July 17, 2009

The Finish Line

 

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.

 

July 10, 2009

Launching the Assault

 

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.

 

June 26, 2009

Hat Trick House Sold In 5 Days!

 

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 hotdogs 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 a Phyllis Browning 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 Tarrant Realty’s 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.

 

June 18, 2009

Game On

 

The Hat Trick House is finally done and officially on the market and in MLS. We’ve had a swarm of buyers throughout the rehab and 3 great offers before it was even finished. We went 9% over budget but luckily our estimated sales price is surprisingly up 25% due to market conditions! Our list price is $359,000, this will be the highest sale in our area and set a new high comp if it sells for that price. My wife and I staged the house and it’s all ready for an advertised open house this Saturday. We already had one showing today, one scheduled for tomorrow morning and an agent that sold another one of our properties (The Abandonded House) just called and her “picky” client found it today on Realtor.com and wants to see it. The agent from our first showing today said the master bedroom closet alone would sell the house. Really? Can’t wait to see how this weekend turns out and get all the feedback. According to the Brookings Institution San Antonio was ranked THE strongest metropolitan area for economic performance in the wake of a recession for the whole nation for Q1 09. Top 5 cities mentioned in the report are San Antonio, Oklahoma City, Austin, Houston and Dallas.

 

 

 

June 7, 2009

The Final Countdown

 

We are in the home stretch and shooting for next weekend to be completely done with the Hat Trick House. Woot Woot! As you can see we’ve made great progress this week again completing all the landscaping while the floors were getting done inside.

 

We used 7 pallets of sod, 4 yards of river rock, 2 truck loads of topsoil, $600 in plants and a yard of black mulch after lining the beds out with the metal edging. All that’s left outside is to paint the front door.

 

The hardwood floor refinishing is done now as well so we will install appliances tomorrow and get started on the shoe mouldings on the baseboards. The floors came out nice and dark, as we planned. In fact when they first started applying the dark walnut stain it wasn’t dark enough for my liking so I had the guys mix in some black pigment. They look dark and rich now and go well with my interior colors and oil rubbed bronze fixtures.

 

We’ve had numerous visitors this week and early inquiries from sign calls. Additionally the neighbor directly beside us put their house on the market Friday so everyone who pulls up to see their house of course sees our “coming soon” sign and walks over to take a gander. Although theirs is in a lower price range and not updated it has enabled us to get some traffic even though we are not in MLS yet. Everyone that’s seen our house has been blown away, one well-respected local realtor predicted that we’ll get $335k. Stay tuned.

 

May 31, 2009

Taking Care of Business

 

I had a big week on the project. Monday morning I dragged the whole family up to Ikea in Austin to buy the cool farmhouse sink for $299. After getting back I went and picked up 6 pre bull-nosed granite slabs and with the help of a friend we got all the countertops installed by 11 pm. This is the way to do your granite counters for about $10/s.f. I used the color Verde Butterfly this time. I had to alter my sink base cabinet to accept the farmhouse sink from Ikea but with some simple cutting out on the front and back it fit perfectly. I also got all the bathroom sinks and faucets in and the hot water heater installed. The A/C guy finally showed up and installed the condenser so we can call in for HVAC final inspection this week. We started sanding the hardwood floors Friday and I was pleased to see that most of the problem areas are disappearing. Once we come back with the dark Walnut stain they should end up looking fantastic. The wrought iron driveway gate is also installed now and adds a great touch. The floor refinishing guys will work through next week, while I switch gears to the landscape. My “Coming Soon” sign is in the yard now so stay tuned.

 

May 24, 2009

“Hurry Up and Finish So We Can Make Another Offer”

 

This is what the potential buyer told me Friday when he stopped by during my cabinet install. It’s the same couple that wrote the great offer a few weeks back. First time I’ve ever heard anyone say this, he’s really not shy to let me know how bad he wants it. They really love the house so I hope they get it. I passed final electrical inspection Tuesday so now we are waiting on CPS to drop the power to the new meter loop. I finished the fence, it ended up being a 4-day project with my helper and a total of 210 feet of dog-eared cedar with a rear, locking gate on the alley. Because all the cedar started to look a little “fency” I decided to go with a wrought iron driveway gate so I had my guy come and measure on Friday. After the fence I jumped right into the 30’ x 12’ rear deck project, only 2 days total to build the 360 square feet with a sweet bench to boot. When the pressure treated wood dries out for a week or so I can put some stain on it.

