It’s been about seven weeks since we closed on the sale of our house (the one we sold without a realtor!) And we spent most of that time living in a travel trailer in the backyard of our lake house that is being totally remodeled.
We had to DIY at lot of the early work at the lake house after our tenant of 22 years moved out this summer. But in late August, we found a local contractor who was interested in taking on the rest of the project. They couldn’t start until early October but we were fine with that! We’ve used this contractor in the past and have appreciated their reasonable prices and quality work.
The Original Renovation Plan
The lake house was built as a cottage in the 1940’s. It had two additions over the next decade. A bathroom was added in the back of the house and a kitchen, attic and covered front porch were the second addition. The house had an L-shaped layout on 3 different height cement pads (no basement). It was 1020 square feet and had a mostly unusable 150 square foot attic.
I purchased it as a foreclosure in 1993 when I was 26 years old. I bid $44,500 for this 2 bed/1 bath Cape Cod which was listed as being 1.7 stories. I used it as an investment property for more than 23 years (with only one month of vacancy) and collected over $168,000 in rent.
Fast-forward 24 years and with both kids off to college, we decided to sell our house and downsize into the lake house to start our snowbird housing plan. We plan to use the lake house for most of the year and spend the winter at our condo in Sarasota, Florida. When the kids are out of college, we can sell the lake house without paying capital gains or depreciation recapture because it will be our primary residence for at least three years.
The original plan was to do some major updates while keeping it a 2 bed/1 bath house. We’d have a new roof and siding, new flooring and a few new windows. We’d paint every room and clean up the attic. We’d make some fairly low-cost kitchen and bath upgrades and buy a couple of new appliances. The contractor would complete the bigger projects and we’d do the rest.
We understood that there was a good chance that they might find other issues that would need to be addressed during the renovation. The contractor estimated $40,000 for their work and the work we would do would cost about $15,000. The renovation cost and the purchase price would bring our investment to about $100,000. A local realtor told us that with the improvements we were planning, the house would be worth at least $125,000 when it was finished.
And the timeline for completing the work was about six weeks. We should be moved in by Thanksgiving.
This was a “good enough” plan. It met many of our needs, but not all of our wants. And we decided we’d get by with what we had. So we signed the contract and went on enjoying our summer – knowing that we had a plan in place.
When Problems Become Opportunities
Six weeks flew by! The kids left for college, we had a great time in Colorado, and we came home and finished moving things to the storage unit we rented earlier in the summer. We had three large trees removed at the lake house and we put in new drainage after some flooding this spring. We also moved the electric and internet service underground.
Our house sold in early October and we moved into the travel trailer the same day. The contractors started the lake house renovation the following week. Camper life was working out fine and we had travel plans to head to Dallas and FinCon 2017. And we’d get a hotel at the end of the project for a few days when the bathroom was being updated.
But by the third day of demolition, the contractors had uncovered some major issues. The upstairs windows had been leaking and many of the walls upstairs were rotting. They were also concerned about some of the rafters.
We had expected some serious problems, so we weren’t surprised. We couldn’t just repair the rotting walls or hope the sagging rafters would support the new metal roof or another layer of shingles. Rather than get upset about all of these problems, we used this information to look forward and consider some new options.
Scaling Up from Renovation to Massive Remodel
Renovate means to restore something old to a good state of repair. It would be impossible to renovate parts of the house because a good state of “repair” was no longer an option. At this point, we talked to the contractor about scaling up the project to a major remodeling of the entire house. (Remodeling means to change in structure or form.)
The contractor suggested staying with the same “footprint” and making sure everything was built on the existing concrete pads. This would save a lot of money and time and they would use as much of the existing structure as possible.
We decided that if we had to replace the rafters, we wanted to raise the roof line and make the attic into a 3rd (and really large) bedroom. We asked about adding a small half bath upstairs by reducing the size of the old master bedroom. We could only fit a small table in the existing eat-in kitchen, so what about moving a wall and making the covered porch part of the kitchen? And then we asked about having the existing bathroom totally gutted and moving the laundry area.
