We are wrapping up a 3-family condo conversion in Dorchester, MA (near JFK/UMass) and will be hosting an open house on Saturday, December 13 for anyone local who wants to see our work, network, etc. We will have light refreshments served and the meeting is being hosted through the Boston Wealth Builders. The meetup details can be found here: http://www.meetup.com/Networth-Investors/events/21...
For those on BP who are looking for the details of the project and photos not from the area or unable to make it, we will post those towards the end of the year once everything is complete. We will be staging 2 of the 3 units.
Condo conversions are tricky and we've taken a more active role in this one, acting as the GC. To summarize some of the challenges: three carpentry crews had to be fired at various times, the city stopped the project once, a dumpster delivery/removal damaged our house and our neighbor's house as well as destroyed the driveway, we almost had a ridiculous roof leak after the board and plaster was installed, the project went over budget both in terms of dollars and timing (although we probably made the mistake of under-budgeting the rehab to begin with), and we learned that even recommended trades from other investors can still not work out, such as an architect who does all his drawings by hand!
I promise I will update this thread with more details once we complete everything and if there are any questions, feel free to queue them up now!
You can also follow our progress on this project and other projects via Facebook (https://www.facebook.com/pages/HRV-Homes/176829259192011) and Twitter @HRVHomes (https://twitter.com/HRVHomes).
Happy Holidays to all!
Thanks for letting us know, and best of luck with the project! I look forward to making it if my schedule permits. I had coffee with Dan last year - you guys sound like you're off to a great start!
Great to see people active back home! Look forward to the pictures when all is complete!
I'm about to possibly purchase my first condo conversion and I would be interested in talking to you about the process, as well as see your project and what you have accomplished.
Sounds like you've had quite an experience with this project!
I'll check out the Meetup and hopefully will see you Saturday.
That's excellent! Feel free to PM me for more details - I'd be happy to help, especially since it's your first one and there can be so many things to consider. Hope you are able to make it Saturday!
I promised an update, and I'm finally ready, so here we go! We originally planned to complete this project wayyyy back in the Fall (certainly before all this snow fell in Boston). But regardless, we are closing all 3 units by the middle/end of March 2015.
The project will be profitable, but it could have been an even larger success if we were able to control some of the costs better. We did not want to demo as much as was demo'd and the "changing of the guards" aka carpenters caused time and money delays.
One of the other major financial pains was the hard money lender - some of the terms were excellent, including down payment and escrowing of some of our interest payments, but the points and rate were steep, and the additional months holding really bit into the bottom line.
Our next project, starting this Spring, will be using traditional financing as well as some private funding, so we expect those costs to be more normal. On one of the earlier BP podcasts, the topic of how to finance your flips came up and the guest said he used credit cards for his first one, but he would have found a partner in retrospect.
It seems that until you have a strong relationship with any lower-cost lender, you have to "pay to play" in order to build your own positive reputation since no bank and most private lenders would be more apprehensive lending to someone without a track record. Obviously partnerships are a middle ground, but you most likely would run into the same issues with your bottom line financials. Key takeaway: build your brand, highlight your accomplishments, and document it all as professionally as you can.
Having to install a sprinkler system is becoming more and more common in Boston and the general rule of thumb is that you have to install a pump and tank system or have a separate water line run from the street. Since we were not doing any site work, we installed the pump and tank system, along with a fire alarm system.
We also needed to get spray foam insulation installed in various areas and with the extra demo, we now had to board and plaster even more of the space, as well as replace the blown-in insulation that was lost.
The final delays towards the end of the project were mostly related to some quality issues from the prior three carpenters and plasterer, so add another few weeks there!
We are looking forward to starting our next project which will be new construction. Our carpenter (who was #4 on this one) said it's much much easier with new stick built homes since everything will be plumb, straight, flush, and level.... at least that's the theory!
In lieu of some photos, I'm going to post a link to our HRV Homes YouTube video that I whipped up one late night - please excuse the audio - I don't have any fancy equipment for recording yet. We are actively working to build our brand and having an active YouTube channel is part of our strategy! But SEO is a topic for another day...
Thanks for reading!
Is the new sprinkler system some mandates by the city of Boston? What area of Dorchester is this. Is it Savin Hill Area?
I'm surprised they are allowing conversions of multi-families into condos. The renovations look great. Are these units sold furnished or do you have a interior designer that dresses it up for marketing photos? I suppose if you do another one of these you will run into hiccups with the age of these buildings. I've been told by my father in law who is a master carpenter and project manager that most of the time it's easier to build new then to renovate an old building. He was on a conversion of an old fire station to a single family home. It took forever and was over budget.
Work looks amazing and I'd like to know who your carpenter is now that you found someone. Fired 3 teams. That would drive me crazy.
