Seattle Real Estate, Fixer, Real Estate Seattle

I put up a post some months ago about a house on Queen Anne that was being redone. It was gutted down to the studs inside, and out.

http://seattlerealestatefixer.com/wp-admin/post.php?post=258&action=edit 

The point was, to ask the question why some one would go to this expense rather than just jack the framing up. My conclusion was that they were trying to preserve the fire place, but today I saw the finished product. Holy Cow!

When you walk in you are walking up an incline to the middle of the house. On the right is the fire place with the window on the right tilted about a half of an inch, just enough to notice. In the middle of the house is a distinct hump.

I could go on for a long time about the odd feel of the property, but let me get to my real concern. The house has been turned into a triplex. Each floor has a kitchen, bath, and bedroom, or two. The floor issue is only one of a set of issues that I would have. Let’s say the owner has spent $120K, maybe less, but the work is extensive. Let’s say the purchase price was around $225K. Let’s say the whole project comes in at $325K, or maybe $100 per square foot, and will rent for $3600 a month. Let’s say it’s a brilliant move all the way around.

Now you still have the foundation that has settled 4 and 1/2 inches in the South East corner. So even if you are holding the property to reuse the dirt in the future, you still have a tear down. A bigger concern to me is that some one, or entity, has tied up that amount of money, for that long. Even if, over time, the property pays for itself, it’s funky.

Obviously this is a smarter person than I am, but still, if you’re going to have funky, why spend a bunch of money to do it? If you’re going to rework a property you should at least make the attempt to do it right. In this case it was a matter of about $5K, maybe $10K, but probably a lot less.

There is a place that is jacked up about six feet where a company was retrofitting the foundation to prevent earthquake damage. I recognized the owner Bruce Schoonmaker as soon as I saw him. He, like me, is an old timer in the business of saving old houses. His company A Ffix, Earth Quake Prepared is one of the most experienced companies in the Seattle area. 

http://www.earthquakeprepared.com/ 

Your foundation is the most important part of keeping your home. We had a company for years called Rot Work Done Cheap that was a companion of our other company Aardvark Home Inspections. When retrofitting for earthquake became more popular we tried it once, and decided it was a full time commitment. Bruce is one of those people we always recommended. Our problem was that rot is something we could show, we were more comfortable with the smaller projects, where retrofitting is a complete task, all around the house.

It was hard for me to bid for retrofitting. It isn’t something that shows, and the client has to be willing to make that investment. A kitchen, or bathroom is more bang for your buck, so to speak. You can show it off. Retrofitting is a sense of security.

As Bruce says, your kitchen, or bath may come or go, but your foundation is forever.

Yesterday I was talking with an architect about a new construction project. He used the term that the new construction was a design build project. The term means that the designer of the project works with the contractors, and sub contractors to get the desired results from the finished product.

The company that I left years ago ended up being a design build company. The problem the architect pointed out is that in this system a lot of the money is paid up front for the design. That seems to make sense, but the realities can be very different in the execution. There may be scheduling conflicts, and you may not be able to get the contractor you want at the time you want them. That is a risk, having an unfinished project to live with can be a drain.

Planning is great, and we highly recommend it. Having a good set of plans to follow is essential. The execution is something that needs to be watched. Very few of your contractors, and especially sub contractors, are going to look at, let alone follow the plans.

This is where the design build concept made sense. The entire process is controlled by one central location. Where it kind of runs amok is in keeping a set of contractors busy all the time. Having the same contractors who will follow your system, sets of plans, and consistently deliver the look of the finished product is hard to keep going.  

In other articles here I have talked about how some contractors keep a crew of people busy all the time. Recently in this economic down turn, things have reverted back to the normal process of keeping a set of independent contractors that you call as needed. So while some groups promise the design build service I think you would be better off having a set of plans drawn, study them yourself, so you know what’s there, then have contractors bid on the plans.

My next article will be about choosing a contractor. There’s no set rule, because you have different things that you want, and expect. We’ll just talk in general.

We added Saul Cortez General Contracting in March of this year. Now we have found a cabinet maker.

We’ve done three or four projects in the past few months that have turned out well at a reasonable price. Jet City Cabinets just happened onto a job we were having a problem with. No one could decide on the Home Depot, Lowes cabinet to go in a bathroom. So Moises went ahead and built a custom cabinet for $400, the price at home Depot.

It’s interesting to me that more people have approached us wanting to do work than people who want to contract our services. It’s the same in all our labor related business. We get calls from people who are highly skilled looking for work.

I, personally, would like to be able to facilitate matching workers with home owners for home projects. We have developed a long list of resources.

As always if you have question concerning your home project you can contact us securely by clicking on the contact link at the top of the page.

