I talked with Kara Mack on Afternoon Live today about whether people should buy a new house or remodel the one they have. It’s worth diving into a little bit because home prices, building materials, and contractor prices are all up this year. Below are some things to consider. To watch the 5 minute clip, click here
Get honest about what really doesn’t work about your current house.
Enough space
Outdated
Location
If a remodel could work, get estimates
Costs of some building materials have increased exponentially over the past year (lumber)
Demand for remodel has gone up, contractors are busy, and their time is worth more than a year ago as well.
Determine a realistic timeline- most materials are coming late.
Planning to Buy
Home prices in the Portland area are up 17% from a year ago. For a $500k house, that’s $85k more
Since 2/3’s of houses sell in the first week, you will have to compete
You may have to be willing to pay more than the appraiser says it’s worth, so make sure you’re planning to live there for a while
Right now, when it feels like there is 1 house for every 10 buyers out there, many buyers are having to adjust their expectation in a house. And if they see something they think will meet their needs, they are often writing an offer. Interestingly many of these buyers may have started off with a laundry list of what their needs are. As their offers have been rejected, they have boiled that list down to what their true needs are. In doing that, some buyers are considering houses that have the prime elements they are looking for, and then rely on the future renovation projects they will do to get it the rest of the way there.
Best Bang For Your Buck
Here are my thoughts on what projects new buyers should focus on. Buy something you can move right into (or move in within 60 days). Most traditional loans require buyers move in within 2 months, so find something that is livable. When it comes to projects to take on, consider the things that traditionally increase the value of the house. The kitchen and baths are a great start.
If you’re willing to do more updates, consider something that doesn’t need structural changes, or changes that will require an architect. Pulling in an architect increases costs exponentially. It also usually means city building permits are necessary in order to make those improvements. Many cities are back-logged right now, and might not even be able to look at those plans for 3 months. Stick to surface updates like paint, flooring, and lighting. For a handy person, those are even things you can do yourself. Thoughtfully updating these, along with the kitchen and baths, will typically bring back a high return for what you investment.
Kitchen Project
Updates include: New paint, flooring, cabinets, counters, and appliances
Living Room Project
Update Surfaces: Paint and Flooring
More Than Cosmetics
While I recommend generally staying away from houses with structural issues, making updates to the electrical can be easy enough, and is one of the most important upgrades to make when it comes to safety. Do yourself a favor though and hire a licensed electrician. If you find a home you love that has 2 prong outlets, no GFCI protection in kitchen or baths, or has an unsafe electric panel, these are prime for upgrading. Not only will it be safer, it adds modern conveniences. You will need these kinds of upgrades later down the road anyway to make further improvements in the house that you really want. While this electric project could average between $7,500 – $10,000 or more, if you’re buying in a market where the average cost of a house is over $500,000, that doesn’t feel like too much.
Looking for more of a project? Here are some tips for something more extensive: Click Here.
In the summer of 2010, I had been working as an internal consultant for sales and marketing at a major pharmaceutical company. The next role for me within the company was to be a District Sales Manager. It had been a goal of mine for several years. I had taken on roles and jobs within that company over the course of five years in order to prepare myself for that sales manager job.
That summer I applied to five different sales manager positions within the company that would have moved me from the middle of the country back to one of many great cities on a coast, which I desperately wanted. Two of the positions, I was able to get a live interview for, which was a big deal. I thought one of my strengths was actually in face to face communication. It turns out, when you work for a great company in their sales and marketing department, there are many other people who share that same great strength. I did not get offered any of those positions that summer, although I heard I was the second choice for one of them. Which turns out, really doesn’t matter.
I was coming to the end of my 3 year assignment in the consultant role, and wasn’t willing to take on another role within the company. So I left. My #1 job didn’t pan out, so I went for my #2. I left the company, and the middle of the country, and started up my runner-up career. That was in real estate in Portland, Oregon.
The Runner Up House
Sometime getting your #1 house is a little like that. Your #1 doesn’t pan out, so you’re going for the runner up. That’s happening quite a bit right now. Many houses are getting multiple offers, and there’s only one person or family that’s getting that house. Often that means there are more disappointed than delighted buyers.
Or sometimes the #1 house isn’t what you thought it would be when you actually walk through it. There is only so much pictures, and even a video tour can convey. I have had several clients buy a property sight-unseen, and it’s worked out very well. In a competitive real estate market, sometimes that’s going to be the best option for getting a house that checks all of the boxes. And there are ways and strategies to mitigate that risk. But there is no replacing being inside the house and seeing it for yourself.
