Sorry I’ve been gone so long.  I’m not sure where the time went.  I just wanted to post a quick update on Mesa Verde.

The house was leveled on January 9th.  They started digging holes and setting piers on the 5th so it was really quick.  The first week of January we worked on taking down trees, electrical rough-in, and site clean-up.  We started the roof tear off on January 11th, and we had weather delays on January 16th, the afternoon of the 22nd, the 23rd and the 24th.  The entire back of the roof has been shingled and the upper roof on the left of the house is completely shingled front and back including the ridge cap.  We have 12 more squares to tear off, tar paper and roof and we’ll be done.  This roof was 40 squares, for those of you new to roofing a square is 100 square feet so 40 squares equals 4,000 sf of roof area.  We’ve used about 3 sheets of plywood to repair rot, installed 4 vent stacks, and filled about 2/3rds of a 10 yard dumpster.

A roofing crew would have been able to tear off and install this roof in about 3 days.  We are considerably slower because there are only two of us and we don’t roof full-time.  In addition, I have a fear of falling so I’ve been harnessed up most of the time which inhibits my speed somewhat.  The main reason we decided to take on the roof ourselves is that after you have a house leveled you need to wait 1 month for it to settle back down before you start work on the interior or you risk damage to your newly installed work, so we had some down time that we could devote to the roof.  We have some fascia repair to complete and we need to restructure on roof overhang area before we are ready to roof the remainder of the roof but we’re hoping for to complete the roof by next Friday.

The following week, (2/6-2/10/12) we will be installing a new sliding glass door, pressure washing the house, painting the exterior of the house, and re-pointing the limestone.  With the exception of building the deck, repairing a few screens, site clean-up from the storm we had last week, and some minimal landscaping that will wrap up the exterior of the house and we’ll be ready to move inside.

I haven’t posted any pictures because at this stage of the project it seems like we are making the house look worse rather than better but progress is being made.

Until next time.

Tamara

We’ve not been getting a lot of wins at Mesa Verde the last couple of days.  On Monday I removed the crown molding in the living room and discovered that the living room wall is as detached from the ceiling joists as the rest of the house.  We had the first foundation guy over and he said that he had been there three times and an engineer’s report was completed.  Essentially the house is higher in the front and sinking towards the middle.  This could get expensive.

On Monday Mark discovered the hard way that winterizing the pipes and a big old hair ball in the pea trap of a 33-year-old sink do not make for a pleasant combination.  From the retching and rapid evacuation, plus the lingering odor I must say I have to agree.  He also learned that water ants or whatever kind of ants live in moist areas like under the shower pan leave a nasty bite.

When we left Monday we had torn out the crown molding, sawzall’d out the shower pan and gutted both bathrooms.  The one positive note was we determined that we’d have enough room to put a bathtub/shower in the master bathroom instead of just a small shower stall.  This is good on two fronts, the first is that I discovered first hand that sometimes you really want a bathtub in your master bath, like when you have house guests and just want to get away.  The second is that even with a tile surround a tub is less expensive than a cheap shower stall, and the reviews are much better.

Tuesday I got over my fear of the sawzall and demo’d the closet in the master bath and the frame for the master shower stall.  Once we opened up the space Mark determined that if we put in an angled linen closet instead of a rectangle I would feel less claustrophobic walking in the bathroom door.  An added bonus is that we don’t have to move the door to the bathroom.

Our big accomplishments on Tuesday were opening up the master bathroom, putting a temporary patch over the gable end vent to block one security threat, and capping some of the water lines, we’ve got a few more to go.  We’re capping the lines so we can turn the water back on without risking flooding the place.

Our plans for today are to repair the top of chimney where the mortar has eroded, cut the tape at the top of the walls in anticipation of getting the foundation repaired and maybe if I have a big enough spray bottle I’ll start scraping popcorn off the ceiling.  We are kind of limited in what we can do because the foundation repairs can wreak havoc on finish work.  We really can’t start any interior finish work for one month after the foundation has been leveled.  So it’s exterior work, rough plumbing and electrical.

In my past posts I sounded so confident, but we’ve had the house less than 24 hours and already things are starting to slip out of control.  Here is a video of the house so you can get an idea of what I’m facing.

So the first thing that happened was when then copper thieves stole the copper from the electrical panel the damaged the electrical panel.  I knew about that so it wasn’t that big of a deal, what was a big deal was that the lines from the meter box to the new lugs were too short.  We spent most of the day yesterday trying to sort that out.  Luckily, the answer came to Mark when he couldn’t sleep last night.  We added some lug splices and a few feet of 3/0 wire and we’re good to go.