 

The cabinets arrived Thursday so I got right into hanging the boxes and vanities as well as topping out the plumbing. All that’s left for the cabinets are a few filler pieces, glass and the crown molding. The simple Shaker style with square lines really goes with the house and the wine rack adds a nice touch. All in all, I am really pleased with how my kitchen design turned out. The next major items to tackle on my list are granite slab counters for kitchen and baths, hardwood floor refinishing and A/C final inspection. I am ready to get this one done, it’s been fun but I’m feeling a little burned out from the final big push.

 

One more week until the Grand Opening of the $74.4 Million dollar Museum Reach section of the River Walk Extension Project. Here’s a great video containing a sneak peek of the new River Walk Museum Reach area and the artwork incorporated. Thousands of people are expected to be milling around down there next Saturday. We are planning a family stroll Sunday morning.

May 17, 2009

Riverwalk Extension and HUD Blunder

 

The Hat Trick House is coming along quickly now. I switched gears to working outside this week painting the garage to match the house and starting the rear privacy fence. Final inspection for electrical is scheduled for Monday so if we pass we’ll proceed with finishing A/C and calling it in for final as well. The cabinets and vanities will hopefully arrive on Thursday. The buyers who wrote the killer offer have been by twice this week checking progress.

 

$8000 Dollar Tax Credit as HUD down payment?

 

HUD is now allowing first time homebuyers to use their $8000 tax credit as the down payment on FHA insured loans. Isn’t this taking us right back to where the problems began with putting people in homes with zero down and no skin in the game? We already got rid of the “down payment assistance programs” due to the high default ratios of buyers who didn’t put anything down. HUD secretary Shaun Donovan announced this brain fart this week during a prepared speech.

May 11, 2009

Paint and Two Offers

 

The interior paint came out really good and we’ve received 2 offers already and the house isn’t even done yet! Build it right and they will come. Instead of popping out different room colors like a clown house we ran Ralph Lauren Macaw through the entire house except for the baths. With all the floorplan changes and the room addition now it seems the house is reconnected with the color unity and it all flows well. My electrician also came this week and installed all the devices, switches and receptacles.

 

The buyer’s agent I spoke about on the last update showed up Monday with her buyers in tow, a really cool young couple. I had told her my price was in the $300k range but wasn’t specific. They absolutely loved the house and have been looking since Feb and have seen almost 70 houses. They wrote an incredible offer the next day for $310k with only 2 pts for the agent so effectively a $313k offer. With the recent new comps I really think we can push it a bit higher and as good as the offer was, I really want to market the property correctly and see what we can get. There have been 2 recent sales (one was ours with Craftsman Bungalow) that have got $175/s.f. The new pending sale we are excited about will be close to $190/s.f. With our addition of the master suite the Hat Trick House will be around 1930 s.f. so even if we use the conservative $175 per square foot then that puts us at $337k. If they love it now just wait until the landscape is done and we stage it. The highest sale in our area was for $299k and only 1650 s.f., so it looks like we are headed to another record breaking sale.

 

Wednesday night we received a call from Agent #2 whom we’ve done business with before. He has another buyer who has evidently already stopped by, spoken with me and seen our project. They offered a little less than 300k and wanted to finish it themselves so they can pick the colors and fixtures. We’ve got about 13k left to spend but we also have final payments to our subcontractors and open permits to finalize. Plus as we mentioned, half the fun is staging it and marketing it so we maximize the potential on the project.

May 3, 2009

Tile and Market Stats

 

It took 4 days but I got all of the tile done minus the white grout which I’ll do Monday. I went to Daltile and opened a wholesale account to get the Arctic White ceramic because they don’t sell retail to the public. You can find white ceramic at the big box stores but they don’t have all the special bull nosed corners necessary to do the job right. There are also 5 different shades of white ceramic tile so be careful if you are mixing pieces from Lowes and Home Depot. I used 6”square up to the glass liner then 3x6 subway tile on top. For the floors in both baths I used 18” travertine. I spent about $900 for ceramic and $350 for the travertine for both bathrooms. We generally budget $3500 for a complete high-end bath remodel so we are in line here with this expensive tile. I think the classic white ceramic mixed with the modern travertine and glass achieves a good balance of old and new. The cabinets are also now officially ordered with a 12-day turn around out of Dallas.