For my most recent out-of state buyers, their runner up house became their #1 house. Fortunately, on their trip to Portland to see the one they thought they wanted, we saw a couple others. This Irvington house was one of them, and is now the place they call home. Unsurprisingly, this house was the right choice for them, and I think this career was the right one for me too.
Living Sitting Fireplace Irvington
Irvington Dining
Kitchen Irvington
This restored beauty in Laurelhurst commanded multiple offers well over $1M. Check it out here.
Decision making on design: 101. Learning from my personal success and failures working with contractors.
Decisions decisions. Being well prepared with plans, a plan B, and your vision for a project will keep the flow going. Often your contractor will bring up questions during a project that only you can decide and you’ll need to be quick on your feet to respond. For example:
Do you want flat or semi-gloss on your walls, trim, and ceilings?
What size and style trim do you want around your window?
What shape do you want on your handrail?
Do you want silicon or grout around the base of your free standing tub?
Where do you want your light switches?
Often a question will catch you off guard and you’ll make a decision that you wish you could take back! Having a plan keeps you on track. Here’s what happened to me for example- the light switch to the closet. There wasn’t a light switch on our plans. The electrician suggested it go on the right side. But after we were all settled in, we realized this light switch should have been inside the closet or on the left side of door. Its an eyesore(for me) having a white light switch on the black accent wall! At the time the electrical was roughed in, I didn’t even think about it. Now, every time I open the door I feel for a light switch on the left- but its not there. If you are in Australia and is looking for a trusted North Brisbane electrical contractors then JTC Electric is a trusted electrician that can provide you such electrician services in and around Brisbane.
It’s hard to imagine knowing everything in advance. We do our best! Living in the space makes it so much easier to visualize how you want everything to be. Here are some tips on preparing your decision making:
Do have a plan. Either blueprints or hand draw a room layout.
Do have a Pinterest board. Pin all your ideas, including color, furniture, light fixtures, and finishes. This may take a while, but when you have all your ideas in one place you can slowly edit your favorites and it will help you stick to your “vision” for the space.
Sometimes you have to say no. You have a lot of ideas on your vision board. You don’t have to do all of them. When it comes to a budget, you may have to say no to the more expensive windows and the skylight.
If you’re making decisions with a partner and disagree- get a third or fourth tie-breaker. Then you can at least blame it on someone else when it doesn’t work out. Ha! No, actually it’s great to have another opinion. They may see something you haven’t considered. Do get a third or fourth opinion.
Not all contractors have “an eye” for design. I always ask my contractors opinion, but refer back to my design inspo on my Pinterest board to remind me of the direction. Do show your contractor your design inspiration. Several of the ideas we had for our master bedroom, the contractor had not done before. He conceptualized it well, but it was because we stuck to our guns about the style we were going for. Both our GC and the flooring guy didn’t like the idea of transitioning the wood floor to hexagon tile. We literally cut out pieces of hexagon on paper and played with them like a puzzle until we found a good pattern. It was a group effort. It turned out great in the end! Sometimes you can’t compromise with style 🙂
When it comes to design, it’s hard making decisions. Especially when its for your own space. I really think experience is key! If the decision making gets overwhelming, hire a design consultant. When you’re in a pinch call them and they’ll help you figure out a situation. It may seem simple, but if I had called our designer about the light switch, I bet she would’ve said “put it on the left!”
I’ve said this before, but its worth saying again– Don’t make a final payment to a contractor until you are completely satisfied. I’ve made this mistake twice! Trust me, they’ll never come back to fix those final things if you’ve already paid them.
If you have real estate questions, call me!
Julia Robertson | Broker Licensed in Oregon & Washington
You’re ready to add an ADU to your property, but where to begin? We have assembled a top-notch group of professionals, in order of who to call, to help guide you through the process. Why these folks? They are experts in their field who focus on creative solutions for you. Get your ideas ready, take a look at our list below, and call us today!
