Great Deals Are Out There - Check This One Out

We continue to see some amazing real estate deals and ran across one recently that caught our interest and as a result we chased after it but unfortunately missed out on it.  Here's the details and be sure to check out the videos on YouTube for Bradenton Beach.  In about a week they recieved 9 offers.  It's a little unclear what the final offer was but suffice it to say it was a great deal.

The property is located at 2218 Avenue A in Bradenton Beach.  It was originally listed as one unit of a duplex but was actually for the entire building.  The building was bank owned and they priced it agressively at $395K. The vacant land was originally purchased for $695K and the developer got a $1.3M loan to build the duplex. It was foreclosed for $1.5M with fees and interest. The property was located on the water and nothing could be built on the water side of the street.  The original plans included a pool and dock.


View Larger Map

The ground floor had 2 - two car garages each that had an elevator to one of the floors. Each floor was approximately 1750 sq ft with a large front deck that overlooked the water. Both Units (floors) had the same 3 bedroom 2 bath floor plan, 9 foot ceiling with crown molding, tile and carpet throughout, wood cabinets with granite. The great room occupied the front half of the house and had 180 deg water views. The Kitchen looked out over the great room to the water and had all SS appliances, large bar and a separate ice maker.

The building never been lived in because the developer never got the CO (Certificate of Occupancy). In researching the bulding with the City there was a 2 page punch list that would have taken about $20K to $30K to knock out. One floor was for sale for $895K mid 2009. We estimate each floor to be valued at $500K once the CO was obtained and the building Condo'd.

Great deal that got away! That's ok I think we'll see more of these great deals.

Home Inspections Lower Risk

Home Inspections Lower Risk

In spite of (or really in addition to) our experience we always use a qualified home inspector when buying real estate. Seems as though they always find things I haven’t and also provide a good confirmation of things I may have found. You should always be present during the inspection and don’t be afraid to ask lots of questions. Home inspectors see a lot of situations and a good one can provide ideas that can save you lots of money or remedy situations. In some cases they provide an estimate of repair costs in their inspection report.

The picture to the right is of a house we rehabed.  The ceiling of the house had some staining and we thought there were major leaks.  The inspection showed no leaks but the roof still did show considerable wear and needed to be replaced.  Apparently the hurricanes that came through Florida over the past few years may have driven some rain in through the roof vents as a result of the high winds.

All home inspections are different and can vary dramatically from state to state, as well as across counties and cities. Much depends on the home inspector and which association, if any, to which the home inspector belongs. There are established standards published by a number of trade organizations and links are provided below to some of the more majoir ones.  Most all maintain blogs that can be searched. We recently purchased a property in Bradenton and Claude McGavic of Home Check in Sarasota performed the inspection.

Claude McGavic of Home Check can be reached at 941-807-4320 or by email at homechecker@tampabay.rr.com.

We appreciate you comments and thoughts on this posting and be sure to sign up as a follower.

Useful links on Home Inspections Associations

American Society of Home Inspectors

Florida Association of Building Inspectors

National Association of Home Inspectors

International Association of Certified Home Inspectors

California Real Estate Inspection Association

Useful Checklist links

http://www.inspectamerica.com/html/home_inspection_checklist.html

http://www.americanhomeinspectordirectory.com/inspection-checklist.html

http://office.microsoft.com/en-us/templates/TC060904191033.aspx

The Real Estate Funnel - $ drip out the end

I'm adverse to risk especially when it comes to real estate investing.  As a result we look at a lot of real estate in an effort to understand the market and more importantly the market trends.  We tend to focus on a given area or neighborhood and then study it until we know it cold.  When I say "know it cold" it means we know the profile of all properties in that area including:

• General trends and demographics of the area - are they coming or going?
• Age and condition of the properties in the area - just because they are older homes does not mean they are not taken care of.
• Home owner assoication or other fees - we just bought in a neighborhood that had a $100 application fee and $600 one time fee for new owners.
• Past sales including asking price, sales price and days on market - Are they holding out and holding up values or are they leaving in droves?

To get to this high level of knowledge it takes us a lot of work and we find that the more we study an area or neighborhood the higher level of confidence we have when we make an offer.  The confidence is on both obtaining the property for a great price but also knowing that we will be able to resell at a higher price after the property is rehabed.  Obviously the bigger the difference the more money in your pocket at the end of the day.

