It’s Heatin’ Up

Even with the short week we still managed to get a lot done. The plumber is almost done now and I had the hvac guy come through and he roughed in the whole house in 2 days. I installed a Goodman 70,000 btu central heat system only with all new ducts. It was a breath of fresh “air” not to have to do the full central air system because in most areas in San Diego you don’t even need air conditioning. These guys don’t mess around in this town, he rolled in with 6 helpers and they knocked it out. What a change from “Land of Manana” as we called San Antonio, where most workers only did the bare minimum, never showed up and just squeaked by since the cost of living is so low there. Thanks to my buddy Curtis Gabhart from Gabhart Investments for the referral! Check out his site if you want to see how the big boys are rehabbing here in San Diego.

I always bring the hvac sub contractor through second, then finally my electrician will come Monday and start with my 200 amp rewire and new service. The best news all week was that I finally appear to have approval from the Historical Review Board. The City Planner emailed me late Friday and said I could come pick up my plans. My project has been under review for over 4 weeks now, luckily they stamped my structural and mechanical plans right away so I could get started. If everything was approved then I officially have the permit and I’m free to start calling for inspections and can move forward faster. I’ll call for the foundation inspection first so he can check our forms and rebar, then we can pour Wednesday. Next I’ll call in for framing inspection so I can then put the roof on. Finally I’ll call for rough-in inspections on all 3 trades so I can then hang insulation and drywall the house up. It seems like a lot but I’m really not that far away from getting it sealed up.

I was a little surprised about code differences between here and in Texas, seems with all the regulations here in California they would be a little more strict on the duct work but evidently you don’t even have to put “pookie” on the registers or plenum. In Texas with the summer heat they were really strict on the system install but then again this is heat only and no a/c. Right now it’s 68 degrees and sunny. Sorry, to my friends in San Antonio already sweating in 100 degree, 80% humidity.. its going to be a long summer!

The San Diego Real Estate market saw some price slippage, in May there was a 4% decrease from year-over-year prices. Nationally, the 20-City Case Shiller Metro home prices are already in double-dip territory but we aren’t there yet even with the large decrease. I attribute most of this to the artificial market and tax credit last Spring, if the government would just stay out of everything and let the markets correct naturally I think we’d be in a better place. Here’s a good article by Rich Toscano over at Voice of San Diego.org.

House Flipping Tip: Finding Sub Contractors

Finding good contractors is a huge key to your success when flipping houses. There are 2 kinds of contractors, General Contractors, or GC’s, and Sub-Contractors. Most investors hire a GC who then brings in his own sub-contractors, oversees all their work and tacks on about 30% to your price. This works great for people who have little construction knowledge or don’t want to spend the time ordering materials, checking in deliveries, writing checks on Fridays to subs and overseeing work. My feelings are that most investors are doing this anyway and basically acting as their own GC, so shouldn’t be paying for one. Homeowners these days are even acting as GC to save the 30% and hiring subs themselves while building their new home. There’s even a national company called U-BuildIt that sets you up with the list of subs for a fee. So, the key to the savings is finding the subs and managing them yourself. (more)

A/C Duct Blast Test

New regulations from the City of San Antonio with regards to my mechanical permit tripped me up this week. Turns out there are several new codes that took effect January 1, 2010 which affect new central air conditioning systems in remodels. San Antonio is now requiring a duct blast test to be performed by a third party licensed mechanical contractor. After having my new system installed and inspected for rough-in we had to bring in another contractor to test the duct-work for leaks. Since you would never know if there were any leaks until the system was turned on at the time of final inspection they have come up with this cool way to test your contractors work before you hang the drywall.