Aryne + Dulcinea, Real Estate Brokers + ADU Specialists—Aryne or Dulcinea will come to your home to discuss your ADU goals, value, and what is possible for your property. Contact Aryne + Dulcinea at aryneanddulcinea.com
Melissa Wright—Short term rental expert and consultant, strpermit.com
Hillary Seiler—Lender Umpqua Bank—she has several programs to help with financing including ADU loans and construction loans. www.umpquabank.com/hillary-seiler
Lucas Gray-Propel Studio—He will help you create a design that works best for your space and goals,www.propelstudio.com/lucas-gray
Taylor-Smith Construction—Contractors who specialize in ADU construction, taylorsmithsc.com
Look for our January 2020 DIY Developer class, coming soon, to meet these folks in person!
About Us: Over the course of their professional partnership, Aryne + Dulcinea have helped over 200 clients prosper in their new lives. During this time, they have prided themselves in their top-notch selling abilities, with homes outperforming market standards, consistently exceeding list price while most of their listings sell in under 7 days. Whether you’re looking to buy or sell, Aryne & Dulcinea will work in collaboration to guide you in investing in your future and reaching your real estate goals.
Check out my latest remodeled Portland bungalow tucked in the trees of St Johns. When you open the front doors, you will be greeted with the warm, spacious living room with 12 ft cathedral ceilings and pine shiplap walls.
Step down into the large and cozy bedroom with pine wainscoting. Look out to the Evergreen in the front yard with a 7 foot wide tree trunk. Yep, you will feel like you’re in a luxury treehouse.
Continuing through the living room to the new custom kitchen with breakfast bar and quartz counters.
Dine in or step out to the large, private deck where you can BBQ, host friends, or have a cup of coffee in the morning.
Head downstairs to the inviting finished lower level with guest bedroom. Out the back door to the newer 392 SF garage with 9 ft ceilings and city approvable architectural plans for ADU conversion included. Friendly neighborhood and quick commute access.
For more info on this house, check out the listing here. Not quite right for you? If you’re interested in finding a remodeled house like this, or a fixer that can be restored, give me a call. I’m happy to help you in your search.
On the flip side, if you’re looking to sell your current home or investment property, I’m happy to get together for a coffee or whatever you drink to talk about your plans, and what’s important to you.
Bobby Curtis Principle Broker Licensed in Oregon Licensed Contractor CCB# 215071 503-502-3066
Bobby Curtis was recently interviewed on how he finds good houses to flip. Here’s the second part of what he had to say.
1. What are the key financial considerations real estate flippers should think about before they begin a new project?
Make sure you have a reliable financial source that will bring you all the way through the project. Be financially okay to keep the house longer than you need to so you don’t run out of money. Only dip into your own money that you’re willing to lose. I normally don’t recommend using retirement money, or your personal home as collateral.
2. How do you determine a budget when it comes to flipping a property?
First I figure out what work the house needs, and then I figure out what I can buy it for.
A good general rule is that you can purchase a property for 75% of the after repair value (or what you’re going to sell it for) minus the cost of repairs. For example, if I can sell a house for $400,000 after I put $50,000 into it, ($400,000 * 75% – $50,000 = $250,000).
3. Why is project management so important in house flipping?
Timelines, schedules, budgets and great communication with your contractors can make or break how successful your flip is. You or another project manager who has your same interests down to core should be there every day there is work being done. Not all day long, but checking in. I recently took a 5 day trip to Alaska Ain the middle of a project. Even with a crew I’ve worked with for a while, things get handled differently (better) when someone in charge is there to check in, make decisions and overcome challenges.
4. What are some key mistakes that can make house flipping a flop?
Interesting you should ask. I did an interview answering just this question. Click Here.
Here are the nuts and bolts:
A. Putting in materials and finishes that don’t work. Make sure people are already buying houses with the design ideas you are using.
B. Buying a house with no good comparable houses
C. Putting a house up for sale before it’s 100% complete
D. All D-I-Y work
E. Taking too long
5. Anything else to add?
You can only do so much thinking about it and research. If you want to flip houses, you have to get things in place, buy a house and get started. You will learn things along the way. When things get tough, bring in experts in the area you are struggling in. It will be one of the best decisions you make. Miss part 1? Check it out here.
Bobby Curtis Principle Broker Licensed in Oregon Licensed Contractor CCB# 215071 503-502-3066
Bobby Curtis was recently interviewed on how he finds good houses to flip. Here’s what he had to say.
House flip – stately home in NW Portland
1. How do you find a good flip?
I find a good flip by keeping my eyes and mind open. It’s not just about finding a distressed house that needs work. There are many people out there flipping houses. I’ve discovered I need find something that presents a challenge that other people (flippers) don’t want. And I have to get creative to solve a problem in a way many end buyers will love.
