Rehab Addict
Investor · Baltimore, MD · Member since 2014 · 78 posts · 48 votes
Drew & Jonathan Scott have to be the worst ever at estimates.
Every episode goes like this.
Brothers rehabbing a house built in the 1920's. They open up a wall.
"Oh no, knob & tube! This wasn't in the budget."
We have a thing for older properties as well ... which is a good thing as our area is filled with Queen Anne, Second Empire, Victorian, Georgian, & Edwardian era buildings.
It is possible to renovate these old buildings, making them moderately energy efficient (as good as a modern minimum code built home) and still maintain some of the period decor. We have a couple of rental properties which are small multi-units, converted from old, gigantic, SFHs. We have improved the energy efficiency of one by over 70%, the other is still in-progress.
It is possible to renovate an older property and still come out the other end with a profitable buy-and-hold.
We live and work (flip) in the metro area of Minneapolis MN.Over 70% of the homes we work on are from the 1910’s to 1950’s.Many of our homes have outstanding woodwork, original tiled bathrooms, and hardwood floors that just need to be brought back to life.For us, we have to remember that these houses are not ones we are living in, but are doing for resale.With this mindset, we might make a definite different decision on what we do with the house compared to if it was our personal house. Our houses that we work on are not restoration projects, but more of a bringing the original flavor back to life with some updated points.
For an example, last year we worked on an amazing home with a smaller footprint (720 sq ft) but had three stories.The Craftsmanship of the word work was outstanding; just a little rough at places and 90% of it was painted.If this was our own home, we might have stripped the paint, revealed the oak, and refinished all the woodwork, making it drop dead gorgeous (We love natural wood). After thinking it through from a profit vs. what we liked, we went ahead and prepped the woodwork and enameled it.The house still has much of its original style, while still profitable. On the sale of the home, the new homeowner told me how much they loved the dove white painted woodwork.
When we have looked at homes that begged for a true renovation, but we could not get the numbers to work.
Hillary on Love It or List It is the absolute worst contractor ever..she is always surprised by what is in the basement...don't let her go in the basement ! They don't go in the attic to check the insulation...then are surprised when it is sawdust...they don't climb on the roof and are shocked when it has multiple layers or needs replacing...they don't make a trip to check if work is permitted or not and are shock shocked when it is not...I like to think they are trying to get potential buyers to be aware of all the pitfalls out there when rehabbing and showing you some basic things that can be wrong...
That said I am so glad when folks rehab the older historic homes here...99% do it to live in ...there is no way to make money flipping here with prices as they are
Rachel,
I have done quite a few "traditional" rehabs that I have loved doing and took a lot of pride in completing. I have looked into restoring the old "historic home" and decided that it wasn't for me. I would love to bring one of those homes back to glory but my buddies who do rehab those homes say that getting the approval from the historic committees is very difficult and you have to restore the homes based on their determination of what they want the home to be like. If that is the direction that you are looking to go and are passionate about it then you have a good chance of succeeding, just beware of where you are buying and make sure you can rehab the way you want without having to answer to some committee. Good luck
Hey Rachel. one thing you might consider is reaching out for city, state, and federal grants. There are tons of them out there and they love historical properties, community improvement projects, training un- and under-employed people. All these can apply to rehabbing. I looked into a block improvement project in Wilson and got lots of potential partners such as Habitat for humanity, Bk of Am, BB't. and city preservation society. I have not followed on it yet, been too busy rehabbing. But inner cities have plenty of guys that would love to work on rehabbing and get trained too. In Wilson there are plenty of guys willing to work for $9.00 an hour and some have experience with painting, carpentry, roofing, etc. good luck with it
Thanks for the info Howard. I did a little research on the grants here in Baltimore, but it seems that most of them are for owner/occupants. Still worth looking into a little more for sure. I have a soft spot for the historical properties, but from a business standpoint, it may not be the most logical thing.
Yes there is a market for restoring older homes. Take a look a what Tucker Merrihew is doing in Portland Oregon. He has done several flips in historic neighborhoods of Portland. He had done a podcast for Bigger Pockets and recently started Deal Finders Academy.
Will definitely check that out Chuck. I'm making my way through the podcasts now. That sounds like one, I'd definitely like to listen to.
Rachel,
I have done quite a few "traditional" rehabs that I have loved doing and took a lot of pride in completing. I have looked into restoring the old "historic home" and decided that it wasn't for me. I would love to bring one of those homes back to glory but my buddies who do rehab those homes say that getting the approval from the historic committees is very difficult and you have to restore the homes based on their determination of what they want the home to be like. If that is the direction that you are looking to go and are passionate about it then you have a good chance of succeeding, just beware of where you are buying and make sure you can rehab the way you want without having to answer to some committee. Good luck
Thanks for the encouragement Jerry. The older homes are definitely where my heart is and I hope to somehow make them a part of my business model, just haven't figured out exactly how that will work just yet. I think pride in your work, no matter what type of property it is, shows in the end product.
