So you want to buy a house but don’t have a lot of money? No, this isn’t some “no money down” seminar where I’ll attempt to get you to buy my “insider secrets” course for $1000 after I tell you that it’s a $5000 value. That’s just annoying. This is my true and honest account of how I found a 3 bed 2 bath home in the Phoenix housing market, for the price of a used honda accord.
It was an experience that made me realize there are a few strategies for getting a great deal when buying anything really-cars, boats, tree forts(ok maybe not tree forts), but it works great on homes. The experience made me realize that for a lot of things in life, you need to go against your instincts to find a real deal. It can be counter intuitive. Let’s face it, humans all want pretty similar things when we look for a home-fantastic floor plan, great garage space, safety, good location, the right color, and yard set up, but this is the problem! If the buying scenario is already perfect with a house, everyone would want it, and you’d be in a bidding war to see who gets it. Chances are that 2 income households are going to simply outbid you. What I needed was a scenario that would minimize all the bidding, making it so I wasn’t paying the highest price. I needed to find a house that wasn’t perfect, a house that made all of the yuppies and newlyweds flee with a collective alarmist shriek of panic and over-reaction at the work they’d have to put in, or pay and extra 100k to make it go away. I realized that exactly the opposite of a perfect scenario is the key to a great deal. I needed to find a place that looked ugly, made most people say ‘that’s too much work’, and otherwise made people uncomfortable. Uncomfortable about the old paint, dated carpet, and aged appliances. Uncomfortable about the layout and feel of the living space. It turns out that I found just such a place.
Discomfort lever: Significant. Satisfaction level: also significant.
The roof leaked (I re-roofed it for $750, check that out here), the floors creaked, the bathroom and kitchen made me more and a little uncomfortable, and let’s just say that the yard, workshop, and guest house (The term guest house is a stretch. Think more like a shack from one of the SAW movies) had a lot to be desired.
Now picture it at night with a flashlight
I’m not gonna lie, this made me nervous as hell. I didn’t, at this point realize that I was fully capable of learning each and every skill needed to turn this place into a quaint comfortable cottage. In fact, most human beings are, they just don’t believe in themselves enough to realize they can. I didn’t have any special training, I didn’t have a large bank account, and I didn’t have a guru’s course to guide me though the process for a large fee. I was just an ordinary guy working a desk job (don’t get me started about how I feel about that). If I can do it, then so can you as long as you don’t let excuses turn into obstacles. I started working on the things I knew how to do first. Easy things like paint, yard care, throwing out trash, tearing out cat urine stained carpet.
In one weekend, I had 10 neighbors tell me that they, in their wisdom and insightfulness, thought the place should be torn down. This is the response of an average person who sees a house that’s only 85% completed-tear down the 85% instead of build up the remaining 15. Sounds like a bad way to go through life in general, shortening everyone else’s leash instead of lengthening your own. These were the same people who would be offering to buy the place one short year later.
People would occasionally approach me with well-meaning advice such as ‘what about the value of your time?’. They saw me pouring in a lot of hours and thought this wasn’t a fair trade off. I was very nearly deflated several times by knowing people looked at me this way. I now like to believe I’ve outgrown feeling this way, mainly from experiences like working on this house. I later calculated that based on the now improved market value, the value of my time had been $141/hr. I just kept thinking to myself “I’d rather work on it for 5 years than be paying it off for 30”. So that was exactly what I did. Today, I have a paid in full house while still in my thirties, no debts, a detached garage, and a guest house.
Here are some before and after pictures:
Still not a beauty contest winner but there’s no mortgage so that’s nice.
The truth is, it would have been infinitely easier, but not cheaper, to have just bought a cookie cutter home like my peers, but I have grown and developed so much just by being willing to test my boundaries and taking one step after another in the direction of a goal. I would not have gained any of the rewards that go along with accomplishing something like this and that has been nearly as valuable as the financial benefits.
“Opportunities multiply when seized”-Said some Asian guy, and this was no exception. If you’re willing and have a basic aptitude for repairs, look for a place that is deficient in some way, that is counter to the obvious path, that is not clearly laid out for everyone to see with a casual glance, you can get a deal that everyone else willingly passed by.
It doesn’t have to be an extreme project like in my case. It simply has to be something that turns other buyers off. The discount you get will be proportionate to the lack of obvious beauty. If your first thought is ‘that’s hideous’ when you look at some aspect of a prospective house, ask yourself ‘what would it really take to change it?’ and work backward from that question without letting your emotions answer for you. Ugly carpet? Ridiculous color scheme? Rotted front porch? Cramped Bathroom? Zombies in the back yard? Almost 100% of the time, with some elbow grease, vision, creativity, and discount supplies from Craigslist you can fix them for cheap and get a great discount on the price. It just has to scare off other people.
So to recap:
1) Intentionally search for an ugly house
2) Be a patient stalker to get an amazing price.
3) Ask, what would I need to do to improve it
4) Get discount supplies on Craigslist
4) Put in some time and elbow grease.
Now go back to realtor.com or Zillow (This was actually how I found the house I bought. I also found several other contenders on Craigslist) and search for potential diamonds in the rough through this perspective. You might just be surprised how much it saves you. I know I was.