According to the MLS, the sale of 161 San Pablo closed escrow on 4/1 with a reported contract price of $1,825,000. That’s an official 23 percent over asking! (And it’s no April Fools of which we know.)
That being said, $1,825,000 is the exact same price the “How to Build a Fortune in Real Estate” professor paid for the property in 2006. And that was prior to its grand renovation (after which it was taken back by the bank).
∙ 161 San Pablo Makes Another Grand (Bank Owned) Return [SocketSite]
∙ Lesson Number One: Don’t Do This [SocketSite]
Any idea on what types (cost) of the renovation?
Its odd to me that it sold for its 2006 price, when everyone on here documents how things are down 25%+ since then.
[Editor’s Note: It’s time to drop the rote straw man comments (and do a bit of research). According to the permit history (which one can easily access online): interior remodel (including a new kitchen, bathrooms, and some reframing) and some cosmetic changes as well (new windows, doors, etc.).]
SFRE, is it possible they spent $400K on the grand renovation, or about 25%, which was not recouped with the sale?
@tipster: That makes sense, but spending 25% of the value of a house on renovations sounds like a lot, I would rather just buy a more expensive house initially as opposed to go through the hassle of renovating.
@Editor: Fair point about the research, what site would recommend.
With regards to the rote comments, it would be nice for everyone to drop the standard comments, ala inflation calculator, etc. I mention 25% down from peak, b/c that is what the overall market has done in the SF area, and when there are properties that have not dropped by that amount, its nice to point out, to support the ‘sky is not falling’ opinions. With that being said, I will be more judicious in those comments.
[Editor’s Note: San Francisco Online Permit and Complaint Tracking. Just don’t confuse the reported “cost” with the actual.]
SFRE:
interestingly last year (2009) I just spent 21% of the purchase price on renovations on my house (windows, doors, siding, air conditioning, electrical, etc), and this year I will likely spend another 20-30% (entire basement remodel with an added bathroom and a new kitchen).
this is after the first 5-6 years of owning when I got a new boiler, removed asbestos from the basement, remodedled a bedroom, remodeled a bathroom, put in a sprinkler system, put in a ton of landscaping… probably another 10-20%
so by the end of the year I’ll have spent about 50% of the purchase price of my home in renovations after owning the home for 8-9 years. it is one of the things that makes discussion about housing appreciation difficult.
I chose my particular house because it worked for me at the time and I loved the location. You can change siding and windows and a kitchen, but can’t change location.
there was nothing in my location renovated the way I wanted at a price I wanted. thus, it made sense to buy what I bought and renovate over time.
we just went house shopping to make sure that we’re making the right decision (renovate vs move to a “done” place), and it still makes sense to just stay put as opposed to selling and then moving into a renovated place, partly because of transaction costs and partly because of our nabe that we love and partly because the redone stuff is SO overpriced.
@ex SF-er: Good real life example. I guess it really depends on what else is in the area and pricing.
In 2005 I bought a single-family home, and last year I felt I needed a new kitchen, roof, windows, and wanted to redo the baths, but I just opted to sell it. I didn’t want the hassle of dealing with contractors and living through the repairs. I ended up selling it for the same price I paid in 2005 (though I added a new furnace along the way).
I’m renting now, but having that experience of owning, it really made me aware of the hassle of having to remodel. But the decision is certainly property and person specific. Buying a crappy house in a great neighborhood is one example where it could make sense to remodel. I’m not sure if this was the case for 161 San Pablo.
Speaking as someone in the middle of a renovation of a house that was bought for the location and modern layout but needs quite a bit of updating, I wouldn’t want to do it again.
I realize we’re saving money by managing the renovations ourselves with the added benefit of not ending up with an ugly and nonfunctional remodel we hate (which seemed to be the only types of remodels being sold) but the hassle and stress factor is off the charts.