Some of the ways that we learn about an area or neighborhood include:

• Team with your realtor to provide you regular updates on whats for sale and what has sold.
• Drive the nieghborhood and talk to people that live there - you'd be amazed what they'll tell you.
• Visit open houses to get a feel for what the general condition of the properties are. 
• Get you realtor to show you properties that may not have open houses.
• Ask about association fees and special assessment - past and future.
• What amenties are included with association fees - we live in FL and alot of communities are maintenance free.
• Have any properties been updated?

After doing this on a regular basis you should get to the point when a property comes on the market you can estimate within 1-2% of what the listing price should be based on past sales without even seeing the listing.  The greatest advantage that we have found is that as properties come into the markets that we are monitoring we can act quickly when we see a bargain.  Couple that with some circumstances around the buyers motivation (death, estate, short sale, bank owned, etc.) and you could have a winner.  The other key is to know you market cold and move fast.  If you have the knowledge you'll be able to manage the risk even in this market.

Manage the risk through knowledge and don't be afraid to make some crazy offers.  You just might find you end with with a great piece of property.

Rehab 4470 - In Search of Granite @ $27.50 sq ft

In Rehab 4470 we will be installing a total of 90+ sq ft of granite in the kitchen and baths.  In reality few people know the difference between good granite and less good granite, me included.  I always look for 3 cm thickness and slabs that had relatively uniform coloring and no big blemishes.  It's stone after all and since it comes out of the ground it should not be perfect.  For our rehabs we always want the best looking stuff for the lowest price - duh!

For the entire project I have estimated $50 sq ft for a total nearing $4500.  Last night I found a link on Craiglist for granite at $27.50 sq ft,  a considerable savings.  The ad stated that the cost included materials, fabrication and installation and  fabrication included 3 different edges, sink cutouts, faucet holes, electrical outlets, one time seal, template and install.  Was this too good to be true?

So today we called expecting some surprises.  A couple hours later we have driven to the shop and met Jhonny Castillo (that spelling is correct) of A Castillo Cabinetry in Riverview, Florida.  At the fabrication shop Jhonny greeted us warmly and questioned if it was us that had called earlier.   He then proceeded to show us the granite that was on sale for $27.50 sq ft.  In questioning him further he offered to take us to the yard to see more slabs and after a 10 minute drive we arrived.  Needless to say there was granite everywhere (video).

Jhonny Castillo  turns out is the owner of a 6 year family run business along with his wife.  He is of Columbian descent and actually started the business selling cabinets.  Now he moves considerable granite and is able to offer extremely competitive prices which does not endear him to the competition.  He stills sells cabinets but we've got that covered already.

The $27.50 got us in the door but we settled on a sligthly better granite that had a color more in line with the cabinets we are planning to install @ $33 sq ft.  We close on Rehab 4470 in three weeks and will most assuredly be doing buisness with Jhonny.  If you're looking for granite give him a shout.  The A Castillo Cabinetry website also provides an extensive portfolio of projects they've completed - check it out.  I'm guessing you won't be disappointed.

For an education on granite check out the All Stone Granite  and Ezines blog articles that provides a resource for questions around granite and use of granite in kitchens. 

Thanks Jhonny and looking forward to doing business.

The "Wow!" Effect - Part 3 Add Some Color

The first time we painted a rehab with something other than white, beige, or other neutral color it felt risky. However, what we found was that color creates a "Wow!" when used the right way in coordination with the other elements of the house. We do however stick to very basic and complementary colors that seem to be everywhere (and popular) these days. The good news is the paint department at Lowes and Home Depot has already figured out what colors fit together with all those color strips. We do not cheap out on the paint quality and usually $5/gal makes a big difference in how the paint spreads and covers. The last rehab we used 24 gallons of interior paint which equals a difference of $120 more than the cheap stuff - I highly recommend you do the same, it'll pay off.

The Valspar website has a pretty cool on-line digital painter program that can be a great starting point when considering colors. When the Palette is displayed select "Modify Palette " and then the "Our Suggestions" Tab. The screen shots to the right should help.

We use no more than 3 colors per house with gloss white one of the colors for the baseboards, trim and doors.   We usually use a neutral color in the larger rooms like living rooms and colors in the bedrooms and kitchens.  We do not get too crazy with multiple colors in the same room.  If you are uncertain what to do in a room use the neutral color and remember if the color does not fit with the flooring, cabinets, etc. don't force it.

We are creatures of habit and when something works we do it over and and over.  Every once in a while we'll try something new but for the most part stick to the same colors.  Here's some examples of the colors we've used.

Kitchen rehab - We refaced the cabinetsand installed granite, added a piece of trim to the plant shelf and painted it white, nice green on the walls, faux stainless applicance package from Lowes, and last the cool lights rather than the old track lights.  Tile floors came with the house.

