Sell apartment and purchase fixer upper, advice?

[Elderflower]

Have our apartment up for sale but our next decision is tricky one.
So far we have come across 2 houses were are interested in. But 2 very different options.


Net cash after sale of apartment: 225K
Combined salary of 125K
Mortgage approved (AIP) for 425-465 K
Age: 30
Liquid shares: ~60K we are willing to sell if needed.



Option 1.
Turn Key B3 home, asking 695K for 3 bed plus side "granny flat".
- Could rent out the granny flat and have this help us comfortably pay of the mortgage.
- Location is not our ideal and i fear we would always be aspiring to another location.



Option 2.
Fixer upper, asking 625K for 3 bed --> barely livable and needs work. A lot of potential. Our dream location.
- Its energy rated G, big garden, huge but run down garage with rear access.
- We have no experience or know where to start with this type of project.
- Would happily rent out a room to a student to help pay mortgage in future.

Are we mad to consider the Fixer upper, are we pushing it on our salaries at this purchase price. Fearing it will be a money pitt for the rest of our lives.

Any advice greatly appreciated.
Thanks in advance.

 

[misemoi]

Do you plan children in the coming years? If so which area would you like to raise your kids in? And can you afford the renovation costs on house 2 before you have kids ? Renovating or moving with kids are pretty tough both mentally and financially. So if your ultimate goal is area where house 2 is I would go with that assuming you can get it to a reasonable standard pre kids arriving.

 

[misemoi]

Also double check planning condition of granny flat so that you can actually rent it before factoring that into your financials.

 

[Pinoy adventure]

Labour is hard come by and it’s very costly at the min.

 

[Banemore]

Sound like a job for a QS , but you would need to know what type of finish on your dream house / location to give yourself an idea on some sort of a final figure.You will know if you can afford it or not .Good luck .

 

[RonnieShinbal88]

Option 2 seems like you could do it, buy it and refurb the bathrooms and kitchen, new flooring, redecorate etc. for 50-60k, once you didn't do anything structural.

Of course you could drop a lot of money on stuff you don't even see the difference on like wiring, plumbing, insulation, new windows etc. and as pointed out the labour is very dear.

You could probably convert the garage for another 30-40k into a room to rent with a small shower/toilet.

 

[_OkGo_]

Option 2.
Fixer upper, asking 625K for 3 bed --> barely livable and needs work. A lot of potential. Our dream location.

Being realistic, it is probably a stretch too far for you. Asking is 625k but it could easily sell above that price at 650-700k

And then the huge risk is the unknown renovation cost. If you plan to live there for a long time, then I don't think a superficial renovation of €50-100k is going to be enough. And if you take on a deep retrofit to avail of SEAI grants then you are likely commiting to a spend headind towards €200k. And then you'll have the obvious question of "should we extend while we are renovating", further pushing up the cost.

- We have no experience or know where to start with this type of project

This is also a concern, when you have no practical experience of what is needed then it is really difficult to estimate how much it would cost or the potential for hidden costs to arise through the renovation.

Are we mad to consider the Fixer upper, are we pushing it on our salaries at this purchase price. Fearing it will be a money pitt for the rest of our lives.

It all depends on what you are comfortable living with. If the house is really not fit to live in today, then are you prepared for purchasing above the asking price and renovations that could easily run past €200k?

 

[Leo]

I don't think a superficial renovation of €50-100k is going to be enough. And if you take on a deep retrofit to avail of SEAI grants then you are likely commiting to a spend headind towards €200k.

Electric Ireland say that their retrofits under the scheme are averaging €56k gross, €30k net of grants. Unless there is something out of the ordinary about this house, then it's a good enough guide.

Of course, once you start adding extensions, new kitchens and bathrooms the costs can spiral quickly, but if you're looking at spending €200k on fitting out a ~600k house without a significant extension, you'd probably be better off looking elsewhere.