 

 

We had several new, interested parties contact us this week including a realtor representing a buyer whom had heard of us through a lady 3 blocks over. She knows the area extremely well and didn’t flinch when we had told her our plan on listing in the 300k range and in fact she also was aware of the recent price increases in the area including the 2/1 that’s under contract for 249k without major upgrades. There is virtually no inventory in our area and it’s also helping push prices up. We spoke about why Mahncke Park is seeing such good appreciation while for the most part the rest of San Antonio is staying flat. She felt its partly because it’s the second best choice for a historical neighborhood to King William/Monte Vista where prices are substantially higher. I still feel strongly it’s mostly due to the San Antonio Riverwalk extension to Witte Museum and all the Broadway revitalization. Additionally, M.P. was just under priced for its location for a long time and is now just catching up. San Antonio Board of Realtors put out a press release regarding March 2009 real estate sales statistics and first quarter trends. It said sales activity had dropped by 25% but prices remain stable. From talking to struggling agents on the front line it seems to me that activity has slowed a bit more but as one agent just told me the other day “There are just too many agents in San Antonio, all hanging on after the boom years when Californians were buying 3-4 houses sight unseen.” Those days are gone now because investors in California and other bubble markets can get cash flowing properties closer to home and be better positioned for the next upcycle in real estate prices.

 

April 26, 2009

Color Me Historic

 

We almost finished the exterior paint but the rain came again Friday. San Antonio needs the rain but when you are so close to adding the final details it really sucks to be forced to stop. The replica historic wooden window screens I made really allow for a cool color blocking combo. The dark purple accent color is from Benjamin Moore and called Vintage Wine. Of course we had it mixed at HD in a less expensive Behr. I am starting on the bathroom tile Monday rain or shine. I was crunching some numbers in MLS on an adjacent neighborhood here in San Antonio called Terrell Heights after talking to a friend who has a flip there sitting on the market. Inventory levels are twice what they were in 08 and transactions are down 50% while the average sales price has stayed flat at 188k. This neighborhood was hot when all the San Diego investors were here due mainly to the school district (AHISD) but several eventually got caught with their pants down as the market slowed last year. The small historic San Antonio neighborhood Mahncke Park on the other hand has seen a y.o.y. average price increase of over 20% as well as an increase in sales activity. I cant wait to get the Hat Trick House done and try to set another record high sales comp. We are on budget with the rehab and our target sales price has risen due to recent sales comps pushing prices up. The cactus came up missing after I offered it to several workers. Someone came and dug it up after hours. I have to say I am sad to see it go even though we were planning on removing it for the new landscaping.

 

 

April 19, 2009

Paint and Rain Don't Mix

 

It’s been a crazy week jumping from one project to another and making offers on 2 other properties. We started to paint the exterior and got rained out on day 2 of a 3 day rain. We did however get 2 coats on the eaves painted with Benjamin Moore’s Monroe Bisque. Then we got 2 coats up on the body of Benjamin Moore Tate Olive before the rain started. We are doing a 4-color scheme here but the 2 additional colors are used sparingly on window screens and accents. If you are ever painting and it starts to rain STOP immediately because the paint will not dry! I still have a day or so left on the trim and columns but it looks like we are due for a sunny week. The green body color came out sweet.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

I was simultaneously spraying the interior trims and doors with High Gloss White. This is tricky business because you can’t have any runs but need complete coverage. It’s very similar to painting a car (or in my case a beach cruiser frame with spray paint). Multiple thin coats is the trick. Halfway through the day the clouds rolled in and it started dumping so with the moisture in the air this paint just sat there wet and wanted to sag. We quickly got lights and heaters to speed up the drying, whew, close call. So we are ready now to put the color on the walls, which I’ll cut in with a brush and roll soon.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We still haven’t pulled the trigger on cabinets yet. An old friend that I reunited with on Facebook this week has a cabinet shop in Houston and can order from several manufacturers and have them delivered right to our job site. I am choosing white shaker style cabinets from Woodmont called Hearthstone. For the price that I would have gotten cheap Ikea cabinets I can have these better white maple ones. The cabinets might take 2 weeks to arrive so in the meantime I’ll tile the bathrooms. I finished all the hardibacker floors and shower walls since it was raining so I’m ready to tile now. We finally decided to go with 18” travertine on the floors but white subway tile for the tub surround and shower with glass tile accents we found online. There’s a great site called glasstilestore.com that offers free shipping on some items in case you want some glass tile for a backsplash or accents.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

April 12, 2009

Why Is Texas Bucking the National Economic Trend?