Bedroom Rehab - They had an ugly peach color and had cut a hole in the wall to the closet for something? We added hardwood floors (bamboo our favorite), gloss white on the trim and doors, patched the hole in the closet and replaced the shelving, and took a chance with the yellow. We also painted the adjacent bathroom the same yellow color. The windows were also trimmed out and painted gloss white. In the end the room popped and had a nice clean modern look to it.

 

One of the neutral colors we use extensively is made by Valspar as part of the Earth Elements collection.  It creates a nice contrast to wood floors and white woodwork.

Jan and I discuss the colors all the time and when we can't agree I usually give into her. Remember men are color blind.

Good luck in rehab!

The "Wow!" Effect - Part 2 Natural Light

Over the past few years we've rehabed several homes in a neighborhood with a 60+ year old age demographic.  Much to our surprise there is a high level of interest in features that I would have expected to more associated with younger people (young = anyone under 65).  The rehabbed homes we've sold have all been to out of state owners that were looking for the "Florida" lifestyle.  In questioning them as to what attracted them to the home it was not always the golf course community - it was more often than not the "natural light".

Florida is known as the "Sunshine State" for a reason.  Look up when you're outside during the day.  Natural light is by far the most underutilized asset and it's free.   The first thing we do is throw away all the window coverings (usually verticals) and let the light in.  It instantly makes rooms look brighter and bigger.  The next thing key is to throw away the marble window sills and trim out the window to create and immediate "Wow!".   Throwing away the window coverings is free, the trim should cost no more than $75 per window.

The before and after photos from our last rehab really show the dramatic difference that we were able to achieve.  The reflection of the light on the bamboo wood floors only enhances the natural light factor even more.  We've found that adding the trim around the windows serves to bring the eyes to the light as well as create visual focal points.

Light coupled with color can be even more powerful so be sure to check out the next "Wow!" blog..  Hope you see the light now, if not just go outside and look up!

Happy rehabbing... if you say it enough you believe it.  Besides it's easier than denial.

Rehab 4470 - Hurry up and Wait

We are about 4 weeks away from closing.  The sellers of the house need time to pack and move. It was part of what made the deal attractive to them.  The inspections were completed with one surprise (some furry critters in the attic) and it seems all we do is plan, plan, and then plan some more.  A key part of planning (and the offer stage) is having a good feel where the money will go and what it will cost to carry the project.

Over time we've grown from working it out in our heads to using a spreadsheet that breaks down the estimated cost for renovation room by room and then aggregates the total of the rooms to a master cost sheet.   We then build in another 10% for the unexpected (which is really "we expect to find a surprise" or "I need a new tool").  One of the tabs in the spreadsheet is used as a central materials listing.   When the materials and costs change it gets pushed to the individual rooms.  Using this method we can rapidly understand how a change to a material cost can affect the entire project cost.

What that said the phrase "the best laid plans soon go to waste" seems to apply as soon as a wall is open or a cabinet removed.

The best laid schemes of mice and men
Go often askew,

And leave us nothing but grief and pain,
For promised joy!

Welcome to rehab

Rehab 4470 - Inspections Completed With A Furry Problem

We are currently planning our next rehab in a nearby community and will close on the property in about 4 weeks.   The house is in a community with low turnover and a short drive for us (ideal and saves a lot of time).  The home was built in the early nineties and has had a single owner who maintained the property well but did not perform any updating.   The home has the original roof which is in good shape.  The air conditioner compressor and air handler have been replaced within the past few years as had the water heater.  We have always bought real estate "as is" with the right to inspect and this week we completed the inspection process using a certified home inspector.  We also decided to have a termite inspection since it was only $35.

The inspection was performed by Claude McGavic of Home Check.  Fortunately the inspection did not find any surprises and he confirmed most of what I knew during his debrief after the inspection.  Claude as always gave up some great tips on cleaning the sliding glass door tracks (wire brush and steel wool, no oil) and determining if a sink leaks (stopper it, fill it completely, drain and watch the pipes).   His report was received the next day and will become a punch list of minor fixes.

The inspection by Jonathan of Hughes Exterminators was a different story.  Although there was no evidence of termites the inspector found evidence of "RATS" in the attic! yuck!  The termite guy went as far as to say "I see this all the time" and "I can fix this problem for $500".   The news brought memories when years ago we bought a small frame house in the Ballard Park area that the City of Bradenton Downtown Development Authority was focusing on improving.  That house had rats but it was not surprising as it was 80+ years old.  The rats were climbing through the crawl space, into the walls, and eventually into the attic where they had a nice size nest.   The renters were not real happy to be hearing all the activity at night and of course we had them exterminated.  However it took a while to find all the entry points and close them off.

