surprises

[frugal]

Recently found out that the back half of the house has been infested with termites (live in New England) so this is not that common. Anyways it will cost approximately $50,000 to fix the problems. Will be going back to work part time to pay for the fixes. The woman who will be watching my children just turned 70 and just ran out of her retirement money. A divorce did not help her financial situation. It seems unless I build a nest egg of over two million that 50,000 surprises would be a problem. Hopefully there will not be very expensive surprises in retirement or the need to bag groceries at the age of 70 or 80.

 

[wabmester]

Ouch. I've been struggling with how to budget for such surprises. I basically look back at the magnitude and frequency of big non-recurring expenses and try to annualize for planning, but sometimes I cheat and call them capital expenses that I plan to recoup when I sell a house or car, for example.

An unexpected $50K in one shot is tough -- I hope your insurance is picking up part of the tab.

 

[cute fuzzy bunny]

Sorry to hear about that. Unexpected expenses can really shoot a hole in your plans. If possible during the work, consider adding a room or doing some other low cost renovation that would add some value to the property; in other words, if you're going to have to replace all the studs in a wall, consider extending that wall. Then you'll get back some of your investment.

Perhaps the part time job you take up will be something different and more enjoyable and it'll turn out to be a plus. Maybe you'll meet some new people.

I used to live in Natick MA and many of the houses in certain neighborhoods had extensive termite damage on the east and north facing sides of the house.

When I lived in the San Francisco Bay area, most homes had termite damage, it was just a matter of how much and where.

 

[frugal]

Hi wabmaster. termite damage is not something that is covered in homeowner insurance. Rodents and birds are not covered either. So buyer beware. We have had the house five years and if the seller had been honest it would have been disclosed( there is evidence of old damage). Anyways as TH said there is a positive side. Part-time work is not such a bad thing. I don't think I would want to put the money into expanding as the house is one that I can see us staying in for a long time. It is a cottage not a Mcmansion so we would be quite comfortable here in retirement.

 

[John Galt]

I am passing along one of the best pieces of advice I ever got, from my former attorney. He said, "If you can
possibly avoid litigation of any kind, you are almost always better off. Very often, even if you win you lose."
In spite of this, I have certainly been involved in my share of legal troubles over my 60 years. I've spent a small fortune
on attorneys, which reminds me of a story. About
2 years ago, I had sold a piece of real estate, bought
a house, was getting remarried (needed a prenup),
and also needed to update my will. I am pretty lazy,
but after I thought about what it would cost to have an
attorney involved, I handled everything myself and it all
worked out just fine. Obviously, not everyone has the
experience to do that, and sometimes you can't
avoid them (lawyers). When I was younger, I actually
kind of enjoyed the combat (probably a macho thing).
I don't enjoy it so much any more and I surely don't enjoy writing checks to attorneys.

John Galt

 

[cute fuzzy bunny]

On the inspection front, I believe you have a year for pest inspection 'warranties'.

As far as litigation goes, unlike some states that offer and/or require arbitration, if I recall correctly most new england states like their lawyers. However you can suit for undisclosed damage within 7 years in most cases.

Something like that might have stood in my old neighborhood as "everyone in the neighborhood knew" all the houses had termites of some sort. However the litigation costs and time would be extensive and chance of a sure win low. When I bought my house there, I was fortunate to look at another in the neighborhood and get an inspection on it. After a few hours the inspector called me over to the east wall, put his finger to his lips in a 'shhh', and put his shoulder to the wall. It moved outward about a half inch. All the studs were gone and the wall was essentially hanging from the 2nd story cross beams.

Needless to say I passed on that one, but when I bought one a street over, the pest inspection was done thoroughly and the same east wall (all windows) was found to be thoroughly loaded with termites, while a portion of the west wall that was behind extensive shrubbery was loaded with carpenter ants. Fortunately both problems easily solvable...and by the seller. However had I not known about the problem as evidenced in the other home where it was quite easy to see, I wouldnt have pushed the pest inspector into closer looks at those two walls.

