Good Deal or Not? “renovate & …” edition (reader request)

This home is located at 506 7th St, SE:

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The flier says:

“Opportunity! Livable! Financable! Why let developer/investor purchase, renovate & sell for huge profit. Chance to design, renovate & select finishes to your taste. Sweet, charming federal awaits your special touches. Live-in & renovate at your own pace. Neighborhood comparables selling in the upper 600’s to low 700’s.”

You can find more info here and photos here.

The reader writes,

“The house next door sold for somewhere in the $600s a couple years ago. This is listed at $390K, and has obviously been set up as a bidding war. I’m curious what the peeps think it might eventually go for.”

This 2 bed/1 bath is going for $390,000 – what do you think it’ll settle at?

45 Comment

  • That doesn’t look so much like a bidding war as a gut job that will, predictably, cost in the neighborhood of $200-$250k.

    Maybe I’m jsut being naive.

    • With all due respect I think you are.

      Note that this is priced at $100k below the assessed value.

      • The person may be naive but property assessments are in no way indicative of a house’s value in this city. I’ve seen plenty where the city attempts to assess for $100 or $200K over the real value of the property.

    • I don’t think it needs to be gutted. Just a bit of restoration and renovation. I’ve rarely seen a house that has been gutted completely that doesn’t look like a Home Depot showroom, which (in my opinion) is more offensive than leaving it as is.

      • Yeah, it’s a “fixer upper” not a “gut job”.

        The question is, would the rennovations needed to bring it up to speed with others in the neighborhood cost less than the difference in price? I find they usually do not. Unless you’re a professional contractor who knows what they’re doing and knows how to get discounts on materials these fixer uppers are typically not worth it.

        • Unless you want it to be exactly how you like it for the next 60 years. If you want to flip it yourself and have no experience doing so, then, no, it isn’t worth it.

        • Eh, that’s a value judgement. If you’re in an upward moving neighborhood (where you’d typically find a fixer upper) you have more head room than you’d necessarily expect.

          And if you’re doing the actual work yourself, as opposed to just GCing your own house, you can save a ton of money. The money’s in labor, not materials.

          But then “worth it” becomes whether it’s worth it to put in the sweat equity.

  • My guess is around $500,000. It is a gut job, and it’s not huge, but great location.

  • Perhaps i’m just slow – but barring any huge unseen water or system issues, how is this a gut job? It’s not fancy, but I could move right in and live in it as is.

    • Yeah, I’ve seen a few true “gut jobs” on Capitol Hill and they’re hardly even safe to go in. They were all small houses in the $450-600 range and not as conveniently located.

      This looks more like a fixer-upper. And a great deal.

      • Sure, you could live in it as is, but to make it comparable quality to the surround area, it’s a gut job. You’d want to redo the kitchen and baths (and probably all the plumbing), ceilings in the living room would need to be redone, it’s possible it needs other things like new windows, new floors (who knows what’s under that carpet). When I say “gut job” I don’t really mean it’s unfit for habitability, but rather that it essentially needs to be gutted if you wanted to make it comparable to the surrounding area, which I would guess is what most people do.

        • If you want it to look like everyone else’s house with little to no character inside and brand spanking new, maybe.

          • There’s really not much character here to retain, other than maybe the fireplace mantle. It’s hard to tell, but the floors don’t appear to be in good condition.

        • Its not a gut job. Its not even close. Do you think every house in dc that is well done with modern features has been gutted? Do you know what a gut job is?

          • Anon 2:50:

            You would need to redo the bathrooms, kitchen, windows, plumbing, and there is likely some damage to the roof that hasn’t been addressed in the past 20 years. That would make it a gut job. You could live in it, but you could also live under free overpass.

  • I don’t think the house looks all that bad. Sure the kitchen and bath are outdated, but are liveable. That’s a super cheap price and will go for more than that.

  • Yep. Barring any serious structural problems, I can see this getting bid up to the mid-400s then having a buyer pour $100k+ into it for a brand-new renovation and still feel like he’s getting a good deal by keeping it under $500k.

  • I would suggest it sells for 486K.

  • I went to the open house last Sunday. The pictures make the place look much more “livable” than I would consider it to be. The space is broken up oddly in such a way that the common area is barely functional, the stairs come right down into the dining room in an awkward fashion, the kitchen is claustrophobic, and the floor upstairs are comically uneven. There’s also no alley access and almost no yard to speak of.

    Even from a renovation perspective, the space is small and the layout is awkward to an extent that I think you would have to do something pretty drastic to make it a good living situation. The problem is, while the comps are 250-300k higher, even if you pour 100-200k into it to fix the flooring, roof, cosmetic, and kitchen/bathroom issues, I still don’t think it would be a “comp” of the other houses you see about this size because of the weird layout, lack of yard, and no possibility for parking. I think 390k is about right, and perhaps even a bit high.

    • Thanks for the feedback! I was thinking the layout might be weird. The lack of yard is not a huge drawback (since Eastern Market and Barracks Row are practically in your backyard), nor is the parking (since the metro and tons of bus lines run through there) but a small awkward layout will discourage a lot of potential buyers.

    • Redoing the layout = Gutjob. Thanks for confirming my suspicions.

    • Interesting to get the scoop on the weird layout. Thanks, Mike!

  • PoP, have you ever entertained the idea of having people share before and after pictures of renovations/restorations and share how much they spent? I see a lot of astronomical numbers here when it comes to renovating homes and I just can’t understand it. I have several examples of how a mere $30K can go a LOOOOOONG way. I can’t even wrap my head around a $250K renovation/restoration job unless you’re looking to live in the Bellagio. I’d love to see examples.

