Diary: Single Family - Land Park - Sacramento, CA

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Diary: Single Family - Land Park - Sacramento, CA

Brennen Cook
Elk Grove, CA · Member since 2014 · 82 posts · 5 votes

1317 1st Avenue Sacramento, CA 95818

Hello BP,

Here with a deal diary this time!

This single family home is located at the above address. It is currently a 3 bedroom 1 and a half bath house with 1378 square feet. Literally just closed on this house not even a day ago now.

This deal should be very interesting. Land Park is a HIGHLY desirable neighborhood near downtown Sac. Although I will admit I believe we are pushing the boundaries on this one I am very confident in the end result. Here is my basic evaluation. I try my best to be as conservative as I can that way to leave myself the most upset. Prepare for the worst....

ARV: $480,000+ ( Some comps dictate an even high $/SquareFoot )

Purchase Price: $320,000 ( Cash )

Rehab: $80,000 ( Interior/ Exterior )

Real Estate Commission: $23,000

Closing Costs, Taxes, Small Misc: $12,000

Conservative Profit: $45,000

Cash Out of Pocket: $400,000

Cash on Cash Return: 11.25%

Acquisition to Resale Time: 4 Months

Annualized Return: 33.75%

1317 1st Avenue Before Pictures

We will be converting this to a 3/2

My phone died while taking photos. More to be uploaded. That is most of the house. The missing pictures are of the back yard, screened patio area with laundry, detached garage. Pictures to follow.

When I comped this out it seems as the further you get away from 1317, the higher price per square foot gets. There is also a rehabbed property at 1325 1st Avenue that sold for $335 a square foot. It appears as if it was a minimal rehab and I know some of the construction cost had to go to unanticipated structural problems. Looked at property and spoke with neighbors

I think that an ARV of $480k or $348/ Square foot is being conservative for a well done, rehabbed and fresh product. There are some houses in the area that have sold for $400+ a square foot. I am not saying that is likely to happen here, but I could see a nice house in this area selling for $370 a square foot, easily. ( That is me with my fingers crossed and hoping)

I feel comfortable with this deal and the potential money to be made. I think on the conservative side ( which is what I try to plan for) there is decent profit to be made. I think property has some serious upside potential though! I would love to rehab this house very nice and it sell for $520k! =)

I would love to hear what everyone thinks. I plan to update this each week with progress pictures once work begins. Would love to hear opinions, suggestions, and ideas.

Do not be afraid to bust my bubble! 

I am posting this to learn myself and for everyone to potentially learn along the way. Please post any comments, suggestions, design ideas, anything! Know an architect? POST IT! Got an idea? POST IT!

Look forwarded to flipping this one with this diary..

Talk to you all soon!

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Chris Vail
Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes
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@Brennen Cook I am trying to figure out what you are going to do to the house that is going to push the value up to 480,000.  Two houses down at 1325 1st ave sold on 2/20/2015 for 410k  it was a nicely (completely) rehabbed 3 bed 2 bath granted it was only 1224 sq ft versus your 3 bed 1.5 bath that is 1378 sq ft however both lots are 5,227 sq ft.  I am just struggling with how you are planing to add an additional 70,000 in value over the house that is the perfect comp for the area of what should be able to expect.  Just playing devils advocate here as I can't wrap my head around what you could possibly do to add 70,000 in value.

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  • Josiah W.
    Lender · Miami, FL · Member since 2015 · 134 posts · 5 votes
    11y

    congratulations!!!

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  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    11y

    @Brennen Cook  Congratulations! What improvements are you planning to make?  If you get a floor plan drawn out, please be sure to post it.  

     The interior of the house has some interesting character, seems like the house must have originally been more hacienda or spanish style? 

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  • Chris Vail
    Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes
    11y

    @Brennen Cook I am trying to figure out what you are going to do to the house that is going to push the value up to 480,000.  Two houses down at 1325 1st ave sold on 2/20/2015 for 410k  it was a nicely (completely) rehabbed 3 bed 2 bath granted it was only 1224 sq ft versus your 3 bed 1.5 bath that is 1378 sq ft however both lots are 5,227 sq ft.  I am just struggling with how you are planing to add an additional 70,000 in value over the house that is the perfect comp for the area of what should be able to expect.  Just playing devils advocate here as I can't wrap my head around what you could possibly do to add 70,000 in value.

