moving on up?
September 29, 2009 12:05 PM Subscribe
I own a row house. The house next door is for sale due to foreclosure. If I were to buy the house and connect it to mine, does owning two adjacent properties have a synergistic effect on house/resale value?
More details, if helpful. I knew the house's previous owners fairly well and know the ins and outs of what probably would need fixing. The house itself is a decent price, about 20% cheaper than it would have been if it wasn't a foreclosure (or in a better economy), but not an exceptional price.
The neighborhood is okay, a tiny (30 home) gated community, right on the border between a very expensive area and a housing project. The neighborhood does not have many foreclosures although the local economy is in bad shape.
The two houses are virtually identical in plan and I would be going from a 3 small bedroom, 2 bathroom house to 6 small bedrooms, 4 bathrooms.
If the answer is: buy it because you want it, then, my answer is, not that interested, but it would be nice to have that kind of space. If the answer is: this sort of thing makes for a good investment, a six bedroom house is worth much more than two three bedrooms, then may be it would be worth it.
More details, if helpful. I knew the house's previous owners fairly well and know the ins and outs of what probably would need fixing. The house itself is a decent price, about 20% cheaper than it would have been if it wasn't a foreclosure (or in a better economy), but not an exceptional price.
The neighborhood is okay, a tiny (30 home) gated community, right on the border between a very expensive area and a housing project. The neighborhood does not have many foreclosures although the local economy is in bad shape.
The two houses are virtually identical in plan and I would be going from a 3 small bedroom, 2 bathroom house to 6 small bedrooms, 4 bathrooms.
If the answer is: buy it because you want it, then, my answer is, not that interested, but it would be nice to have that kind of space. If the answer is: this sort of thing makes for a good investment, a six bedroom house is worth much more than two three bedrooms, then may be it would be worth it.
Are there any other six bedroom houses in the area? I think the viability of the combination depends on whether there is some segment of the population both interested in living in that area and filling a six bedroom house. The only people I've seen in urban six-bedroom houses are irresponsible college kids and extended families unfamiliar with Western architecture - both of whom tend to be rough on property.
posted by Inspector.Gadget at 12:11 PM on September 29, 2009
posted by Inspector.Gadget at 12:11 PM on September 29, 2009
I don't think that it will be a good investment in terms of getting the money you pay out of the house when you sell -- there probably isn't a market for gigantor houses if it's mostly smaller homes. You don't want to be the nicest nor the crappiest house on the block.
posted by Geckwoistmeinauto at 12:17 PM on September 29, 2009
posted by Geckwoistmeinauto at 12:17 PM on September 29, 2009
I'd say lousy investment. Even if there are some 6 bedroom houses in the area, one with a mirrored floor plan seems much less attractive then something with a larger great room, etc. with the same square footage. The synergy isn't working in your favor here.
posted by craven_morhead at 12:18 PM on September 29, 2009
posted by craven_morhead at 12:18 PM on September 29, 2009
Response by poster: My immediate neighborhood is on the border of an area with mansions. It's kind of an oddity in that it is a series of rowhouses that have the same name as the expensive neighborhood alongside it. So, yes, there are houses with six or more bedrooms nearby, but those look like mansions, not like two joined rowhouses.
As I mentioned, these bedrooms are small. That would probably discourage anyone from thinking this was mansion like. On the other hand, if someone had a huge family and couldn't afford a mansion, six small bedrooms would be nice.
My house, bought in 2003 for $105,000 is probably worth about 120,000 now. The next door house has less improvements than mine, probably would have sold for about $100,000 but the bank is asking $84,000. I imagine at least five thousand in roof repairs.
posted by dances_with_sneetches at 12:26 PM on September 29, 2009
As I mentioned, these bedrooms are small. That would probably discourage anyone from thinking this was mansion like. On the other hand, if someone had a huge family and couldn't afford a mansion, six small bedrooms would be nice.
My house, bought in 2003 for $105,000 is probably worth about 120,000 now. The next door house has less improvements than mine, probably would have sold for about $100,000 but the bank is asking $84,000. I imagine at least five thousand in roof repairs.
posted by dances_with_sneetches at 12:26 PM on September 29, 2009
You could buy it and rent it out, if you're willing to take on the job of landlord. It wouldn't affect the resale value very much (as far as I know), but you'd have a stream of income from it, assuming the repairs aren't that extensive.
posted by oinopaponton at 12:28 PM on September 29, 2009
posted by oinopaponton at 12:28 PM on September 29, 2009
Not a great investment, as described. You don't really have a six bedroom house, you have two three bedroom houses.
