"First Time Fixer Upper" is a seven part series on buying and financing your first rehab project, with new posts published weekly in January and February 2020. This is the third post in the series.
If you listed “buy my first property” on your 2020 goals this year, you’re probably already checking out neighborhoods, going to open houses, and possibly even starting your first walk-throughs with your realtor. You’ve evaluated your budget and set your target price range, you’ve carefully considered whether you’re looking for a move-in ready home or a fixer upper, and you’ve got yourself a top shelf realtor to help you find it. If any of these steps aren’t ringing a bell, you might want to check out my earlier blog posts linked here when you’re done with this one.
Buying a property, whether it’s your first or your fiftieth, requires a series of carefully executed steps with certain rules and desired outcomes. It’s a process like any other, and if it’s your first time through, the process can seem complicated, overwhelming, and designed to take your money at every step of the way. My goal with writing this series is to help all of you first timers out there know what to expect, what steps to take, and how to recognize a “good outcome” when you see one. If you don’t know what you’re looking for, it’s hard to know when you’ve found the right one, whether it’s a realtor, a property, a contractor, or a price.
This week I’ll be going over the rules of the game for evaluating properties, whether you’re looking for a freshly rehabbed home or a property that needs work. The builders of a brand new rehab should have already addressed each of these key areas, but if they haven’t, skip it. Whether someone else has done it for you in a rehab or you will be doing it yourself, these are all things you’ll want to look for before you make that offer.
1. Structural soundness.
Are the floors slanty? Are there cracks in the plaster or drywall finish? Is the front of the building bowing outward? If you can see any of these signs, they are a pretty good indicator that a building has foundation trouble, failing bearing walls, or rotting floor joists. While all of these signs of structural damage can technically be fixed, they will be costly repairs eating up large chunks of your renovation budget. Unless you are a building professional, these properties are better left alone. If you’re not sure if a property has structural damage, it can be helpful to consult a professional if you’re really interested.
A building’s structural system -- foundations, bearing walls, and floor/roof joists -- is like the skeleton on which everything else is attached. This is typically the longest lasting component of a building, with stone, brick and concrete buildings capable of lasting for several hundred years or longer (did you know that the Roman Pantheon, made of unreinforced concrete, has been standing for almost 1900 years?!). While other building components can more easily be replaced, a good structural system is the foundation, no pun intended, on which everything else must be built.
2. Water shedding roof.
The number one job of a building is to provide shelter from the elements, primarily water and rain. A good building envelope keeps water out -- including water vapor as well as rain -- and this starts with the roof. If the roof leaks, even the smallest amount of water will find its way into your walls, your floor joists, your drywall ceilings, and your window frames, and it will cause mold, rot, and decay everywhere it touches.
I once walked through a property in which the seller had begun a renovation but gave up half-way through, and in the few months that construction had ceased, so much water had entered through cracks in the roof, walls, and around the windows that black mold had started to form its own civilization on the brand new drywall. It’s never a good idea to start interior work without securing the exterior envelope first, and if you’re buying a property, look for one that already has a weather proof exterior envelope to give yourself the best possible starting point.
Inspect the roof for damage or pooling water if you can see it, and check the seller’s disclosure to see when the roof was last replaced. If they “don’t know,” this means they haven’t done any roof repairs during their ownership and therefore YOU will be doing roof repairs soon enough yourself. If you have an asphalt roof, check to see that it has been silvered recently, a silver coating is usually good for about three to five years. If you’re buying a recent rehab, make sure that the roof has been fully replaced in the project.
3. Airtight, insulated envelope.
Let’s face it, those super cute masonry rowhomes with exposed brick walls are… not insulated. These buildings, mostly constructed between the late 1700s and the early 1900s, were constructed of brick and relied on the adjacent houses on either side -- separated by a double wythe brick “party wall” -- to insulate each other and keep warm. Earlier colonial rowhouses would have had a fireplace in each room for warmth, and later industrial-1920s era homes used an oil-burning boiler and hot water radiator system to provide heat. Both methods use an enormous amount of fuel, and today we typically use natural gas or electricity to provide our heat.
