Even though we were plagued with more rainout days this week, I still managed to get the exterior paint 95% complete. This is probably the most labor-intensive paint job I’ve done as it’s 6 colors and it entailed a lot of detail brushwork on the trims. So far I’ve put up over 60 gallons on the exterior! Keep in mind there’s a big 2-story guesthouse in the rear and I also sprayed 2 coats of everything including primer. As you read in my last post, I picked up a guy from Lowe’s parking lot to help me paint so it’s gone really fast. This guy is actually a great painter, he was making fun of me for using economy brushes so I broke down and bought a Purdy brush, man this thing practically paints by itself. Well worth the $14 bucks.
Because I was so happy with my historic craftsman style replica window screens on the last project, Hat Trick House, I decided to make them again for this house. I changed the design a bit so they wouldn’t look exactly the same, especially since the other house is right next door. I designed the center mullion placement to minimize the visability of the white vinyl and this new design came out great. I won’t stretch them with screen, although the future owner can if desired. My new double pane windows have screens already so these frames are basically just a cosmetic design feature that also plays an important part in the color blocking of our paint job. The historic replica screen hangers are also still available from Stanley. This extra little finishing touch really gives the house the historic look that I need for our neighborhood.
There was a new BusinessWeek article this week that ranked San Antonio #1 for the top National economy. The measurements used were job growth, economic growth, employment and home prices. Texas seems to be the clear winner with San Antonio in the lead and five other metros in the top 10. While we are still seeing signs of the recession here and I’m always quick to say we are late to the party, this study shows that we are still fairing extremely well compared to the rest of the country. We’ve seen the housing market here drastically slow down in the last 2 years, but homes are still selling and people are still moving here everyday from other states so we have to be thankful that when coming from California, we picked a winner with San Antonio.
Things finally started to dry out after all the rain we had, so I got the texture crew in last weekend and as luck would have it, pouring rain again all day. Geesh. It took 3 days for the texture to dry with 90% humidity. It finally dried and looks incredible so I proceeded with spraying a good primer coat and ceiling paint throughout. I was at Lowe’s buying the exterior primer and met this guy in the parking lot asking for work, I’ve had him helping me everyday to speed things up and he’s actually turning out to be a great helper. We spent 4 days just caulking, scraping and filling holes on the house in preparation for the paint job. The weather cooperated at weeks end so we made a huge impact with spraying the entire house in a day. We got 2 coats on the soffits and body of the house, accounting for 2 of the 6 colors planned. I still have all the time consuming trim brushwork to do, which is really going to be the important part of this color scheme. Our façade designer for this project Morgan Penix at DeWitt Architects really picked some unique colors, which I initially had a hard time grasping, but now I’m finally starting to see her vision and am loving how it’s looking. The dark rich columns with rust accents will make a bold statement against the soothing earth tones on the body of the house, all done in historically correct flavor.
The 9th Annual Mahncke Park Home Tour was today so my wife and I had the chance to mingle with some neighbors and enjoy a diverse mix of 6 inspirational and eclectic residences. We saw some great gardens, tons of personality and very cool historic craftsman bungalows. Adorned with unique features, incorporated artwork, bright colors and highly personalized, these homes offered something we never get to do in our designs with resale in mind. We saw green painted hardwood floors, claw foot tubs, blooming esperanzas, purple staircases, garden borders made from Skyy Vodka bottles and mosaic tile galore. Three of these unique homes belong to artists and included studios, fun workshops and galleries. The tour was a great success and Mahncke Park proved again why it’s THE coolest and most hip place to live in San Antonio for the artistic urbanite.
Interestingly though all of the homes on the tour this year are currently for sale where in past years it was not allowed for any of the participating homeowners to use the tour to promote the sale of their homes. Is this a sign of the times or what? Seems even in our small niche neighborhood we are not immune to the higher inventory levels and general real estate market slow down that finally caught up with San Antonio last year. At any given time last summer in Mahncke Park there were only 2-3 homes for sale and now there are currently 10 on the market.
