Look What We Found!

You never know what you’ll find when you start cleaning out an old home. With the Colclough House, Jennifer and I began this reno with getting all the trash off the property.
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The back porch seemed to be a cozy place for a passerby to take a nap. Unfortunately, we can no longer allow naps for strangers, so we kindly asked our visitor to find a new place. We moved the mattress to the trash pile. Later, he moved the mattress and some old clothes, so hopefully he has a new home.

The house came with an old carport with attached storage space. Our plan is to restore this carport including keeping the sliding barn door. We’ll add new support columns, electricity, a roof, and a clean workspace in the back.

First things first, the piles and piles of trash and treasures had to be removed.

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We created a trash pile.

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And a salvage pile.

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Best of all, behind piles of vinyl windows, plastic shutters, and press-board cabinets, we found the original front door to the home! Isn’t she beautiful?!

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And, lastly, this past week Jennifer and I began the demo to the downstairs kitchen. We had to remove the cabinets before our asbestos experts come on May 9. I was working upstairs when I heard Jennifer scream. I ran down to find Jennifer unharmed but startled. This passerby unfortunately didn’t wake up from his nap.

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Thank You Times Two

If you know us, you know that we rely on others’ expertise to do things right. Sometimes, those experts come to us first. Almost like divine intervention. This happened on two occasions recently, and we must say Thank You!90111

When our dear friend and realtor learned about Magnolia Properties, she began actively searching for those beautiful homes that needed some TLC. Every time she found a potential property, she’d call and ask if we’d like to jump in the car to see it. Ultimately we landed on the Colclough House.

Not only did she negotiate the contract on our behalf, she navigated several unusual issues with city zoning, an oil tank, and a driveway easement. Check out her web site. Thank you Cristine!

Our second Thank You goes out to Brooks Adams with Minerva Design and Renovation. During one of our numerous visits to the Colclough House before closing, we ran into Brooks who was restoring the home that borders our backyard. We immediately bonded with Brooks. He gave us a tour of his project and explained his background in home restoration. He started out like us…renovating one house at a time.

What we love most about Brooks (other than his dog) is his eagerness to help and share his expertise. We learned so much about the Historic Rehabilitation Standards and the obstacles we’ll overcome in restoring an old house. Check out Brooks’ story on the Minerva web site. Thank you Brooks!

 

 

 

The Next BIG Thing

It’s been a long wait for our next house. After over a dozen auctions and several months of searching, we finally found our next adventure…and it’s a BIG ONE.

Jennifer and I recently closed on a beautiful 1910 historic home in Downtown Durham. We’ll refer to it as the Colclough House since William Colclough was the original owner.

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Since closing a few weeks ago, we selected our General Contractor, a native of Durham who specializes in historic restoration. We also submitted the first part of the application to qualify this project for a national historic tax credit.  Stay tuned for a dedicated blog on that process.

We’ve got so much to share…so many fun details. For now, we’ll share a few photos of the Colclough House. We’ll post often with lots of pictures. Let us know what you think!

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View from the back yard.
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View from the front door. Check out the original hardwoods!
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This home has six fireplaces!
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Fireplace in the downstairs bedroom. This is original tile!
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Downstairs bathroom. The tub will be refinished.
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Main hallway downstairs. Water damage above from a burst pipe.

Who Knows?

Disclaimer: We hate long, wordy blogs, but sometimes it’s necessary. If you’re not interested in knowing what to expect in selling and/or buying real estate, you can stop here. We’ll have plenty of short blogs with reno photos in the near future.

Our last flip is complete and sold! But, the selling and closing process didn’t go as planned. In pricing the townhouse, we consulted our realtor. The list of relevant comps was small. Ultimately, we settled on a list price of $179,900 considering the average price-per-square-foot of comparable homes paired with our complete home renovation, including a new HVAC.

We received a full-price offer with exceptional terms. And, the renovated townhouse right next door also went under contract for above their asking price of $174,000 (a property with one less bedroom).

To make a very long story short, neither of the properties appraised for agreed price. Our property appraised at $12,000 less than asking at $168,000! And, the smaller property next door appraised at $167,000 (only $1000 less than ours).

So, who knows what’s realistic in determining an ARV (after renovation value)? Determining the ARV is key in our business, because this number determines what we can bid at the property auction considering the desired renovations.