While later, early-1900s era homes may have cellulose insulation (sometimes containing asbestos) between the plaster and lath walls and the brick, these wall assemblies were certainly not air tight and allowed a considerable amount of frigid winter air to flow through cracks in the brick and into the house. Unless these homes have been renovated with either a new exterior insulated cladding system or gutted down to the interior brick and reconstructed, they are still going to be poorly to moderately insulated and definitely not airtight. Does this mean you can’t or shouldn’t buy a beautiful old masonry home with tons of character and detailed plaster and woodwork? Absolutely not. But what it does mean is that you should expect to use and pay for an enormous amount of heat energy to keep that home warm, and it will cost you dearly every single winter whether you’re paying for oil, gas, or electricity. Let me tell you, I live in a 1908 West Philadelphia Victorian, and I fell in love with the ornate woodwork and chose to leave it intact in my own renovation. It is beautiful, expensive, and cold, just like a Victorian lady. Lesson learned.
If you choose to take on the renovation yourself and you have the opportunity to deconstruct it down to the interior face of the bricks, you’ll be able to completely insulate and seal your home and it will be extremely warm, comfortable, and inexpensive to heat and cool. The structure of the building itself can last for several hundred years, so by upgrading the building envelope and insulation you will be giving your home new life in the modern era as a high-performance, energy efficient building doing it’s part to both combat climate change and reduce your utility bills.
If you are looking at new rehabs, look for signs of insulation in the basement, where walls and ceilings are more often exposed. Most builders use yellow spray foam insulation, but although it works well initially to both insulate and airseal the envelope, foam will shrink and crack over time, and its performance as an insulator actually decreases in cold temperatures. In addition, spray foam is manufactured using harmful chemicals which can be damaging to the person installing the foam and can off-gas in your house during occupancy. Look for information in the listing that states that the home is either “Passive House Certified” or “designed to Passive House Standard,” both of which indicate a standard of performance that assures you the property meets rigorous air sealing and insulation performance requirements.
4. New or recently updated plumbing.
Cast iron pipes, unfortunately, do not last forever. In residential properties, they typically have a lifespan of about 75-100 years, which means that unless you are looking at a home built 1950 or later, you’re about to have a problem. In my 1908 Victorian, both the cast iron main stack (the vertical pipe in the center of the house that all fixtures drain to) and the sanitary sewer line out to the street (the horizontal pipe in the basement) had aged to the point of failure. The main stack had cracked in multiple places, and any water or toilet flushes running down would be spewing into the interior of my walls. Fortunately, this was discovered during the inspection period and the seller paid for the repair.
In the case of the sewer line however, I did not discover the bowing in the line (what is known as a “belly”, or sag) until after I moved in, and started flushing toilets. Before long, the basement was flooded with sewage, and though I hired a plumber to clear the clog, two weeks later my basement was flooded again. It cost six thousand dollars to replace the sewer line from the house to the street, and it would have cost me only a hundred dollars to have the sewer line inspected by a professional during inspections. Highly recommend having it inspected, or "camera-ed", before making an offer.
Plumbing systems need to be replaced about every 75-100 years, so if you’re interested in an older building, you’ll either want to verify that both supply and drain pipes have been fully replaced, or you’ll need to budget to do it yourself in your renovation. The presence of a "PEX board" (has blue and red flexible pipes attached to a central manifold) in the basement is a good sign that the plumbing has been replaced. More on estimating your renovation budget is coming in a future post.
5. New or recently updated electrical.
You will also want to determine if the electrical system can be used as-is or if it will need to be upgraded or replaced. There are several elements to consider here: what is the total amperage to the panel, and will it be enough? When, if ever, was the wiring in the house replaced? Is knob-and-tube wiring present in the house?
Most houses have either 100A or 200A service to the electrical panel. You can usually read this by opening up the panel door and looking at the main switch. This number tells you how much power is served to the house, and you will need to consider this if you plan to use many electric appliances such as a heat pump system, an electric or hybrid heat pump hot water heater, an on-demand hot water heater, an electric or induction range, etc. Smaller houses typically have only 100A service, and you will most likely need to upgrade to 200A or more depending on what other systems you plan to install.