I had my framing inspection Monday and he passed me on the room addition but failed the new front porch because I had trimmed it out already and he couldn’t see how it was framed…oops. He said he would pass it with a letter from an engineer so I had to pay 300 bucks to have my engineer crawl in the attic to verify my framing was done correctly and draw up a certificate on it. I went straight into hanging all the insulation and called in for the insulation inspection Tuesday. The same inspector showed up the following day and passed me on that. Meanwhile I had all the drywall delivered. It turned out to be 150 sheets for the room addition, kitchen and existing bath. Man, prices on drywall have come down; I only paid 6.50 per sheet for 12 footers. My drywall crew hung it in a day and went straight into tape and float over the weekend. It’s coming out really nice as it’s always a cool stage to get to when you can see it all sealed up and smelling new. My drywall crew charges 10 bucks/sheet to hang, tape and float and texture. Since the existing bedrooms were not demo’ed I am retexturing the whole house so it will match. These guys are real pro; they do mostly new construction so the seams come out great. For texturing they don’t mix in a hopper, a truck with a mixing machine actually shows up and they spray the whole house with one batch so it turns out consistent. Drywall finishes and textures can make it or break it when it comes down to your final product so it’s important to get pros to do this part. In the past I’ve done small rooms myself but now that we are on a larger level I always sub this out. I also got all the wood floor patching done which included all new wood in the kitchen and I also ran it into the addition. I even put the wood floors into the master bath, which will be new for me this time and should be a real dramatic touch. With all the rain lately (6 inches in 1 night) I feel lucky that at least I’m making progress inside the house. After being in a record drought all summer now we get hammered with flooding, crazy weather here in Texas.
The local San Antonio real estate market continues to slow. So far this year we’ve had only 13,185 homes sold compared to the same period last year of 14,724 and 17,981 for 2007. Last year was the big slow down here when a lot of Realtors went starving. Things picked up a little this summer mainly due to the $8000 first time buyer tax credit so it will be interesting to see what happens to the real estate market if they let it expire. There’s a bill in Congress to raise the credit to $15,000 and open it to non-owner occupied buyers which would be great for investors and definitely clean up some inventory, but I’m not sure how we could pay for it. Foreclosures at the courthouse steps here in SA are also still rising, I ran across a Realtor friends’ house while reviewing the auction list for this month. Ouch, now that’s hitting close to home. Our strategy for this market is as always be extra careful on location, buy extremely right and offer a high quality renovation and unique product for the price level. Even with the slower market there are a lot of people continuing to move here to San Antonio and we only need one buyer.
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.
Our great start is now officially over. It’s the “Land of Mañana” again here in good ole SA. Plagued with bad weather and sub-contractor delays we can’t proceed with the drywall until we pass these inspections. A whole week has gone by and I am still waiting for an inspection on electrical and re-inspection on HVAC. I’ve heard every excuse in the book, it comes down to the sub contractors taking on any work they get and dragging everybody out. With the slow construction season coming they won’t dare tell anyone “no” now. Once I pass these rough-in inspections the pace will pick back up as it will all be on my shoulders. I did manage to trim out the front porch while I was waiting for inspectors (who weren’t coming) so now the house is ready for some primer. My square tapered columns came out great as planned. Our architect came through with a rendering from which we made our yard sign in order to start our marketing campaign and hopefully avoid paying a realtor fee once again by procuring our own buyer.
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.
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.
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.