A fan is connected to the return air box and all registers are sealed with tape. They then crank up the fan and measure at one of the grills for pressure. The fan measurement vs. its affect on the duct pressure determines efficiency. Any leakage is shown on the computer and would indicate a loose seal somewhere that may need more tape or “pookie.”  Before this technology existed we would wait until passing final inspection, turn the a/c on and manually feel around the joints for cool air.  Leaks in your ducts cost big bucks on utility bills, especially in hot climates like Texas. If you are remodeling a house its now mandatory to have this test performed, the results are sent to the local power company CPS, and you wont get your electricity turned on without it.  If you haven’t checked your system lately it might be worth a trip to the attic, one neighbor to a rehab I did asked for my help last summer. Upon inspecting her system my A/C guy saw that she was losing all the cool air into her attic as the tape from the coil/furnace had come completely unglued. Today we passed the duct blast test as well as rough-in for mechanicals.

Hot & Cold

It was nice to get in a full week on the project now that the other house sold. I finished up the front porch by making new stairs and replacing the siding skirt where needed. We got a comment from Mike asking what I was going to do about the column base overhanging the porch floor, I’ll just have to live with it as its only over by a few inches and doesn’t strike me as really looking that odd since they overhang the top too. The posts that hold up the porch are existing 6X6’s. Their placement was really far out to the corners so in order form me to have the tapered columns I had to have the bases hang over the floor a bit. If I had gone back with just square posts I don’t think it would look as cool so I’ll live with it.  The 16 degree flare on the skirt looks real cool with the 117 siding.

My firebox arrived this week as well so I got to install it. Of course the dimensions I got online for the rough-in framing hole didn’t work out so I had to reconfigure this wall a bit on the fly. It’s a double sided see-thru gas fireplace that I’ve put between the jacuzzi tub in the master bath and the master bedroom. Locally you’d spend $5,000-$8,000 for something like this even at a wholesale builders supply so I was excited to find them online for $1295.00 from Ebay/Discount Fireplace Outlet. With the vent pipe and everything you need, the total including tax and delivery was about $1800.00. It’s easy to put in, once you have the box framed in there’s just one gas line that I’ve got coming in underneath and then the vent through the roof. The unit doesn’t need electrical as there’s an ignitor and low voltage switch that you mount on the wall. This is a real cool feature for what I spent, we’ve designed the whole master suite around it, can’t wait to see it with all the tile around it and the 6′ tub in.

I found a new HVAC guy last week who’s already got started roughing-in my new 5 ton central air/heat system. It’s a horizontal gas furnace of course (electrical is not smart energy) with a A-coil like I always use. Since this house is so long we’ve got a real long supply trunk line with 11 drops and 3 return air grills. Yellow Page retail prices in San Antonio for a total new install like this would run over $2,000/ton, or $10,000. My regular sub-contractor was bidding $6,500.00 for this house which equates to $1,300/ton. Like I’ve mentioned before, it’s common to experience price creep with subs, you always have to keep hammering them or switching because they slowly raise their prices on you. So here’s the good part; my new guy is only charging me $4400.00 complete. That’s only $880.00 per ton my friends! I’ve already turned him on to another investor friend of mine, this guy is hungry for work and I saved over $2k by shopping around and walking away from old faithful. In my business any savings along the way goes straight to the bottome line.

San Antonio Home Sales of single family residences were up 20% in April when compared to the same month in 2009. Great news but undoubtedly this is directly reflective of the Federal Tax Credit that’s now expired. In typical cheerleader fashion, the San Antonio Board of Realtors has come out to predict “these home sale increases should hold through the Summer” although I have different thoughts..especially knowing that mortgage applications are taking a dive in May.