 

Everyone always asks us why we decided on moving to Texas from San Diego to invest in Real Estate. Our plan was to pick a stable city to go to and flip houses while we wait out the California price freefall and then go back to invest in more rental houses at the bottom of the next cycle. We could have picked any state in the US but for us it was an easy choice (and not to mention I am originally from Houston). In the face of National headlines delivering nothing but grim economic news, Texas is a Lone Star shining bright, a beacon of stability, growth and prosperity. With the projected growth around the metro areas and added commerce, jobs and real estate opportunities, there will soon be a Lone Star Boom. Let’s see why everyone is talking about Texas:

• If Texas was a country, it would be the 10 largest in the world.
• If Texas was a country it would be the 5th largest based on oil and gas production.
• If Texas was a country it would have the 12th largest economy based on GDP.
• In the last year ½ of all jobs created in US were in Texas.
• Texas has largest population growth in US.
• 82% of Texas population is in metro areas Houston, Dallas, San Antonio and Austin.
• 3 out of the top 10 largest cities in US are in Texas.
• Texas is home to more fortune 500 companies than any other state.
• CNBC recently rated Texas #1 state for doing business.
• Forbes recent article picks San Antonio as #2 for “Best Bang for your Buck”.

 

This is a really good video that demonstrates why Texas is a good bet:

 

April 4, 2009

Post-mud walkthrough

 

All the tape and float is now complete and the whole house got textured today with a light orange peel. This crew did a great job and the house looks incredible. The texture guy was checking out my cactus in the front yard so I had to keep an eye on him. We ordered 13 pre-hung interior doors at roughly $68.00 ea. this week so they will get delivered Tuesday and I can start hanging them. I chose a raised 2-panel hollow core with oil rubbed bronze hardware, which we will use throughout the house. A nice young couple has been by several times looking at the house and found me through a friend who lives on the next block. They are extremely interested and love the area however I think we might be priced a bit out of their range. It’s amazing how hot this area is and what little good inventory comes up. Most of the houses in Mahncke Park are 2/1’s with tiny closets and not fully updated so our 3/2 with luxurious master suite will be a very unique offering and timely to coincide with the surging popularity of the area. Here is a quick walkthrough video from today.

 

March 29, 2009

Anthony Bourdain ain’t got nothin’ on me

 

Last week we passed the mechanical, framing and insulation inspections and finally got the drywall hung Friday. Eating cactus is a big thing here in San Antonio with the Mexicans. First the sheetrock delivery driver spotted my cactus in the yard and wanted to take some with him to eat, of course I obliged. Then when the hangers showed up Friday and also got excited about it I had to give it a try. Evidently you are supposed to boil it first and then chop it up and use it with eggs in burritos or carne asada on the grill. Eating it raw off the plant in my backyard was quite an experience; I’d have to say it tastes like room temperature cucumber. The workers I find are quite resourceful. My roofer on another house found a wild berry plant in the alley and harvested them saying he was going to make salsa. I tried those too and they were hot as hell. I’ve seen these berries for years on plants but always assumed they were poisonous. I want to know who the first guy was to try eating these backyard plants and find out they were ok. The tape and float crew came in over the weekend and got started as you can see. They didn’t find anything appetizing growing in the yard. By mid week we should have it all the way to texture inside and then I can take over with the paint sprayer. My stomach was feeling a little off today; don’t think I’ll be eating any plants out of the backyard again anytime soon.

 

 

March 22, 2009

Plumbing Inspection: Passed; Mechanical: Failed

 

We passed plumbing this week but failed A/C inspection yesterday due to some minor details overlooked by my sub-contractor, which have already been addressed. Second mechanical inspection is set for Monday. After passing plumbing I went ahead and installed the new plywood sub floor and set the tub in the hall bath and shower pan in the master bath.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As soon as we pass the mechanical inspection I can call for the framing inspection. It seems odd and out of order the way San Antonio does it, they inspect framing after all the tradesmen have finished. If something were incorrect you would have to rip out all those sub contractors new work, weird. So the schedule is: pass mechanical Monday. Call in framing inspection for Tuesday. Pass framing Tuesday and schedule the insulation inspection for Wednesday. Once we pass the insulation inspection we can hang all the drywall. My drywall crew is chomping at the bit and ready to get started. I am going to have it delivered Thursday, 225 sheets to do the whole 1930 s.f. house, 5/8” for the ceilings and 1/2” on the walls.

 

 

Take one last look inside these walls, next time you see the house it will be all sealed up. This is always a huge milestone for me; to see the house with all new drywall really shows how it will look. It blocks out all the “old house” smell and it’s all downhill from there, baby.