This is why I learned to do my own work on my homes and cars. I've found that a lot of "craftsmen" do a sloppy half-assed job most of the time. After following several home inspectors around and doing some reading to know what to look for, I always do a full day long home inspection myself. The findings are surprising...usually several thousand dollars worth of construction problems and defects the inspector didnt find. One home I ended up passing on was covered with a siding material that had been the subject of a class action suit and a recall. Bottom line is I would have had to reside the home for about $25,000 with a reimbursement from the manufacturer of a few thousand. The home inspector and realtor "never heard of it". One home had some "minor cosmetic cracking to the stucco" per the home inspectors report. On getting up on a ladder (which the inspector didnt do), extensive horizontal cracks were visible and a good look at the interior wall showed it was bowing outward. I removed a loose piece of baseboard and found mold. Also rejected.

i guess the moral of the story is when getting your repair work done, get several people out to look at the job and give estimates. Check references. If possible, look up their contractors license for complaints.

This was one area that I tried hard to avoid surprises on. When I sold my old mcmansion (a term i've used for a long time and always makes me chuckle) and bought my new little tract home, I picked a newer one with a stucco exterior, concrete tile roof, and good quality construction materials and workmanship. With minor maintenance, all I'll have to do for the next 25-30 years is replace the water heater and perhaps the furnace.

Well Frugal, I hope this does turn out to be somewhat positive in the long run. And do try to make an improvement of some kind if you can do it at low cost. Add a bay window or some extra new windows. A sliding glass door to a small concrete patio. Perhaps a good spot for a fireplace and exterior chimney?

 

[Ted]

Since frugal is from Massachusetts, and this is an election year, he should be able to find plenty of politicians willing to add termite damage to the list of "catastrophes" eligible for correction at the expense of the general taxpayers. The multi-billion dollar "big dig" in Boston, mostly paid for by all of us federal taxpayers, has the dubious distinction of probably being the biggest single pork barrel project in history, made possible by prominent Democrats like Tip O'Neil, the Kennedys, and John Volpi (who conveniently was Secretary of Transportation when the project was initiated).

Unfortunately, most Republicans aren't a whole lot different when it comes to "doing good things" for favored groups with tax dollars. So I'll bet that with a little lobbying, frugal could get the parties competing against one another to wage a "War on Termites."

 

[unclemick]

Down here - New Orleans- we get government grants to study the 'Formosa Termite'- a truly evil and dastardly dude.

 

[wabmester]

Looks like Ted resolved to be a tax-griping curmudgeon this year

If you don't like how tax dollars are spent, check into Roth IRAs, municipal bonds, and the 15% tax rate on LT cap gains and dividends.

Being retired means fewer things to gripe about. Give others the pleasure of griping about having to work for some chump and having the first 3 months of your salary going to the feds.

 

[Telly]

frugal - Sorry to hear about your termite damage. In my jack of all trades approach to life's "leisure time" in the last 35 years or so (which was interest-driven, but the LBYM effects of it have been GREAT!), I have done quite a bit of personal construction and reconstruction work. As such, I have a bit of a difficulty imagining $50,000 work of termite repair to a house described as a "cottage", if the roof hasn't collapsed! Unless "cottage" was just a figure of speach, as compared to a "McMansion".
Or, I could just be out of touch with what it costs to pay others to do the work, for them to make a profitable business out of it.

unclemick - Please corral the Formosan Termites and keep them in your area... we are doing just fine with the ground-based termites here to the west of you. Any non-treated piece of wood left on the ground for a few months becomes food. Keeping an eye out for dirt tubes on the foundation.
But if you're short on our old friends, the imported Fire Ants, I can ship you a billion or two

 

[Cut-Throat]

I guess that is one good thing about living in this frozen tundra called Minnesota in DEC, JAN and FEB. I think it keeps termite damage to a minimum.

I guess most of them go south also!

We do have mosquitos in the summer, but at least they don't eat your house!

 

[John Galt]

Hello cut-throat. I've been in Minnesota in the summer
(and every other season). The mosquitos may not eat
your house, but I've seen some big enough to eat
your horse. Biggest I ever saw anywhere, easily.

John Galt

 

[John Galt]

And another thing...............

When we were looking for a place in the south,
we looked in Florida and Texas. The Florida
mosquitos were a real turn off for me. I lived for years
in northern Michigan and Wisconsin. That was enough for me. The mosquitos in Texas are smaller and less
aggressive. Of course they have fire ants, killer bees,
chiggers, and rattlesnakes, so I guess there is always a
downside.