Inspections Passed, Next On Deck Insulation & Drywall

The skies cleared and the inspection gods have blessed our project. Finally, we passed all 3 rough-in inspections. We had to have the mechanical inspected twice and he almost failed me the second time because I had the incorrect tape on the joints of the dryer exhaust vent. The correct taping for the seams is the UL rated aluminum tape with the red letters, same as the A/C guys use. After some word games and a battle of the egos he busted out the green card much to my relief. It always seems the young inspectors have such a chip on their shoulders while the old guys just roll through, pass you and start talking sports and telling stories. Since I pulled the main building permit myself as the owner/builder then I am in charge of the next 2 inspections. First I’ve called in for framing inspection Monday for which the City of San Antonio will look at the placement of the fixtures with relation to each other, framing and construction as well as fire blocking of all penetrations from wiring and plumbing and foaming of the windows. Once I pass this framing inspection Monday I’ll be free to hang the insulation and call in for insulation inspection for Tuesday. If you hire a company to insulate your new construction they will furnish you with a certificate that will satisfy the city but because I am such a penny pincher I hang it myself which thereby requires them to come inspect. I buy the insulation wholesale saving about 30% from what Home Depot or Lowe’s charge. Once I pass insulation inspection I am finally free to drywall! Yea buddy, whew! You’ll also see on the video update that I’ve trimmed out the front porch and removed all the kitchen hardwoods due to old water damage and poor patching. I need to get the new wood patched in also before drywalling the kitchen but that won’t take long. The original wood floors in my house are red oak, which is still available through lumber liquidators for .45/ foot. All 330 feet of wood I am replacing only cost me about 700 bucks. Once the floors are refinished you wont see the patches. I am planning on the dark walnut stain again since they seem to be so trendy now. Stay tuned; next time you see the house it will be all sealed up. It’s a big milestone, what was previously stick framing all of a sudden becomes recognizable defined spaces.

CSI and Rock Stars

I had my first theft at the jobsite this week, someone came in the backyard after hours and stole my 45 dollar extension cord. Since it’s been raining all week the thief left some good footprints when he tracked mud onto the driveway. I’ve taken photos, made castings and measured the prints and concluded the perp is a size 8. This happened the night before I installed the exterior doors and locks so we’re Fort Knox now if he decides to come back for a second helping of construction materials. My bad for leaving it out anyway. Before the rain started this week I got all the #117 siding on the room addition and the front of the guest house, also building a cool balcony deck. The rear unit is turning out swell and will make someone a great rental unit, granny flat or at home office space.

 Master Suite Addition

Guest House

 I failed my mechanical rough-in inspection this week due to multiple small items that my sub-contractor overlooked. They left off a little insulation on the copper and also drilled through the furnace exhaust vent with a small screw when strapping it in the attic. Additionally they “forgot” the secondary overflow from the drip pan under the coil. It’s hard for me to believe he can still keep failing inspections for basic stuff as we’ve gone through this so many times and he knows what needs to be in place to be legit and pass. I never saw him personally in the attic during the job…maybe that explains it. The inspector also called me out for my placement of the dryer vent from the laundry room. The V in HVAC stands for ventilation. When he comes to inspect the rough-in of new heat and a/c equipment he also looks at the dryer and hot water heater vents even though my a/c sub-contractor has nothing to do with these items. I have the dryer vent placement about 2 feet from the back door and he said it is a fire hazard to leave it that close. It needs to be a minimum of 3 feet from any opening to meet code, chalk that one up to another learning experience. Also, keep your dryer vents clean, there is a serious fire risk from lint build up and it reduces energy waste. I also handled the hall bathroom subfloor on Friday and set the tub Saturday morning.

Master Suite Framing

Bathtub

After my regular electrician burned me on the last project I was back to square one getting bids from new guys. 3 out of the 4 bids were twice as much as I usually pay. I ended up finding a good price from my plumber’s referral and the guy rocks, literally. This master electrician is also the lead singer in a local San Antonio Judas Priest cover band called Sad Wings of Destiny. He can hit Rob Halfords’ lyrics note for note. Still waiting for him to bust out while we are working.

Plumbing Inspection: Passed; Mechanical: Failed

We passed plumbing this week but failed A/C inspection yesterday due to some minor details overlooked by my sub-contractor, which have already been addressed. Second mechanical inspection is set for Monday. After passing plumbing I went ahead and installed the new plywood sub floor and set the tub in the hall bath and shower pan in the master bath.

