The painted ladies of Lafayette Square, a mile southwest of downtown St. Louis, were worth more in 1890 than in 1970. The late 19th century was the heyday of these grand parkside homes, before slumlords sliced them into boarding houses, before the mansions of bankers and brewers were abandoned. The city razed countless properties and seized others for taxes.
Today Lafayette Square is flourishing again, and the painted ladies in this registered historic district are strutting their stuff. A year and a half ago, Karen and Peter Snyder paid $300,000 for an
1878 beauty that was partially restored. Since then they have invested an additional $100,000 in a new kitchen, powder room and other renovations, and they estimate it will take $100,000 more to finish the job. With prices in their neighborhood sizzling like a St. Louis summer, the Snyders' investment seems secure.
Whether they're artsy singles, young parents or empty-nesters, modern urban prospectors dream of striking gold in a boarded-up inner-city house or polishing a diamond in a rough neighborhood. Even in St. Louis, which has never experienced a real estate frenzy ˆ la Boston or San Francisco, asking prices can go as high as $500,000 for completely rehabilitated houses on gentrified streets.
When that happens, first-time buyers and families on tight budgets head for tougher neighborhoods, where it helps to have thick skin, a big dog and a spirit of adventure. Access to a ready supply of cash doesn't hurt either. When you pay an $800 heating bill and still find yourself shivering from the cold, you can't overestimate the cost of maintaining a 4,000-square-foot house that may be rich in pocket doors and carpenter's lace but lacking in modern niceties, such as safe wiring and a functional kitchen. "I tell people a fixer-upper takes three times the money and four times the time you'd expect," says Chuck Jung, an agent for Mary King and Associates, a St. Louis real estate firm.
The payoff comes in building home equity and close-knit communities with a combination of guts and physical labor. "If I slipped and fell, any of 12 people would be here in seconds," says Peter Snyder, 50, co-owner of a public-relations firm. "In the city, you look out for one another." That kind of camaraderie didn't exist in Ladue, a prosperous St. Louis suburb where the Snyders raised two sons before moving to Lafayette Square with their 10-year-old daughter, Elicia. But reclaiming the city is a street-by-street campaign, and every block has a story of its own to tell.
Tales of the city
On a Monday afternoon, Edna Gravenhorst stands outside her home, a mile and a half from the Snyders'. As she speaks with a visitor, a police helicopter hovers overhead. Sirens blare, and officers with guns drawn race into an alley 200 yards away. Unfazed, Gravenhorst never even bothers to suggest that she and her guest take refuge in her house. (The next day she learns that the police were chasing a fleeing car thief.)
A downtown girl from San Antonio, Gravenhorst, 47, spent two years in Effingham, a rural town in Illinois, and decided that country life wasn't for her. She persuaded her husband, Ted, who works in his family's 115-year-old butcher-block business in Effingham, to buy a house in St. Louis, the nearest metropolis. She would live there full-time, and he would make the 200-mile round-trip commute on weekends.
The Gravenhorsts initially eyed the city's Soulard area, a second cousin to New Orleans's French Quarter, close to the Mississippi River and Lafayette Square. But the houses were out of their price range. So Edna and Ted landed in an area known on maps and in real estate circles as Benton Park West, but which Edna wisecracks is really "the 'hood."
On a street pockmarked with boarded-up buildings, empty lots, a storefront church and barred windows, Edna and Ted bought property for $217,000, which in 2001 set a record for that block of Ohio Avenue. What they got was a partly restored, three-story townhouse, two empty lots and a rental unit that brings in $350 a month.
Financially, the Gravenhorsts' pioneer venture seems to have been well timed. Across the street from their house, three tenements described by a neighbor as firetraps and nuisances have been torn down. A few lots up, work crews are finishing renovation of a big two-story house, sold by a developer to a suburban school principal for $245,000. A wreck of a building on the corner is being turned into two "new" townhouses. Edna is smiling, although she isn't eager to sell her lots. And there's no guarantee she's sitting on a gold mine. Two lots up, half a duplex in need of work but still habitable recently brought only $41,000 in a foreclosure auction.
But if the Gravenhorsts stick it out, they may one day find themselves in the position of Linda and Charles Dahlheimer. Fifteen years ago, the Dahlheimers moved to a house about midway between the Gravenhorsts' block and Lafayette Square. Natives of St. Louis, they were returning with their 7-year-old son, Michael, after Charles, then 47, left a job in Washington, D.C., to start a consulting firm. Michael has since graduated from college and moved away, but his parents are just now finishing their house.
In 1987 the Dahlheimers came across a three-story manse built in 1890. The former owner had divided it in half, with an ugly partition right behind the front door. The place was a mess. "She must have had 100 buckets to collect all the drips," Charles recalls, and there was no electricity on the top floor. Still, the Dahlheimers phoned several times from Washington, and even flew out to St. Louis to plead with the owner to sell. Eventually, they paid $50,000 for the 4,000-square-foot house.
For a few months, the family camped out in one room, carrying in meals or eating out every night. Using their considerable skills in carpentry and other crafts, Linda and Charles tackled one project at a time: fireplaces, decks, sitting rooms, a new kitchen, a garage, a home office. "Each time we'd finish one room, we'd celebrate with a bottle of wine and come up with grandiose plans for the next one," Charles says, laughing. "That was a mistake, because once you start talking about it, it's irrevocable."
