Almost Milwaukee pricing

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I went on a road trip today to look at a couple of 5 & 6 unit properties about an hour from me and came home with a duplex. {Well actually, I left the duplex where it has sat for the last 80 years and just brought the accepted offer home}.

The bank - a local credit union - has had this property for over a year, but decided to drop the price late last week - to a level not seen in 25-30 years around these parts.  

We put in an offer over the weekend and walked the property this morning - since I was going to be in the area looking at multis anyway.  Someone allowed the oil to run out and the radiator lines froze and split in a couple of places - but miraculously little water damage.

When I ran my numbers I allowed for a purchase of up to $30K with renovations of 80K for an all-in of $110K.   Comps in the neighbourhood indicated the renovated property should sell for $140 - $150, but it will also rent for $1400 - 1500/month.  I'm leaning towards the rehab and rent ... unless the realtor brings us a "you can't refuse this" offer.

There were multiple offers on the table when we went in, so we made an offer of $26K and sent a $15K deposit.  The lender was back to us in four hours (before their submission deadline), which tells me we were too high and could have gone in 4K less and still got the property.

After walking the property this morning, it needs a lot of work but less than I was anticipating:

1) Electrical: Entrance to both units needs to be separated and the "half story" in the upper unit still has active knob-and-tube.  I am assuming the entire upper unit (as a minimum) needs rewired, though I could not find active k-n-t on the other levels.

2) HVAC:  At this point it is unclear if the boiler is functional, but I am assuming it froze and cracked.  It appears the upper unit and lower unit are on separate zones, giving us the option of installing two smaller boilers and retaining the existing hydronic plumbing and radiators (provided there are not too many split pipes).  If we remain with hydronic heat it would likely be electric boilers as I do not believe natural gas is available in the neighbourhood ... nor is it any more cost-effective here.  It is equally probable we will remove the existing hydronic lines and radiators and install heat pumps with electric resistance auxiliary heat.

3) Plumbing:  The sewer main is cast iron, as is the main stack, but most of the smaller runs are ABS.  We will replace the internal portion of the sewer main and have the lateral to the street scoped {hoping for no surprises}.  Supply lines are all copper.

4) Envelope:  The house has minimal to no insulation and the windows and storms are all original.   Depending on what we decide to do with the current floor plans - the kitchens are tiny (upstairs is 8x8) - we may take all external walls back to the studs and properly insulate and air-seal the envelope (likely with closed cell foam as I expect there to be limited wall cavity space).   This would make it easier to rewire the house as well.

5) Garage addition:  There is a 1.5 car garage with a "non-conforming" bachelor apartment in the loft overtop.  However, the flat roof has been leaking for 6-12 months and the apartment is a loss.  My initial impression today would be to tear off the entire addition - I'll look at it more closely when we take possession.  Someone in the past had went through the effort to have the lot subdivided and the garage sits on a different parcel from the house.   Removing the garage would also provide the opportunity to building an in-fill unit on the other half.

I need to develop a detailed plan and estimate, but at first blush, I am thinking we can carry out an energy efficiency retrofit  on this property and be closer to a 60K price tag rather than the 80K used in my purchase analysis.

If we decided to come down on the more common and, IMHO, slumloard approach to rentals, we could skip the air sealing and insulation replace the windows, put electric baseboards in all around to unload the {still high} heating costs on the tenants and call it a day with a 30K renovation ... but that is unlikely to happen.

Evan sticking with our normal level of energy efficient renovation, we should come out the other end of this one either with a sale and 30 - 40K in our pockets or a rental where we have refinance all our our capital back out.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Sounds like a very nice project

Please keep us posted on this potential purchase

Jenkins Ramon, JMWPS Ventures, LLC | [email protected]

Originally posted by @Roy N. :

4) Envelope:  The house has minimal to no insulation and the windows and storms are all original.   Depending on what we decide to do with the current floor plans - the kitchens are tiny (upstairs is 8x8) - we may take all external walls back to the studs and properly insulate and air-seal the envelope (likely with closed cell foam as I expect there to be limited wall cavity space).   This would make it easier to rewire the house as well.

.....

I need to develop a detailed plan and estimate, but at first blush, I am thinking we can carry out an energy efficiency retrofit  on this property and be closer to a 60K price tag rather than the 80K used in my purchase analysis.

....

Thanks for sharing your story! I also love the thread title!

I'm interested in your analysis here.  Since you plan to rewire anyway, the whole 'down to studs' plan makes sense, but couldn't you do pretty well with dense pack cellulose (or mineral wool) and fishing wires???  If the walls are in rough shape you may as well gut. But we've found ourselves doing a mix.  

I wonder about the cost and benefit of less extreme makeovers versus doing it completely.

The more air sealing the better!  We've done the spray foam in the roof and box sills (accessible), cellulose elsewhere. Could be tighter, but the cost seemed too high. Have you calculated the added energy saving benefit of a total gut versus a partial? If yes, are you willing to share?

@Tanya F.

Dense/wet packed cellulose, mineral wool or hemp may be an option, but the house is old enough that it may be balloon framed or from local cut (non-standard dimension) lumber with live edge plank sheathing.  In those cases, the most cost effective way to air seal and obtain any significant insulation is closed cell foam.

I would prefer another material - I've even looked into  air-crete as an alternative - though it has its own embodied energy issues and there are claims it's not nearly as effective or stable as claimed.