I totally agree with geekgrrl on remodeling. I NEVER want to go through one again. There were so many issues once everything was opened up and of course this meant much more money than originally thought. I would rather buy a place that needed a small amount of cosmetic changes than to go through the hassle of a remodel again. Sorry to be off subject. I think the house above is unattractive.
actually, I agree with all of you.
I HAAAAATE remodeling. let me say that again: I HATE it. the only reason I’m willing to do it is because I literally have the best neighborhood on Earth and I can’t see leaving my neighbors at this time, and it will save me hundreds of thousands of dollars not to move.
this is the last remodel i will do though(kitchen/basement). I’m choosing a very high end remodeler who will act as the GC and manage everything. I will have every decision made AND all the supplies delivered before they start any demo. In theory, the kitchen can be done in 4-6 weeks. we’ll see. (I’m thinking about doing it early this summer).
the basement isn’t a big deal because I can “wall it off” from the rest of my house and won’t be so disruptive.
As a contrasting view, I neither hate nor like remodeling but would do it again. Planning up-front really pays off as well as choosing good contractors. It is still a lot of inconvenience and work, even if all you do is select the details and professionals to implement your plan.
I used the general rule-of-thumb that it will take twice as long as expected. But then the project really took 4X as long, in part because I was one of my own subcontractors.
Remodeling is noisy, dusty, and generally messy. It will take longer and cost more than you think. Your contractors will go AWOL at some point during the project. If you enter into the project with that expectation then you will be OK.
But now reading the negative comments above I can see why I was usually bidding against developers/speculators for even cosmetic fixers.
(I think I now have my post-tech career figured out.)
The key to remodeling so you don’t tear your hair out: don’t live in it at all during renovations. Of course many can’t afford that, but that’s the way to go.
As for this specimen, it’s hard to say what the good ole’ prof spent in renovations. Probably between $150-300k. So he sold for what he brought, minus renovation, holding and sales cost. Consider it community service/charity work en route to building that RE fortune!
I always likened remodeling to the childbirth process: it’s hell when you’re going through it, but a year or so later, you have forgotten the details and it seems like a great idea to try again.
(Two children, four kitchens, three baths)
This is a good topic. Unless I’m mistaken, none of the comments above talk about having an architect on board for the entire process. I would submit that may be part of the problem with all the mentioned hassles, delays and cost increases. And I’m aware that an architect can NOT prevent all of those problems.
But, by and large, when you engage a qualified, residential architect to design the project and manage the construction process, it will go much smoother. I design lots of residential remodels and alterations. Each one is unique. Each one has challenges. Each one costs a different amount per square foot. Here’s basic advice I give to all new clients:
1. We design it ALL on paper, with detailed specifications up front. That means all materials, products, lights, plumbing fixtures, windows, doors, hardware, appliances and finishes are written into a Project Manual (or spec book) for final bidding purposes and for the contractor to follow during construction.
2. I help the client develop a realistic construction budget based on the drawings and specs they approve. My proposed budget is always higher than theirs, but it’s real.
3. I make sure they ADD IN a construction contingency budget, usually 15% more for additional costs and unknowns and changes that WILL come up during construction.
4. We always get 3 firm bids from licensed, qualified general contractors. Most of them I know personally, and they built work for me before. I help the client select the best contractor (not the lowest price) for their particular project and scope of work.
5. As part of my full service fees, I am hired for Construction Administration, to work closely with the contractor, on a daily basis, to keep the job running smoothly and solve any problems quickly and safely.
6. I do a lot of client “hand-holding”, a lot of explaining and a lot of listening. I am the lead person to help the client get what they want, and make it go as smoothly as possible.
Every project has challenges, cost overruns, changes and unknowns that come up. But with an architect, the project goes a LOT smoother than some of the stories noted above.
@noearch: I agree with most of your points, except I don’t think you need an architect to do most of this. An experienced (and realistic) homeowner or contruction pm can handle all this just as well.
I think most people’s issues with remodeling are unrealistic expectations heading into it.. if you can talk some sense into them before they start, you’re halfway there.
