Our new home: The good, the bad, and the ugly

I know it's been quiet around Money Boss recently, but that's because it's been a busy three weeks in Real Life.

Kim and I spent the latter half of June packing the condo and prepping to move. Last Friday evening, we picked up the keys to our new place. We brought the animals over and spent the night. Then, on Saturday morning, we started a four-day marathon of shifting our household eight miles south.

Our new home

We're still not completely unpacked — and probably won't be for a couple of weeks — but we've made good progress. The kitchen, bathroom, bedroom, and living room are all functional (if somewhat cluttered). All of our remaining boxes are staged in the back office (which used to be a garage). The internet is now operational. Mail has begun to arrive. The cats and dog have already learned to love the place. So have we.

After only five nights in the new house, Kim and I do love it — warts and all. And make no mistake: This place has some warts.

Major Repairs Needed

The people who sold us this home are great. They're interesting and fun — the kind of couple we'd love to hang out with in our spare time. That said, they weren't responsible homeowners.

“This house shows a pattern of long-term deferred maintenance,” the inspector told us in May. Translation: Needed repairs have been left undone for a long, long time. Based on his inspection report, and based on our own observations after a few days, our best guess is that the previous owners did little (if any) preventive maintenance during the seventeen years they lived here.

Some examples:

  • The duct work in the crawlspace was mangled and lying loose. Because the crawlspace has a heavy rodent population, that meant the furnace was pushing polluted air into the house. (We asked for the previous owners to fix this before closing.)
  • There have been a variety of plumbing leaks over the years. The kitchen sink still has a minor leak. The toilet and tub had major leaks that we asked to have repaired before we moved in. Also, the subfloor beneath the bathroom had some rotting that needed to be fixed.
  • The roof is at the end of its lifespan. The inspector found bare patches and spots where the shingles have lost their integrity. This is a top priority to replace before the Oregon rainy season begins in mid October. (The sellers provided a credit at closing to compensate some of the cost to replace the roof.)
  • The siding, too, is in bad shape. According to the home inspector, it has “begun to fail”. It's feathering in spots. There are isolated patches of dry rot. That said, he believes (as do we) that it can function for a couple more years. We intend to replace it, but not until 2018 or 2019.
  • The front and back decks are in the final stages of useful life. They have rotten spots (some of which the sellers cleverly hid beneath flower pots) and all-around weakness. That said, the decks aren't critical to the function of the house, so they too will have to wait.

An example of the rotten decking at our new home

  • Some of the floors are in bad shape. We didn't notice this during our previous visits to the house, but the problems were clear when we moved in. The carpets are especially dirty and damaged. (Kim was so disgusted by them that she rented a steam cleaner at eight o'clock the first morning we were here. While I worked on moving stuff over from the condo, she cleaned the carpets.) The hardwood floors are also in rough shape. They're functional but they have tons of scars and stains from decades of use and abuse.

These are just the major problems we've found. There's lots of minor stuff too. The light over the kitchen sink doesn't work, for instance. The bathtub hasn't been caulked. (Really?) The walls need to be painted. We only have keys to one of the three doors. The furnace is thirty years old; it works, but we'd like to replace it before it fails, not after.

I don't want to sound like I'm complaining. I'm not. We knew about most of this stuff before we bought this place. Kim and I spent a lot of time talking about whether or not we wanted to take on this much work and responsibility. We decided that we did.

This might surprise some long-time readers. In the past, I haven't been much of a handyman. I've shied away from yardwork and home maintenance. But I'm in a different place than I was five or ten years ago. After much discussion, Kim and I agreed that the advantages of this home and its location outweighed the short-term headaches.

For the record, here's a brief description of the home we bought.

Officially, the house was built in 1948. In reality, it was built a few years before that, but moved to its current location after the catastrophic Vanport flood in 1948.

Officially, the home has a footprint of 950 square feet. In reality, it contains another 300 square feet of unpermitted remodels, giving it a total living space of 1250 square feet. (Our condo had 1550 square feet, so this is about 20% smaller.)

The home itself is quaint. (Or “quirky”, according to our real-estate agent.) To me, it looks and feels like an English cottage. Many of the rooms have low (seven-foot) ceilings. The floors aren't quite level. It has the same musty smell as the hundred-year-old farmhouse I bought with my ex-wife in 2004. And so on.