That's what is surprising to us with this house.  It's in great shape and made of cement block.  Apparently the rats are climbing up the nearby trees, crossing the roof, and entering the attic where two areas of the roof line converge.  Apparently the builder did not seal up those areas well.

Good news.  The seller agreed to have the entry points sealed and the rats removed before closing (saving us the time and cost).   That's a pretty good return on the $35 investment.  I'm not sure about the rat droppings the inspector noticed in the attic - guess the shop vac will take care of that.   The last thing we need is to turn off the future buyer when they have their inspection.   A day after the inspection we got a video link from our real estate agent... he has a sense of humor, watch it to the end, its a hoot!

Mouse vs. Mouse Trap

Happy rehabbing and your comments are appreciated.

Why Use a Real Estate Agent?

Welcome to Florida where a few years ago if you didn't have your real estate license you were in the minority.  Fortunately most of those agents are gone as a result of the recession and looking for their old jobs back (you know the ones they quit to become real estate investors).  Back then anyone could make money just by buying any real estate and holding it for 2 months.   It was like the wild west and ultimately the west cost of Florida would be ground zero when the market dropped off a cliff in late 2006.

Today the agents that survived are some of the best.  They know the market like the back of their hand and they are comsumate pros.  I still see the occasional housewife and retiree real estate agent mostly on Longboat and other keys.  Stay away from them and hook up with an agent that needs to sell to eat.  A good agent can provide guidance and make deals happen.  When the agent is your representative they are one step closer to the buyer than you most cases unless its their listing.

When selecting an agent interview several to find one that seems to think like you and is willing to help you find property and professionally and agressively market your property when it goes on the market after rehab.  The agent we have used over the past few years and probably one of the best we've seen is Roger Cumbie of Keller Williams.  Jan met Roger when she was working as a personal banker and was impressed with his professional manner.  We eventually both met with Roger and discussed some of our approaches - lots of looking and lots of offers to eventually find the "deal". Also once its rehabed help us find the sweet spot for the price and provide lots of exposure quickly.  Needless to say Roger bought into the strategy and has been our exclusive agent ever since!

One of the first properties that we worked on with Roger was bank owned and we decided to use a mutiple offer strategy until the property sold.  So we proceeded to submit the same offer multiple times over a couple of months as the property was dropping in price.  Eventually the agent for the listing called us and asked if our offer was still good.  In a last ditch effort we tried to squeeze another $5K out of the seller to Rogers surprise!  We eventually landed at our original bid after a few days and the rest is history.  Since then Roger has worked hard for us and we continue to surprise him what some of our methods and seemingly silly offers looking for that diamond in the rough..

I recently asked Roger what advice he would offer to people looking for a good real estate agent (other than him of course, he's ours!) and he provided the following insights.

"Aside from the obvious…. like making sure the agent is properly licensed, knows the market, is knowledgeable in writing contracts and is continually educating themselves. I think the most important aspect of finding a realtor to work with in an investor capacity is to find someone whom you trust completely, have a rapport with, and know that they want you to succeed as greatly as you do over the course of time. A good realtor knows that ultimately the investors success will become their success and both will prosper. You really want the relationship between the two of you to quickly develop into a partnership where you trust the realtor’s advice and know that it is not just for the sake of their next commission check but for your mutual success over the long term. I’m currently working with a small number of investors and believe that we share the type of relationship I’ve described above.


So how do you find a realtor to help you locate and identify homes to invest in if this is what you’ve chosen to do? Maybe the most reliable source would be to get recommendations from your friends or relatives of realtors they have used recently with good success. Obviously the internet has become a great source as well.

When beginning to work with a realtor make sure that you both know what each others expectations are. You want an understanding of not only the type and price of property being sought but also things like, do you work over the weekend, prefer a phone call or email to communicate, when is it too late to call, etc, etc. Usually these issues will work themselves out over time but a few minutes spent in the beginning of the relationship to set the expectations can make the process so much easier and enjoyable to participate in."

Good luck finding your "Roger" and happy rehabbing!

 Roger Cumbie can be reached at:

KELLER WILLIAMS MANATEE

5260 SR 64 E

Bradenton, FL 34208

E-mail: r_cumbie@hotmail.com

Ph 941-350-5869