    1Reply
  • Al Williamson
    Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
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    @Brennen Cook

    Yep, a 3bd 2bath will be very desirable. The sooner your rehab is complete, the better. It feels like we are at the top of the market right now. Prices don't make sense.

    I say proceed with caution and great speed.

    1Reply
  • Derek Daun
    Investor · Sacramento, CA · Member since 2012 · 289 posts · 151 votes
    11y

    2/1 => 3/2 is great business model in that area. 

    I agree with @Chris Vail, though that you have to be really careful on your comps in that area. Land Park north of 2nd avenue is a completely different neighborhood compared to south of 2nd avenue. 

    1Reply
  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y
    Originally posted by @Chris Vail:

    @Brennen Cook I am trying to figure out what you are going to do to the house that is going to push the value up to 480,000.  Two houses down at 1325 1st ave sold on 2/20/2015 for 410k  it was a nicely (completely) rehabbed 3 bed 2 bath granted it was only 1224 sq ft versus your 3 bed 1.5 bath that is 1378 sq ft however both lots are 5,227 sq ft.  I am just struggling with how you are planing to add an additional 70,000 in value over the house that is the perfect comp for the area of what should be able to expect.  Just playing devils advocate here as I can't wrap my head around what you could possibly do to add 70,000 in value.

     Chris,

    I appreciate the insite and devils advocate. If you take 1325 1st at 410k with 1224 square feet that's a,price per square foot if $335 dollars. 1378 x $335 is roughly $462k. That is how I usually comp it out. So in reality I'm only adding 20k in value and from what I have seen it shouldn't be To hard.

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y
    Originally posted by @Derek Daun:

    2/1 => 3/2 is great business model in that area. 

    I agree with @Chris Vail, though that you have to be really careful on your comps in that area. Land Park north of 2nd avenue is a completely different neighborhood compared to south of 2nd avenue. 

     Thanks Derek for the insight. You are not the first I have heard say this.. I think the real zingerf here will be how much I have to spend on rehab.. I paid a,little more than I would have liked to. 

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
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    Originally posted by @Karen Margrave:

    @Brennen Cook  Congratulations! What improvements are you planning to make?  If you get a floor plan drawn out, please be sure to post it.  

     The interior of the house has some interesting character, seems like the house must have originally been more hacienda or spanish style? 

     Older home build in 1938. One or two owners. Plan to pretty much gut the house almost. Should get a floorplan and will post.

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  • Chris Vail
    Investor · Sacramento, CA · Member since 2014 · 308 posts · 94 votes
    11y

    @Brennen Cook I hope for your sake you are correct.  Price per sq ft does not translate 100%, or at least I have not seen that in other neighborhoods.  Maybe an agent can weigh in on this that is familiar with the area, as I would be interested in what they would say.

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y
    Originally posted by @Chris Vail:

    @Brennen Cook I hope for your sake you are correct.  Price per sq ft does not translate 100%, or at least I have not seen that in other neighborhoods.  Maybe an agent can weigh in on this that is familiar with the area, as I would be interested in what they would say.

     Agreed! I have had several independent agents comp this house and walk it. They all range very similarly. I would be extremely interested if there are any Sac agents very familiar with Land Park that will chime in.

    Regardless there is some money to be made I think. Either you keep it 3/1.5 or spend the money to 3/2 if you can get it out.

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  • Derek Jones
    Real Estate Agent · Sacramento, CA · Member since 2015 · 338 posts · 135 votes
    11y

    Good luck on your flip.  I'll be sure to keep an eye on this post to watch your progress.

    As far as pp/sq goes within a neighborhood I've found that the smaller units usually have higher pp/sq than the larger units.  Not knowing what your finished product will look like, 1325 has great curb appeal for the area to really emphasize the look of a 1930's bungalow.