That’s cool,but you missed entirely what I said. You’re certainly entitled to your opinion.
The clients who hire me are those who respect and value the experience of an architect, and are willing to pay for it.
Those who don’t, typically think they can do “what I do”..more power to them. They are not the kind of clients I want, in the first place.
But they can’t. They always end up with the disasters described in the above comments. All I can say is best of luck to them.
@R, most homeowners are capable of doing this but I agree with noearch on this one. Capable and competent / qualified are different. I can paint a room, but I’m not a painter and trust me, you’d see the difference. Most homeowners dive into these projects with an unrealistic budget / timeline and then concede to blow the budget once the project is underway. It also leads to scope creep since most owners start adding little things here and there. Having someone to really play devils advocate and spec it all out is certainly helpful. And I wouldn’t underestimate the need for daily feedback with the GC. Now, does an architect need to be involved in this aspect? I think that is debatable. A good GC and an owner should be able to keep a decent dialog; but having someone like an architect around isn’t a bad thing either. Pay for service / results when it makes sense.
@eddy: good points, thank you.
I will take issue with one thing. I have had several clients who chose not to use my services during the construction phase, thinking they could handle the day to day relationship with the contractor and the hundreds if not thousands of questions and issues that arise. It did not work.
Their project became a disaster, with cost overruns and strained contractor relationships. I am then typically called back in to save the project and bring it back on course. From my experience and track record, the homeowner, with all good intentions can NOT handle this on their own.
The need for a professional (architect, GC, or enlightened hillbilly) to manage is proportional to the project size and complexity. If you’re doing a gut remodel of a whole house then you’re asking for trouble without an experienced project manager. But if you’re just adding a deck, this is something that a savvy homeowner can manage on their own.
Nope. you’re flat out wrong.
There may be “savvy” homeowners out there. I won’t argue that. Skilled homeowners who know every aspect of design, construction, codes, permits, bids, change orders, specifications, construction administration?
No.
Even something like “just adding a deck” as you say, involves life safety and code issues. Witness the collapsing decks a few years ago, where people were injured and killed.
What if the savvy homeowner is not aware that the contractor they hired left off some critical bolts and anchor plates attaching the deck to the house, that were REQUIRED by code. What if the contractor “forgot” to put in the correct amount and size of rebar in the footings? What if the railing attachment to the deck framing “looked ok to me”, but did not meet the code requirement of 200 lbs/lateral foot of deflection?
and on and on. I have seen this happen. And they don’t get a permit for this deck “to save some money”, therefore they don’t get a building inspector out to inspect it. By having a licensed architect at the job site to observe that all of the construction is in compliant with drawings, specs and the code is a small price to pay for quality work and life safety issues.
Seriously. Your idea that the need for an architect is only proportional to the size and complexity of a project is simply ill informed.
My projects range from a small powder room remodels to a full house remodel from foundation to roof, to new houses. Each project is complex and important enough to have an architect on board. Within the overall project budget, generally the architect’s costs are around 10-12%.
A small price to pay for quality work.
@noearch: so your argument is no matter how savvy the owner, there is no way they can do any size remodel well without the help of an architect?
“generally the architect’s costs are around 10-12%.”
lol. let’s see. this light fixture costs $500
and the other one costs $50. they both go in the same place and the connection is the same. hmm, do you think the ‘architect’ deserves to be paid as a percentage of the cost?
i’ve never heard of a contractor trying to justify such an outlandish payment scheme-so why does the ‘archtect’ believe he should?
what a racket…
noearch, you are definitely over-reaching here in what appears to be a self-serving way.
Your point is very well taken that most homeowners are not competent (or not as competent as they think they are) to manage a construction project. And, very often, having the architect to be involved through construction is very helpful,not the least to be the owner’s advocate/interpreter with the GC. I don’t doubt that you provide great service to your clients.
