The Neighbor’s House is finally done and officially on the market (in MLS). On Friday we took hundreds of photos for our marketing campaign and web content. My favorite parts would be the master suite, having hardwood floors in the master bath, the cool Samsung fridge and of course the river rock shower floor. This house really came out good and all the concrete work and driveway gate really makes it a complete package. I got it in the computer late Friday night and this weekend we are already getting calls and have had offers. We priced the property at $389k and are marketing it heavy as a 2 on 1. Total square footage with the rear house included is 2,630 and if we used our recent comp of $175/s.f. it would put the value at $460k so I think our pricing is fair. The extra value that rear house adds should push us close to this new price level if we find the buyer who needs it. We sold the house next door for $340k in 5 days, $175/s.f., so I think our pricing here is in line although it’s quite a bit higher than most comps in the area. As I mentioned before there was never any sales over $285k for these historic homes in our farm so what we are doing is really outside of the box and drastically changing the neighborhood. We are buying at such a low level and with low construction costs it enables us to come to market with a superior product and at an affordable price, as replacement costs for one of our projects would be much higher than our asking price. Plus, who would want to live through a remodel of this caliber? Our success has been derived from offering a quality high-end remodel in an inner city neighbor and knowing that there are young professionals who work downtown and want to live close that will gladly pay for it. I compiled some pics so you can see the finish out as well as a new YouTube video that documents the whole rehab and shows what we went through along the way.
My plans are finalized for our next project, The Target House so we’ll be pulling the permits this week and weather “permitting” ha ha, getting started grading the back yard with the Bobcat in preparation for the addition. As we all know, The Spring buying season starts right after football season ends and it’s right around the corner. Additionally there are over 3000 more medical officers moving to San Antonio from February to May that will be stationed at neighboring Fort Sam Houston due to B.R.A.C. and most of these soldiers will be buying homes in our area. We have a great product and are ready to see how this plays out; we’ll keep you posted!
We’ve been “targeting” this house for well over a year after finding it in one of our secondary farm areas. It’s not in our favorite Mahncke Park, but along the Broadway corridor closer to downtown, the River Walk Extension Project and the hot Pearl Brewery revitalization area. While it fits our overall financial investing criteria, additionally it also stays with our current model of taking historic houses close to town and turning them into better-than-new special homes for the young, hip and trendy urbanites. Over the past year we’ve sent numerous letters to the homeowner as well as left notes asking if they wanted to sell the house (see video). The elderly owner never wanted to sell the home and didn’t answer any of our correspondence but when he passed away a relative came into town and gave the listing to the first Realtor sign they saw which happened to be a few houses away. The listing agent had the home priced accordingly for its extremely poor condition but even at asking price in the high 130’s we knew it was a great deal.
After seeing it hit MLS late on Thursday night after I got home from work I called the listing agent and scheduled a showing for the next morning and had her write it up. You have to monitor MLS everyday to grab the good deals when they pop up, another day and this puppy would have gotten snagged. For anything in MLS we always write our own offers and take the 3% commission but for the $3900.00 we left on the table it was worth it to let the listing agent double-end the deal as from our experience it *somehow always increases your odds of getting an acceptance. After she wrote it up I pressed for her to present it to the sellers that very day which was Friday the 13th so we wouldn’t get into the weekend and have more offers come in. Our strategy worked and just as we received the signed contract evidently the rest of the city awoke to the offering and other agents were calling disgruntled because they didn’t have a shot. You snooze, you lose! The neighborhood that this house is in is very small so there’s not much turnover or recent sales comps. For as close to downtown as it is, it’s fairly stable and walk-able. All of the SOLD comps have an average price of 275k but go back to 2004. Average price for all ACTIVES now on the market, (only 3) is 335k. It’s only because we knew our area so well and have an accurate handle on what’s going on that we were able to jump so hard and fast. By looking at the numbers it’s going to pay off, stay tuned, as I’ll start the restoration after Christmas.
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.
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.
