I want to wish everyone a Merry Christmas and Happy New Year. Thanks for checking out our house flipping blog this year and a special thanks to the 6000+ returning visitors who find our content interesting and have returned regularly. In this first full year with the website we received over 23,000 new visitors. It’s great to get the comments also; we enjoy the questions and feedback. 2009 was a great year for our company, especially with the success of our project “The Hat Trick House”. It was probably my favorite renovation to date and we set personal records in several areas on this house. In the process we also were able to buy the house right next door “The Neighbor’s House” and are 99% complete with that big rehab and looking forward to an early Spring 2010 sale. Our third and last big deal this year was the purchase of a house we’ve been after for years, “The Target House”. I’m all set roll into 2010 with this big historic renovation as we’ve already handled the demo and foundation leveling so stay tuned if you like house flipping and Craftsman style homes.
I’ve somehow managed to stay busy through the Holidays and have at least some sub contractors show up at Neighbor’s House. As you might have heard from Twitter, the first attempt at the floor refinishing was a bust. The guys had to re-sand them all down again after the stain and clear coat wouldn’t dry due to the weather conditions and did some weird stuff. They really know what they’re doing but I think he was just in a rush and trying to pull it off before Christmas so he could get his final payment. This put us back a week on having the Energy Star appliance package (all stainless of course) delivered but they finally came and wow, what a Cadillac the new Samsung refrigerator is. It’s a grand more than I usually spend but we required a counter depth model for this kitchen design to flow properly. Really nice. I also managed to do most of the landscaping while the floor crew kicked us out, I threw up about 150 feet of fence and brought in 4 yards of top soil, some river rock and 4 pallets of sod. With my energy efficient theme on this remodel I decided to use Bermuda Tiff turf grass instead of St Augustine as it requires way less water and holds up to this Texas heat in the summer. Of course I know all grass is dormant this time of year and arrives brown from the grass farms but it still sucks to put down brown sod and not to get that initial “new yard” look like the summer. The A/C guy stopped by and installed the compressor but the heat isn’t on yet until I can pass finals on Electrical, HVAC and Plumbing and then have the power company come out and set the new gas meter. I am doing a killer driveway gate again this time but this one will be automatic. Should have been installed “before Christmas, I promise” but hopefully it will come this week. Land of Manana here again in good ole SA as a lot of Hispanic workers go to Mexico from Christmas to New Years to be with family. A cool old guy stopped by this week from the area, an 87 year-old millionaire investor. He had heard of me through some local Realtors and came to introduce himself personally and see my work. Of course I love listening to seasoned pros, he told me of a land deal that netted him a million bucks in 3 months time. His parting words were: “There’s one out there for you”, very motivating.
It was a crazy week now that we have two projects in progress. At “The Neighbor’s House” we are winding things up and are having the floors refinished while the concrete guys are pouring 1500 s.f. of driveway, 2 patios, an A/C pad and flatwork around the room addition. With all the mess over there I’ve now received disgruntled phone calls and threats of calling the cops about the workers having to stay so late finishing the concrete.
I feel like an unwanted houseguest that comes and stays at your house for a week. At first everyone is glad to see me, has remodeling questions and loves what I’m doing for the area, but add 3-4 months of random work trucks parked in front of their houses, mud everywhere in the street and a constant mess and noise and all of a sudden it’s not so cool and the animosity starts to set in. Understandable though, I’m sure it’s annoying.
It was really difficult to pour concrete this time because the cold weather delays drying time and the days are shorter now that it’s winter. They’ve had the forms and rebar down for almost 2 weeks and we keep getting days on end of misty cold rain. After finally having four trucks dump about 30 yards, the finishers ended up having to stay until midnight using lights…temps were in the low 40s and it wouldn’t dry fast enough to smooth.
That was a particularly bad night for neighbors, I hate having to do that. On the inside, the floors are coming out great as the crew has gone through 3 sanding stages, wood filler and a fine screening to smooth them out. The stain goes on today so I am anxious to see the extra dark walnut stain we’ll custom mix. Can’t wait until they are done so I can install appliances and then it’s down to the final stretch of small punch list stuff and I can get off this street, its time to go!
Over at “The Target House” we broke ground with the demo this week with the help of some day laborers and tore out the entire house in one day gutting every room completely down to the wood and removing both the kitchen and bath. Additionally there was a dilapidated garage and apartment in the backyard that took 2 more days to take down by hand.
I had planned to rent a Bobcat to knock it down but it ended up being cheaper to just pay the laborers to do it. Going through someone’s old personal stuff in a garage really lets you get to know them, weird. We found pictures of the house from Christmas 1991 in perfect condition, crazy how 20 years of deferred maintenance can take its toll. Now that the demo is done, the next step is I’ll have my foundation guy get started leveling the house.
Our architect is currently working on plans; I have some great ideas for totally changing the floor plan around as well as adding about 1000 s.f. onto the back of the house. We’ll do a walk through soon and show you how we are changing things around for the renovation. Several of the other interested parties who didn’t get the house have stopped by this week seeing the demo underway and inquiring about our plans.
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.
The interior is getting close to paint. I’ve hung all the doors and trimmed everything out using MDF this time. The finish out is really going to be slick so I’m excited. The master bedroom closet got a little more love this time with trim. I’ve also been busy getting some of the tile done. Picking building materials is like fashion, you have to know what’s new and in style but also know when to use it. Everything is always changing and you have to keep up with what’s new. While it’s all really still subjective, there are new trendy materials that are becoming very popular and incorporating them can set your house apart from all the other inventory therefore increasing the likelihood of a quick sale. I frequently look at design magazines and go through custom homes to keep up to date on what’s cool. You know that colored ceramic and glass tile accents are hitting big time when you can now find them at Lowe’s. While our specialty size ceramic wall tile is of course special order, the glass accents are Dal Tile and came from The Home Depot. Up until last year you couldn’t get the colored glass tiles at the big box stores, we used to have to special order them or get it online. Picking the right materials can really make or break your rehab. It really sets apart the pros from the Joes. There’s nothing worse than walking into a rehab that just looks like a flip.
When I am doing a major renovation there are a few very important features to try and incorporate to maximize retail sales price. In no certain order they are: Master suite (master bath is connected to master bedroom), dual vanities in master bath, walk-in closet, indoor utility room and food pantry. To be missing one of these items would be a huge mistake in my opinion.
My cabinets are now on order as well and should arrive before Thanksgiving. I am using Kent Moore here in Texas and they are full custom Maple and made to size with no filler pieces. I picked an off white shaker style that goes well in historic homes. For that high end custom touch, all the bathroom vanities, linen cabinets and laundry room cabinets in the whole house will match and for the bathrooms we will be using the 34” high new style vanity that you don’t have to bend way over for when brushing your teeth. We’ve used these before and it’s amazing to see how many buyers walk through and notice the vanity height.
The house was scheduled to be done December 1 but since there’s no rush to get anything on the market during the holidays I’m planning to take my time with all the details and landscaping so we can hit the market after Jan. 1. There have been buyers stopping by every week so we’ve got interested parties lined up, and as always I like to focus on that last 10% of the project because that’s where most house flippers drop the ball and how we make our houses sell for top dollar.
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.