If the home is more than sixty years old, you will probably need to replace the wiring if it hasn’t been done already, and if it is a recent rehab, check the seller’s disclosure to be sure it’s taken care of. A recent replacement will be indicated by the presence of yellow or white plastic wire jackets, whereas older wires were encased in fabric (seriously, such a fire hazard). You will also want to look out for knob-and-tube wiring, which is evidenced by fabric covered wires or white ceramic knobs holding the wiring off of wood joists. It is often easiest to see this in the basement where the underside of the floor is exposed. The problem with knob-and-tube wiring is that because its a fire hazard, some home insurance companies won’t insure your home or you will have to pay a much higher premium.
If you will need to replace the wiring, consider whether you will be deconstructing walls down to the brick or trying to leave existing plaster or drywall in place. If you do choose to remove the plaster, your electrician will have a cleaner slate to work with and charge you less.
6. Updated mechanical system.
In the northeast, or any heating-dominated climate, your mechanical system has the potential to absolutely make or break your utility costs every year. In Philadelphia, as in many northern cities, many homes used oil or natural-gas burning boilers to circulate hot water around a radiator system from the early 20th century onward. In some cases, you will also find a natural gas-burning forced air ducted heat system, which can be easily upgraded to add cooling to the same set of ducts.
Unless you’re buying a recently rehabbed property, you’re almost definitely going to want to budget to update the mechanicals in your own renovation. These systems typically have a lifespan of about 20 years, and efficiencies have continued to improve with time. Installing an energy efficient heating and cooling system in your house alongside insulation and airtightness upgrades will save you thousands in annual heating and cooling costs. To learn more about the different types of heating systems you might find in a house or choose to install, check out the mechanicals section of this earlier post.
7. New hot water heater.
Along the same lines as the logic of updating your mechanical system for energy efficiency, you’re going to want updated appliances as well, specifically your hot water heaters. These are relatively inexpensive to replace, and will run you a few hundred for an electric hot water heater (least expensive to install, most expensive to operate) to about twelve hundred for a hybrid electric air source heater. I would actually recommend the hybrid electric heat pump models, as the marginal cost is negligible within the context of your budget but they are extremely efficient and inexpensive to use over the long run, and they can be powered by clean, renewable-source electricity if you choose. They provide plenty of hot water, I have a Rheem 50 gallon tank and it can serve the shower, laundry, and kitchen sink needs of up to five people without much of a problem.
The only caveat with heat pump heaters is this: make sure that when you have it installed, you also install a duct directing the exhaust air outside of your home or basement. Because of the way these work, they actually pull heat out of the air to heat the water and then exhaust the cooled air back into the space. Air conditioning your basement in the winter is not going to help those heating bills.
Hot water heaters typically have a functional life span of 10-15 years, so check the tag on the heater when you walk through the house to see when it was installed. If you’re buying a fixer upper, you’ll most likely need to replace the water heater, and if you’re buying a new rehab, make sure this was handled already in the renovation or you’ll be replacing it yourself very soon.
You’ll notice that none of the things I mentioned are going to show up in those sexy interior shots you saw on the MLS posting, and you’ll have to look deeper than surface level to even see these in a walk through. It’s the things that are under the finishes that really matter in a house, and these are also the things that will cost the most to repair or replace down the line. These are the proverbial “good bones” that you should look for in a house, because the finishes and fixtures are just icing that you can choose yourself and update easily as your preferences change.
The very fact that you can’t know what you can’t see is the number one reason I advocate for taking on a rehab yourself. This way, you can be responsible for the necessary envelope and system upgrades, and you can make sure that they’re done right the first time. Putting your money towards your rehab rather than your purchase price is a great way to secure your investment for years down the line and save yourself costly, unseen headaches down the road. If you’re willing to put in the sweat equity and “stress equity” required to manage your own rehab, the results can be well worth your effort.
Heather Medlin is the design architect and founding principal of Ginkgo Vernacular LLC, serving residential and commercial clients in the greater Philadelphia area. She specializes in regenerative design and construction techniques for both building retrofits and new construction and is licensed in Pennsylvania and Washington, DC.