Here’s what we learned:

  • Cash buyers are gold! If no loan is needed to buy the property, both buyer and seller can proceed with the price that they both agree is fair.
  • If a buyer needs a bank loan to purchase the property, why wouldn’t the bank give a loan on the mutually agreed price? Well, the bottom line is that the bank is technically buying the property. The bank is taking the risk. Considering the housing-market disaster around 2007, financing has never been tighter.
  • With tons of new regulation in home financing and tight Fannie Mae (Federal National Mortgage Association) requirements, completing the loan process is a pain in the ass. For example, just recently Fannie Mae began providing its own comps to appraisers, and appraisers must use those comps or provide solid reason not to.
  • Banks use qualified and unaffiliated appraisers to determine the value of each property needing a mortgage. With new regulations, appraisers have even less subjective criteria to judge a property. Appraisers find themselves under the microscope with these federal regulations.
  • Here’s the disappointment for a flipper…sometimes it’s more profitable to not renovate!
    • Even though we provide buyers with a beautifully designed, move-in ready home, we may lose money to a low appraisal.
    • Beautiful upgrades help a home stand out and entice someone to buy. But those updates don’t translate into a higher appraised value.
    • Appraisers look at the condition of the home, not the high-end countertops or stainless-steel appliances. A newly renovated home will score a higher quality rating over a home with holes in the sheetrock, but that higher quality rating translates into only hundreds of dollars in increased value (not thousands).
    • Even though we replaced the HVAC, it does not add to the appraised amount. A new HVAC system, new roof, new paint are all considered home maintenance. An old air conditioner that works has the same value in appraisal as a brand new system.
    • In an attached home, like a condo or townhouse, price-per-square-foot should not be used in calculating your home’s value — even if you’re comparing your townhouse to your neighbor next door. For example, appraisers consider bedroom square footage as “dead space.” In other words, the cost to build a three-bedroom townhouse isn’t that much more than a two-bedroom. Just some electrical, sheetrock, and flooring. This explains why our property only appraised $1000 higher than the smaller town house next door.

The foundation of our business model is “more than a basic flip.” We want to incorporate beautiful design choices in the homes we renovate. But, we must consider the impact those choices have on our bottom line. We will continue with an acute focus on the front end: Acquire each property at a price low enough to allow a renovation that delivers the high quality and high design for which we’re known.

Blog note: Our posts represent our experiences and opinions only. If you choose to do your own renovation, buy or sell a house, definitely consult the advice of an expert including licensed contractors and/or realtors.

Crooked Corner

While we’re completing the finishing touches to the townhouse, I’d like to share a pretty cool solution for an odd-shaped corner countertop.

We knew that we needed to replace the cabinet/countertop vanity in all the bathrooms. In the guest bathroom, the vanity seemed to be custom-built with a very old laminate countertop cut to fit a double corner. Jennifer and I certainly wanted to avoid the “custom” option. Custom = big $.

We chose to purchase a pre-manufactured cabinet and align it with the “first corner.” This left a weird triangle between the right side of the cabinet and the wall. Next, we had our granite guys cut the countertop to cover the cabinet AND the weird triangle space to meet the wall. Last, we built two shelves to bridge the distance between the cabinet and the wall.

Check out the pictures to see the finished product. A “custom” look for less money. And, the shelves add that much needed storage space for toiletries or rolled towels.

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Just Say No No to Apollo

We’re in the final stretch of completing our townhouse remodel in North Raleigh, and we would not be this far along without the support of some fantastic contractors.

As we’ve mentioned before, we hire experts for those jobs we’re not qualified to handle. For example, we learned that this home had an Apollo Heating and Air system. Do you know what an Apollo system is? No? Neither did we. Back in the 80s, homes were installed with the HVAC system tied to the hot-water heater.

Jump to today and you’ll be faced with a big question: Should I repair the existing system for a large amount of money…or do I replace the archaic system for double that large amount of money?

We hired Marcus Barnes with Bee Bee HVAC to help. (I used him at my personal home earlier this year.) Marcus provided us with a short tutorial on the Apollo system. He explained that our AC handler wouldn’t last another week (charge wouldn’t hold). And, he provided us with two choices –replace it with a new system or repair it for the half the price.

Half-the-price sounded great, but who would throw money at an inefficient dinosaur? We bit the bullet and bought the new handler.

Marcus did an excellent job and remained in touch to ensure that we were happy.

We like working with family-owned businesses like Bee Bee HVAC because of the personal attention to detail.

BUT, please be wary of those companies that advertise often on the local radio stations with a “family-owned-like” name…like, for example, Carl and Son. Make sure to get competitive estimates for each project. We found that “Carl and Son” quoted  $1250 for an electrical project, while another local company quoted “no more than $300.” It’s a pain in the butt to get multiple estimates, but it’s worth it!

No photos this time. We’re so close to our post featuring the before-and-after pics!