 

[_OkGo_]

Electric Ireland say that their retrofits under the scheme are averaging €56k gross, €30k net of grants

That info is out of date and probably a little disingenuous in how much grant aid is applicable to every retrofit

Cold facts and uncomfortable truths about retrofitting our homes

With the soaring costs of energy, the Irish Examiner Property team asked Superhomes to assess two very different homes built a century apart to see how much it costs to improve their energy rating

www.irishexaminer.com

The article above has a realistic figure of €65k gross, ~€50k net grants but that comes with a +/-15%. The article is 7 months old so the quote is probably >9 months since they discuss getting work completed before March.

Prices have continued to rise so that figure could well be €80k gross today and that is with all of the following excluded

Items excluded from costs: Painting. Tiling, decorating, all builders works, fit out, and works not relating to grant works (unless specifically included).

Even some modest building works like changing room layouts and that figure is easily gone above €100k.

And then you need to decide on the level of finish. I personally would not spend that kind of money on a house and deep retrofit to then scrimp on the finish and have the most basic finish for a spend €750k+

 

[_OkGo_]

but if you're looking at spending €200k on fitting out a ~600k house without a significant extension, you'd probably be better off looking elsewhere.

This I agree with, which is why the OP should be looking at option 1. Option 2 could be a potential money pit with very little to show for it

 

[Leo]

That info is out of date and probably a little disingenuous in how much grant aid is applicable to every retrofit

The One Stop Shop scheme only launched this year so it's not that out of date.

The article above has a realistic figure of €65k gross, ~€50k net grants but that comes with a +/-15%. The article is 7 months old so the quote is probably >9 months since they discuss getting work completed before March.

That article really only speaks to two peoples's experience, the first complicated by microbore plumbing and stone wall construction. That is quite atypical of housing here so should not serve as a guide to most. The second a house that could get to A2 for €38k.

The main problem I'd have with using that article as a reference though is that it pre-dates the current grant scheme so the figures are out of date. The first example who received €14k in grants but current rates for the work mentioned is €23k

Regardless, a retrofit of a typical 3-bed fixer-upper is never going to come close to €200k

 

[Look ahead]

There's no mention here of the substantial interest rate hikes already arriving at our shores or no mention of impending recession and all that entails or is it people think cost of housing will continue to climb upwards towards the moon, stars and beyond.. €600,000 for a G rated 3 bed house and adding in another €200,000 that doesn't even Include an extension is mind boggling. Even with the good deposit from sale of apt, Op will be strangled by the high interest rates alone.

 

[lff12]

When you say "barely liveable" do you mean the roof has holes in it, there's no heating or running water and the floors are caving in?

If you have hot running water, the roof & floors are sound then odds are you can get by doing it item by item or room by room. You can heat a place on portable gas heaters if there is no adequate heating.
In all honesty if it just looks "tired" and needs repairs and perhaps a retrofit then no need to redecorate now (saving cost) but do it alongside a retrofit.

 

[_OkGo_]

The One Stop Shop scheme only launched this year so it's not that out of date.

Yes it is...the article uses the same figures you have quoted from EI. The article pre-dates the One-stop shop so those figures existed before a single one stop shop was completed. They can't be average figures for the one stop shop.

The main problem I'd have with using that article as a reference though is that it pre-dates the current grant scheme so the figures are out of date. The first example who received €14k in grants but current rates for the work mentioned is €23k

Regardless, a retrofit of a typical 3-bed fixer-upper is never going to come close to €200k

How about this one?

Extension and renovation costs

I know there is a one stop shop scheme but you have to use one of their contractors in addition to your own builder and them it gets messy when there’s an issue down the Line The One Stop Shop scheme is not designed to be used in conjunction with extension work. If your proposed extension/...

www.askaboutmoney.com

€65k net One Stop Shop and a total of €145k for a deep retrofit and rennovation of a normal 140sqm property. That figure also excludes some pre-spend on architects, a DIY painting (quoted at €14k) and a happy coincidince of finding a cheaper electrician. And if I'm not mistaken, it doesn't include decorative finishing touches such as blinds, curtains, light fixtures or much to do with upstairs or any external landscaping. Maybe @Truffade could jump in with some final figures?