Today, I cleaned the gutters.  This is kind of like rearranging the deck chairs on the Titanic, because we know the roof is bad, but we got a lot of rain last night and I figured I could see how the water was running.  Bad news all but one of the gutters are pitched the wrong way so the water doesn’t run towards the downspouts.  We will need to rehang the gutters and 2 or 3 more downspouts.

The biggest blow of the day was when we were staring at the ceiling in the Alice in Wonderland bedroom (once we get some light on in the place I’ll post some pictures so you can see for yourself why it’s the Alice bedroom) we noticed that the ceiling joists aren’t actually resting on the bearing walls in the center of the house.  It’s like the center of the house has sunk.  Not good.  That’s a much trickier fix that reinforcing the exterior of the foundation.  Not much we can do about it now, we’ll meet with the foundation contractor on Monday and see what he recommends.

We did make some progress today.  We cleaned the gutters, took down the basketball hoop which was acting as access into the house for the copper thieves, changed the locks and secured the house, and got the electrical panel hooked up so the power company can turn our power on.

Monday is all about demo.  We’re going to demo the master bath and the paneling on one wall in the master bedroom and take down the crown molding in the living room.  Hopefully this will give us the ability to more clearly see what’s going on with the ceiling joists.

As we get more of the house stripped down we’ll have a better idea of what we are facing and I can develop a project schedule.

I’ll keep you posted.

I’m on pins and needles waiting for Mesa Verde to close.  The closing is scheduled for December 15th, wow that’s tomorrow but I feel like I’ve been pulling teeth with the Title company.  This is a cash transaction so blissfully I don’t have to wait for the mortgage company but I am so ready to close this thing.

I really want to get started on the project I’ve purchased some major elements, planned my color scheme and I know what needs to be done but now all I can do is wait, right?

Well not exactly, there are a few things that need to get done before I can start the project.  First and foremost I need a project schedule.  I have a budget which is one leg of the stool, I have a plan which is the second leg, now I need a schedule.

What’s the difference between a plan and a schedule?  A plan is like a mission statement, it’s the overall vision for the project, what it’s going to look like, the major activities that need to be completed, and a tentative completion date.  A schedule on the other hand is a detailed lists of tasks, activities, and dependencies with times attached that will get me from point A to point B and tell me realistically how long it will take to get there.  For instance, my schedule will show that I have to build in a 3 week delay from the completion of the foundation work to the installation of the drywall.  My challenge is to find tasks that are not affected by the foundation and complete those in the lag so the whole project can move forward.  I’m struggling for a good analogy to explain the difference, I guess a plan is like the satellite image on google earth and the schedule is like the road map.  You can get a general idea of where you need to go by looking at the satellite image but it would be pretty hard to navigate to a specific address with it.

I would argue that most renovation projects fail because they are managed with a plan instead of a schedule.  Hands down the most expensive part of any project is time.  Labor costs money, downtime is money spent for nothing, and opportunity costs and holding costs are silent killers that many first time renovators and sometimes veteran renovators fail to recognize.  I would also argue that building a project schedule and maintaining it is one of the most difficult parts of a project but trust me it is critical.  And yes, I know it’s boring and painful which is why I haven’t done it yet.  The official project start date is Monday so I have until then to build a schedule.

Stick with me, over the next few days I will take you through the nuts and bolts of building a project schedule and some of the tools that I use to manage a project.

As promised here are some of the places to look for bargains:

1. The clearance section of big box home improvement stores.  My Home Depot has two end caps and often discounts pallets of flooring back in the flooring section in addition to having some lesser bargains up front.
2. Warehouse clubs like Sam’s or Costco you would be surprised at what they carry for instance Sam’s has a dual flush toilet for $99 and laminate flooring for $1.43 a square foot.
3. On-line specialty stores especially for things that are manufactured overseas and purchased in bulk like door hardware.
4. Amazon.com sells everything and you can compare prices for what you’re looking for on one site.
5. Ebay, I never would have thought of this but Mark told me about it.  You can score some great deals if you hone your auction skills.

When we last spoke, I had just filled you in on the process for completing my budget for Mesa Verde.  I envisioned the house as a vaguely Spanish style, family friendly house.  The house has a huge living room and four bedrooms, a limestone fireplace, tile floors, dark cabinetry and a dark front door with a glass and black wrought iron half-lite. Because of these features I decided the house had a vaguely Spanish vibe and I decided to go with it.  I envisioned oil rubbed bronze or black fixtures and lights, dark wood floors, white walls, etc.  I was planning on staging the house with comfortable contemporary furniture and lots of red or burgundy accents.  The reason I work so hard to come up with a theme for a project is two-fold:  1.  it helps to ensure cohesiveness throughout the house which makes a house feel more comfortable and inviting, and 2.  the plan provides a framework and a structure for purchasing everything for the house.  When re-doing a whole house at once it is amazing how many decisions I have to make.  If I don’t have a focus it would be very easy to purchase a door that doesn’t match the others in the house or a light fixture in the wrong finish.  If I were competing against other resale properties this wouldn’t be a problem, after all while living in a house updating tends to happen one room at a time, it’s a constant work in progress.

