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Short Summary
Main recommendation: If you want a DIY fixer-upper with good return on investment, buy a house from around 1975 or 1976 rather than something much older, because its foundation, electrical, and plumbing are likely still serviceable and the money goes into finishes and fixtures. Avoid "money pit" homes where mechanical systems, framing, insulation, windows, and roofs all need replacing, and budget for mechanical replacement costs before buying. Get your own independent home inspector rather than one the real estate agent suggests.
Key Points
- Houses built before 1974 are the speaker's "line in the sand," since the US and Canadian building codes converged in the 1970s and 1980s, and houses before about 1980 may contain asbestos and lead toxicity concerns.
- Mechanical systems (plumbing, electrical, HVAC) are generally expected to last about 50 years, so a house that old should be planned for upgrades, though plumbing can sometimes last 70 to 100 years.
- Older homes built with weaker framing, cut joists, and nailed connections tend to sag and degrade, and this structural decline can be stopped but generally not reversed.
- Pricing should reflect the need for replacement; a house should not be priced at the same level as a newer one just because it has cosmetic updates.
- Return on investment should be assessed regionally, considering local comparables, crime, and proximity to suppliers.
Details Worth Noting
- Concrete instructions:
- Before buying, hire your own independent home inspector, not one suggested by the real estate agent, and check whether the roof line is straight along the horizon, since a bow suggests the foundation is collapsing in the middle.
- Check whether the water stays out during rain, the age of the hot water tank (treat it as temporary, since it can fail), and look for soft spots, rot, or termites.
- Remove or trim bushes growing against exterior walls, since they trap moisture in the wall assembly and attract bugs and rot.
- Estimate mechanical replacement costs and deduct them from the purchase price, for example about 10,000 for plumbing, 10,000 for electrical, and 10,000 to 15,000 for HVAC, as the speaker suggests.
- Check whether the electrical service is at least 100-amp rather than fuses, since modern code allows a 12-2 wire to serve two kitchen plugs instead of two separate 14-2 dedicated circuits.
- Check insulation levels, since older walls may have degraded from about R13 to about R8, and consider whether windows and doors need replacing.
- Check local rules and building office requirements, as codes vary by state, county, province, and city.
- A 1960s house is a middle option: it has two-by-ten floor joists and one-inch subfloor boards, but the electrical is often a hazard and usually needs rewiring.
- Using the speaker's return-on-investment rule of thumb, a $10,000 investment should aim to add about $40,000 in value.
- A house with extensive moisture, bugs, rot, mold, termites, and needing new windows, roof, and all mechanical systems is described as a money pit, not a DIY fixer-upper.
Bottom Line
A cheap house is only a good investment if its structure and mechanical systems are sound enough that your money goes into finishes, which is why a mid-1970s home usually makes more sense than a much older one.