John Galt

 

[cute fuzzy bunny]

The cost hit me as well. Heck, a "cottage" probably only costs about $100k to build. Recent prices per square foot are 50-150, averaging about $95/foot. With a foundation and roof in place, the costs should be a little less than that. Of course we dont know the extent of the damage. I know in some situations that required extensive removal and disposal, those costs to get to the meat of the problem were higher than the actual repair/rebuild work.

I did do some work on my rental last year. It was brick 1/3 of the way up, some "has had its day" siding, 40 year old windows, and needed re-roofing. I did the 'demolition' work of removing the old siding and windows, replaced the dry rotted window sills, and dragged 5 truck loads of the debris to the dump. I then had a guy some in, install the new double pane windows, stucco the are from the brick to the roof line, and then had a roofer come in and re-roof. My cost was halved for the net work total. Because the area the home is in has almost doubled in RE value in the past 5 years, basically every dollar I put into the place is recoverable. I'll probably sell it in a year or two and invest the proceeds if my other investment efforts work out.

So couple of ideas: bring in a general contractor who can stop by once a week and advise you on self-removal of siding and whatnot to reduce the cost. You might find this a more effective cost recovery than the part time job. Also if the damage isnt dangerous, ie the roof falling in or walls falling off, consider fumigating to stop further damage, leaving it alone for 5-10 years while you build up some cash working part time or through investments, and do the repairs later. Really out-there option if the damage is extensive...live with it as long as possible and knock the whole house down and rebuild it.

I might offer more constructive (!) ideas if I knew the age of the home, the square footate, the type of foundation, number of floors, size of the lot, real estate pricing situation in the neighborhood (rising, falling, ??), extent of the damage and its type, etc. By all means give us more info and there may be some better ideas.

 

[John Galt]

Hello TH. Noticed your comments about building costs
per sq. foot, etc. We are trying to build a new
"cabin" on some rural land we own. Our target
(perhaps naively) was $50.00 per sq. foot. I've looked at about every type of construction imaginable with no luck even coming close. Presently, I have designed
a home with a very small living area and about half of the total space
"under roof" but unfinished in an attempt to reach the magic $50. The design is quite simple. I am "shopping"
it to local small contractors now. If that doesn't work
I am out of ideas and will probably end up selling the land. BTW, a few days ago I was quoted $65.00 per
square foot for a new "close out" doublewide. Don't want one, and certainly not at that price.

John Galt

 

[unclemick]

John

Keep us posted on your progress. $50/sq. ft. is my 'throw away' cost of our home - fish camp over water.
Living in 'Hurricane alley' requires having an backup/exit plan in place for unplaned(oxymorn) events.

Also have 20 acres out in Miss. boonies which may get a cabin built someday.

Easily check rents every year or so - but I don't know to do building costs - I assume they can vary widely.

 

[LA_Newsboy]

Have you guys thought of trying to build a house yourself, using straw bales? It's an old, but not widely known building technique, and it can be done pretty cheaply, at least out in the West and Southwest, provided the zoning allows it.

Dick

 

[cute fuzzy bunny]

I've seen some of the straw bale home, the adobe homes, concrete block homes, steel framed homes, some made of composite sheets/blocks made of old soda bottles mixed with shredded newspaper.

From the practical standpoint, thinking 'outside the box' on building a home is a great idea, much like thinking about ER investments. The downside is trying to sell the place. Its a novelty and six figure novelties make buyers nervous.

Most of these "different" building methods offer superior insulation characteristics, good or great resistance to pests and rots, and can be very inexpensive and fast to build.

As far as reaching the magic $50 level, I'd have to do a little research into the factors that come into play, as most of the standard homes I've been involved with played out to $80-100. I'm going to bet that its some type of manufactured home on a non-permanent foundation, and limited in appliance type and quality.

 

[cute fuzzy bunny]

John Galt -

You might want to check this design out, it appeared in sunset magazine in august of 2002. Reminded me of your description. The total cost as finally rendered is quite high, but their sample involved a lot of very expensive materials. I think this might be buildable for well under $100 per sq foot. In any case, perhaps theres an idea or two that you can add in to your current thinking. This sample uses a number of synthetic and unusual building materials and practices.

