Our story of a Fixer Upper

We bought a fixer upper in 2005 when the market was hot and we were gung-ho to buy an investment property. It was a duplex apartment building with good rents.

I first showed it to some clients who said it was way too much work for them to fix up. The linoleum floors in the bedrooms (not vinyl, but old sheet linoleum) were rolling on the edges and the space between the linoleum and the wall was full of dog hair, cat hair and general filth. One bathroom had a claw foot tub and an old toilet. The floor was a repeat of the bedroom floors but with bathroom filth added to the mix. There were dirty diapers and old pizza boxes on the kitchen table. You get the picture.

We saw potential in the hardwood and softwood floors, in the new roof and new boilers, and in the deep yard. The price was low in a hot market. If we sunk $15,000 in carpets, paint, bathroom updates, we thought it was a good investment.

When we walked into the inspection, the same dirty diapers that that were there the week before were still sitting on the kitchen table. So, no cleaning up for the inpsection. There was a new resident who hadn't vacated for the inspection -- a baby goat! It was bleeting sadly, huddled in a wire cage in the living room. Whenever I left the room to follow the inspector, the goat cried. "I'll sit with the goat," I told the inspector, "tell me when you need me." Luckily, the goat was gone at closing.

In the past six years, we've added refrigerators, jacked up one floor that sagged, upgraded the knob and tube electrical circuits, refinished the floors, put in new kitchen floors, new carpets, new shower, and an assortment of other repairs and additions. New, wonderful tenants have removed layers of wallpaper and have painted all the rooms. The house is being treated well.
Did I mention we hired everything out because we are not handy? Well, we can paint, but that's about it.

Over the years, we've invested about $30,000. We have a small cash flow every month. And I mean small. Until our current tenants, we've had problems even though we've vetted the tenants carefully. If we sold the place today, we wouldn't break even. And we haven't had a lot of fun!

Of note is the fact that we have a write-off on our taxes because of depreciation and repairs. We'll be seeking accounting advice when it comes time to sell.

Was it worth it? We'll see in about five years when Franklin County, Vermont has recovered more from the housing decline.

Personally, I think the best buyer of a Fixer Upper is someone who can personally fix it up. Or someone who has enough cash to pay someone else to fix it up. And, most importantly, buy it at a price that makes it a good investment.