So you want to buy a "wreck" of a house — meaning something you can remake from top to bottom — for under $500,000? Where exactly should you look? And how much blood, sweat, tears (and cash) will you need to put into it in order to see a profit in just a few short years? Halstead Property’s Jeffrey Goodman gives us the skinny on finding a fixer-upper in this week’s Buy Curious.
THE WISH LIST:
I’m looking for a house that’s a fixer-upper (and I can renovate myself) for around a half a million dollars or less. I’d like to put money into it now, but get some money back within five years. I'm open to anywhere in the city.
Finding a house—even a wreck—for $500,000 or less in Manhattan proper won’t be easy, but a neighborhood that “might fit this bill is the northern end of Washington Heights, north and east of the George Washington Bridge,” says Goodman, who reveals that he has “encountered houses for under $600,000 there as recently as the beginning of this year” (although a quick StreetEasy search reveals that there aren’t any for sale at this price point at the moment). As far as the outer boroughs, Crown Heights, Bed-Stuy and Bushwick could also work. “The further you get into Brooklyn and the Bronx, the more houses you will find,” he says.
When embarking on your search for a NYC wreck, be mindful of the language used in listings. While few owners or brokers will be forthright enough about the state of a property to actually use the word “wreck,” many will employ telling phrases such as “in need of TLC,” “needs some work,” “in need of renovation,” “bring your architect” or “blank palette.” A dearth of photos on listing pages, or pics that depict a dusty mess of a dwelling are also indicators that you’re probably dealing with a wreck.
If you plan to renovate now and resell within five years, Goodman says that you will “see a return based on what you put into it.” As such, he recommends you use “at least mid-range fixtures, finishes, appointments and appliances that would wear reasonably well” after several years of use. How much you spend depends upon a number of factors: Are you a handy type who’ll be doing the work yourself or do you plan on hiring a contractor? Will you gut the entire house or leave some parts intact? What level of fixtures, appliances, etc., will you install?
Buying a fixer-upper can be stressful, but there are actually a number of benefits to putting in the work. First, you can renovate to your own taste and set up a space that truly reflects who you are. Second, there’s often less competition for these types of homes since many buyers are wary of all the work required. Also, notes Goodman, “one mitigating factor with renovating a house that you would not have with an apartment is that you can live in the house while renovating it (with inconveniences), unlike most apartments, where if you did a gut renovation, you would likely have to live somewhere else and pay for housing—in other words, pay for two residences—while work is under way.”
Of course, there are also several disadvantages, including the fact that you’ll have to supervise the renovation or do the work yourself, and that a makeover will require a sizable budget. It could also be a long time until you’ll be able to live comfortably in your new abode.
Buying a wreck isn’t for the faint of heart and can be a nerve-wracking experience for even the most experienced real estate buyer. Adds Goodman: “The biggest piece of advice [I can offer] is that if what you are doing is a labor of love, then it will be a more meaningful journey.”
Check out these possibilities:
Crown Heights single-family townhouse, $549,000: Although slightly over budget, this four-bedroom, two-bathroom house at 194 Buffalo Avenue between Prospect Place and Park Place still might appeal to you. The lot measures 24 feet by 100-feet, and the property has a pass-through driveway that leads to a two-car garage.
Weeksville multi-family townhouse, $499,000: This brick semi-detached house at 1603 Lincoln Place between Buffalo and Ralph Avenues has seven bedrooms, three bathrooms, a two-car garage, and, according to the listing, the "property needs TLC."
Bedford-Stuyvesant two-family house, $540,000: Located at 15 Monaco Place between Herkimer Street and Atlantic Avenue in Ocean Hill, this fixer-upper house features a decent-sized backyard with a peach tree. Note that the "property needs some work," according to the listing, and that "this is a great opportunity for an investor or someone who wants to customize a home to their own taste." It’s also a bit over budget, but it still could work for you.