Saturday morning the plumbers beat me to the punch. I got there at 8 and there were already 6 guys all over the place and a strong odor of PVC glue in the air. My plumber brought in a new construction crew and they roughed in the whole house with a complete new system in 1 day! Monday he’ll run the new gas line and we’ll call in for an inspection Tuesday. This week I also opened up 3 interior walls creating more of an open floorplan, doing a different kind of arch this time with square corbels on the bottom. Monday the roofers finished and he apologized for trying to raise the price on me? o.k… I also wrapped the house with Tyvek and installed all the dual pane vinyl windows after they arrived midweek. I remember about 10 years ago putting in my first set of retrofit vinyl dual pane windows in my personal home, a buddy of mine who is actually a general contractor told me not to ever use foam because it would cause the windows to warp when the foam expands. This was in San Diego where it’s always 75 and sunny and probably wouldn’t matter but here in Texas it’s the code and the homebuilders foam everything including the new construction windows inside before the drywall goes in. You want to create a tight envelope in order to be more energy efficient. With these new windows, a high efficiency A/C, roof vents and new insulation in the attic the future homeowner will benefit greatly with a low power bill. Our buyer of the Hat Trick House next door has a electricity bill in the $100’s while most other original homes in the area are paying around $300/month. Hey don’t get me wrong; I love original sashed historic windows with wavy glass, but not at $300 per month. While doing the new windows I also went ahead and also redid the wood trim because for the cost and labor saved in stripping and sanding, my paint job will come out killer now. Next up to bat will be getting HVAC and Electrical sub-contractors through the house, we’ll see who I can corral this week. We are moving at a really nice pace, I’ve scheduled it so I can be doing projects while the subs are busy without getting in their way.
We had a big week 3 on the Neighbors House project. Monday I passed inspection for my foundation so we ordered materials and went straight into framing the master suite room addition Wednesday. When laying out the floor joists I had the option to grab an extra 15 square feet by not cutting down my 16 footers and additionally we cantilevered the sills out and ended up with extra footage along the rear thus making our addition just over 700 s.f. instead of the planned 620. The framers kicked ass and got it done in a day and a half. I also had the stucco guy do the column bases for the front porch during the week. For the roof I went with my favorite 30-year composite shingle but since there were “Estate Grey” roofs on either side of this house (one being Hat Trick House) I had to choose another color, Driftwood. It’s really bizarre to flip two houses right next door to each other. Not only will I get to use my sales comp but also get the carryover curb appeal. My roofers showed up Friday and really got off to a slow start, it’s really disappointing to see someone intentionally dragging something out. Turns out the workers were being paid a day rate instead of a contract rate. After turning up the heat on my subcontractor he quickly changed their pay scale to per square pricing and they really started working, it was like I was looking at a different crew. These clock milkers had the nerve to ask me to buy lunch for them Saturday, I told them where they could go… to find the closest taco shop. The roof didn’t get finished due to the time lost so they’ll be back Monday to wrap it up. This week I’ll take care of the interior framing and arched openings and then its time to run the sub contractors through there for HVAC, electrical and plumbing to work towards the big milestone of passing rough-in inspections on all 3 of these trades.
After completing the bulk of the demo last week my main goal has been towards getting the new roof on. I always start with the new roof first (and foundation if needed) on any major remodel so if there were any leaks previously it wont trash any new stuff going in. Before I can get the roof on this house, I have to add the porch and room addition so it’s been my main focus to get these taken care of first. I had to move the gas meter back 40 feet from the house but luckily the power company showed up Monday and obliged so I got started with no delay. The porch came out really good as it completely changed the look of our house. In this historic neighborhood everyone loves the big front porches and they are an important feature in order to maximize retail sales price. I mimicked the original house design with the 30” eaves and open rafter tails. There are about 10 different Craftsman style home models in our neighborhood but unfortunately this one doesn’t come with the traditional porch so we knew we had to add it. The rear addition is the major change of this house, it will be approximately 620 square feet and contain a utility room, master bedroom, master bath, hallway and walk in closet. Once again to obtain maximum retail sales price these are things that today’s buyer will expect. We will also be giving them a walk-in food pantry and double vanities in the bath, all popular amenities to consider when given the opportunity to remodel. I was fortunately able to design around the big pecan tree so after we are done I plan to do a cool deck around the tree with a circular bench and French doors leading from the master suite. We’ve gone through 6 dumpsters so far, 3 being filled with dirt from the excavation I had to do with the Bobcat for the addition. Monday I have an engineer inspecting my foundation and issuing a certificate, which the City of San Antonio requires for our permit and then we’ll be free to start framing. Do you want to learn exactly how someone pulled down $155,510 his first year Flipping Houses in a recession? Visit our friend’s blog and see. Congratulations bro!