But there is nothing absolutist…as MoD says, the scale of the project DOES have a lot to do with it. For small, uncomplicated projects (like the deck example) a competent and trusted contractor can save you time, money and headaches. And even for larger ones in which the involvement of an architect is more clearly needed, a lot depends on the personal styles and competencies of the three players: owner, contractor, and architect. It’s impossible to say what MUST always be done.
@anonee: I’ll defend noearch here, I think. My assumption is his 10-12% is not a flat rate, but more or less that’s what it works out to. And to carry your light fixture example, while it wouldn’t actually cost any more for an architect to pick the $500 or the $50 one, the owner buying the $500 one is likely going to be a lot more picky on everything, causing more time for the architect.
And I agree with curmudgeon, that’s what I meant to say, he’s just more eloquent than me.
Lemme weigh in also. I think noearch is mostly right. Even seemingly simple things like a deck can get quite complicated. Furthermore, most SF homeowners have full time jobs. Most housing stock is older. Dealing with the city is like dealing with a medieval fiefdom. I suppose if the project is small, does not involve structural changes the homeowner can take some risk and self manage. It’ll probably come out ok, but then they have to askmthemselves ifmit was worth the extra time and aggravation.
My case is different. I am a full time RE investor. I make my money by saving money on renovations. I still have to hire an engineer and permit expiditer/designer for basic things. I also have a reasonably priced contractor who I work with on a regular basis. And let me be honest. I do save a lot of money, but everyone I work with is so half assed about everything! It takes my efforts to pull the project through.
I laughed when noearch tacked about specing all finishes beforehand. I agree that is an ideal way to do the work- actually organize it, have follow through, accountability. But the way I get good prices is to totally wing it with my Vietnamese contractor. This guy has limited organizational skills. We decide on finishes as we go through the project. Mistakes happen. Disagreements are common. But we have a relationship and some who the shit gets done. I have also learned where to buy decent finished products for good prices- I.e. Decent light fixtures for $70-100, not $500.
But remember, this is basically my job- I save loads of money by managing half assed morons! Remember, I have given them repeat business, so they know I am tough. It’s all in the relationship. But I can promise you that these guys would not give ‘retail’ homeowner the same prices, and good luck managing them and getting accountability.
So if you are not in the biz, and have an occasional project, unless you feel lucky, you’re much better off getting a full architect on board and saving all the aggravation, for there is plenty of it in this decidedly imperfect business.
@45yo hipster: Not sure how to respond to your comments. Some are valid. Your approach certainly seems to work for you. I’m not going to argue that.
But I am bothered by your comments that everyone you work for is so “half assed”, and “morons”. Thinking of people you work with that way is disrespectful and immature. Not sure what you get out of it.
Your bottom line appears to be “get it done quickly, and for the least amount of money”..I don’t hear a word from you about quality, or durability, or developing relationships..I guess that’s your style. It’s definitely not mine.
I don’t know what your completed projects look like or how they hold up. But there is no comparison between your work and mine.
Nonetheless, yes, I do work in an ideal way, organized, thorough and solid. It’s probably not for everyone, but for the average homeowner, they will get a superior project out of the relationship.
No, you’re misreading my intent. My projects are of good quality. My point is that I can drive good prices by doing some of the planning legwork. My contractors know I can take care of certain details. I get discounts from them also because I am flexible with them. But you always have to watch them, and it’s a constant push-pull dynamic. And they can definitely be moronic and half assed. It’s more banter back and forth as they know I pay on time and am reliable. They think I’m cheap and I think they’re half assed sometimes.
When you deal with contractors you’re outside the money equation. Your clients pay a different sum for the organization and more professional process. I make my money by bypassing that.
I hate the idea of renovating for flipping, as it just takes too much energy for haphazard returns. I prefer longer term projects whereby I repurpose a building that I can keep long term. Hence all the effort is worth the hassle.
Ok, but I have absolutely no idea what you’re talking about.The people I work with including contractors and subs are never moronic or half-assed, and I would never refer to them that way. Ever.