The house sits on just over an acre of land. Because the lot is long and narrow, though, it feels like we have more space than we actually do. The upper part of the property — where the house is — has a gentle slope; it has a lawn and there's some nice landscaping with native plants. The back two-thirds of the property is much steeper, dropping away quickly into a ravine where a seasonal creek flows. The bottom half of the lot is wooded. The upper half is fenced, which means we can let the pets roam freely.

Although our new place is very close to a major Portland suburb, it feels as if it's in the country. We're a quarter mile from the nearest housing development. Our location feels isolated.

Money Matters

Part of the reason I'm willing to take on this project is maturity. I no longer view household chores and yardwork as burdens. They're simply part of the price you pay to own a home like this. Besides, they're an opportunity to learn new skills and to make the place our own.

Another reason we're not stressed is that we're financially prepared for all of the work.

My condo sold for $530,000. After closing costs, I netted about $501,000. We paid about $442,000 for the new place (net, after closing). That gives us a “profit” of roughly $59,000 to use for upgrades and repairs.

Meanwhile, my monthly expenses should drop drastically due to this move. Counting utilities, I was paying roughly $1750 per month to live in a place I owned outright.

By moving to this house:

  • I've eliminated our $570/month HOA fee.
  • I've cut my property taxes in half, from $6000/year to $3000/year. That's a savings of $250 per month.
  • My utilities ought to remain roughly the same (although time will tell). At the condo, the HOA fee included gas and water/sewer. Here, we have a well and septic tank. Plus, we don't have to pay to heat/light the common areas in the condo.
  • I owned the condo. So far, I own 100% of this house. That said, Kim wants to have ownership here too, so she's going to pay me $500 per month to “vest” into the place.

The bottom line? It looks as if this move will improve my cash flow by $1200-$1300 per month. My net out-of-pocket costs to live here ought to be roughly $500 per month. (Again, this is all theoretical right now. I'll share actual numbers as they become available.)

Much of that “saved” money will be plowed into the afore-mentioned home repairs and remodeling, at least during the first few years that we live here. After our first big push to get the high-priority jobs finished this summer, we intend to budget for one major project every year. (Next year, for instance, we'll probably replace the decks.)

And, of course, we intend to budget in some fun stuff.

Budgeting in the Fun Stuff

Aside from the needed repairs, Kim and I have plans to perform some fun upgrades on the property. Although these are obviously lower priority than, say, replacing the roof, we do hope to pursue them sooner rather than later.

For instance, I want to build a writing shed on the back of our lot, where the lawn meets the wooded area. This home office will be a place for me to read and write. If it's large enough, it'll also be a spot for Kim to do yoga. I've been emailing with Mr. Money Mustache about the shed he built recently. He's urging me to consider a pre-fab shed, which I'll look into. Anyhow, the budget for this writing shed will come from the sale of our RV. Whatever I get out of that vehicle I'll put into the new office space. (When this project is completed, it'll save me $250/month in office rent.)

Plus, Kim and I both want a hot tub. She and I love spending time outdoors. We both also love baths. Our lot has a wonderful park-like setting, and it seems natural to install a spa so that we can relax outside year-round. We know we have to take care of the roof and floors first, but we do a lot of dreaming about what kind of hot tub we should purchase and where we should place it.

Before we can get to the fun stuff, however, we have to take care of the necessary repairs. Starting now. As soon as I press “publish” on this article, I'll start calling roofers. It's time to give this home some of the repairs and improvements that have been neglected for the past two decades!

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sfmitch
sfmitch
3 years ago

Why will are the property taxes half of what you were paying? Homes aren’t that different in price.

Cj Cope
Cj Cope
3 years ago
Reply to  J.D. Roth

In Michigan we have a similar law, but the taxable value resets upon sale of property. Is that the case in Oregon?