 

 

We’ve been monitoring sales activity a little closer lately and I ran some interesting reports out of MLS last night. In our little “area” there were only 9 sales in 2008, (2 of which were ours) and avg. price was 206k. In Q1 08 there were no transactions, so far this year we have 6 pending or sold. Average price on these 6 is 257k. That’s an increase in sales activity of 600% and an avg. price increase of 19% Y.O.Y. Currently there are only 4 months of inventory making it essentially a sellers market. While the overall market has slowed down in San Antonio our area seems to be a bright spot. The Craftsman Bungalow sold for $174/s.f. last year setting a record for high comp based on $/s.f. The avg. price per s.f. is closer to $155.00 so with Hat Trick being 1930 s.f. and the level of rehab we plan on listing it for around $289k –$299k. The only thing better than setting a high comp for a neighborhood is getting to come back and use that comp in your next sale!

 

March 12, 2009

Primed & Ready

 

After 5 days of prep on the Hat Trick House I finally got the outside in primer last weekend. Just in time before this week’s 4-day rainstorm hit. It looks great, can’t wait to see some color on it. My wife and I are considering an olive drab body color with cream trims and plum accents. The A/C is all roughed in now so we will be calling for inspection shortly. The plumbers are finally now working on roughing in the complete new system including water supply, waste and gas lines. There will be no trace of any old mechanical system in this house when we are done. Although the market has slowed way down this year we are happy to see 2 more houses go under contract this week within blocks of our house. Despite the troubling economy and all the bad press in the media, people still need houses to live in and this area we have been investing in is hot. Additionally, we are getting random potential buyers from the neighborhood stopping by asking when the house is going to be ready. The word is out that I am doing this rehab as we have developed quite a following in Mahncke Park, everyone loved our last remodel one block over, the Craftsman Bungalow.

 

 

March 1, 2009

Electrical Inspection: Passed

 

This week we had our electrical inspection for rough-in and passed. The inspector that came out was the same guy who did our last rehab house one block over and complimented us on the good work being done. I really felt guilty for taking out the original sashed, leaded glass windows after seeing all that white vinyl earlier this week. It had to be done though as they were in such bad shape and with tons of cracked panes. Additionally, with the room addition having new dual panes it just made sense on this house. To redeem myself with the historical gods I spent 2 days remaking wooden original replica hanging window screens. I designed them in such a way to minimize the appearance of the white vinyl. They came out sweet and will be an important accent feature of the exterior paint job coming up soon. I used 1x2 and 1x3 Poplar hardwood and pre-drilled, screwed and glued them. I also used the historically correct screen hangers still available from Stanley. After the screens are painted I’ll stretch the mesh behind the frames.

 

 

I also installed the pre-hung back door to the kitchen and went ahead and replaced the siding around it since I had extra left over. These pre-hung units are really easy to install, any DIY’er can tackle this project. Finally, I installed the French doors to the master bedroom so now the house locks up good at night.

 

 

Many of our regular visitors remember the wholesale deal we offered last summer called Bungalow 2. We sold it to another investor and he quickly rehabbed it with a full crew. He did a nice Ikea kitchen with granite and stainless and added a master bathroom on it as well. After being on the market only 44 days we saw that it just went under contract. Here’s how the house looks now after his rehab.

 

 

February 21, 2009

The Old and the New

 

As you can see I have the whole house sanded down and the new windows are in. I did all 30 windows in 1 day by myself. It’s looking really good now and it’s easy to imagine how it looked in bare wood form circa 1925 with a possible Model-T parked out front. Looking in the near distance you can see the new 20-story luxury upscale condo building called The Broadway that’s being built just 2 blocks away. It’s the largest scale condo high-rise in San Antonio and the most expensive coming in at $500 per square foot. The San Antonio Riverwalk Extension will reach 2 blocks away from this high-rise and our property as well. This area of Broadway will become quite swanky in the next 3-5 years with the addition of this high-rise and more on the table. We are in good company with the builder, Mr. Red McCombs who is also betting on this area as being a good investment. Mr. McCombs is supposedly keeping the top floor for his private use while the 19th floor is comprised of two penthouses at 4 million each, one of which is already sold.

