mansion Archives - Lazy Man and Money

It’s been a solid 18 months since we found our investment property, which was part of the our plan to expand the real estate empire.

And now I’ve been bitten again…

Unlike previous real estate purchases we didn’t set out looking for something. Instead something jumped in my lap.

There’s a property that’s down the street for me that’s been on the market for the entire time we lived here. It’s a colossal estate with a driveway so long you can barely see the house from the street. That’s always added a bit of mystery.

I searched for the property on Zillow and found what I expected… a property that was priced at 1.5 million. That’s a bargain price compared to the 2.5 Million it was listed at a few years ago.

Either price might as well be $10 million, because with our current real estate properties it isn’t realistic at all.

However, I got an email saying that the asking price had dropped to under a million. Six figures? That’s something that I at least have to kick the tires on. There’s always a chance that I bring a friend on-board as an investor.

So I sent an email to my real estate agent to check it out. I did this fully expecting more red flags than an MLM pyramid scheme.

However, if it came out clean, just maybe there something there. After all, the interest rates are good (keep scrolling after this calcultor, there’s a lot more to the more story):

The property has been on the market for more than 4 years now. The owner seems to be having some financial trouble and it’s a short sale and soon to be foreclosed upon.

That’s reason #1 why the price reached six figures. Another reason is that the home doesn’t look like the pictures. My guess is that it looked that way when it was first put on the market. However, four years of New England weather has done a number to the paint. Other parts of the interior look like they need some updating.

So what do you get for almost 7 figures? The property has two houses on it… over 6000 sq. ft. of living area spread over 5 acres. The “guest house” at 2000 sq.ft. is actually bigger than what we live in now. It has four bedrooms, but they are small. It’s historic, predating the Emancipation Proclamation, but it is recently renovated with marble counters, stainless steel appliances. It is surprisingly very nice.

The main house is 5 bedrooms. It consists of a main portion of 3 bedrooms and an in-law suite of 2 bedrooms. The in-law suite doesn’t have a full kitchen, but a bar with running water and a fridge. There’s more than enough room to make a kitchen.

Overall there are 9 bedrooms on 5 acres of property, covering what I’d call 3 units. (The county’s official zoning board may disagree.)

At first the idea was to go live there. I thought of living in the guest house and renting out larger property. The wife wanted to live in the big house and rent out the guest house. However, it doesn’t look like either scenario will work. The big property needs some updating and my wife didn’t like the layout of the main house/in-law combination. The guest house is a better fit, but the small bedrooms make it less desirable than the house we have now.

So my idea would be to buy it and use it for what it was intended for… running a bed and breakfast. If you’ve met me, you never would have pinned me for doing such a thing. Honestly, I’m pretty sure it isn’t what I want to do. However, there are some things like weekly rentals and AirBNB that do very well in my area.

The question would be whether I could make enough income to offset all the expenses. I created a spreadsheet of expenses and it goes on forever. I was overestimating expenses and I think I found that it was over $8000 with principle, interest, taxes, insurance, maintenance, and utilities.

The big wildcard is that I don’t know anything about running a bed and breakfast. I can guess at the expenses, but I know I have no experience. I can guess at the income, but that’s even more difficult to forecast.

Most importantly, I am self-aware enough to know that I don’t know these things. I know enough to not jump into this without doing a lot more research first. I also have a good network of friends with extensive real estate investing experience to gather advice on.

I’m going to continue kicking the tires on this one a bit. If nothing else, I’m learning a lot in just going through the process.

I was surfing the web earlier this week when I came across a home that I like. I haven’t shown my wife it yet. It’s a little larger than she’s looking for and I’m a little nervous about her reaction. While she’s really good at cleaning, she definitely doesn’t enjoy it. This home would require a lot more cleaning than our current place… and we know that I’m too Lazy to do it. Nonetheless, I thought I’d openly brainstorm about this house… toss it by my budget and see how it goes.

You probably want to know a few things about the house. You may have read a little about it on the news already. It’s the Spelling estate with a 150 million dollar asking price.

Is the Spelling Estate too Expensive?

While a price tag of over $2500 a square foot may seem expensive, I’d argue that it’s not. You have to factor in all the surrounding land. How many more houses could you build on that? With a bit of work, you might be able to get that dollar per square foot down. Also, not all square feet are created equal. A square foot of a top end new stove is worth more than square foot with an a low-end one from 1976.

The Opportunity

Before we get into the costs, let’s dream a little bit about how I could make money with the Spelling estate. Here are just a couple of ideas of the top of my head:

Make it a Museum and Charge Admission – Maybe I could turn it into a . I saw Tori Spelling on Smallville a couple of weeks ago, and she looked poised for a big acting break. That could only help the museum style business, right?
Rent it out for Special Occasions – Weddings are big businesses. I imagine Hollywood’s rich and famous have significant money to spend for such once in a lifetime opportunities. There’s no need to stop at weddings. My home could be “the it place” to have a Bar and Bat Mitzvahs, Quinceanera, or other similar celebrations. Anyone who has seen MTV’s My Super Sweet 16 knows there’s money to be made here.
Use it to Jump Start My Socialite Career – I’d get in all the newspapers as the buyer. That kind of publicity is hard to buy. I have to do more research on the socialite front before I can count on this income stream. I’m not sure if a guy can even be one. If so, do I have have a video tape get out there like Paris Hilton and Kim Kardashians? Yikes, I think I just lost all but two of my readers.

I think some combination of all of the above is the answer to unlocking the full value of the home. Readers, can you help me out with other things that I missed in the comments?

Budgeting for the Mansion

I had a little difficulty in budgeting for the mansion. I fired up my mortgage calculators and found that most topped out at a paltry 10M loan. Fortunately, I can make some back of the envelope calculations with that amount. A 10M seems to lead to payments of around $70,000 a month. That would put the payments on a 150M home at around an even one million a month. However, I might be able to bargain down the 150M number a bit in this economy. I suspect I could get payments down to $900,000 a month. Judging by how much Lazy Man and Money has made over the last year, I’d need approximately 500 more sites like it.

If you are smart you’ll start snapping up domains like LazyManAndBasketWeaving.com right now.