You could connect the two and use it as one large house, but you'd be best off making it reversible so you can sell them separately when the time comes. Also, local zoning may not allow for this type of use, so you'd want to check on that as well.
posted by electroboy at 12:33 PM on September 29, 2009 [1 favorite]
You could connect the two and use it as one large house, but you'd be best off making it reversible so you can sell them separately when the time comes. Also, local zoning may not allow for this type of use, so you'd want to check on that as well.
posted by electroboy at 12:33 PM on September 29, 2009 [1 favorite]
Best answer: I rent a 3-bedroom rowhouse. If I had the money to buy a large-ish house, I wouldn't want the exact double of my current house. I think the scale would be really odd since you'd still have more or less rowhouse room proportions.
My neighbors own the two houses next to mine and have combined them into one. They seem happy with it, but they've lived in the neighborhood forever and have put a lot of work into the house.
posted by Meg_Murry at 12:33 PM on September 29, 2009
My neighbors own the two houses next to mine and have combined them into one. They seem happy with it, but they've lived in the neighborhood forever and have put a lot of work into the house.
posted by Meg_Murry at 12:33 PM on September 29, 2009
Are there other houses connected to the same row? Or are these 2 houses connected like a duplex? I don't know if that would make a difference or not, but if I were looking for a big house, I would be less inclined to look for a 6 bedroom house if it was connected to other houses in the row.
Also, you might do some research on house prices in your area - if you can find a neighborhood which has equivalent-quality houses which have differing numbers of bedrooms. I would bet that each additional bedroom would increase the price by some incremental amount, but that the price of a 6-bedroom house is not as much as 2 * a 3-bedroom house. So I would guess that if you sold the 2 houses together as one unit, you would not be likely to get $105,000 plus $84,000 together. (IANAREAgent)
Just a couple more reasons to think that this would not be a great investment.
posted by CathyG at 12:40 PM on September 29, 2009
Also, you might do some research on house prices in your area - if you can find a neighborhood which has equivalent-quality houses which have differing numbers of bedrooms. I would bet that each additional bedroom would increase the price by some incremental amount, but that the price of a 6-bedroom house is not as much as 2 * a 3-bedroom house. So I would guess that if you sold the 2 houses together as one unit, you would not be likely to get $105,000 plus $84,000 together. (IANAREAgent)
Just a couple more reasons to think that this would not be a great investment.
posted by CathyG at 12:40 PM on September 29, 2009
It may not be possible to connect them. The wall between them may be a firewall, and making a hole in a firewall is a violation of building code.
posted by Chocolate Pickle at 12:43 PM on September 29, 2009 [1 favorite]
posted by Chocolate Pickle at 12:43 PM on September 29, 2009 [1 favorite]
Don't really have anything of substance to add, but a question does come to mind:
Are any of the bedrooms situated in such a way that you could combine a couple of them into not-so-small bedroom(s)? My guess is that a funky 4-bedroom with a largish master suite and a 'den' might be comparable in value to a weird place with 6 tiny bedrooms, not to mention appealing to a broader spectrum of potential buyers.
Also, what of the kitchen? You could turn that space into something else.
posted by willpie at 12:53 PM on September 29, 2009
Are any of the bedrooms situated in such a way that you could combine a couple of them into not-so-small bedroom(s)? My guess is that a funky 4-bedroom with a largish master suite and a 'den' might be comparable in value to a weird place with 6 tiny bedrooms, not to mention appealing to a broader spectrum of potential buyers.
Also, what of the kitchen? You could turn that space into something else.
posted by willpie at 12:53 PM on September 29, 2009
Do you want two kitchens? 2 living rooms? 2 master bedrooms? Seems like it would be a very very odd layout, which would surely make it harder to sell later.
Always jealous of areas where you can get a 3 bedroom anything for less than 100,000. *wishful thinking*
posted by cgg at 1:01 PM on September 29, 2009
Always jealous of areas where you can get a 3 bedroom anything for less than 100,000. *wishful thinking*
posted by cgg at 1:01 PM on September 29, 2009
Response by poster: Presuming I could cut a hole in the wall, I would have one long kitchen. As for two living rooms, one could become a billiard room. The bedrooms are each spaced, bedroom, bathroom, bedroom, bathroom, bedroom so to join them I would have to knock out a bathroom. I think the walls could be cut through without violating zoning, integrity, whatever. The houses are concrete as are most in Puerto Rico, so it is usually a matter of having overkill in sturdiness. Built that way for hurricanes. As for the prices, I believe that my neighborhood is undervalued in general.
Thanks for all of the answers. I probably wasn't going to go for it unless someone said, six bedrooms is worth logarithmically more than three.
posted by dances_with_sneetches at 1:13 PM on September 29, 2009
Thanks for all of the answers. I probably wasn't going to go for it unless someone said, six bedrooms is worth logarithmically more than three.
posted by dances_with_sneetches at 1:13 PM on September 29, 2009
If you combine the houses, you'll not only have the most expensive house in your neighborhood, you'll have the most unusual house in the neighborhood, which will appeal to a much smaller, niche market.