We live and work (flip) in the metro area of Minneapolis MN.Over 70% of the homes we work on are from the 1910’s to 1950’s.Many of our homes have outstanding woodwork, original tiled bathrooms, and hardwood floors that just need to be brought back to life.For us, we have to remember that these houses are not ones we are living in, but are doing for resale.With this mindset, we might make a definite different decision on what we do with the house compared to if it was our personal house. Our houses that we work on are not restoration projects, but more of a bringing the original flavor back to life with some updated points.
For an example, last year we worked on an amazing home with a smaller footprint (720 sq ft) but had three stories.The Craftsmanship of the word work was outstanding; just a little rough at places and 90% of it was painted.If this was our own home, we might have stripped the paint, revealed the oak, and refinished all the woodwork, making it drop dead gorgeous (We love natural wood). After thinking it through from a profit vs. what we liked, we went ahead and prepped the woodwork and enameled it.The house still has much of its original style, while still profitable. On the sale of the home, the new homeowner told me how much they loved the dove white painted woodwork.
When we have looked at homes that begged for a true renovation, but we could not get the numbers to work.
Good to know Dave. That's kind of the route I was thinking of taking. Maybe not completely restoring the home, but leaving some of the charming touches like woodwork or original floors and then modernizing other parts of the home to save time and money. I just can't see stripping all of that history and character out of a home.
i'm really a big fan of Income Property because i like his process and how he points out different things that are pluses and minuses about each property. But the only thing I don't understand, and I guess this is just a market thing as Scott's show is based out of Toronto I think? But you have an investor buy a $600-$700K Row house with only a $200 cashflow. Which just seems incredibly risky because the downpayment for these homes are probably $100K. I mean you would be better off putting your $100K into a bunch of CDs.
@Rachel Gill There absolutely is a place for rehabbing and restoring old homes. It's what I primarily do and I find it very profitable, both monetarily and in personal satisfaction.
For you, it will depend on your market, finances and abilities. There are many challenges in the process but it is so worth it.
That's so good to hear Art. The personal satisfaction part is what I believe is drawing me in. The old homes are where my heart it is. I'm hoping to somehow make this a part of my business model.
Homes on Holmes seem to be realistic show as compare to other DIY and HGTV shows.
That is a good point Rachel. If you have a passion for it...I would say that is the most part of any business plan. I have sold perfectly good businesses only because ultimately I lacked the passion to continue. Passion will pay more bills and create more success than anything I can think of. If your heart is into it....then you owe to yourself and the others around you to investigate this idea to its potential. Even if you don't make a million you will still love what you do...that is in itself priceless.
Okay I like historic properties in historic neighborhoods. I'm in the process of doing one now in a historic neighborhood and I sold two last year in same community- With that said- I would never and I mean never ever ever restore it to original condition. What's the point of taking a 1900 home and making it look like it did in the 1900's.
While I think its great for some there are more buyers who are looking for older homes that are newly renovated than there are buyers looking for restored older homes. Now I'm not saying that buyer doesn't exist- While I was doing one house last year the neighbors told me they didn't like granite, wanted all the old doors, trim and would only buy a restored home.. Needless to say they might like Nicole a lot.
They are however the minority and this is business... who wants to have a house that only appeals to a very small sect of people in an already small sect that would buy a historic home.
I've done one historical home (Richmond, VA) and am working on a "historic preservation overlay zone" house in Los Angeles right now. Trust me, most historic homes are more trouble than they are worth unless you know the board that approves the remodeling. Do some serious checking on the laws before you work with any historic home. The last thing you need is to get $50K into a project just to have a neighbor call the Board on you for doing work that isn't allowed and then you get shut down for months. On some houses (Painted Ladies, specifically) you are even limited to the color that you can paint a house. It can be fun and profitable, but I would make sure that you either work with someone who has done them before or you do a lot of research before jumping in.
I'd like to see that episode where N. Curtis was in a bikini.
@Rachel Gill baltimore is full of great architecture on houses and neighborhoods that have become dilapidated. Yes there is opportunity here. Just be aware if it is actually designated as a historic area that may drive up costs. You may be required to do some things that don't make economic sense or that you wouldn't otherwise do.
Also make sure the neighborhood you pick, there will be a market for what you do. In Bolton Hill there may be demand for original architectural details inside. Just a few blocks away in Upton probably not.
I've done one historical home (Richmond, VA) and am working on a "historic preservation overlay zone" house in Los Angeles right now. Trust me, most historic homes are more trouble than they are worth unless you know the board that approves the remodeling. Do some serious checking on the laws before you work with any historic home. The last thing you need is to get $50K into a project just to have a neighbor call the Board on you for doing work that isn't allowed and then you get shut down for months. On some houses (Painted Ladies, specifically) you are even limited to the color that you can paint a house. It can be fun and profitable, but I would make sure that you either work with someone who has done them before or you do a lot of research before jumping in.