 

 

The complete electrical is also now roughed in. All we have to do is set the meter loop next week and then we can call in for rough inspection. I hired and fired a plumber this week as well, after talking him down to the price we needed he dropped off his materials and disappeared for 4 days. He begged me to give him another chance and explained how badly he needed the work, I could only keep asking myself why wouldn’t he show up and do it then? If it’s this hard to get him over to do the rough-in then we could really be in a jamb when inspections started…better to clip this guy now. Of course we didn’t give him any money up front so we haven’t lost anything but time. The HVAC guys have started running all the ductwork for the new central A/C I’m adding. I’ve located the furnace and coil in the attic to save space. I am using a 4-ton, 14 seer Goodman system for this house. They recommend roughly 1 ton for every 500 s.f. of living space. Prices in San Antonio for a system like this with all new equipment, ducts, grilles, boxes and permits run about $5,000. Keep in mind this is an investor price; retail companies from the phone book would be quoting $8-10k easy.

 

 

I got the siding on this week as well. I used the “historical replica” #117 siding for the whole master suite addition so it matches the existing house. I did the whole rear addition with 1 helper in a day, a big day though. It’s been pretty fun building this “new” addition in the “old” style. It reminds me of the restoration/modified builds they do on old muscle cars these days. All old and original looking but with today’s advanced technology. They call these cars Resto-Mods. I think I’ll dub this house a Resto-Remod.

 

February 7, 2009

February 3, 2009

Get 50% Off By Haggling With Your Subcontractors

2.5 days and the whole master suite addition is all framed up and dried in. It came out sweet; I am really excited with the reconfigure of the floor plan on the Hat Trick House. I have the roofers coming tomorrow to put down a 30-year dimensional shingle in the color Estate Grey with ridge vents. My electrician is also getting started in the a.m. roughing everything in for the complete re-wire. I am also planning to call for framing inspection tomorrow as well so let’s hope for a pass, should be no problems as I went with 2x8 for ceiling joists and 2x6 for the roof. I had a bid yesterday for all new plumbing with permits including tying in the new room addition. This character had the nerve to bid $8,000. It’s really crazy now that construction has slowed down; some subs are actually raising their prices to make up for less work. I had him down to $3,500 by the time we got outside to the curb. I’m still getting bids and trying to hit $2,500 max.

January 30, 2009

5 Yards of Concrete & 200 lbs of Rebar Later

I finished the 15 concrete piers today for the 435 s.f. master suite addition. There are 3 rows of 5 with 7 foot spacing. After the bobcat grading I dug 24” holes, 2 feet deep with an auger. At the bottom of the holes I placed #4 rebar in a tic tac toe pattern, 3 pcs each way. Then I filled the holes up 18” with 4000 psi concrete to make the footing. For the pier I placed 2 more pieces of rebar sticking straight up through 10” sonitubes. I left these 2 pieces of rebar a little high so the sill beams can lay inside them. Finally I filled the sonitubes with more concrete to complete the pier. I have to reflect for a minute on how easy this is in Texas vs. California which has all the earthquake codes and bureaucratic red tape. The City of San Antonio only requires an Engineer’s approval letter for the foundation inspection of my building permit, (which I pulled over the counter). He comes out twice, once to inspect the hole depth then secondly after the beams are sitting on the piers. Try pulling a permit in San Diego. Drop off your plans, wait for months and prepare to jump through some hoops! The framing will start on Monday. Stay tuned.

January 16, 2009

San Diego, California Market Case Study

Here’s a good one for the bubble bloggers out there. To illustrate how far the real estate market has fallen in Southern California, our Flip from 2004 seen here on our site “The Probate House” just sold as a short sale for 345k. We bought it in Fall 2004 for 375k as an extreme fixer and sold it Spring 2005 for 500k. That’s a 31% price reduction off the ‘05 peak. It’s pretty crazy that people were paying 500k for a tiny 1000 square foot 3/1 with a 1-car garage. You could get a mansion here in Texas for half a million. The buyer obtained a Subprime adjustable loan with 100% financing. In fact, his “creative” realtor/mortgage broker tried to overwrite the contract for 525k and take out the extra 25k at the close of escrow for himself telling his foreign national client it was part of his fee. The poor buyers almost got stuck with it until our realtor blew the whistle on him and called the DA’s office. He was prosecuted and went to jail for pulling that scam multiple times. I wonder if they confiscated his brand new black Porsche.

Here's what the house looks like now 4 years later and worth 31% less. At least the palm trees I planted still look good.