This first week of getting started on “The Neighbor’s House” has revealed some nice surprises. As we were doing the demo in the kitchen we noticed all this new Romex wire, turns out the whole house has already been rewired so this will save me some money. I will still rewire the kitchen and have to add some circuits for all the recessed lighting but having everything new already is a huge plus. I had my foundation guy over and we went underneath and discovered it really only needs some shimming to bring up a couple of corners an inch or so. The main thing is making sure the rear of the house is perfectly level before we do the addition so it lines up well. We also spent 2 days taking off all the fake brick and shingle siding. I had assumed the original siding would be wrecked and had budgeted to replace it but low and behold the original waterfall historic wood siding was in clean perfect condition underneath. It was like unwrapping a Christmas present, only one coat of paint on it and smooth as a baby’s butt. This is going to be a breeze to paint, no grinding years of peeling paint jobs.
Probably the most dramatic surprise is the original fireplace chimney design we found underneath the faux brick. It’s really cool and nothing like the other houses on the block. I had my stucco guy come redo it this weekend so it’s back to its historic original condition and is going to add a nice detail to how our new façade will eventually look with the new front porch; stoked. I also had the power company out this week to move the gas meter back 40’ for the room addition. We might be waiting 2 weeks for them to get around to it so that kinda sucks as I wanted to get working on the new piers for the addition but we can’t bring the bobcat back there until the gas meter is moved. We also can’t do the new roof until the room addition and front porch are framed up so I am stuck until we get that gas line capped off.
While working on the Hat Trick House this summer we were networking with all the neighbors and thus landed our new project right next door, appropriately tagged: The Neighbor’s House. Had I hired out all my remodel work like most investors and not been on site everyday working I wouldn’t find these bonus deals. Just like last year when we flipped the Craftsman Bungalow one block over and found the wholesale deal across the street for 50 cents on the dollar, Bungalow 2. This shows that it pays to network with the neighbors and keep your eyes open when you are doing your rehab. Our farm area is virtually a hotspot within the San Antonio real estate market and there is literally no inventory in MLS, much less an abundant supply of fixer-uppers with enough upside to fix and flip. This is our 6th non-MLS deal in a row, which demonstrates two things, the first being, the best purchases are the ones not in MLS and when there is little or no competition and the second being that you can always find a deal if you are willing to go out and get it. It’s kinda like fishing; you wouldn’t expect the fish to jump in your boat, would you? If you are a serious investor you cant rely on working with Realtors and buying stuff from MLS. You have to leave your cave, go out and kill something and drag it back.
Directly next door to Hat Trick was a nice little bungalow with an elderly single lady who had expressed interest in selling to us one day. That day came sooner than later when she called me just as we were wrapping it up next door and asked if we could move forward. We actually signed the contract with her the day we closed on the Hat Trick House sale so the timing couldn’t have been more perfect. Furthermore, being given the opportunity now to have another investment property right next door to the highest comp in the whole neighborhood that we just finished will allow us to use Hat Trick as a sales comp when we go to sell this house later this year. This new project will also be a complete gut remodel down to the studs with added square footage. It’s currently a 2/1 so I’ll be adding another bathroom and new master bedroom addition with walk in closet in order to get top price on the resale. Our biggest challenge on this project will be designing the master suite room addition to wrap around a huge 100-year old pecan tree in the backyard. As luck would have it, it’s smack dab where ideally we would have the room addition. Taking down a cool tree like this is taboo so we are going to work hard to design around it as long as our floorplan doesn’t suffer. As you can see the façade of the house is in need of some help, I have big plans for a new front porch and gable with new craftsman style square columns and all new historic waterfall siding to give it the charm that everyone is looking for while keeping it historically correct. We are also helping the seller move into her new house this weekend as a good deed and expecting to start demo Monday so stay tuned for more rehabbing fun!