You and I are definitely on different planets. Let’s just leave it that way.
To clarify a couple of points made earlier in response to some valid comments:
1.Of course, even a “savvy” (whatever that means) homeowner can take on any size remodel they choose. Architects didn’t learn to be savvy in architectural school, nor being savvy is a requisite for being licensed. I am definitely not savvy, I am experienced and trained with a particular skill.
2.I did not mean to say that my particular fees are percentage based. They are not. Once a Scope of Work is determined (after a detailed client interview) in writing, I then analyze the hours I believe it would take to produce all drawings, specs, reviews and meetings for that project. Those hours add up to a fixed fee. If the project costs more, or less, my fees do NOT change. The $50 or $500 light fixture does not make my fees change. Some architects are percentage based, I am not.
3. Of course, I would never advocate that a homeowner MUST hire an architect for their project. But I do believe that the scale (size/complexity) of a project has little to do with hiring one. Homeowner designed projects or contractor designed projects typically “look” or “function” in a way that’s not quite right. And that’s ok for some people. People who hire architects are those who value our services and expertise and are willing to pay for it. They understand that we don’t just “do drawings”. We solve complex problems, we challenge ideas, we listen to their initial idea and often expand on it and develop it into something that goes way beyond their imagination.
That’s how I work.
I’m simply being honest. I know many others with direct experience working with contractors agree with me…right here on planet earth.
Noearch, you talk like your work is at some high level like Zumpthor, Murcutt, etc. and then your website has projects that most would consider lower level design. I know quite a few GCs that could pull your work off with builder sets, to think otherwise is naive.
ok, Architect. thanks for your comment. If you really take time to read the comments by myself and others, you will see that the discussion is about process and relationships. We are not debating design.
You missed the entire essence of the discussion. I have happy, satisfied clients. I treat people with respect. That’s what matters to me.
i want to be on 45yo hipster’s planet. its called earth. once you’ve been thru a few remodels you know what needs to get done, when and how. so do the people who actually make it happen.
if you are inexperienced you certainly need help, but to say that your gc cannot provide that service is incorrect. a good gc is always busy-not so for an architect…
I do think that noearch is drawing a hard line but at the same time you have to respect where he is coming from with regards the perceived value he has of his service. I don’t think there is a service provider on the face of the earth that doesn’t have an unhappy client but you can certainly reduce the chances of that happening by having an extremely tight filter on who you do business with. And having a strong constitution and methodology is one way to screen your customers. I’d be willing to be that his jobs are run well and stay reasonably within budget. Could someone else do it for less and w/o his services, sure. 45 y/o hipster could probably do it with his half assed Vietnamese contractor for 10-40% the total cost. But look, not everyone has these skills or connections, or the time to manage these types of projects. I can certainly see that there are the types of people that need a guy like noearch and there are others that are satisfied with taking a different path. Maybe we can let this particular thread die and move back to the merits of renovations in general.
Here’s a sort of on topic question. What us the general consensus of dealing with time / materials versus fixed costs when dealing with renovations & contractors?
eddy – I’ve always gone with fix cost contracts. It usually works well though I’ve learned to include some time parameters in the contract. Otherwise there’s no incentive for your builder reach closure quickly. If something better comes along, they might go AWOL while “waiting for the plumbing fixtures to come in”.
Here’s another mini-real estate empire in flames:
136 Saint Francis Blvd.: NOTS 05/17/2010 – looks like they averaged a refi every year (World Savings, Cal State 9, Wells Fargo). Bought in June 2003 for $2 million.
286-88 Ocean Ave.: NOTS 7/16/2009. Bought for $1.3 million in 2005 with financing from WaMu.
San Mateo County property: NOTS 4/21/2010
PropertyShark is showing an auction date of June 22 for 136 Saint Francis Blvd (~$2.5million owed according to RealtyTrac).
Wow. I thought expensive places were more immune to that. I guess “extend-and-pretend-and-pretend-no-more” applies to everyone.