January 12, 2009

2009 Forecast, Will San Antonio get Spurred while San Diego Charges?

The SABOR 2009 Housing Forecast was recently presented. They do it every year and hold it downtown in the fancy Omni Hotel conference room. All the bigwig Realtors and Builders give their spiel on the San Antonio Real estate market. Remember, these are Realtors painting this picture for us so take it with a grain of salt as with anything coming out of the NAR. They stated the following in their presentation, which I have posted here on my site. Sales were down 18% in 2008 compared to 2007. Down 23% from peak in 2006. A bright note they claim is that inventory is not however growing. This seems odd to me because as I drive around all I see are For Sale signs. Fewer sales but less homes being listed for sale with 17,359 units sold in 2008. Months of supply are up at around 8 but only due to the fewer sales. The average days on the market for 2008 was up to 87 and that number doubles when you get north outside loop 1604. Foreclosures were up 23% compared to 2007. The median sales price stayed flat at around 155k. According to the head honcho’s San Antonio Prices are now stable and expected to stay stable through 2009. The percentage price change per neighborhood can be found on the .pdf file presentation but most neighborhoods saw about 2% appreciation rate for 2008. There were reports in another earlier that SA was down 4% but that was comparing November 07 to November 08.

 

In a recent article from Yahoo titled 2009 Real Estate Forecast: Troubles Spread it states that some Texas cities could now also be in trouble like the rest of the US. It forecasts that Houston could drop 8.5% and San Antonio could see price drops of up to 10% in 2009. The article then goes on to explain how severely damaged markets such as Boston, Orange County and our hometown San Diego could be reaching affordability levels seen before the boom and may level off. My wife ran across a thread on City-Data that asked all the California transplants how many of them would consider moving back now that homes were affordable and back down to 2001 prices. Honey, pack the bags and I’ll load up the tools in the truck!

 

As always, Location, Quality and Price will be key for our rehabs through the New Year.

January 10, 2009

No LaDainian tomorrow but we have another LT, Darren (Lil Tank) Sproles. “I’ve played against him and seen a lot of film, I’ve never seen anyone get a great hit on him” – Troy Polamalu. With the incredible D of the Steelers we have our work cut out for us. The good news is the Steelers don’t run well and can’t score. With only 11 points scored against us at our last meeting, turnovers might decide the game. My prediction 28-17 Bolts. Go Chargers!

 

We are anxious to return to work soon on The Hat Trick House, stay tuned for regular updates once I get back over there. We want to give a special shout out to another blogger and investor named J. Scott at REIstartup.com. He and his wife also quit their corporate jobs and moved from California to the Dirty South like we did. I love his site, he shares tons of info, tips, numbers and pics. I can’t get off it. It’s a must read!

December 17, 2008

Recently we switched gears to the 430 s.f. room addition for the new master suite. It's a pier and beam foundation and since my lot slopes up towards the rear, the first thing I had to do was to rent a Bobcat and grade down 18 inches. This will allow for the crawlspace to comply with the building code of having a minimum of 1 foot space between the earth and the bottom of your sill. With the Holidays quickly approaching it's now time to take off work for a while and spend precious time wih family and loved ones. We wish everyone a Merry Christmas and a safe and Happy New Year!

December 10, 2008

December 7, 2008

When my wife and I first moved to San Antonio 2 years ago an insurance agent told us the city’s nickname was “Land Of Mañana.” We’ve found this to be totally true, it seems most workers are satisfied to poke along and only do what’s necessary to keep their family fed and stay semi-busy. Oh, I’ll just finish it tomorrow seems to be the consensus. Since the cost of living is low here there’s really no sense of urgency to get anything done. Although we do most of the rehab work ourselves there are still sub contractors who we depend on and recently we’ve had our pace slowed down a bit.

 

 

 

The foundation guys disappeared for a week after there was a water leak under the house and things got a little muddy. You can’t lift the house to level it if it’s muddy because the hydraulic jacks will sink on you. I had the meter off but it turns out it was faulty so some water was getting by even though it didn’t show it. I had SAWS come out for free and replace the water meter so we are all dry now and the guys finally got the house level and are almost done.

 

 

The design of the kitchen cabinet layout is complete thanks again to our Swedish friend's website. Last time we wrote that we had some people email us and ask who our Swedish friend is...for all of you who don't get that joke our friend is Ikea! Yuk yuk yuk. The design required us to remove the 3 existing kitchen windows and put one back in with a new location so it's centered over where the sink will be.

 

 

I finished the entire interior framing this week so the new laundry room, hot water heater closet, refrigerator cubby, food pantry, hallways and relocated doorways are all complete. I also patched the wood floors with Red Oak in the areas where I opened up interior walls. Once the floors are refinished you won’t be able to see the patched areas.