We’d end up with a 3 bed/1.5 bath house with an extra 350 square feet of living space. We’d have a bedroom for each of the kids and a really large bedroom for us. We could enjoy a large eat-in kitchen and a somewhat “open concept” connection between the kitchen and living room.
And we wouldn’t have to go downstairs at night to use the bathroom! PRICELESS.
The contractor estimated that it would be closer to $80,000 for the new remodeling plan. And we would still have about $15,000 of costs for the work we would do. Between the remodeling costs and the purchase price, our investment would be about $140,000.
And for that price, we’d basically be getting a new house. A house that was safe and met all of our needs and our wants. We also checked in with the realtor and they said that based on the remodeling plan, our house would be worth at least $165,000 and likely much more.
We decided that spending $40,000 more was a really smart decision based on the situation. The contractor said that our original estimate was going to go up anyways because of all of the damage that was found. He suggested that if we had to replace walls and rafters, it made sense to scale up the project.
Thinking long term, this house could be turned back into a great rental property. And with the location across the street from the lake, it could also make a great AirBNB house (even though we don’t think we really want to do that! Read more about that in a post from last year.) But I guess we could change our minds! Or maybe one of the kids will end up back in the area and would want to take over the house.
No matter what happens, we don’t think we’ll lose any money and we’ll be much happier in this bigger and newer house. (We already are whenever we walk in the door!)
We’ll pay more in taxes when we’re reassessed, but we think moving from “good enough” to “really great” will be worth it too.
The lake house remodel will take 4-6 weeks longer now that we’ve scaled up. We hope to be in by the end of the year. We had to move out of the travel trailer about a week ago because they had to demolish the bathroom in the house – but the six weeks of trailer life was great! We learned a lot about “tiny” house living and it was good preparation for the downsize (that isn’t as downsized as we thought it would be!)
With a bigger house and the change of plans, we decided that we didn’t need the trailer anymore – so we sold it yesterday! The couple who bought it was thrilled and already have it set up at their family camp. A win-win for everyone.
We are now renting a lake cottage a few houses down the road from our house. No one would rent us a cottage back in the late summer when we were looking for places. Cottage owners hope to rent for the whole off-season rather than just month-to-month. But this cottage was empty, so they gladly took us up on our offer for a 4-6 week rental!
We’re deep into the remodel at this point. We have a full second story (no more 1.7 stories), a huge third bedroom, all new windows, a new metal roof, and a much bigger kitchen! We’ve ordered new kitchen cabinets and countertops and the drywall started going up today.
I have 87 items in my online shopping cart at Lowe’s right now! I have a 10% off card to use on top of the holiday sales and rebates – so we’ll be saving more than $2000 on this order. The items include a full set of kitchen appliances, over $4000 worth of vinyl plank flooring, a hot water heater, hydronic wall heaters, exterior lights, faucets, and a toilet. (Some things are more fun to shop for than others…)
I also have another tab open on my computer with a Home Depot order for a pedestal sink, a washer and dryer, and another toilet. (Because Lowe’s didn’t have the toilet Mr. MSD always installs in our rentals for small bathrooms! And since it’s his job to install them – he gets to pick the toilets!)
It’s been a challenging couple of months – but we’ve learned a lot and we’ve had plenty of fun along the way. But for any of you who have built a new house or completed a major remodel – you know that decision fatigue is real. We find making all these decisions to be as tiring as a lot of the physical work we did getting our house ready to sell and on the DIY projects we’ve taken on. And we’ll be happy when it’s over 😉 But for now, we just take it day by day and we’re amazed at the changes we see in the house each day.
Thanks for following our story! If you have questions about our remodel – ask away! If you’ve ever had been involved in a project like this, how did you handle all the decisions? Any advice you can give will be appreciated! I’m just glad that some of my side hustles are over because I couldn’t imagine doing all of this while working full-time too!