Yesterday was a great day for us – we closed on the Hat Trick House and bought another one all in one day. We ended up getting $340k for Hat Trick from an ALL CASH buyer, which equates to $176 per square foot. We established this high price per square foot previously with the Craftsman Bungalow project. Knowing what we could then get for Hat Trick is what made us decide to add the additional square footage. If you can build for $70/s.f. and sell for $175/s.f. it makes sense to add the square footage if it’s the right area to do it in. Some people thought we were blowing it by not just sneaking in a second bathroom but we had the big picture vision and knew what we could do with this house. As you can imagine, being in a transitional area and setting a new high sales price $65k above anything comparable before (and in a slow market) has all the local realtors talking. The highest sale for a redone historic house was $275k while there have been some new construction homes that have sold for up to $310k.
Lender appraisals have been conservative lately with the changes from HVCC and with this house pushing a new price level for the neighborhood it was great to find this buyer. Another nice thing was that the buyer didn’t come with a realtor so we double ended it (didn’t have to pay any commissions); essentially he also got a better price on the house. After the closing we then went straight over to a seller’s house we have been negotiating with and got another house in Mahncke Park under contract. We are closing on it next Friday. It’s another historic arts and crafts bungalow that we’ll be totally renovating and hopefully get to use our own sales comp again. There are a lot of sketchy rehabs out there not selling; this goes to show that if you buy them right and do good work that you can still make money flipping houses in any market.
While we are always networking and farming for new deals, we really turn up the marketing machine when we have time off between rehabs. Since the sale of the Hat Trick House, which is due to close next week, we have launched a full assault on distressed properties in our target areas. We thought we were rolling right into a nice duplex conversion to SFR in a historic area but when out of state family members decided not to sell it put us back to square one. Some of our methods of deal finding are driving, leaving notes, pre-foreclosures, mail shots, FSBO’s, networking with neighbors, talking to the mailmen, calling expired/cancelled listings and last but not least MLS and Craigslist. Our “We Buy San Antonio Houses” website leads have also been increasing. The courthouse steps can also be a great resource but make sure and do your due diligence before bidding on properties sight unseen. Local Realtors will also bring you deals that are not in MLS if they know you are a cash buyer and can close as promised. We frequently get offered these “pocket listings.”
I was recently asked what the best way to find a deal is. The answer I gave was there is no single best way, you have to do all 10 different things and then start weeding out your leads. To rely on one single source like MLS for instance, wouldn’t get you the good deals and frequently enough. Your acquisitions should be handled the same way as your sales, from all possible angles. Should you put your house for sale in MLS?, Craigslist?, Open Houses? Newspaper? I say you should do them all if you want the best results. I had a Realtor friend ask me this week if I still used Craigslist. She feels it’s blown out and full of spam and scam. I told her its still a valuable avenue that cannot be ignored. An investor friend posted a probate deal on there this week and has had great response with calls from motivated cash buyers. Bandit signs also still work in any market. Don’t overlook any of these avenues and you’ll increase your chances of making your deal work, whether buying or selling. Any given week we consider about 100 properties through our methods, this week we made 6 offers and got counters on 3. We think we have landed our next rehab and have a verbal offer accepted, hopefully the deal will go to contract next week when out of state family members arrive so stay tuned.
We Sold The House In 5 Days and with Multiple Offers! Yahoo! Last weekend we had an Open House California style. We ran the big photo ad in the newspaper, passed out invites to the neighbors, had signs & balloons on the major intersections and hot dogs for the guests.
To all my Realtor fans, THIS is how you get 100 people through your house on a Saturday. It was really quite rewarding to hear all the feedback from the guests admiring the design and craftsmanship. On Sunday we accepted a great offer from the buyer and not 15 minutes later we had an agent call saying he had a back up offer.
The buyer had his home inspection on Wednesday and for the first time ever we saw an inspection report that couldn’t list one single thing wrong with the house! All the inspector could say to the buyer was “this one was done right, you better buy this house.”
In all my years we’ve never seen this happen. These home inspectors will pick any small detail just to make the buyer feel like he earned his fee. They’ll usually even list questionable things just to protect themselves. I think I’ll frame this report as it’s a testament to our workmanship and attention to detail.
Additionally, this week we passed finals on our mechanical and building permits so we are just waiting for the power company to move the line from our temporary pole and drop it to the new meter loop. We are set to close in mid July and are currently searching and writing offers on the quest for the next project.