Eileen
Eileen
3 years ago

Congrats JD and Kim! I know I’ll enjoy reading about the processes of making needed repairs and a new chapter of home ownership. I find there is something about getting home maintenance done (especially when you can deal with it financially) that really feels so good. Knowing you’ll have a new roof (and thus protected contents) will be amazing + it will be nicer aesthetically too. We had a HUGE project in 2016 (discovering that the previous owners of our home built an addition over part of our septic field) that included septic, trees, a deck, a fence. It was… Read more »

Peg
Peg
3 years ago

The concept of a buyer being responsible for roof repair/replacement is totally foreign to me. I live in Wyoming, and it is ALWAYS the responsibility of a seller in this state to provide an insurable, up-to-code roof. If that isn’t possible, they either submit a claim on their homeowner’s insurance or pay for repair out-of-pocket. We have one of the highest occurrences of terrible hail storms in the country, and roof inspections are mandatory here.

Eileen
Eileen
3 years ago
Reply to  Peg

I wonder also about his Home Owner’s insurance. Do they review the inspection and insist on the repairs? When we had a bathroom leak, we had our insurance co come take a look and since it was considered a longer term issue than would be covered by insurance, they declined the claim. However, they also insisted that we get it fixed and set a timeline to do so or risk losing our coverage.

John
John
3 years ago
Reply to  Eileen

I received a ‘letter of cancellation’ from my former insurance company. They had performed a visual inspection from curbside, noting that some shingles had been repaired. They sent a form letter informing me that the roof must be replaced or I would lose coverage (with no contact from my agent who’s office is 5 blocks away).

I did end up replacing the roof but also switched to a different insurance company.

Sam
Sam
3 years ago

Great project you sound so happy. Good for you. And you could always learn how to do roofing yourself!!!!

Shara G.
Shara G.
3 years ago
Reply to  J.D. Roth

asphalt shingles on a single story is straightforward. However roof repair/replacement tends to be higher priced if you go with reputable places because their insurance is so high due to the risk of falling off the roof.

This isn’t to say you should or shouldn’t do it, more of just FYI. I don’t have much roofing experience, but I have helped and gotten quotes on a few.

Kristen
Kristen
3 years ago

When it is time for the hot tub, look at Artic Spas. They are a touch more expensive but will save you a ton in energy costs….super efficient! Best wishes!

J. Money
J. Money
3 years ago

You had me at writing shed!!! *Droooool*

WantNotToWantNot
WantNotToWantNot
3 years ago

Frugality, as much as it has been a lifelong habit for me, does not have to be the sole basis for every decision in life. My spouse and I moved into a 1925 colonial that had been lived in by an elderly woman for a couple of decades, so there was a lot of deferred maintenance. We went into it with eyes wide open, a detailed inspection report, and with considerable money knocked off the purchase price (we quickly paid off the mortgage). The location allowed me to walk to work and not pay for the expensive parking at my… Read more »

Brian singledadmoney.com
Brian singledadmoney.com
3 years ago

It appears you may have enough profit left over to do the Roof, the studio/office, AND at least the rear deck (if that’s where the new hot tub is going). Congrats on the new home.

rosarugosa
rosarugosa
3 years ago

Congratulations! I would love to see more pictures of your home in a future post. We’ve been working on our old house for decades and there is still so much more to be done, but it’s truly a happy little home, so it’s been worth it.

Friendly Russian
Friendly Russian
3 years ago

I love this. That’s exactly what I and my wife would like to have when our kids will go to college, a small house with a big lot.
Are you going to DYI all the projects?

JC Webber III
JC Webber III
3 years ago

I have to make note of the coincidence here. We just bought a new townhouse and are using the proceeds from selling our RV to help pay for it. 8^) Ours is brand new and not quite finished yet, in fact we won’t be able to take possession and move in until the 15th of Aug. In the mean time we’ll just keep moving around the country and living in our RV. Our new place is two stories, 2250 sqft, 3 bdrm, 3.5 bath. It’s made of concrete and stone and sits up on a hill overlooking the most beautiful… Read more »

Eileen
Eileen
3 years ago
Reply to  JC Webber III

Wow — that’s an amazing story!

(But I’m so distracted by an RV lot that costs $48k! )

JC Webber III
JC Webber III
3 years ago
Reply to  Eileen

Yea, crazy isn’t it. We bought it (the rv lot) two years ago for $42.6K and sold it yesterday for $55K. Crazy!

Laura
Laura
3 years ago

Good luck! We had a good experience with West Coast Roofing last year – worth a call.

Jennifer Nielsen
Jennifer Nielsen
3 years ago

For inspiration for your writing shed – check out A Place of My Own: The Architecture of Daydreams by Michael Pollan. An interesting journey of his dream of creating his own place to write in the backyard. It is a fun read.