Tub

Shower Pan

As soon as we pass the mechanical inspection I can call for the framing inspection. It seems odd and out of order the way San Antonio does it, they inspect framing after all the tradesmen have finished. If something were incorrect you would have to rip out all those sub contractors new work, weird. So the schedule is: pass mechanical Monday. Call in framing inspection for Tuesday. Pass framing Tuesday and schedule the insulation inspection for Wednesday. Once we pass the insulation inspection we can hang all the drywall. My drywall crew is chomping at the bit and ready to get started. I am going to have it delivered Thursday, 225 sheets to do the whole 1930 s.f. house, 5/8” for the ceilings and 1/2” on the walls.

Kitchen Plumbing

Take one last look inside these walls, next time you see the house it will be all sealed up. This is always a huge milestone for me; to see the house with all new drywall really shows how it will look. It blocks out all the “old house” smell and it’s all downhill from there, baby.

New Back Door

We’ve been monitoring sales activity a little closer lately and I ran some interesting reports out of MLS last night. In our little “area” there were only 9 sales in 2008, (2 of which were ours) and avg. price was 206k. In Q1 08 there were no transactions, so far this year we have 6 pending or sold. Average price on these 6 is 257k. That’s an increase in sales activity of 600% and an avg. price increase of 19% Y.O.Y. Currently there are only 4 months of inventory making it essentially a sellers market. While the overall market has slowed down in San Antonio our area seems to be a bright spot. The Craftsman Bungalow sold for $174/s.f. last year setting a record for high comp based on $/s.f. The avg. price per s.f. is closer to $155.00 so with Hat Trick being 1930 s.f. and the level of rehab we plan on listing it for around $289k –$299k. The only thing better than setting a high comp for a neighborhood is getting to come back and use that comp in your next sale!

The Old and the New

Front Siding

As you can see I have the whole house sanded down and the new windows are in. I did all 30 windows in 1 day by myself. It’s looking really good now and it’s easy to imagine how it looked in bare wood form circa 1925 with a possible Model-T parked out front. Looking in the near distance you can see the new 20-story luxury upscale condo building called The Broadway that’s being built just 2 blocks away. It’s the largest scale condo high-rise in San Antonio and the most expensive coming in at $500 per square foot. The San Antonio Riverwalk Extension will reach 2 blocks away from this high-rise and our property as well. This area of Broadway will become quite swanky in the next 3-5 years with the addition of this high-rise and more on the table. We are in good company with the builder, Mr. Red McCombs who is also betting on this area as being a good investment. Mr. McCombs is supposedly keeping the top floor for his private use while the 19th floor is comprised of two penthouses at 4 million each, one of which is already sold.

Electrical Wiring

The complete electrical is also now roughed in. All we have to do is set the meter loop next week and then we can call in for rough inspection. I hired and fired a plumber this week as well, after talking him down to the price we needed he dropped off his materials and disappeared for 4 days. He begged me to give him another chance and explained how badly he needed the work, I could only keep asking myself why wouldn’t he show up and do it then? If it’s this hard to get him over to do the rough-in then we could really be in a jamb when inspections started…better to clip this guy now. Of course we didn’t give him any money up front so we haven’t lost anything but time. The HVAC guys have started running all the ductwork for the new central A/C I’m adding. I’ve located the furnace and coil in the attic to save space. I am using a 4-ton, 14 seer Goodman system for this house. They recommend roughly 1 ton for every 500 s.f. of living space. Prices in San Antonio for a system like this with all new equipment, ducts, grilles, boxes and permits run about $5,000. Keep in mind this is a builder price; retail companies from the phone book would be quoting $8-10k easy.

New Siding

I got the siding on this week as well. I used the “historical replica” #117 siding for the whole master suite addition so it matches the existing house. I did the whole rear addition with 1 helper in a day, a big day though. It’s been pretty fun building this “new” addition in the “old” style. It reminds me of the restoration/modified builds they do on old muscle cars these days. All old and original looking but with today’s advanced technology.