Many of the walls are in fair shape, but we will still be required to redo the bottom 8" if we remove the present hydronic baseboards in favour of heat pumps and/or resistant electrical baseboards.   If the walls are not balloon frame and there are not too many cross-blocks, we could try to retain the inner walls and inject insulation, but the more of these we do, the less it seems to save us in the end ... the cost of drywall and mudding versus an effective air sealing and application of insulation.

It has also been our experience that while materials are cheaper to air seal using poly & caulking and insulate with mineral wool, the labour required pretty much make it a wash with the cost of closed cell foam.

Once we confirm our plans, I'll do a full envelope model on the house and share my results. Where this is an REO, I have no access to the previous utilities data, but given the boiler was an older oil burner (76% efficient), the envelope has little to no insulation and the windows (single pain with storms, which have not been maintained) and doors are all original, I expect the ~2375 ft^2 building was averaging 300 - 400/month in heating costs. On top of that both units are on a single electrical entrance and despite some of the waste lines being ABS, the toilets were all 5-gallon models from the 60s, there is one original claw-foot tub and a 1960s shower unit with a 2.5+gpm fixture. Going by other rental properties of that vintage in the area, I would not be surprised if the landlord was averaging $600 - $800/mth operational costs (not including property tax which is 3%).

Once we get rolling in June, I may move this to the Diary Thread and post our findings, mistakes, and successes.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Thanks, @Roy N.

I look forward to following this project!

Related, what do you know about replacement windows, and what is your plan for this house?  Again, I think about a cost/benefit. I don't like the vinyl in general and have heard some people are dissatisfied. We have old wood double hung windows with iron weights (1914 house) with 1950's storms and we are just starting to shop around. Looking at wood or fiberglass replacements. They're more expensive than vinyl but I wanted to consult with someone who has done the research,(and I suspect you have) who also values energy efficiency in rental properties.  I know that filling the cavities where the iron weights are moving around with insulation (closed cell foam preferably) is essential.

@Tanya F.

Fibreglass are the best.  We used them in our own house, but they are not a cost effective solution for anything other than a {very} high end rental.  A good quality triple pane fibreglass window, the kind you would use in a Passivhaus build or retrofit - will run you $50 - $75 per ft^2.  One of your best sources in North America would be Ken Lothian at Thermotec Fibreglass in Carp, Ontario (just outside Ottawa) ... who knows, with the 25-28% currency exchange in your favour, they might not bee too terribly expensive.

You can get windows that are wood or a wood/aluminium blend. If done right they provide less thermal conductivity than vinyl or pure aluminium framed windows.  The downside of wood is the ongoing maintenance, but there are some which come with an enamelled finish which should lengthen the repaint interval.   

Several companies are now making vinyl windows with better insulated spacers and sashes to reduce the thermal bridging and claims they are less prone to warping.  Only time will tell the full story.

We tend to use triple glaze vinyl windows in our rental renovations.  While not in the same category as a good fibreglass window (< 0.90 W/m^2K), 0.15 Btu/ft^2), a good triple-glazed vinyl window will be in the vicinity of 1.35W/M^2K, 0.23 Btu/ft^2.  We still plan on a vinyl window having a 20-25year lifespan.

What will help as much, perhaps more, than the material from what the frame/sash is constructed, is choosing a more efficient style of window.  Obviously, fixed pane is the most efficient and you should use them where possible.   Where operable windows are required or desired, casement/awning are your best design, followed by tilt-n-turn, then your single/double hung and, bringing up the rear, your horizontal slider.

Finally, it also pays to "tune" your windows to your location and the exposure where they will be installed.  Here in the north, that means higher solar gain on south / southwestern exposures to capture heat from the winter sun (you need to ensure the window is shaded during the summer months to avoid over heating) and more thermal glazings on northern and eastern exposures.

Updated almost 3 years ago

Tanya: Other manufacturers of quality fibreglass windows are: Accurate Dorwin, Inline, Duxton, and Fibertec. Though Ken and Thermotec were great when we dealt with them years ago, there have been some more recent complaints about slow delivery and custo

Updated almost 3 years ago

....complaints about slow delivery and customer service (they were/are a small company, so the growth in demand may have been more then they could accommodate).

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Thanks, @Roy N.

Our builder estimates $700  per window (installed) for a nice wood window (Kolbe).  I don't know the costs yet per window (with and without labor) for some of our other options. I just know that the big chain window replacement company is hugely more expensive than that.   This is a 1914 house and I think casement windows would look funny.  On new construction (an attic addition on this same house) we used Marvin Integrity fiberglass.  They seem pretty nice.  I'm interested to see how the ones you suggest compare. Thanks for the suggestions on other suppliers.

Interesting idea to vary solar gain and thermal glazings for windows facing various directions. I've always gotten the same windows all around the house....


Once we get rolling in June, I may move this to the Diary Thread and post our findings, mistakes, and successes.

How's this project coming, Roy? Looking forward to updates.

Originally posted by @Tanya F. :

Once we get rolling in June, I may move this to the Diary Thread and post our findings, mistakes, and successes.

How's this project coming, Roy? Looking forward to updates.

Tanya,

We had to shuffle projects and will not be starting demolition on the house until late August.   I have had the floor plans drafted and paperwork filed for a month now ... I just sent a letter to the City last week advising them of our change in start date.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126