2. What are the key steps to successfully flipping houses?
The key steps are:
A. First, hire a great real estate agent who is an expert in the area you’re looking in, and knows a thing or two about fixer uppers
B. Buy a fixer upper at the right price, and make sure there are good comparable houses for the price you plan to sell if for fixed up.
C. Get solid estimates for the work that needs to be done, and hire dependable contractors to do the work
D. Hire a cost-effective designer, or be one yourself. This is not a time to try out your super specific design ideas. You want something that will appeal to most
E. Get it done, and do it quickly without compromising quality. My goal is 4-8 weeks. If this is your first flip, don’t go over 3 months. Ideally you want to buy the fixer and sell the fixed up house in the same market.
G. And finally, sell it. Don’t nickel and dime the buyer who places their offer. You will often give more than you want to. That’s okay if you’re making enough money on it.
3. What should real estate flippers have in place to make sure the process runs smoothly
A great real estate agent, dependable contractors, a personal support network, and a reliable financial source.
4. What’s your best advice for working with and managing contractors? How do you cut ties with a bad contractor legally?
Very good question. I’m professional, and I hire professionals. That doesn’t mean the best price, because WHEN shit hits the fan, you want to know you can count on them. I hire a mix of contractors who do the work themselves, and larger companies who have crews. Equally as important is I work with people who specialize in fixers, not new construction.
I’m in this for the long haul, and most people who want to get into flipping houses usually want to do more than one. So, if I cut ties with a contractor, I usually give them more than I think they deserve and just agree not to work together again.
Lastly, reputation is important, and frankly you’re very exposed when you flip a house. If they want to make things difficult for you, they can. Most of the time when you want to part ways, they do too. So, shake hands and agree to be done.
Hiring a contractor: 101. Learning from my personal success and failures working with contractors.
First I’d like to say, when you hire the right contractor- your project will be so much easier to deal with. When you hire the wrong contractor- get ready for a long, stressful, expensive process. When we started our renovation in 2015, many of the bids we received were from contractors referred to me within our broker network(other real estate agents that I know). Other contractors I hired were from “Thumbtack” or personally referred. If you have a large project, having the right mindset is #1! You can’t be passive, you must be deliberate. Here are some basic do’s & don’ts. I’m happy to share my experience with you, to guide you in the right direction. Feel free to reach out if you’re curious about the process.
Do include a design plan in your budget. Having a plan is worth the extra couple hundred/thousand dollars.
Do have a design plan before getting a bid with your general contractor.
Do get multiple bids. Second phase of our attic/master bedroom renovation, we got 6 bids.
Do ask for past client references. We are very happy with our contractor that we had a personal referral from. When I say personal, I mean- a past client that personally shared their experience with you. Hiring a contractor for a job because you like their work, “hear good things”, or another REALTOR® used them to fix something on a repair addendum- is NOT the same.
Do plan for your project to take longer than expected.
Do read your contract thoroughly and look at how the contractor expects to be paid.. Biggest mistake we made with one of our contractors is not reading this fine print. We were so eager to negotiate price, that we missed our contract stated- “50% payment due 30 days after project begins…” This landscaper only worked 5 days in the first month because his crew quit and weather delays. This was a stupid oversight on our part. So many decisions are being made, it’s easy to miss something. Best situation for us was paying our contractor by cost plus. He pays all the sub-contractors directly, emails us all the invoices, then we pay him about 30 days after the work is complete. Then he takes an overall percentage for managing/cleaning/communicating the jobs.
Do pop in and check on your project and ask questions. I can’t even count how many times our landscaping contractor had to re-do parts of our project. If we had brought up our questions sooner, the project would have been finished 3 months sooner and cost several thousand less $$.
Do tell your contractor that you want weekly updates.
Do make sure EVERYTHING you discuss is in writing. Ask to update your contract if there is a change order to remove or add a part to your project.
Don’t make your final payment until you are completely satisfied. I’ve made this mistake twice! Trust me, they’ll never come back to fix those final things if you’ve already paid them.
If you’re having thoughts about buying, selling, or renovating- give me a call! I’d love to be your guide through the process. Watch for part II of hiring a contractor!
Julia Robertson
Broker licensed in Oregon & Washington | Living Room Realty