He estimates that because he and Linda did all the work except plumbing and wiring, improvements cost "only" $100,000. "Otherwise, it would easily have run three times that much." Friends in the suburbs told Linda and Charles they would go broke. Instead, the Dahlheimers figure their house is now worth $400,000.
Life's work
Tim Vogt, 30, has turned a love of restoration and architectural detailing into a career. Vogt grew up in the suburbs and studied to be a life-insurance agent and financial adviser. But jobs building decks and restoring floors gave him the skills -- and the bug -- to quit business school and start rehabbing and reselling old houses. "It took two years to convince my parents this wasn't crazy," he says. But after selling a house in only three days in 1999 -- and making enough money from that one to try again -- he persuaded his mother, Claire, to join the business.
Vogt's firm, Millennium Restoration & Development, is juggling about ten rehabs, including a four-story, 4,000-square-foot project around the corner from the Dahlheimers. The four-bedroom leviathan -- with leaded-glass windows, five fireplaces, two sitting rooms, an office, a game room and a garage out back -- is scheduled to be completed this fall. Vogt will ask $499,000 for the house. If he gets it, it will raise the neighborhood's top bar by $100,000 -- and possibly help attract restaurants and other businesses.
Vogt got title to the hulk for just $7,000 when the city, which owned it, chose him as the developer based on his record of finishing other "gut" rehabs. He firmly believes that professionals are the only ones who have any business tackling a total wreck. "It's incredibly labor-intensive," he says. After his current projects are completed, Vogt hopes to cut back on his own labor and concentrate on running the company, acquiring more shells and supervising other contractors. He recently moved into a building that he restored and expects to sell as many as ten finished rehabs this year, up from four in 2002.
Is it for you?
Vogt's advice about leaving gut rehabs to the pros makes sense. It's far more realistic to consider a structurally sound property that you and your family are willing to occupy in the rough while you bring it back to life. Aside from a sympathetic spouse and family members who are as committed to the project as you are, here's what it takes.
Money. Unless you're buying into a glitzy neighborhood, the cost of the house will be the least of your worries. In fact, the seedier the place, the more likely you'll be doing the owner a favor by offering any price that's reasonable.
But even if you plan to spend your weekends wielding a paintbrush, it still takes wads of cash to do the big jobs -- or to pay someone else to do them. Figure on at least $200,000 for a major makeover of a large house, including walls, floors, electrical wiring, and heating and cooling units. If you buy in a registered historic district, you'll face even higher expenses as a result of strict -- and legally enforceable -- rules about what you can and cannot build. For example, you may have to install fencing to conceal modern conveniences such as air-conditioning units, or be limited in your selection of window and masonry treatments.
Buyers say your best bet is to arrange a financing plan that will pay for both the acquisition and the ongoing renovations. When Julie Padberg-White, a business consultant, and her husband, Wayne White, a graphic artist, bought a seriously deteriorated Lafayette Square house in 1998, they got a purchase-and-rehab loan from a local bank through a city-sponsored program. It's a traditional 30-year mortgage that also provides the couple, who have a 2-year-old son, Spencer, and a second child on the way, with money to finance restoration work (see their before-and-after Web site).
Incentives. Most large cities and about half the states offer tax breaks for investing in certain neighborhoods or for restoring historic residences. Not every real estate agent knows about such programs, and some people who qualify don't apply--perhaps because they mistakenly assume these incentives are limited to senior citizens or low-income buyers (for a list of incentive programs, check city and state Web sites, and the National Trust for Historic Preservation).
In Missouri, for example, the state historic-preservation tax credit will refund 25% of the total to rehabilitate a house, provided the costs -- which can include fees for architects, engineers and contractors, but not the imputed value of your own labor -- exceed 50% of the price you paid for the property. The house must be in a designated preservation area, and the rules about which improvements qualify can be picky -- for instance, don't even dream of claiming wall-to-wall carpeting. "Getting that check was our bonus for all our backbreaking work," says Padberg-White, who received a tax credit of more than $50,000. But she and her husband still have to come up with more money, including $20,000 for a porch and $6,000 for stair repair.
The city of St. Louis lends a helping hand with a ten-year tax abatement on rehabilitated houses, meaning that property taxes are frozen at their pre-improvement level for ten years. That can easily save owners $200 a month until the ten years are up. To qualify, residents have to ask their local alderman to submit their names on a citywide bill. Other cities have similar provisions, so it pays to learn the political ropes in your area.
Neighborhood spirit. Peter Snyder does electrical work but won't touch plumbing. His neighbor, Michael Petetit, knows pipes, but fears he will incinerate the city if he handles wires. So the two occasionally trade their skills.
In addition to financial means and elbow grease, becoming an urban pioneer takes an outgoing personality and an unflappable disposition. People walk in and out of each others' homes and yards in a casual way that's unheard of in communities with huge lawns and fences. In the city, neighborhood associations exist to keep streets safe and deal with problem properties -- not to keep out basketball hoops.
In Benton Park, the Dahlheimers' neighborhood, a group of residents turned the tide in the 1990s by helping to find a buyer for an abandoned public school that had been taken over by squatters and was a regular target for arsonists. A Catholic foundation renovated it into a residence for senior citizens. Says Charles Dahlheimer: "The problem becomes the opportunity."
GETTING STARTED