A quick back of the envelope calculation of whether this makes sense as an investment: Let's call each house worth $100K. If you had $200K, what kind of house would/could you buy?
As mentioned a couple times upthread, two identical joined houses are not really the best utilization of space (eg. The first thing that jumped out to me in a negative way was small bedrooms)
posted by Tuesday After Lunch at 1:15 PM on September 29, 2009
A quick back of the envelope calculation of whether this makes sense as an investment: Let's call each house worth $100K. If you had $200K, what kind of house would/could you buy?
As mentioned a couple times upthread, two identical joined houses are not really the best utilization of space (eg. The first thing that jumped out to me in a negative way was small bedrooms)
posted by Tuesday After Lunch at 1:15 PM on September 29, 2009
"a six bedroom house is worth much more than two three bedrooms"
Per sq ft it is probably worth less. EG: you can often buy both halves of a duplex for less than you can buy each separately.
Chocolate Pickle writes "It may not be possible to connect them. The wall between them may be a firewall, and making a hole in a firewall is a violation of building code."
Well if you are knocking hole in the wall to make a single residence the reason for the firewall goes away and therefor your hole is allowed. Even if you are required to maintain the integrity of the fall wall (HOA/Condo rules maybe) one could fit a fire door into the hole to maintain it's firewall status.
As an investment it could work well as long as you maintain the separation of the units or only do renovations that are easy to reverse (like the above mentioned fire door). While you're living there you have access to twice the square footage. The duplicate kitchen is kind of a waste but other wise there would be many increased space advantages (like increased off street parking if the houses have that). When you go to sell you revert the join and sell each piece individually. Or if you end up retiring at that location you could revert the join and live in one unit while either renting or selling the other half. The down side is you end up paying account fees for electricity, water, gas, oil, taxes, etc. twice. If you wanted a larger bedroom you could always combine two of the existing bedrooms in the same unit.
posted by Mitheral at 1:32 PM on September 29, 2009
Per sq ft it is probably worth less. EG: you can often buy both halves of a duplex for less than you can buy each separately.
Chocolate Pickle writes "It may not be possible to connect them. The wall between them may be a firewall, and making a hole in a firewall is a violation of building code."
Well if you are knocking hole in the wall to make a single residence the reason for the firewall goes away and therefor your hole is allowed. Even if you are required to maintain the integrity of the fall wall (HOA/Condo rules maybe) one could fit a fire door into the hole to maintain it's firewall status.
As an investment it could work well as long as you maintain the separation of the units or only do renovations that are easy to reverse (like the above mentioned fire door). While you're living there you have access to twice the square footage. The duplicate kitchen is kind of a waste but other wise there would be many increased space advantages (like increased off street parking if the houses have that). When you go to sell you revert the join and sell each piece individually. Or if you end up retiring at that location you could revert the join and live in one unit while either renting or selling the other half. The down side is you end up paying account fees for electricity, water, gas, oil, taxes, etc. twice. If you wanted a larger bedroom you could always combine two of the existing bedrooms in the same unit.
posted by Mitheral at 1:32 PM on September 29, 2009
Best answer: There is hardly any way to see this as an "investment" - thinking of this in terms of DC real estate... When I was speculating on properties in DC... a rowhouse in the "small family" size of 2-4 bedrooms w/ 1200-2000 sq feet was pretty desireable... so much that in that size/price (of course neighborhoods made a big diff in pricing) each of those could easily fetch upwards of $700K. Now one large place would not fetch over twice that, but less than twice that... no matter how nice the renovation.
Yes, you could improve a $700K property to get back $1M in some neighborhoods, but you really need to know who you're trying to attract as a buyer... someone who'll "pay anything" for what they want, or someone who wants a big house at their price... in which case the price on an existing "big house" will always be cheaper than one that was made from two significant investment properties shoved together with lots of money and time thrown into the mix.
Now, again I'm assuming that you're talking about brick rowhouses that are connected in blocks of relatively narrow segments throughout metro areas... these are great properties, the right market can provide stable rental income... tying together a floor or two and using the rest of the property as rental... maybe... maybe you could recoup some of the money... but really - it does fall into the "do it because you want it" category, not as an investment.
The incremental fixed costs for each "home" is already baked into the price... let alone talking about dealing with building codes, drawings to the city for showing that the intrusions into the common wall will not compromise integrity, possibly merging the plat paperwork so that the property is "redefined" as a single giant unit... there are multi-million dollar places like this in Georgetown... but this is a niche market that appeals to those who simply don't care about price.