WantNotToWantNot
WantNotToWantNot
3 years ago

When you get to roofing—if you are doing asphalt tiles, ask about the 50-year tiles. For very little extra money, you get a thicker tile and one that will probably outlast us all. Also consult with gutter-guys in advance of having the roof installed (we didn’t and learned from our mistake). In a rainy clime, your gutters are just as essential as your roof and you need to pay attention to getting the water as far away from the foundation as possible. Good luck!

Angela L.
Angela L.
3 years ago

Congrats on your new place!

How do you anticipate this will impact your newer foray into biking more often?

Dreamer in Chief
Dreamer in Chief
3 years ago

J.D., based on how much work you have ahead of you, is this a case of buying “the worst house on the best block” and having a lot of upside for forced appreciation? It seems like there should be some room there with all the major improvements you’re going to make.

Shara G.
Shara G.
3 years ago

I’m happy for you.

But I’m annoyed because you made me remember that I have a ton of work to do on my house!

Jennifer
Jennifer
3 years ago

Good luck with your project! I’m lucky to have a partner who is very handy. We renovated a house in DC ourselves (we had to hire a few people, mainly to pull the required permits), and replaced the electric, plumbing, HVAC, kitchen, and all the walls. I’m amazed at the number of fixes he’s been able to do just by googling the problem. Having the confidence that you can follow instructions goes a long way! We were lucky enough to buy a real fixer upper in an up and coming neighborhood. Between the work we’ve done and the improvements in… Read more »

Ben
Ben
3 years ago

Congratulations, J.D. and Kim! I’ve enjoyed reading about your journey to sell your condo and purchase this place, and hope you will continue sharing updates/experiences with us as you continue through the process. Kudos to you both for taking on a “challenge” – I really respect your balanced view of the tradeoff between getting the best financial deal vs. finding a place which checks all the boxes for you personally. So many in the FI community have laser focus on the former but miss that achieving the later is whats really important in the long run. Please keep the posts… Read more »

Mr Wheat
Mr Wheat
3 years ago

Your post makes me feel better about all the work we had to do when we moved into our farmhouse, :). Looking forward to seeing some posts about projects.

Joe
Joe
3 years ago

Congratulations. Oh man, that’s a lot of DIY. I’d be willing to tackle it, but Mrs. RB40 probably would veto it. It’s awesome that Kim is up for some DIY.
I went to clean the roof at our rental yesterday and I was scared $*&#less. The roof was steep and somewhat slippery. I didn’t finish the job and will need to hire someone to do it later..

Rob Barker
Rob Barker
3 years ago

Sounds like you have a good start on your punch list. Before you get started on the roof, have a good look UP into the surrounding trees (or better yet, make the small investment in an arborist’s inspection). You want to do any cleanup – or surgery, if required – ahead of the roof work if possible (because accidents happen) and certainly before the winds pick up in late fall.

Lake Livin'
Lake Livin'
3 years ago

I’m so excited for you both and look forward to the progress reports. You really seem to have done your homework and it’s great that you’ll be saving so much compared to the condo.

Mr. Hammocker
Mr. Hammocker
3 years ago

Buying a fixer upper eats up a ton of time! But why not do it if you have the skills, interest, and time? Mrs. Hammocker and I have acquired some rental properties that take elbow grease. We are glad we put in the time because we now have good cash flow! Congrats on improving your cash flow by over $1k per month.

Isabella
Isabella
3 years ago

Yikes, that is a fortune to pay for an old house that needs so much work. Are housing costs that crazy in Portland?

Tom Sherry
Tom Sherry
3 years ago

Congratulations on your new home! I think a smart move at this stage in your life. And love you leaving that high HOA fee behind. Regarding your eventual hot tub, a few thoughts from someone who owns one in the Northwest.
Bigger is not better. Consider a 2-4 person. And I don’t use my jets. I like soaking. My next tub will be smaller with minimum jets. Thanks for all your great writing.

Financial Samurai
Financial Samurai
3 years ago

Congratulations on the house! Before you buy the hot tub read my post I did on the cost to own and maintain a hot tub. It’s very thorough and something that will be a very interest to you before you buy. I love my hot tub but do know there are ongoing maintenance costs.

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