Affording the Payment. Just.
One of the anomalies in today’s uneven, quirky housing market is the home that — due to relentless price cutting and/or lengthy market time — Buyers can now afford, but which won’t leave them with any leftover money for related expenses.
I’m thinking of two situations in particular:
One. The Upper Bracket — and near Upper Bracket — homes in Minneapolis’ Kenwood and Lowry Hill neighborhoods that can now be purchased for $700k to $1M (vs. $1 to $1.5 million at the market peak).
Unfortunately, such homes can still sport property tax bills ranging from $15,000 to $25,000 or more per year (see, “Minneapolis’ Property Tax Millstone“).
Exacerbating matters in these neighborhoods: Buyers’ perception that they’ll need to pop for private schools for their school-age kids.
Two. The once-grand-now-tired larger family home.
Found most often in high-demand Twin Cities neighborhoods in Edina, Minnetonka, Wayzata, etc., such homes feature terrific construction, modern floor plans, 3,500 square feet (or more), gorgeous lots and neighborhoods, and generally what people refer to as “good bones.”
However, the Kitchen and Baths may be dated.
And the decor certainly is.
The total cost to tackle the foregoing?
Anywhere from $100k to $300k.
So what do discriminating Buyers make of the above?
Are there opportunities to be had?
The answers are necessarily Buyer-specific, but I think the second type of situation holds more potential (and doesn’t leave Buyers subject to the whims of the property tax assessors).
The ideal candidate to tackle a dated home with great potential has a long time frame, so spreading the updates over time is feasible (and financially appealing).
They may also have a bunch of kids who are going to beat the house up, anyway, so moving into a pristine home isn’t a priority.
And lastly, they have the time, aptitude and inclination to tackle some of the cosmetic updates themselves (i.e., create “sweat equity”).