If you're a sunset subscriber you can get access to the full article at

http://www.sunset.com/sunset/Premium/Home/2002/08-Aug/VacationCabin0802/VacationCabin08021.html

or a subset without photos here:

http://www.findarticles.com/cf_dls/m1216/2_209/90113785/p1/article.jhtml

 

[cute fuzzy bunny]

Ah hah. On picking at the lower cost per sq foot figures, it appears that to get down to $50, you need to use fairly raw natural materials such as logs, do much or all of the work yourself, and the construction needs to be fairly large - - cost to build a house of 20x20 rooms is not 2x a house of 10x10 rooms. Excepting the construction folks who eschew even quoting per sq foot costs citing variances from one home to another, seems like $80-100 for non-rustic materials with labor included is more realistic.

 

[John Galt]

Thanks TH and all for your input. BTW, I misspoke
earlier. That $65.00 per square foot was for a stick built home by a small contractor. No frills obviously.

I'm not too concerned about resale and am willing to
put a lot of creativity into it, including non-traditional
methods and materials. I never built a house from the ground up before, plus I would be doing this one long
distance. On the other hand, I have the time to stay
involved. Unfortunately, I can do little or no work myself.
That would save me a bundle. I'm still betting that
bare bones (one bedroom, one bathroom and the kitchen area off the living area - 3 rooms basically)
combined with leaving almost half the house unfinished
inside will get me to $50.00. BTW, before we bought the land,
I put in an offer on a beautiful A-frame in rural Florida.
The home was gorgeous, but small (maybe 700 sf).
Anyway, 700 X $50.00 is $35,000. The lot was maybe
100 ft X 150 ft. About a nine iron shot from a small lake.
Oh, and the A-frame was fully furnished. Lots of antiques. The price? Mid 30s! Couldn't resist and
made an offer which was countered. I did not go back
as I was queasy about the neighborhood (location,
location, location). It sold within a few weeks. I would have paid twice the asking price if it had only been located somewhere else.

John Galt

 

[eridanus]

"The Owner-Builder Book"
"The Complete Guide to Contracting Your Home"

Both are for people that want to be involved in the building but they would be valuable to anyone planning a custom home.

For example, General Contractors are usually hired on a percentage basis rather than a time basis. Thus, cost overruns and time delays don't often hurt the GC and may in fact help them. Find a GC that will work for a set fee according to their own estimate for the work. To avoid the hidden fees some GCs collect from labor and materials markup from their subs, you'd have to buy the materials and solicit bids yourself, making the GC more of a supervisor and consultant.

 

[eridanus]

Oh, JohnGalt, could you expand your space with decks and patios and whatnot? It's far cheaper than indoor space and adds room and livability to a house but not everyone is into it as much as I am. Just a suggestion.

 

[John Galt]

Hello! Our current design already has a rather large
deck included. However, I have considered converting to more "outside" space, after I see what the builders
are quoting me. My indoor unfinished space is plenty
large, so some of this could be converted.

John Galt

 

[frugal]

Hi TH and Telly the reason for the high figures is that the house is over a crawl space. TH I appreciated your comments about doing things yourself and the stories of the houses you had looked at. It seems to be very true including with finances if you want to be sure something is done right do it yourself. We got several different quotes to tear down the house and building prices in this area start at 150 and the typical price that is spent is between 400 and $500/sq foot. Anyways when we purchased the house I was eight months pregnant and trusted the building inspector to let us know what was under the house (big mistake). The back of the house is not constructed with pressure treated wood and directly on the ground. So options are to start digging myself or pay someone to lift the house and put a proper basement under it. The 50,000 is for a house lifting, new basement etc. It has crossed my mind more the once to start digging with a shovel and then put a vapor barrier down and replace the wood. But I am hesitant to start the project ( husband has back problems & unwilling to dig). If we stay in the house long enough we would probably recoup the costs, the neighborhood is next to a lake. Things will work out one way or another and I will keep trying to convince my other half to move to a cheaper area to live the prices John Galt was mentioning sound cheap.