    If at all possible I'd try to speed up the timeframe as some buyers stop looking during the holidays and that's when the market usually cools down.

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  • Gordon CuffePro Member
    Investor · Roseville, CA · Member since 2009 · 1k+ posts · 584 votes
    11y

    @Brennen Cook

     I went a 1/2 mile out from your property and the highest and closest comp was at 1157 2nd ave. sac. sold in 7 days for 510k. It looks like a awesome rehabbed house. the next 2 that I found were at 2612 harkness st. sold for 465k in 53 days. then 2712 18th st sold in 16 days for 479k. I have an idea for saving money on commissions. and hopefully you will get a cash offer to save on closing costs like the offer on 1157 2nd ave.

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y
    Originally posted by @Gordon Cuffe:

    @Brennen Cook

     I went a 1/2 mile out from your property and the highest and closest comp was at 1157 2nd ave. sac. sold in 7 days for 510k. It looks like a awesome rehabbed house. the next 2 that I found were at 2612 harkness st. sold for 465k in 53 days. then 2712 18th st sold in 16 days for 479k. I have an idea for saving money on commissions. and hopefully you will get a cash offer to save on closing costs like the offer on 1157 2nd ave.

     Thank you Derek Jones and Gordon for your insight. I have come to find out the house is actually 1428 square feet. Prior owners had said 1378 but after measuring rooms it is slightly more. As I had mentioned this one is pushing the limit.

    I had do done another flip in Cameron Park and my price per square foot eval worked out like a charm. Fingers crossed with this one.

    I actually have a family member who is interested in purchasing the house which would help for RE commission.

    I will be adding a few photos of the rear and a floor plan soon. Before and after. 

    Thanks again for all the advice, insight and questions. Look forward to getting g this one moving.

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y

    Sorry BP for the lack of updates. Holiday and all...

    Here is a,link to the existing floorplan. I will have the AFTER version shortly As only a few walls will be moved. A few pictures have been added of the rear of the house.

    http://plans.sensopia.com/559a91fb222af

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  • Tom V.
    San Francisco, CA · Member since 2014 · 345 posts · 281 votes
    11y

    Here you go: 

    Your best bet is to position this as a more open midcentury-ish flip.  

    Exterior

    1.  Think about the landscaping.  It stinks.  Low water use, pretty plants.    

    2.  The stone veneer on the front is brutal.  Can you put nicer stone veneer on? 

    3.  Get rid of the granny awnings on the front. 

    4.  Paint it a dark neutral color. 

    Interior. 

    Refinish the wood floors darker. 

    See floorplan comments.  You need to make the house feel bigger with the low ceilings.  You can do that by opening up the walls in the common rooms.   Sunroom in the back is great, but you should push the hallway through to make it accessible common space.  Only accessing off one bedroom is tough.   I am not an architect (shocker!)  Your mileage may vary.  

    It will be tough to do this with 80K.  You definitely won't get it done in 4 months.  

    You'll need to stick to paint and a new kitchen if you want to get it done fast.   Make it pretty on the outside and feel fresh inside.  

    Good luck!

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y
    Originally posted by @Tom V.:

    Here you 

    Tom,

    A huge thank you for taking the time to not only view the pictures, but understand the layout and give a suggestion. I really appreciate it.

    Most of what you mentioned is pretty much on par. Going are the awnings, japanese blinds and front stone finish ( replaced by a,more modern stone). I plan on refinishing the hardwood floors darker. I am working on a plan to take out the portion of wall between dining kitchen and living area to make a,more open. Definitely a mid century look at the end.

    Here is my suggested floor plan. The only thing not shown is a small kitchen pantry where the master bathroom is.

     The only reason I did it this was is because the sun porch area is not a raised foundation as the rest of the house. Building this out would cause much more expenses than I think are needed.

    This plan should net a nice Sacramento 3/2 home with a nice size master and master bath. I'm excited about this layout and house this home will end up.

    Anyone with any suggestions? 

