to pile on... I am from Detroit, and still have family there. (I know this is not a Detroit-specific question, though.) Any house that is in the 4 digits is overpriced. Even if you somehow managed to make it livable, it would be in a neighborhood full of abandoned houses, empty lots, joblessness and despair. These are neighborhoods people move from, not to. Plus, those houses have already been stripped of wiring, siding, plumbing, fixtures, flooring, and anything else that scavengers can get a buck for.

My dad lives in a house in such a neighborhood. He recently responded to a suspicious noise and went outside with a handgun to shoo off a man who was ripping the aluminum siding off his house, thinking it was abandoned. (Or, hoping no one was home.)

On the other hand, my brother is looking into some homes in the Detroit suburbs in the 25k - 50k range. They are in ravaged but relatively inhabited neighborhoods, but they need a LOT of work, probably at least 20k worth to even be livable. In his case, it might make sense. He already lives in the area, and his house payment would be about the same as his current rent. He has a good job that requires a lot of travel by car, so he doesn't have to live near a specific office.

Another option on the plus side is that some neighborhoods turn into artist meccas. Cheap rent for lots of space encourages painters, photographers, sculptors, and similar people to certain areas. This can eventually restore a sense of community, albeit within some desolate and dangerous areas. If this kind of bohemian lifestyle appeals to you, and you can make a living, then it becomes a possibility.

In the end, the question, as we all must answer, is: What kind of life do I want to live? And does a cheap house in a questionable area help me accomplish that?
posted by Fuzzy Skinner at 7:47 PM on January 8, 2009

In order to counter the (perhaps justified) negativity in this thread, I would say that your dream of owning a home while still a college student is not a pipedream. It seems like you're prepared to do everything it takes to own a house, it's just you have adjust your startup capital requirements.

Why not achieve your dream and figure out how to own a home right out of college?
posted by KokuRyu at 8:13 PM on January 8, 2009

Best answer: Everyone keeps mentioning Detroit except the OP.

There are plenty of other places in the "middle of the country" that are, while not Detroit-cheap, certainly extremely affordable. When I lived in Nebraska I knew a couple of brothers that went in on a house together. It was a three-story house in the state's capitol (Lincoln), pretty-much right in the middle of town. There were no major structural problems, just lots of cosmetic issues (the 1970s hit hard). They bought it for ~$75,000 and lived in it while renting out the other rooms to their friends. Every weekend they'd do a little work on the place; by the time they graduated it was in great shape and they were adding a private deck to one of the 2nd floor bedrooms.

Now, $75,000 is a long way from four-digits. But at least there were jobs, a police and fire department, schools, restaurants & businesses. There are probably plenty of places in the "middle" that are like this.

Just pick any state bordering the Mississippi or Missouri Rivers. From these states, make a list of all the cities with populations over 50,000 that have colleges. That should help narrow down the list of viable places (i.e., not Detroit) to start your house-hunting.
posted by Civil_Disobedient at 9:11 PM on January 8, 2009 [1 favorite]

Also, the brothers were 18 and 19 when they first got the place. It might seem kind-of strange (after all, you can't drink, can't rent a car, but you can buy a house!?); like nitsuj said in the first comment—if you have the cash, age is irrelevant.
posted by Civil_Disobedient at 9:15 PM on January 8, 2009

Sorry, forgot to add:

If you were actually thinking about a house in Detroit, keep in mind that it's entirely likely that the foundation on which the house stands will be the only salvageable component of the structure. I tried using Google Map's street view to get a glimpse of the really bombed-out places, but apparently even Google can't pay the drivers enough to go down those abandoned blocks. This was the closest I could get, but should suffice as an example of the sorts of dilapidation everyone's been talking about.
posted by Civil_Disobedient at 9:27 PM on January 8, 2009

"College dorm room handy" isnt the same as "junker home handy." Youre not going to be able to redo a roof or install a forced-air heater. If you sign that mortagage you just bought a house that isnt up to code and no one will buy your house if its not up to code. So essentially youre buying a gut-rehab that you will need to fix and pay property taxes on. A 10k house can mean 100-200k in debt on day one.

Your not buying a house. Youre buying land that needs a house removed and a house built on it. Youre buying a whole heck of a lot of debt. The locals have already dismissed this investment opportunity, why would someone out of state have a better idea for it?

Thats not to be said that good opportunities cant be had, but any 8k home is just a lot with a lot of garbage on it.
posted by damn dirty ape at 10:57 PM on January 8, 2009

the OP has really not been clear on what exactly they intend to do with this house?
a) live in it
b) rent it out
c) just let it sit there
d) fix it up and try and sell it?
posted by mary8nne at 5:13 AM on January 9, 2009

Sounds like you've already made up your mind, but one more anecdote for you: a friend of mine actually did this. I went to school just outside of Utica, NY, and it was eminently possible (even in property-value-inflated 2005) to buy a fairly sizable house for a song (2500 square feet on a postage stamp of land, for something like $19,000). The catch, of course, was that it was a house on which no maintenance had been done in a decade, in a horrible neighborhood, in a town with no jobs to be had. But he did it anyway, as a revenue stream (!). He ended up with tenants paying him small sums of rent (a couple hundred bucks a month, if memory serves), and had to devote half his life to keeping minor problems with the property from becoming major, the-city-is-going-to-condemn-this-house problems. It was squalid, and he would never have wanted to live there (this is perhaps relevant to your situation), but... there it was. He finally sold it maybe a year and a half later, when he realized he would never come out ahead... by then, he'd sunk hundreds of hours and a bit of money (though not as much as has been cautioned upthread--mostly a couple coats of paint and some lumber, just enough to keep the building from collapsing on itself) into the place, and was able to resell it for slightly less than what he paid for it.

I think you can see where I'm going with my parable. It might not work out so well for you, even if you're just looking for a cheap place to live.

Yes, I went to college with a slum lord
posted by Mayor West at 6:47 AM on January 9, 2009

Everyone is mentioning Detroit because that's where these houses are. The OP saw this article linked by Boing Boing or something like it.

There are 18 listings in Flint, Mich., for under $3,000, according to There are 22 in Indianapolis, 46 in Cleveland and a whopping 709 in Detroit. All of these communities have been hit hard by foreclosures, and most of these homes are being sold by the lenders that repossessed them.
posted by gerryblog at 1:00 PM on January 9, 2009

There's a house selling for 4 digits? So what? A $9999 house today will be worth more like $9000 next year. Buying real estate for the sake of getting a good deal right now is a sucker's bet.
posted by rxrfrx at 5:56 PM on January 9, 2009

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