Saturday, December 30, 2006

Assessment, as 2006 comes to a close......

Over the years, my husband and I bought and renovated two 19th century houses in Cornwall, a historic Hudson Highlands village 55 miles northwest of New York. He was the handy one; I was the primary breadwinner. When we divorced after sixteen years of marriage, I rented a tiny, 3-room carriage house up on Storm King Mountain, feeling sad, vulnerable and relieved not to have a big house to care for alone.

I gave myself a year to heal and then assessed my prospects. The picture was serious - splitting our assets in half had been devastating financially. It seemed foolish to rent in a market like Cornwall, which is rapidly transitioning from rural backwater to NYC bedroom community. With college tuition and retirement looming not too far in the future, I knew I needed a real estate investment, pronto. I started to look for a “fixer-upper” that would become a profitable asset in this rapidly appreciating market, though frankly, I was a little frightened by the prospect of renovating on my own, without a “handy” partner. Though technically I had experience from our previous homes, the truth of the matter was that we bought and he renovated.

I began by searching for a 19th century house, hardwood floors, working fireplace, ample land. There were just five such properties listed in Cornwall. I called a realtor/friend, who hesitated and then said gently, “One of them is a lot like the house you used to live in.”

We walked in through the living room and opened a door onto an inviting back porch. As I took in the coppery sunset, filtered through a towering weeping willow, my teenage daughter whispered from behind me, “I call the tree!”

A fixer upper? Was I crazy? The place had been rented for years, and it was a mess. I could see that the roof was shot, the exterior paint was peeling, it still had its ancient, original windows, and the bathrooms? Well, let’s just say we gave it a ZERO rating in bathrooms. Decrepit, water damaged (“grotty,” Jules sniffed). I knew I could negotiate a low price and turn it into a jewel. But I didn’t have the skills to do the big work myself, nor the cash to hire a contractor.

Still, we loved this house. And after paying for an extensive inspection by a structural engineer, I was certain that the investment in this property, one of the last remaining “old” houses up on the mountain, would be a good one. I went back online, searching for a loan that would advance cash for the renovation.

“Have you ever applied for a HUD 203K loan?” my mortgage officer asked doubtfully. “There is a lot of paperwork.” I dug into the application, creating a work plan, getting estimates, selecting materials, hiring a contractor, creating a budget and timeline. I might not know how to install sheetrock, but this I could do!

Twenty months later, having spent virtually every weekend working our way through each room, sanding, refinishing, and painting, we are reclaiming the beauty and charm of this old house. Seven rooms down, two to go. And, now that I have proven to myself that I can do this, my next step toward financial security will be using the equity I have earned in this house to buy a fixer-upper investment property. This could become a habit!

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