Heavy Metal

Our contractor let us borrow their magnet roller, a rectangle on wheels with a high-intensity magnet inside.

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We spent a couple of hours rolling the property to capture all the nails and screws that could flatten our tires.  Look what we found!

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Windows…Finally!

Jennifer and I have made a ton of progress over the last several weeks with great appreciation to our building team at Trinity Design/Build. With the expertise of Lee, Steven, Trent, and Jody, we have complete architectural plans, an engineer review of the home’s structure, the building permit, numerous sub-contractors scheduled, and, finally, our windows ordered.

The previous owner replaced many of the home’s old windows with cheap, vinyl windows. And, because these windows were much smaller than the original, the previous owner filled in the gaps with wood trim.

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Notice the large wood trim around the smaller windows.

As you know, we’re working with the Historic Preservation Office to restore this home. And, the HPO is extremely particular about windows. We set out to find 13 standard windows (custom is cost prohibitive) to match the style of the original windows of the house.

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The windows above are just a few of the original windows that we’re saving and trying to match.

Our challenge…find a standard-sized window that comes close to the original opening (no wood fill) with nine lights on top and one on the bottom. (See the nine squares on top and the single on the bottom above.) The windows should be wood at least on the inside, and, even though the top nine lights won’t be individual pieces of glass, it should appear so with what’s called “shadow bars.”  This is called “SDL” or simulated divided lights.

Thanks to Builders First Source and Windsor Windows, we found them! After weeks and weeks of HPO discussions, they’re approved and ordered!

Up next, foundation repairs and more demo.

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Our asbestos team at AB Control spent three days removing asbestos from the crawl space, some interior pipes, and the linoleum floors in two rooms. We finished with a third-party air test that confirmed the air in the home is clean.

Now that the asbestos is gone, it’s time to demo! Throughout the last two weeks, Jennifer and I have been opening the three small rooms in the back of the house. This will soon be the large, eat-in kitchen. We’ve removed the walls, ceiling, and layers of flooring on top of the hardwoods. Behind the plaster and sheetrock, we uncovered beautiful wood panels and bead-board that we’ll use elsewhere in the house.

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Jennifer and I wore respirators and protective glasses. What a messy, dusty job!

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Jennifer got plenty of sledgehammer time with these cabinets.

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Our daughters Logan and Caroline earned some summer money by pulling down sheetrock. They grew up together but went to different high schools. It was fun listening to their old stories while they worked.

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The photo above shows the wall where Logan and Caroline were standing (on the left). You can see the kitchen take shape now that the walls are down.

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We removed the wood panels from the walls and ceiling. And, each plank of wood had numerous nails to be pried out.

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This is just a portion of the wood and bead-board we salvaged for later.

Up next, we’ll demo the bathroom downstairs along with the kitchen and bath upstairs. These demo days are the definition of sweat equity!

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.