A couple of months ago I wrote about a home renovation on Queen Anne Hill where the new owner has completely rebuilt around the original framing of the first floor. For me, for sure, after seeing what’s been done, I can can see the virtue of leaving the first floor as it was. They have added onto the back. It’s getting more popular here is Seattle to leave the “charm” of the original craftsman front of the house. Then you add onto the Kitchen that opens into a more modern “back of the house.”

In this particular place there is a slope in th back that allows for the addition to come right off the back of the original roof line. You step down into the addition, but it transitions at the kitchen anyway, and there is a staircase to the second floor, so you don’t really notice.

Phew, that was more introduction than I wanted to do, but it needed to be said.

There is a house we have been working on near Green Lake that is more what I would like to discuss. It is a small two bedroom house with a bathroom shared by both bedrooms. From my figuring it would be the perfect house to jack up, and add a first floor to.

Under the house are large timbers. It’s a pier and post foundation. It sits up off the street so you could raise it only six feet and excavate four feet. You’d pour the foundation, do 2X6 framing, rewire, re-plumb, and set the “craftsman” back down.

Truth be told you could extend four feet out the back and make the whole thing huge. In my mind, if you excavate the original look of the house could remain almost the same. You can maintain the charm. Now the cost may be subject to discussion, but the way I figure it’s possible to jack up for less than a tear down, rebuild.

In this particular case the cost of the property will be somewhere around $350K. I originally figured about $120K to jack up, re-sheet rock, wire, and re-plumb. Site work $20K, wiring $30K, plumbing $30K, framing $15K, sheet rock $10K, with a $5K trim package.

It may not be pretty, but I think the value is there because of the location. It addresses all the systems, gives a good foundation, and would be retrofitted for earth quake. OK, maybe I’m off by $20, but you are still all in for less than $500K.

At the 800 sq ft that is there now, the additional sq ft would be at $188 per sq ft, the over all house would be at $313 per sq ft. That is less than the $500 a sq ft for a down town condo, and you have a yard, and a semi new construction home, close in, near Green Lake.

Oh, my gawd, what a mess.

I just got back from checking on a couple of projects that are absolute disasters. We did some of the work, which is of course fabulous, but the home owners started having opinions so we got paid for our portion, and went away. The painter was a person we introduced onto the site, but they contracted with him directly. His work is fine, the colors, and requests are a muddled mess. Painting 1970s kitchen cabinets in a small U shaped alcove will do nothing for any one. Both properties are for sale.

You pay a contractor to know what works. It always amazes me when we are hired, and the home owner starts telling us how to do things. We do listen, and come to an agreement, that’s the contract. In the contract is a scope of work. We outline what we will do for the amount of money to be paid. It gets pretty tricky, so it does all have to be in writing. That’s the contract.

The execution varies from State to State. The laws of the State determine how things will look in court. In one of my earlier posts I complained about a contractor who tried to swindle me. He never performed any of the work he was contracted to do, instead he sent people, sub contractors. There was no supervision, no presence of him what so ever on the site, even though I had made that request. He was given a deposit so I had to wait out the work to get at least that out of him. What he had done is misrepresent himself, but it was legal in the State of Washington. Bottom line is I paid $14K for about $7K worth of work.

As home owners the end result is you pay for what you get, with some give, and take. You should be able to trust that you are getting the best service you can for a reasonable price. Reasonable is a matter of negotiation. Your contractor should be able to provide service that delivers a high quality finished product in a predetermined length of time.  

A contractor writes the contract with you. In most cases the person you contract with does the work, or at least, supervises the work. They then perform according to the contract what needs to be done to deliver the product. If the contractor is good, all goes well.

Well, at long last, my main blog site of FixerFixer.com has a home. I had two web sites for about the same length of time. One was for my Real Estate sales, and marketing, the other was for my home repair, and services business, at www.aspringcleaning.com

I leased the Real Estate site because for $30 per month there was a lot of content. The A Spring Cleaning site taught me that owning a web site was expensive. I had paid $2000 for three pages that I supplied the content for. Any time there was a need for a change I had to contact some one who knew HTML? or something. Our cleaning business still leases a web site, and they took over the site for A Spring Cleaning. We just converted that to a Word press blog last month and it is very well received.

In 2006 a friend of mine told me about Word Press, and helped set up a web site for my domain name FixerFixer.com. I bought server space and began writing about a fixer project that we were working on. It was an immediate success, and I was getting all these comments, questions, and responses. It was fun for about a month until a pattern started with contractors admonishing me for doing the work myself. Then the spam started. As I began adding plug ins it was once again obvious that I needed web help. Then the site crashed. It all got to be a problem so I left the internet to others.