So... there's my .02 on the topic (from what I've learned in the DC rowhouse market - which has never really suffered as much as the rest of the world's housing and has pretty much just taken a small pause on it's slow march into stratospheric pricing).
short answer, keeping properties separate that are next to one another is a bene to YOU if you want to walk next door to fix something for the tenants instead of driving across town, but selling two properties together limits the interested parties greatly... you have to be pretty creative and have a fair amount of capitol on hand to delve into two-property issues in a city, where each step may involve filing fees, percentage of value (of each property) taxes on improvements, etc... etc... etc... which leaves the possibility of "off the books" improvements, but then you're asking about resale value - and if it's off the books of the gov't then it doesn't help you as much at resale time.
posted by Jiff_and_theChoosyMuthers at 1:52 PM on September 29, 2009
Yes, you could improve a $700K property to get back $1M in some neighborhoods, but you really need to know who you're trying to attract as a buyer... someone who'll "pay anything" for what they want, or someone who wants a big house at their price... in which case the price on an existing "big house" will always be cheaper than one that was made from two significant investment properties shoved together with lots of money and time thrown into the mix.
Now, again I'm assuming that you're talking about brick rowhouses that are connected in blocks of relatively narrow segments throughout metro areas... these are great properties, the right market can provide stable rental income... tying together a floor or two and using the rest of the property as rental... maybe... maybe you could recoup some of the money... but really - it does fall into the "do it because you want it" category, not as an investment.
The incremental fixed costs for each "home" is already baked into the price... let alone talking about dealing with building codes, drawings to the city for showing that the intrusions into the common wall will not compromise integrity, possibly merging the plat paperwork so that the property is "redefined" as a single giant unit... there are multi-million dollar places like this in Georgetown... but this is a niche market that appeals to those who simply don't care about price.
So... there's my .02 on the topic (from what I've learned in the DC rowhouse market - which has never really suffered as much as the rest of the world's housing and has pretty much just taken a small pause on it's slow march into stratospheric pricing).
short answer, keeping properties separate that are next to one another is a bene to YOU if you want to walk next door to fix something for the tenants instead of driving across town, but selling two properties together limits the interested parties greatly... you have to be pretty creative and have a fair amount of capitol on hand to delve into two-property issues in a city, where each step may involve filing fees, percentage of value (of each property) taxes on improvements, etc... etc... etc... which leaves the possibility of "off the books" improvements, but then you're asking about resale value - and if it's off the books of the gov't then it doesn't help you as much at resale time.
posted by Jiff_and_theChoosyMuthers at 1:52 PM on September 29, 2009
Doing something like this isn't a job for an amateur. Even if it is legal, that's probably a load-bearing wall, and putting holes in it requires expertise to prevent the building from collapsing at some future date.
posted by Chocolate Pickle at 3:20 PM on September 29, 2009
posted by Chocolate Pickle at 3:20 PM on September 29, 2009
I would check with a local Real Estate Agent. I would assume that PR may have some unique real estate variables that may not necessarily follow the mainland wisdom. With that being said I would probably agree with the general sentiments here. I don't think you would loose money on this deal, but it may not be as easy as you think and will probably not be a great investment.
Another thing to consider is if you could use the property to add to your house and leave a small one bedroom apartment. Depending on the layout, this may be a lot easier and practical. A 4 bedroom, 3 bath house with a 1 bed 1 bath income suite may be a lot more attractive to a potential buyer than a 6-4 monster.
posted by Yorrick at 8:53 PM on September 29, 2009 [1 favorite]
Another thing to consider is if you could use the property to add to your house and leave a small one bedroom apartment. Depending on the layout, this may be a lot easier and practical. A 4 bedroom, 3 bath house with a 1 bed 1 bath income suite may be a lot more attractive to a potential buyer than a 6-4 monster.
posted by Yorrick at 8:53 PM on September 29, 2009 [1 favorite]
Yorrick said it better than i did in my ramblings... if you could create a small unit to rent, that's prolly better.
As far as poking holes in the load bearing walls... yes, those WILL be load bearing, but not really a big deal... use a good mason, and buy steel lintels from a local steel fabrication shop (just "L" shaped steel in proper thickness... overkill is good here).
best o luck.
posted by Jiff_and_theChoosyMuthers at 9:13 AM on September 30, 2009
As far as poking holes in the load bearing walls... yes, those WILL be load bearing, but not really a big deal... use a good mason, and buy steel lintels from a local steel fabrication shop (just "L" shaped steel in proper thickness... overkill is good here).
best o luck.
posted by Jiff_and_theChoosyMuthers at 9:13 AM on September 30, 2009
This thread is closed to new comments.
posted by GuyZero at 12:09 PM on September 29, 2009