Anatomy of a Pittsburgh House Flip. House flipping is all the rage, largely because it can be very profitable and because the people on TV make it look so easy. Let me clue you in, those people aren’t flipping houses in Pittsburgh. They also aren’t exactly trying to make money, the TV show covers that part for them. I am amazingly well versed on how TV flips work, I have been interviewed six times about doing a flip this house sort of TV show, but the truth is that I am neither good looking or interesting enough. You people are stuck with me.
The most interesting thing about Pittsburgh housing, and this extends well beyond the city limits is the age of the house stock. See table below. Almost every house in the city was built before Ronald Reagan moved into the White House.
|Median Year Built||1940||N/A|
|Built in 1939 or Earlier||78,341||-0.7%|
|Built between 1940 and 1949||14,039||-2.8%|
|Built between 1950 and 1959||19,795||2.0%|
|Built between 1960 and 1969||13,723||6.2%|
|Built between 1970 and 1979||10,612||-3.7%|
|Built between 1980 and 1989||6,939||-0.8%|
|Built between 1990 and 1999||5,535||3.5%|
|Built between 2000 and 2009||4,776||2.3%|
|Built in 2010 or Later||3,551|
Pittsburgh is a very historic city. It was founded in 1758, 18 years before the Declaration of Independence. It is not impossible to find a house that was built before the Civil War.
The median house in Pittsburgh was built in 1940. That means that half of the houses were built before that date. Almost every house you will ever renovate in Pittsburgh (90%) will predate the EPA bans on asbestos and lead paint. You are going to need to get rid of both of those substances. Which means that you are probably pushing towards a full gut job right out of the gate. There are legal ways to encapsulate both substances, but you are going to want to consult a professional before attempting anything that comes with a HUGE EPA fine.
Now, let’s talk about the major systems in a house and how the age of our housing inventory affects every aspect of our renovations.
The walls in your flip house are likely to be made of plaster. That plaster will be backed by either wooden or metal lath. Either one will make a man out of you. You do not, just hammer our plaster walls with hand tools. You will need a hammer drill or a small electric jackhammer for this task. You will also need respirators and a full hazmat suit to make the process even more unpleasant. In this process you will create a lot of very fine dust, that dust has asbestos and lead in it. The City of Pittsburgh will force you to tarp the entire house during demolition. This is a hoot of a process, especially on a row house. I highly suggest that you hire a demo company to do this work. They will open up your walls and give you access to the other systems in a couple of days. The problem is that many of the local demo companies wont work in the city due to the tarp requirement. YAY The good news is that the companies who will work in the city will also clean up after themselves and give you a blank canvas to work with.
Sewer lines are a big caution area. Being a very old city, the sewer lines can be ancient. Some of the lines are made of clay. This was an acceptable method of construction 100 years ago. The sewer lines were expected to last 50 years. Do you see a problem here? You NEED to run a camera through your sewer lines BEFORE you get involved in a house flip project. Missing this little detail can cost you up to $40,000 which will blow any rehab budget out of the water. The good news is that sewer camera inspections are not expensive. in many cases you can sleeve an old sewer line, but if you can’t you need to be able to cover the cost of excavating in your rehab budget. In rare cases, the sewer line will run under the neighbor’s house. To remedy this, you need to run a new sewer line, with a grinder pump which will allow you to pump sewage up hill.
Plumbing in a house from 1940 will likely have lead or old galvanized pipes. Neither of these is a good thing. The good news is that once the walls are open, it is fairly straight forward process to replumb an entire house with modern PEX and PVC pipes.
The infamous knob and tube wiring was starting to be phased out in the 1940’s, starting I said. At least half the houses in our area still have some remnant of this fire hazard hidden within the walls. Over the years lots of newer wiring has been spliced into knob and tube circuits that lay hidden within the walls. A quick test for a ground will identify the old circuits as quickly as finding screw in fuses in the main electrical service box. If and when you locate knob and tube wiring you are required by code to replace it. Your electrician will love you as he hands you a $5,000 to $15,000 bill.
Prior to 1940 houses used coal fired boilers as a main heat source, and you will still find some of these behemoths in use. You will also find oil and wood fired heating elements. The one thing that these all have in common is that they used water filled radiators to move heat through the house. The problem here is that there is no way to retrofit a radiator to accommodate air conditioning. Buyers really want central air. You are going to have an HVAC company come in an fun duct work through the house, and install a gas powered furnace and an AC unit all in one move. The price to do this will be based upon the square footage of the house. the bigger the house the more expensive this line item will be. You will spend between $5000-10,000 on the ductwork alone. The furnace and A/C unit costs extra.
Old roofs can be a hoot. The big wammy is the slate roof. Slate roofs are very uncommon. If you happen to encounter one, you have a choice to make. You can potentially repair it or replace it. Buyers love slate roofs and will pay a premium for them. You will also pay a premium to have one repaired. Slate roofs are essentially eternal. They can be 100 years old and still in good shape. They are made of slate shingles which are held in place by copper nails. Over time the slates can actually shift, causing a leak. Few roofers want anything to do with a slate roof. They are very steeply pitched and slate is super slippery. The materials are also super expensive. Either way you look at it, repairing or replacing a slate roof is going to be costly.
Why not just build new? Out of state investors sometimes as this question. The problem is our zoning laws make new builds in urban neighborhoods almost impossible. to build a new house, you need to have a “setback” of 10 feet. This is a gap between the edge of the property line and the far limit of where you can build. On a standard 30 foot wide city lot, you need to have 10 feet of setback on each side, leaving you with a 10 foot strip of buildable land. The only workaround is to assemble multiple buildable lots and combine them. This requires a vacant lot along with a house in a gentrifying area that will support the cost of demolishing a house on top of the new construction budget.
You may have noticed that I skipped over a few important things like drywall, paint, flooring, kitchens, and bathrooms. You are going to want to include all of those line items in your flip budget, but this article isn’t about those important items. This article is about the basic structures that make a house livable and how the age of our housing stock makes our process quite a bit different from what you see on HGTV.
Even through all of this, we are still the single most profitable house flipping market in America. Now quit playing on the internet and go found a house to flip. We have access to all of the funding that you will ever need. Check out our funding page. https://pittsburghreia.com/funding/
Tonia Caruso from WQED News did a special on Pittsburgh House Flipping – It is definitely worth a view, if you want to understand why the Pittsburgh market is unique. WQED Specials | The Pittsburgh Flip | Season 2019 | Episode 15 | PBS