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  • Jeff Caravalho
    Property Manager · Sacramento, CA · Member since 2015 · 161 posts · 24 votes
    11y

    Brennen,

    Could the Design & character of this house accommodate opening up the kitchen to the living room by taking out the top half of the kitchens right wall & turning it into a counter top (like Tom V. suggested)?  I think that would help for entertaining as well as bringing more natural light into the house.  Also I would make that fireplace more of a focal point, maybe with a cool wood mantle that matches the new floor.  Good luck!

    ps. I have access to architects & engineers (I'm a draftsman), but I would only hire a structural engineer if needed, your getting free architectural advice right here on BP!

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y
    Originally posted by @Jeff Caravalho:

    Brennen,

    Could the Design & character of this house accommodate opening up the kitchen to the living room by taking out the top half of the kitchens right wall & turning it into a counter top (like Tom V. suggested)?  I think that would help for entertaining as well as bringing more natural light into the house.  Also I would make that fireplace more of a focal point, maybe with a cool wood mantle that matches the new floor.  Good luck!

    ps. I have access to architects & engineers (I'm a draftsman), but I would only hire a structural engineer if needed, your getting free architectural advice right here on BP!

     I am actually looking heavily into changing that wall. I do think it is a structural wall. Hoping i can just leave a beam and pillar and open it up as much as possible. I admit that is a great suggestion and would add so much by making that area more open.

    P.S. Nail on the head. That is one of the reasons I wanted to post this on BP ( among many others). The available resources here are endless! Thank you for the heads up and I will keep that in mind.

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  • Tom V.
    San Francisco, CA · Member since 2014 · 345 posts · 281 votes
    11y

    I doubt that the wall on the right of the kitchen is holding up he house.    The space between the living room and the dining room as a single volume sugg sts that you ceiling joists span from outside wall to outside wall.  

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y

    Sorry BP for the delay. Investing, New RE agent, and more on top of job, wife, n kid. Construction has  since started. later than I would have liked, but the necessary  documentation can take time. Here's a few current photos.

    Entrance

    Kitchen

    Bath

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  • Gordon CuffePro Member
    Investor · Roseville, CA · Member since 2009 · 1k+ posts · 584 votes
    11y

    @Brennen Cook

    nice project. I hope it turns out well. I can also give you suggestions on brokers that do not charge fees and also have a high commission split in case you havnt found a broker.

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y

    Entrance

    kitchen

    Bedroom 1

    Full Bath

    Bedroom 2

    Hallway to Back Patio / Laundry

    Master Bed

    Master Bed

    Master Bath

    Master Bath/ Bed wall (to be moved)

    Updated photos. Things a moving along fine. The layer start on the schedule hurt, but we are on par since. Excited to see the finished product and sales price...

    Thanks  BP!

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  • Tom V.
    San Francisco, CA · Member since 2014 · 345 posts · 281 votes
    11y

    Did you remove the wall between the kitchen and the living room?   It's not too late.   

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  • Brennen Cook
    OP
    Elk Grove, CA · Member since 2014 · 82 posts · 5 votes
    11y

    Hey BP!

    I have not forgotten this diary! Much going on. My apologies if I have not updated enough. 

    I would have hoped to have already placed the house on the market, but unfortunately that is not the case. I had a permit issue which actually shut down construction a week and 2 days. Not fun! Back on track now. Not sure what track, but....

    I thought many people in dealing with real estate have a hard time upholding to timelines. Maybe it's rubbing off. That or it can be hard to coordinate so many moving parts. And more. 

    Lots of experience. Lots of lessons being learned. This one is definately a fun experience.

    Anyways, here is the final floor plan..

    Should look very nice. I hope to be honestly finished in two weeks. Heard that before though.

    On another note I have a post construction appraisal on the home. I was very happy because with recent sales it appraised at $535,000! We shall see what the market says. Hopefully sooner rather than later. Looks like I am going to be forced to sell in not the most opportune time. 

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  • Tom V.
    San Francisco, CA · Member since 2014 · 345 posts · 281 votes
    10y

    How is this going?

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