Forcing a smile while cringing

[Markola]

Last night we had a couple over for dinner, whom we are just getting to know, and who updated us on the house they bought recently. It’s a big, 1903 virtual mansion with 3 floors and a carriage house with an apartment. I would describe the area of our city that it’s in as, ahem, an “emerging market”. As they told us the story, I got a pit in my stomach, which has only grown worse. Both are previously divorced and have teenage kids from those marriages, so they are just recovered from all of that economic fallout. My guess is, knowing what they do, they probably earn $200K-$250K or so.

The house is handsome and was in the half million dollar range. They bought it sight unseen, contingent on inspection, because when they learned of it, there was already one other offer. They couldn’t even get inside it until their offer was accepted. They sold a perfectly nice four square home in two days and took on a new, larger mortgage.

They bought the house to live in and to rent out both the carriage house and also the third floor. The third floor is not yet built out as a rental unit, so they’ll have to put in a kitchenette. The carriage house has turned out to be such a mechanical disaster that it will cost $300K to restore. They learned they can’t even turn the lower half of the carriage house into a garage, because the historic district requires a certain setback from the alley for parking, which the structure doesn’t meet. So there’s no garage, and lots of masonry work needed to even have a proper driveway from the street side to the back.

Despite the marketing photos, the kitchen is cheaply done, with lots of replacements needed. The newer furnace turns out to be a brand with severe problems such that they haven’t yet found a plumber who will service it. And on and on.

I fear our new friends have set themselves up for financial disaster and I can’t help but look at them as two movie characters who are dead but don’t know it. What they have done is none of my business, so all I could do as they talked was say “Wow!” a lot, and “It’s a beautiful house. Good luck!” I also can’t express my concerns to any other real life friends without risking relationships. I can’t do a single thing but be concerned for them.

[Dtail]

Sounds like the movie "Money Pit".

[RetiredAt55.5]

Reminds me of this movie -

https://m.youtube.com/watch?v=TLLQquBdU8M

[Edit - Dtail beat me to it]

[CardsFan]

Two words (and a movie) come to mind. "Money Pit"

https://www.youtube.com/watch?v=nJPj...nel=Movieclips

[CardsFan]

Looks like great minds think alike.

[Aerides]

If you sense they are feeling some regret or overwhelmed, a friendly "hey, you could just sell it!" might be what they want to hear.

[Octogirl]

OP - sounds like a nightmare to me. Their house and your dinner with them
It reminds me that new friends in ER can be tricky
Many of use got here by making good (or at least adequate) financial decisions.
Those making risky financial decisions close to retirement make me wonder - "Do we have enough in common to sustain a friendship ? "
YMMV

[Calico]

Act in haste, repent in leisure.

Agree with all the Money Pit references.

[aja8888]

From a cost perspective, if I was faced with this, I would have bit off on that house deal as a trade for my expensive California divorce.

Heck, by the time your friends get through with the "rehab", they may likely be in divorce court!

All you can do is wish them good luck!

[RetiredHappy]

Not much you can do or say to them in their face. I have 2 wise men around me... my husband and my son. Both of them like new homes because they translate to less repair and maintenance issues.

I agree with the comment that when/if they realize what they have taken on, they can sell the home and get whatever they can get out of it then and look for a newer and less problematic home.

[Major Tom]

I don't know what the RE market is like where you are Markola, but prices are very high here, with properties receiving multiple bids, and being sold for higher than the listing price. It is stories like that of your new friends, that makes me wonder if the market is about to turn. I can't imagine purchasing a property without having seen it first. However, there are many ways to get out of a sale, especially if the inspection is a thorough one, and not the more superficial type that happens with most RE transactions.

I wish them the best of luck. It sounds as if they are going to need it.

[RobbieB]

Three hundred grand sounds like a lot to rebuild a structure that came as a bonus with a half million dollar house. I'd do something more modest.

A plumber to fix a furnace? You mean an HVAC guy?

What's the street address, I'll zillow it, or do you have a pic?

[Markola]

^^^^^ It’s a boiler but maybe I meant HVAC, dunno. I don’t worry about you, Robbie, but I’m wary of posting a pic or address. The Twin Cities ain’t that big of a town, and you never know who on here might have a connection to the house or owners. Cheers.

I wish them the best, too. I don’t sense they have come to grips with the Money Pit, and there’s a chance I’m wrong and they’ll push through and make it work. If not, we’ll be here with a shoulder to cry on.

Man, of all the wealth destroyers I’ve seen, unnecessary, aspirational, emotionally-purchased real estate seems consistently the worst.

[Ready]

The current heated real estate market has caused many buyers to do things they would not do under normal conditions, including buying a house without properly inspecting it first.

We saw similar behavior during the last housing crash, and unfortunately for many it did not end well.

[MC Rider]

Quote:

Originally Posted by Ready ................We saw similar behavior during the last housing crash, and unfortunately for many it did not end well.

But the rebound worked out well for some of us.

[Markola]

I can see why the British call those old, crumbling manor home masterpieces that need everything “piles”. LOL. “Albatross” was already taken.

[travelover]

One of my recurring nightmares is that I've bought such a house and it is so great to wake up and realize it was only a dream nightmare.

[aja8888]

Think of it this way; All the work that place needs is continuing jobs for a lot of people.

[RobbieB]

A boiler, that says a lot. Steam heat with big cast iron radiators? I wish them my best.

Winter is coming and the twin cities get pretty cold. Big energy bills too.

[Amethyst]

Now that they are in the place, do they still love it for whatever unique qualities drew them to it in the first place?

Because that can make up for a lot of dough and sweat equity. Improving the house becomes an expensive hobby, and who are we to make fun of those?