It’s now two years later. My work with Word Press has been greatly enhanced by using www.godaddy.com Word Press hosting, and tools. All of my files have been transferred here, except for the photos. Over time, I’ll probably organize, and continue to write. My goal is to give a clear picture of how to identify good properties, with cost effective ways to repair, renovate, and improve. Of course I would like for the sites to pay for themselves.

If you have followed this site, you know it’s been a while since I’ve added content. Most of it is a couple of years old with new posts since January. This will get more attention this year, and my hope is to start a new project. We’ll see.

Even though I have had a Real Estate license for over twenty five years, I have hired Real Estate agents to buy, and sell properties. The commissions never bothered me because from my point of view agents work hard for the money. The trick is to find an agent who knows what to do, and is willing to work with me. People with a Real Estate license or who have had a Real Estate license are notoriously hard to work with, and that would be me.

I’m going to leave the commission debate, or who gives you the biggest rebate, for all the thousands of other posts on the internet. Let’s just talk about what you pay for. You pay to get the best deal, and a property that is in your best interest to own. I pay the agent so I can step back from the transactions and actually see what I’m doing. I have gotten caught more than once by being focused on the person in front of me.

An agent gives you perspective, and at least a second pair of eyes. The quality of those eyes is where the whole debate starts. I look for some one who has experience. They need to have a proven track record, and for me, they need to know what the heck they are talking about. They need to have a point of view that’s viable.

I pay the agent to know the market place and what direction it’s going. They need to know property, and the community the property is in. I don’t go outside of a six mile radius, and have several areas in that radius I don’t go, so the agent needs to know my area. They also need to be able to communicate with me. Ultimately what we are all paying for is service, knowledge, expertise, and the ability to perform.

We have two yard projects this week. In both cases the house is up for sale. At one time the owners, some owners, had a vision of what the yard could look like if it were landscaped. Once you make that investment the landscaping needs to be pruned, weeded, edged, and mowed.

The one I’m working on today used stones as accents, which I think is the smartest way to do things. A small set of Japanese Maples can get out of hand quickly. Rocks just sit there and look pretty. Rocks in conjunction with a patio area, or outdoor retreat is really the best.

Plantings that will stay naturally low are a good thing, in this case it’s ivy and ground cover. For over head shade there are a set of grape vines, and lilacs. It makes the back yard very cozy. What we are doing today is cutting, pruning, it all back. We have to be careful because the house will be going up for sale so we need to leave enough so the yard doesn’t look bare.

Had the owner, just once a year, taken about 20 hours to prune, and scale back, the yard would be perfect today. The owner would save the money we will be charging, and the tranquility of the yard would have a greater value.

This is a part of a longer discussion on a blog site called Seattle Bubble at http://seattlebubble.com/blog/2010/05/21/weekend-open-thread-2010-05-21/#comment-101662

This is really simple. You have a real economy, and a paper economy. The real economy is housing, food, health, and energy. From that you get transportation, hygiene, and sustainable resources, like monitoring the fishing industry.

It’s simple. The are no complicated formulas of theory. You can talk about going to the moon, or astronomy, but the reality is we have people to feed, shelter, and make sure we keep a killer plague from wiping out the human race.

When you mention Japan, the economy there was decimated by the price of property. http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

A broader reference  http://en.wikipedia.org/wiki/Real_estate_bubble

Look at property when you want to talk economy. There is farm land, Industrial, manufacturing, warehousing, commercial, retail, and housing. The economy goes up, pricing goes up, the cost of goods goes up. On the way down the price of goods goes down, but the debt service on the properties remains the same.

In Japan the people continued to pay mortgages on over priced housing units. You’ll notice that, in the reference, they refer to asset pricing. It’s all across the board. The people of Japan are paying mortgages on farm land, industrial, commercial, retain, and housing units. The money these savers have in the bank then goes outside of the country to make investments. Guess, just guess what the investments are.

In theory, when you invest in the stock market you are investing on a package of assets, commerce, and blue sky. Microsoft shifted that because the biggest asset they have is intellectual property. That opened a lot of doors to paper trading as if that paper was an asset. The paper was only as good as the asset it represented. Now those asset, based on Real Property, are worth less, much less, globally.

The best part in this thread is where there is a debate about the price of farm land in France. We don’t know the price of farm land in France, but it is a matter of speculation. Mexico’s closer so let me use an example from there. A walled hectare in Mexico was built with the hacienda for $225K. It went up in value, based on written offers to purchase to $900K. It’s now worth about $275K, maybe $325K based on an appraisal by the University of Washington.

People were willing to buy for $900K in 2006 by taking American equity into Mexico. What’s that like in Europe? What’s that like with the value of the Euro going up in value? I’ll speculate that it’s 10 times worse there, than it is in the United States. I’ll bet the value of the Euro, based on asset values, will decline sharply.

You see, it’s simple like that.