Rehab or rebuild: Is an old house worth saving?

Rehab or rebuild: Is an old house worth saving?

Organizations across the country are working to preserve the historic value of homes and neighborhoods. But how do they decide if a house can be fixed?

Across America, nonprofit organizations are giving new life to old homes through housing rehabilitation programs. These efforts are preserving and restoring the character of historic homes and revitalizing neighborhoods.

“You really are saving a piece of culture and a piece of the fabric of that community,” says Nancy Welsh, who founded Builders of Hope in Raleigh, N.C., in 2006. “It has an impact on the people living there.”

But not every home can be saved, so how does an organization decide whether to invest time and money on any particular house or street? Cost is necessarily a key consideration for all of these organizations, many of which receive federal funding and therefore have requirements for return on investment.

That’s the case in Pocatello, Idaho, where Mark Dahlquist runs Pocatello Neighborhood Housing Services. In 2012, his organization received funds from the Community Development Financial Institutions Fund.

“The CDFI Fund likes to see a sustainability revenue of above 40%, meaning that at least 40% of the revenue of the organization comes from within,” Dahlquist says. “They don’t like to invest in an organization that’s totally grant-dependent. So we have to work like a private business and make some money in addition to our grant revenue.”

The Pocatello organization makes that money by giving loans to homebuyers that those buyers repay with a bit of interest, and by selling the homes it has rehabilitated or built from scratch. To be profitable, it can’t invest in fixing up homes that don’t make financial sense.

“If we run across something with historic value but it would cost too much, we would walk away from it,” he says. “The real historic ones that need to be saved are like that. But our organization, if we are going to sustain ourselves, can’t do that. We have to make that economic decision to walk away.”

In Syracuse, N.Y., where Home HeadQuarters operates, vacant housing is a big problem. Rehabilitating those properties can be cost-prohibitive, so the organization is selective about which homes to fix up.

“You can’t do vacant-property rehab without a deep subsidy,” says Kerry Quaglia, executive director of Home HeadQuarters. “You could buy a home from the city of Syracuse for a dollar, but it is very dilapidated and you might have to put $100,000 into it to fix it up to make it safe. And it might be in a neighborhood where you can only sell it for $50,000 or $55,000.”

Many older homes require remediation for lead and asbestos just to make them habitable. “Then you can start addressing major systems of the house, like roofing, plumbing and electrical,” Quaglia says. “It drives up the cost.”

Judgment call

His organization has found that it is often more economical to demolish these homes and start fresh. But it does occasionally invest in properties that don’t make purely financial sense.

“You might have a neighborhood that is otherwise pretty good, but there is one vacant house that becomes a nuisance,” Quaglia says. “We’ll get the resources to turn the property around and get it occupied.”

For some organizations, the save-or-demolish question is more of a “negotiation,” as Abigail Mack, who is director of homeownership of Homeport, describes it.

“It’s based on everything from the historic value of the home to the aesthetic character of the home, the quality, the condition it’s in,” she said. “Some of it is cost. If the cost would be excessive to renovate a unit, it’s a better use of public funds to demolish and rebuild.”

Choosing character over cost

What’s “excessive” for one organization might not be for another.

“If the character of the home is special in some way – a nice old style, really great features, a big front porch – that would be really hard to replicate on a new house, then that’s a consideration,” says Patrick Morrissy, executive director of Hands Inc. in Orange, N.J. “We might spend a little more money but would be saving a great old home.”

In Columbus, Homeport stepped outside its focus on creating affordable housing in 2007 when it purchased an old 2,200-square-foot Victorian home. “Normally, we wouldn’t have gone after that because we knew it wouldn’t be affordable,” Mack says. “We had watched it flip four times. It was an eyesore, and we thought it would be better to control it.” The organization did an exterior renovation, then sat on the property until it had the funding to do an interior renovation.

It’s not always up to the organization what stays and goes. In Columbus, any project using federal dollars must go through a historic-review process, Mack says.

For Welsh in North Carolina, the goal is to save every house. Builders of Hope works only with existing structures. “We take every single house all the way down to the studs,” she says. “A lot of mistakes people make is because they are trying to save plumbing or wiring or doing patchwork to fix this or that. Then they get inside and find really serious issues and didn’t budget for it. Every house we do, we budget to replace all of that. We want the house to be good for another 50 years.”

Many housing nonprofits focus on preserving a home’s historic exterior, while redesigning the interior with a modern, open layout and energy-efficient features. Builders of Hope takes that to another level, with its “extreme green” rehab.

Relocating homes

Another interesting aspect of Welsh’s organization is that it doesn’t just rehabilitate homes in place. Nearly a third of the projects that Builders of Hope takes on involve moving existing houses to other communities, for example because the houses are in the way of a planned freeway and would otherwise be torn down. Those homes are then rehabilitated, and sometimes are modified to fit better in a new community.

But in some of those cases, a house can’t be saved. “If the house is on a slab, we can’t move it from a slab,” Welsh says. “We have to have a cross base. Or sometimes the house is so old and it would just fall apart if we try to lift it up. It has to be structurally sound for us to move it.”

A major structural issue is one of the biggest reasons an older home would have to be torn down. “There are houses that no matter how attractive they are because of their style and all, they’re just too compromised structurally,” Morrissy says. “If a house is compromised structurally in a serious way, then forget about it.”

For example, Mack’s organization does its best to preserve brick homes, but had to tear one down because it had a tree growing through it. Fire or water damage could also force demolition. Conditions like that are clear-cut cases for demolition, but it’s not always that simple. It often comes down to a judgment call. Morrissy says his organization’s approach is to “save what we can.”

“We’ve saved some houses that most people might have torn down,” he says. “I’m not positive we were right, but it seemed right at the time. Sometimes you get into a job and it ends up costing you more than you thought.”

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Tearing down and rebuilding come with their own extra costs, too.

“You have to hire someone to design a new house, hire a lawyer to go to planning and zoning,” Morrissy says. “Zoning may not allow it, so you may need variances. And you may be required to provide on-site parking, where the current house might not have it. These other considerations end up costing money and causing delay, and maybe you don’t end up with a better product.”

Read the original article by Leah L. Culler of MSN Real Estate


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