    • I would imagine in your situation the entire 30k went to fun, cosmetic renovations. Real life is normally not like hgtv. Stuff like roofing, plumbing, electrical, siding/repointing, roofing, termite remediation, foundation work, and floor repair (as I said, the second floor of this residence had a noticeable slope to it) cost huge amounts of money without being sexy, but are necessary if you want the house to last.

      • No, my house was a mess when I bought it. I skimmed the walls in every room, completely renovated the kitchen from scratch (Thermador stove and marble floors, hello!) and the bathroom (admittedly, I repainted the clawfoot tub myself, but the contractors did the rest), sanded the floors down and refinished them, and bricked in my backyard for a lovely patio. I live in the real world and I had a budget of $30K. I had two contractors come through, one team did some of the work and another did the rest. You can find deals if you look hard enough. If I ever move, that stove is coming with me (I got it for a third of the price at ABW in Silver Spring… baller).

        • Yeah, but your house probably looks like you only put $30k into it too.

          At the low end, there’s no amount of money that you can put into a house to make it worth more. At the high end, you can get closer to getting $220k back, with a $200k investment.

          I’m sorry but people in DC can tell the difference between ikea cabinets and travertine and actual custom cabinets and marble.

          Just because it’s new, doesn’t mean it’s a good renovation.

          • I dont think you know what you’re talking about.

            In fact, you have a much better chance of recapturing sunk renovation costs at low amounts.

            Think of this scenario. You buy a fixer-upper for 300,00 – comparable houses in the area are selling for 450-500. If you spend 10k renovating a crappy kitchen with ikea cabinets and low end countertops and new appliances, but you expand the appliance option (double oven), make it look attractive, and increase the cabinet storage space, you will almost certainly see that 10k, if not more, come back to you in the sale price. Lets say you get 10-15 back.

            Alternatively, if you spend 20k on custom cabinets, 10k on high end countertops, buy viking and subzero, and end up with a tab of 50k, you will get only a fraction more in resale than you would have with the 10k renovation. You will almost certainly NOT recapture the 50k you put in. You may get 35-40k back. You lost 10-15k…

          • Full of shit comment of the week.

          • Sorry, you can’t buy a $300k house in a $450k neighborhood, only put in $10k and get a sales price of $400k. It doesn’t happen and it won’t work. No house would sell for $300k in a $450k neighborhood that only needed $10k worth of work.

            You might as well try to sell a horse with a pole on it’s head and call it a unicorn.

            People aren’t stupid.

          • I disagree. I think that people are stupid, specifically when it comes to real estate. Have you watched house hunters? Do you see the number of people that don’t pick houses based on paint colors or countertops? Do you see the number of people that are now underwater. 10K may be a low estimate..but putting 20K and fixing everything cosmetic on a that example would get you over 400K. What do you think flippers do? They figure out the least amount of money they can spend for the most amount of profit. Usually that is on the cosmetic side of the house and Updated kitchen/bathroom…all which can be done cheaply.

        • I hate my Thermador oven.

      • I will say the house had a good foundation and solid bones. The first contractor who came out quoted me $150K and I managed to do most of what was needed for 1/5 of that.

  • Spending big numbers like 250k on a renovation is easy.

    $25k for a modern two-zone central ac system.
    $20k to completely redo plumbing and electrical
    25k to finish a basement with a bathroom
    20k for brand new flooring, or 10k to redo flooring
    10k on things like insulation and drywall repair/replacement
    20k on new tiling for, say, 2.5 bathrooms
    10k for roof repair
    5k for new kitchen appliances
    5k for kitchen cabinets
    2500 for new kitchen countertops
    10k for new windows

    Etc, etc, etc. Doing a gut job isn’t all that different from building a house from scratch.

    • These three are way too high:

      10k on things like insulation and drywall repair/replacement (uh…?)
      20k on new tiling for, say, 2.5 bathrooms (20k of tile including labor gets you a LOT of tile)
      10k for roof repair (you could get a new roof on a small huose for this much)

      • True, though maybe not for repair/replacement of walls, depending on the situation and how energy efficient you want the place to be. However, the cost of finishing the basement might be low (what if you have to dig it out? What if there’s water intrusion? What if you have to create an exterior acccess.)

        It also completely ignores the cost of permitting and getting approval from the historic board. The broader point, though, is that these things add up, and if you think you can redo this place on a shoestring you’re probably either underestimating costs or forgetting big ticket items.

    • OK, this I can see… redoing basements, roofing, insulation, completely rearranging plumbing, electrical, etc… thank you for the breakdown, Ledroiter

      • Those numbers are way off…10k to redo flooring? try 1500..for refinishing 500 sq ft. 10K for a new roof? no. try 4-6k for most(depending on the roof) if its copper, then yea… 10k for drywall and insulation. way off, try 2-4k for the whole house. Who is doing your renos? 20k on new tiling? what? what kind of tile? and is someone from Italy coming over and actually doing the tiling. Kitchen Cabinets are underpriced..usually more than 5k. Depending on what type and how big, I would say countertop is low too. Windows are about 1000 a piece in the historic district of capitol hill.

        • 25K for ac? no. If you’re gutting a place and drywall is not up yet then it can be as low as 10K..but probably closer to 14K. Plumbing and electrical can be expensive. so Those numbers are probably right. 20K for new floors is way way way off. Most flooring installed hard wood is in the 5-8 dollar range…with another 1000 for demo.

          Again this is my experience at redoing two houses in Capitol Hill. Size and contractor can all vary widely..but I would suggest always getting 3+ quotes.

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