@Justin Lau According to the inspector, if you demo more than 50% of the existing walls in any of the units, a sprinkler system is required. Other developers have tried to bypass this process by pulling 3 separate permits and working on each unit individually, rather than on the whole house. Inspectors have caught on and won't fall for this trick, which used to work a few years back.
Condo conversions are happening all the time in Boston.
Thanks for the complement about the work! We have a staging company come in and help us market the property. It's a little pricey, but it's well worth the investment as each time we've done it, we sold fast (within a month) and received at or close to asking.
Old buildings will always have issues, that is for sure. In this case, it was the framing of the 3rd floor pitched roof. All the rafters needed to be sistered on both sides, two massive LVLs had to be installed for the rafter, and collar ties needed to be installed to help stabilize everything. Most older homes will have balloon framing, smaller sized wood framing, and larger spacing between studs/joists/rafters than required today. Granted the wood is likely original timber which is more dense and stronger than today's x-generation wood.
There's no doubt it would be easier to tear down and build new, but you're not going to get every house under contract to be able to afford that, especially in Boston where it's going to run you at least $150/sq ft - closer to $175-185 and it can go up very quickly if you get into higher end homes with higher end finishes.
@Ray H. Congrads Buddy! I'll keep my fingers crossed for your March closings.
A couple of Plumbers at our last REIA meeting, some videos on the site (address below in my signature) said that now Massachusetts allows Plumbers, to install sprinkler systems, not just licensed Sprinkler contractors. This should reduce that cost if/when it reoccurs.
This is great -- thanks for sharing Ray! Brings back memories -- I used to rent an apartment around the corner on Kevin Road for $160 month, and then I went across the intersection and bought a 6-6-6 decker on Roseclair for 24K -- that was a long time ago! (In the interest of full disclosure, only one of the units was inhabited/able.)
Thanks @Maureen F. - times are changing, even in Dorchester! It's all relative too... the question is how much more room is there to grow? With GE relocating their HQ to Boston, that's an encouraging sign, but 800 jobs isn't going to swing a market one way or another when the city (boston proper) has over 600k people. Still, demand is high and supply remains low (except luxury rentals, which is in bubble territory right now).
BTW, all units in this project sold last year for 2k less than asking across all 3 units and we were very fortunate to have all 3 go under contract right before the snow blitz began.
After the sale, we did have to go back and remediate mold in the basement. Due to the HERS requirement of spray foaming the basement along the rim/band joist, air flow was nearly non existent and with some moisture in the basement due to the old stone foundation, it became an issue. But under our builders warranty, we fixed it for roughly 4k, which included the installation of a dehumidifier unit that tied into the stack to drain moisture away.
Thanks Ray! We have a multifamily under contract (to use as a rental and owner occupancy, maybe condo-ize it someday) in the Roxbury/Dorchester area and would like to make something of the basement, which has a high ceiling and looks dry, but of course they're always damp at least. The plan could be anything from storage units to an apartment depending on how tough approval would be. Do you happen to have more info about the type of dehumidifier?
@Maureen F. & @Ray H. - and any others - if you have interest on this topic, there is a discussion about the luxury market in Boston going on in the Boston forums...
Great job on this, Ray, and for keeping up with updating. This looks like a great practice that can teach you things you might not realize otherwise.
@Maureen F. - I don't have the specific dehumidifier info, but if you're keeping it open, you can just buy a large unit that drains into the main stack (or if you're fortunate enough to have a drain in the basement floor, directly into that).
If you want to add livable square footage, you would need to go for a variance with the city.
Thanks for all your info, it is great to hear that all the struggles you went thru are making you a better professional, we all welcome that! I m local in Dorchester more specifically Adams Village and have done a few flips and one condo conversion (Ashmont Hill last year), but it was a 2 family. I just closed on 3 family in Fields Corner and plan to keep it as an investment property for a few years until Dot Block is up and prices hopefully better. I would like to ask you if you could share how much per sq foot it costed you to install the sprinkler system with the pump and tank. I m going thru the exactly same problem right now. I m only remodeling the kitchens and adding 2 bathrooms, besides of course doing cosmetic repairs and dress up. Even though i m not gutting the building (only moving 2 non bearing walls between kitchen and living room), and definitely NOT removing more than 50% of the walls, the city is MAKING ME add a sprinkler system. Has the code change since you done yours last year? Would you have any suggestions on how to go about it?
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@Fabricio Bohrer , I don't have the answer but wanted to check and see what happened in your situation. Also, there's a Boston Wealth Builders event tomorrow featuring this development company (that started this thread) about a condo conversion; these sessions are always very informative. May 20, 11 AM, 22 Roseclair Street, Dorchester.
Date correction: it's on Saturday May 27 at 11 A.M.
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