 

 

We are ready to start on the master suite room addition this week. To prepare for the room addition I had to get a 60-foot pecan tree taken down and then grind the stump down. I got a great deal from some guys to take down the tree but once again they only seemed to want to work half days and spread out a one-day job to 4 days. Getting rock bottom prices from subs is a key to our success but sometimes it slows you down a bit. The room addition is 29 feet long so I also had CPS Energy come out and move the gas meter from the rear of the house 30 feet back in the yard. This only cost about $200, which I though was surprisingly cheap. They kind of have you over a barrel when it comes to moving their equipment so they could really charge what they want. CPS is really easy to work with here in SA. They even came out for free when we dropped the big tree and took down the power feed to the house to make it easier and safer.

 

November 23, 2008

Here's how the new floorplan is playing out after our drastic changes. As you can see we've opened up 4 main walls with dramatic arches. It has really given the home a more functional layout and brings in a lot more light.

 

 

 

We also got started on the foundation repair which is always 2nd on our list to do after demo. It was important on this project to get everything level before we even start the room addition and it needs to be lifted 3 inches in some areas. The house sits on 38 cedar posts, these posts are actually trunks of cedar trees which is common in this part of Texas. Each post is 5 feet tall, 3 feet of which is buried in the ground sitting on a concrete pad. Cedar is naturally resistent to termites, however, after 85 years and possible drainage problems the cedar gets rotten as you can see in the above photo. In order for us to level the house, we are replacing all 38 posts. We had 4 workers under the house digging the holes to pull out the rotten posts. How would you like to have to crawl under the house with only a damp dark 24 inches of clearance and dig 38 3-foot deep holes? These guys are rad.

 

November 16, 2008

 

We started the rehab on our next project “The Hat Trick House” this past Tuesday. It’s one block over from the two bungalow houses we sold this summer. It took two days with 3 helpers to do all the demolition and we filled two 30-yard roll off dumpsters in the process. I ripped the kitchen and bath down to the studs and took off the paneling throughout the rest of the house. There was no drywall under the paneling so we have a lot to replace. The house also had vinyl siding that was installed over the original waterfall wood siding. I ripped all this off already as well to reveal the historically correct appearance. I got lucky as the condition of the wood underneath was o.k. I also cut down the loquat trees blocking the cool front porch; we have some great features here to show off with this old craftsman bungalow so you need to be able to see them. You can’t sell a house if you can’t see it, right?

 

 

The house is originally a 2 bedroom, 1 bath with 1450 square feet. There is a bonus sunroom off the master but you can’t technically call it a bedroom since you have to access it through the master. I designed a completely new floor plan to bring this grand old lady current and get us top dollar on the resale. We are closing off one of the two front doors and will now be using the front bedroom as an entrance and study. I’ll open the wall between this room and the living room to give more space to the front of the house. I am also opening the wall between the kitchen and dining room and adding a hallway to access the sunroom in order to take it as a third bedroom. For the middle bath I am relocating the doorway around the corner so it’s not visible from the dining room since I am also opening the wall to the main hallway. There is an original room off the kitchen called the milk run, it is a narrow hallway used in the old days for the milkman to leave your milk and eggs inside your house without entering the kitchen. It’s common to find these interior hallways in older homes from the 1920’s and 1930’s. It’s basically a waste of space and this area will be added to enlarge the kitchen. With the new huge kitchen size I’ve designed a laundry room on the back wall that will be 36 square feet. My wife and I also designed a 435 square feet master suite off the back of the house including new second bathroom with dual vanities, water closet and shower. The master bedroom will measure 13x15 feet and have French doors leading to a new deck in the backyard similar to the last house. A huge 60 s.f. walk in closet is also in my plans at the back of the new addition. I’ll be matching the original siding to the rest of the house, as this “waterfall” is still available and called #117 siding. We are entering uncharted waters here by adding square footage to a flip. Usually we only work with the existing footprint and maybe open some walls or raise ceilings at the most. This neighborhood is fetching around $150/s.f. and I can build the addition for around $50/s.f. so adding this master suite should pay off. We are having a lot of fun given the opportunity to design our own master suite addition. Here’s what my new floor plan design will look like after the complete reconfiguration and added master suite.

 

 

Friday I got started with opening some of the walls for the floor plan changes. Since the ceilings are 9’ I am raising the headers up as far as possible to the top plate and adding arches.

 

 

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