A quick browse of daft shows a number of 3 bed G rated properties in the 120-140sqm bracket so the above quote is in line with what the OP might need. Especially if they feel it is "barely livable" and they have no experience with such a DIY project. And from Daft, there are a few that really are unlivable.

Whether you think a spend of €200k repesents value or not is a seperate question but it is a very reasonable assumption that this property could cost the OP €150-200k to bring it up to standard

 

[Leo]

Yes it is...the article uses the same figures you have quoted from EI. The article pre-dates the One-stop shop so those figures existed before a single one stop shop was completed. They can't be average figures for the one stop shop.

Have another look, they're not the same figures!

How about this one?

That also seems to be in the same ballpark of €65k for a retrofit, but if €27k on upstairs bathrooms and 25k on kitchen fittings is typical, how much would you pay for a high end job?

In terms of typical costs for kitchen renovations, here are a few online guides, and see here or here for how to spend less than 27k on a bathroom renovation.

 

[Sarenco]

€27k for a bathroom retrofit sounds very expensive to me.

We did one a few years ago for €7.5k, all in (including VAT). €27k must be a very high end job.

 

[_OkGo_]

Electric Ireland say that their retrofits under the scheme are averaging €56k gross, €30k net of grants.

Costs range from €25,000 for a typical house built since 2000 to €75,000 or more for older, larger or more complex homes...
The average cost of an Electric Ireland Superhomes retrofit is €56,000 gross, but reduces to circa €30,000 net of grants

Superhomes says costs typically can range from €25,000 for a smaller home built since 2000 to over €70,000 for older, larger homes, while its average retrofit is €56,000 gross, or €37,000 net of grants.

They are using the same gross figures based on work predating the OSS. EI have just upped the grant figure and conveniently haven't changed what a typical gross figure would be. Their gross figures are well out of date

That also seems to be in the same ballpark of €65k for a retrofit

Retrofit via SEAI registered firm - net cost will be about 70k (full external wrap, new windows throughout, doors, attic reinsulation, new heating systems\rads\heat pump etc).
(Later updated to €65k net of grants)

Have another look yourself Leo, its €65k net of grants so the gross works would have been in the €90k region

In terms of typical costs for kitchen renovations, here are a few online guides, and see here or here for how to spend less than 27k on a bathroom renovation.

Of course its a bit high but if you are using 2-3 year old links for typical costs then more power to you.

The point is in the case of the OP, they would effectively be buying a shell for €625k+ and will need at least €100k for the retrofit. Are they really going to then finish it on miserly budget? Who spends >€750k to live in the most basic standard white box finish.

 

[Horatio]

Go for the Turn Key & get to enjoying your new home immediately & avoid stetching your budgets & your collective sanity.
Fixer Uppers, consume, your time, your money, Your patience with each other & your sleep. Oh & almost invariably run over budget.

Best of luck with your decision & new move - exciting times - enjoy them.

TurnKey.

 

[Leo]

They are using the same gross figures based on work predating the OSS. EI have just upped the grant figure and conveniently haven't changed what a typical gross figure would be. Their gross figures are well out of date

Those are the rates they are currently quoting potential customers.

Of course its a bit high but if you are using 2-3 year old links for typical costs then more power to you.

It's a lot more than a bit high, and 2022 isn't 2-3 years ago.

 

[Clamball]

If you think you would both enjoy some diy then why not go with the fixer-upper. It will reduce costs significantly.

But it does depend on what you mean by barely liveable. When we moved into our house, it needed heating, rewiring, painting, double glazing, doors, etc, but it was liveable. The plumbing worked, the house was dry, so we moved in with a bed, kitchen table and chairs and not much else.

But if the thought of painting a wall or sanding a floor is not for you then go for the first option.