If you only had $1 dollar to spend on a home would you do it? Its not a joke its a real thing. In fact lots of people are now seeking out affordable houses and committing to a life of frugality.
In today’s post I will explain where you can find affordable houses and how you can live cheaper.
The year 2020 has thrown everyone for a loop.
That may be an understatement. But lets face it, the way people live and work has altered in ways most of us could have never imagined. With many people changing to remote work or for people that have lost their jobs completely, the question of how to live more thrifty is on the forefront of many people’s minds.
Recently I came across an awesome story from lifestyle vlogger Monica Church. She documented a really cool video about a woman that purchased a historic victorian home for only $18,000 in West Virginia.
This home was found from the increasingly popular website Cheap Old Houses.
On this website you can find a plethora of beautiful old victorian homes, farm houses, bungalows and even old churches for sale. The prices are shockingly low.
You can find affordable houses to buy for as little as $1,000!
It seems too good to be true doesn’t it?
Yes and no. It is true that you can outright purchase a home for $1,000, $5,000 and higher. But the catch is that all of these affordable houses are in need of some TLC.
The website Cheap Old Homes markets these homes to potential buyers as “homes that need saving.”
I think that is a fun way to look at buying one of these affordable houses.
You aren’t just buying a home, you are saving a historic home!
But don’t let a restoration scare you away from buying a home.
The reason I say that is because there are a ton of programs that will give you tax breaks and special loans just for purchasing and restoring an old home.
For example, in the city of Buffalo, New York you can buy a home for one dollar through their Urban Homestead Program.
The main guidelines with Buffalo’s dollar home program require the following:
- You must commit to live in the home for at least 3 years
- Be employed
- You must have at least $5000 dollars in the bank
- You must commit to fixing any code violations within the first 18 months of owning the home
How much do home renovations cost?
If you think this sounds exciting, but you are wondering how much home renovations will cost you, I will provide some typical costs to give you an idea of how much you can expect to spend.
According to an article from the website Business Insider, the typical costs to renovate each room in a home are as follows:
A Typical Kitchen Renovation Cost
The average amount to renovate a kitchen is about $25,000 dollars. The standard rule to follow is expect to spend about $150 per square foot. As noted in the business insider article, most of the costs relate to labor.
So if you can manage any of the renovations yourself, you can save a lot of money.
A Bathroom Renovation Will Cost about $10,000
The website Home Advisor shows that the national average cost in the United States to renovate a bathroom will be $10,675.
A Bedroom Will Run You About $8,000
This seems high for a bedroom. But the website Fixr.com states that a bedroom may need new windows, flooring, drywall and paint, which could cost you close to $8,000 quickly.
On average a bedroom costs about $100 per square foot to renovate.
As you can see costs can add up quickly.
If you have ever seen a home renovation show on HGTV, you have likely seen surprise plumbing or electrical issues come up. Before you know it the buyer’s budget skyrockets.
Expect the unexpected with home renovations.
Even if you consider all of the costs that renovations bring with these dollar home programs, you are still likely to spend far less on a home overall compared to purchasing a brand new home.
According to an article from CNN Money in which they feature a few home buyers from the Buffalo, New York area that participated in the $1 home program.
One of the buyers, Mike Puma purchased the home (pictured below) for a dollar. The home needed new plumbing, a new furnace and new interior walls.
At the time of the CNN Money article, buyer Mike Puma had spent $40,000 already, but expects to spend another $15,000 to complete everything. A total of $55,000.
If you consider only spending $55,000 on a home, you are a winner.
Despite the nearly full home renovation that took place for Mr. Puma you can clearly see how affordable his home will be. Can you imagine the mortgage?
St. Louis Missouri Has A Dollar Home Program Too
Very similar to the dollar home program in Buffalo, is the dollar home project in St. Louis, Missouri.
The city of St. Louis started a pilot program in 2019 allowing buyers to purchase one of the qualified homes for only a dollar.
You can find all of the requirements on how to purchase a home for a dollar on the city of St. Louis government website.
What Are The Tax Incentives For Renovating A Historic Home?
The most popular tax credit for renovating a historic home is known as the Rehabilitation Tax Credit. This is a federal income tax credit that you can receive for up to 20 percent of renovation costs.
This particular program does have a catch.
In order to qualify for the Rehabilitation Tax Credit the property must be used as an income generating property. So think rental property or a bed and breakfast.
You May Qualify For An FHA Rehab Loan
If you are considering financing your home purchase you might qualify for a FHA 203(k) Rehab loan.
According to the website Nerd Wallet there are two types of FHA 203(k) rehab loans.
#1 – 203(k) Limited Loan
The limited loan provides up to $35,000 to be used for renovations. However it excludes major structural renovations.
#2 – 203(k) Standard Loan
With the standard loan option renovations must be a minimum of $5000. This type of loan also allows for major structural repairs.
The Benefits Of Getting An FHA 203(k) Loan
Taking out an FHA 203(k) loan, whether it be the limited loan option or the standard loan option both give you the opportunity to finance a home in need of repairs.
According to the realty website Zillow.com the biggest benefit is that you can qualify to purchase a home in need of repairs that you otherwise may not have been able to purchase outright.
Going International, Where To Find Affordable Houses Overseas
While there are so many unique options in the United States to purchase affordable homes, did you know that similar programs exist in other countries as well?
Its true. There are “one euro” home programs and cheap home programs available for anyone to purchase no matter what country you are from.
Some of most popular countries to purchase cheap homes include:
Italy has one of most attractive “one euro” home programs. According to CNN there are dozens of cities in Italy that are participating in this very appealing offer.
The city of Mussomeli in the Sicilian region of Italy has one of the most popular programs for cheap homes. The website Case 1 Euro has all the details about how to purchase your new Italian home for just 1 Euro.
Small villages across Spain offer plenty of opportunities for people to purchase a home or an entire village for as little as $5000 euros! No joke.
According to a story from NPR, entire villages in central Spain have properties that are for sale. NPR interviewed a British born real estate agent named Mark Adkinson.
He travels to Spain, finds old homes and helps to sell them to prospective buyers for very cheap.
In Conclusion, Are Cheap Homes Right For You?
There is a lot to consider when purchasing a cheap historic home. To know if one of these programs could be right for you just consider weighing the following possibilities.
A renovation project could take months to complete. Consider how this would fit into your daily routine and if it could work for you. Ask yourself if you are okay living in a construction zone, (if safe to do so of course). Also consider if staying with family or friends is an option for you while you are renovating.
Buying a home for as little as one dollar sounds so appealing. But of course homes in these revitalization programs come with needed repairs of all kinds. Know your budget and if you have money on hand for the renovations and surprise repairs that may come up.
Consider the location the home is in. Because no matter how fabulous you make your house on the inside, your outside view will never change. If you are planning a big move to a new state or even country perhaps visit first. See what the job prospects are. If you can work remotely then that frees up the need to consider the job market where you are thinking of purchasing.
Are You Handy?
If you are really good at home repairs and can tackle the bulk of the work on your own then your expected costs can be significantly lower than if you were to outsource to a contractor.
If The Shoe Fits, Buy It
All in all I think the idea of putting in some sweat equity and putting your personal stamp on a property sounds so fulfilling. Finding affordable houses are absolutely possible. Just keep your eyes open for the right opportunity. And, whatever route you choose, remember to do what is right for you.