This is where I was going to add my two cents. Depending on the area and home, you can be limited to what you restore and fix and change. Which isn't a bad thing, if that's what you're going for in a historic home. I feel some historic properties do need to be restored and preserved. But it takes a certain buyer to be ok with single pane windows, boilers, and outrageous utility bills.
These shows are shows, that's all, just entertainment. The only way for N. Curtis from Rehab Addict to make money on those 'fix and flips' is if she got every house for $1. (Which she did in one episode, per the story). With all that said, I watch that show often. Head over heels for that gal :)
Good luck in Baltimore. Haven't lived there in over a decade, scary place to fix and flip. Certain areas, anyway. Those are the homes I love the most though, new england and mid-atlantic. I keep telling my sister I'm going to move back there and fix and flip :)
Every episode of flip or flop: they buy a house, estimate budget $30-50k, in actuality spend around $80k, putting them dangerously close to ARV per comps, which should yield them no profit or like $10k. Then miraculously they sell the house for $50-150k higher than comps in the area, netting over $100k profit, every episode. Sounds realistic, right?
Every episode of flip or flop: they buy a house, estimate budget $30-50k, in actuality spend around $80k, putting them dangerously close to ARV per comps, which should yield them no profit or like $10k. Then miraculously they sell the house for $50-150k higher than comps in the area, netting over $100k profit, every episode. Sounds realistic, right?
It seems they mainly buy in the 200s to 300s and sell in the 400K to 600K range. Being Real Estate Agents, at the very least they are saving they 7.5K(agent's commission) or twice that if they one is the broker.
In this type of show I see a lot of staging, but there often isn't a cost mentioned for it. I have a feeling a lot of the architect/general contractor costs also are provided for free or below market. Also being on a show may help them on the sale side too. Bragging rights of "my new house was on TV" may be worth 10 to 20K, over have people overlook a significant issue that would normally cause a house to sit on the market.
@Rachel Gill -Such a great topic, I LOVE rehab addict because I love old homes, architecture, and their charm. But I also always said the same thing- "who is buying the homes from Nicole and how long is she carrying them??" You are not alone in your love for those beautiful old houses :)
Although I agree that the sub-floor should not be called hard wood, that yellow pine does look really good once it is sanded and finished. You can certainly then say refinished wood floors :)
And I wasn't impressed favorably with the episode where they were doing plumbing and the water was turned on and gushing all over. And then there was the episode where they raised a house to redo the foundation with block walls, but didn't waterproof ...
Like many others, I was originally drawn to the thought of REI after watching too much HGTV, specifically Nicole Curtis' show Rehab Addict. This question is for the seasoned flippers out there...is there any place in the the rehab world for restoring old homes and bringing the charm back in addition to adding modern updates? Would this be profitable as opposed to doing the "typical" rehab or is this wishful thinking on my part?What are your thoughts on this?
She does horrible work. She keeps the old windows in Mn. Why would you keep old windows in an area that gets -20 all the time in the winter. I am not a huge fan of hers.
The cost is much more when trying to rehab the old homes. Old wiring, old pipes, lead paint. You need to keep in mind in most cities when you start rehabbing that means getting inspections and many times they will want a total upgrade of the electrical and plumbing. That can get out of control real fast
Asbestos is also a huge issue. It can be in anything in these older type of homes.
Yes, there is a place. It's just a little harder (though sometimes more rewarding if you have a sense of pride in your finished work). That said, I did historic redevelopment because of historic tax credits. Were they not an option, I probably wouldn't have done them and would have focused on less complicated projects.
One note that I'd like to add to the thread based on a comment above: I cannot speak to Nicole Curtis's work, but as someone who used to do both historic renovation and LEED-certified (green) construction, I would like to help correct a misconception about historic windows. Historic windows are not necessarily inferior to new, and in most cases are aesthetically superior (which may be why Ms. Curtis chooses to keep them). Aesthetics and charm matter, particularly in marketing an historic home. Please don't rush out to switch your historic windows -- particularly for inexpensive vinyl (though I'm more ok with switching out with an energy efficient, aluminum clad, wood window that matches the old design). If you can find a competent window restoration crew in your area, consider the option. See here for more info: http://www.oldhouseauthority.com/archive/old_windo...
Getting it to "look like" original vs function same as original is the difference IMO. Replacement windows can be ordered with "6 over 1" or "6 over 6" glazing (to look like the originals) and still be energy efficient double panes. No need to keep sashes with weights and pulleys that will never be mistaken for being energy efficient. Tall baseboards and casings can be fabricated from millwork at a little extra cost, but still look close to original.
Oh, and those old houses original had little to no insulation, because energy costs were not that expensive (in relative terms). So you definitely wouldn't keep that original "feature".
So I agree that the "restoration and preservation" approach is not a good idea, but you can do things to retain appearance and charm.
For the OP, like Nicole Curtis, don't forget that you will have to keep a stash of old wood to use in places where replacing is needed :)