However, I’m not competing against resales, I’m competing against new construction.  I want my properties to command the premium that comes from everything being done and blending seamlessly together, at least for this one brief moment in time.  You see when I’m selling a house, I’m not selling a building, I’m selling a home, and a dream, and a lifestyle.  I want people to walk into one of my properties and see their best lives (to steal a line from Oprah) because that is what someone wants to buy.

After I built my spreadsheet of all of the interior materials I started pricing everything.  I gather prices by going to physical stores and internet searches.  Once I located all my materials and entered them into the spreadsheet I discovered I was over budget.  So I made some changes, I changed the finishes from bronze to nickel, the tile from porcelain to ceramic, engineered wood flooring to hand-scraped laminate and a bunch of other decisions that didn’t affect the quality of the house but did affect the cost.  Making these changes reduced my budget for the interior about 20%.  So I had my new budget.

But I’m still not satisfied.  Why not?  Because the budget I have arrived at is based on retail prices, and I think I can do better.  Contrary to popular belief, contractors aren’t able to purchase things at 50 – 60 percent off retail prices.  We are able to get better prices by buying in bulk and frequenting the same vendors over and over, but our savings are really only 5 – 10% on most items.  I don’t count on that 5 or 10% in my budget though because it helps offset the cost of things that are impossible to quantify, like screws, that really add up.  So how can I reduce the budget further?

Many contractors reduce their prices by purchasing off brand or lesser quality materials known as “builder’s grade” that look the same as the higher end materials but may have cheaper components inside or are mass-produced in China for pennies on the dollar.  I don’t do that, I refuse to put anything in one of my project houses that I wouldn’t put in my own house, actually I usually put better materials in my projects than what I put in my own house.  What do I do instead?  I go bargain hunting.  Tomorrow I’ll fill you in on some of my secret shopping techniques.

Yesterday I told you that our offer on Mesa Verde was accepted, today I’ll tell you the first thing I do when I get a house under contract.  In Texas we have an “option period” this is an amount of timed spelled out in the contract which you offer a specific amount of money for, typically $5 a day for a 10-day option period, although the holders of a foreclosed property usually offer a free option and some homeowner’s will accept one as well, which gives you that amount of time to walk away from the deal for any reason just by forfeiting your option fee.  The option period is the reason I was able to make an offer on the house so fast.  I told you that I use a quick estimating tool when I’m evaluating a potential project, actually I have two, one is very simple and just takes care of construction costs, the second is more detailed and includes desired profit and carrying costs in the calculations.  (If you e-mail me at tamara@3dogproperties.com I will send you a free copy of my spreadsheets.)

The first day that I saw the property I was pushed for time so I walked through very quickly and then I entered what the items that I saw needed repair into the spreadsheet.  When we all walked the house the following day everyone noted different things that needed repairs and then we plugged those numbers into the spreadsheet as well.  This step ensures that I was still in the ballpark for making a profit if I sold the house at a certain price.  At this point, I also try to figure out who my target audience is, the eventual buyer of the home.  I try to reconcile the style of the home with the potential buyer so I have a design direction in mind, this decision affects the finishes which drive budget.

The day that we received notice that our offer was accepted we went back and walked the property once again.  This time I was attempting to compile a material list.  This is how much of everything I would need to complete the house.  I focus on finishes and nice to haves because the necessities are non-negotiable, and they cost what they cost.  One page of my list looked like this:

1. entry set w/deadbolt (1)
2. garage set w/deadbolt (1)
3. privacy set (7)
4. passage set (7)
5. 44″ vanity guest bath
6. 36″ vanity master
7. vanity mirrors (2)
8. kitchen sink faucet
9. bathroom sink faucet (2)
10. tub/shower faucet
11. tub drain assembly
12. shower only faucet

I have search parameters set up in the MLS (multiple listing service) system to alert me as soon as any houses that meet my criteria go on the market.  My criteria is based on number of bedrooms and bathrooms, location, price per square foot and list price.  I had been scanning listings on and off through the summer but we had remodeling projects so I wasn’t to serious about it.  Around the end of October I was wrapping up my last remodel project of the year and figured work would be slow until the 2nd quarter of 2012 so suddenly I got very serious about the search for a property.  I selected 10 or so of my best prospects (none of them were all that great truth be told) and went to look at them.  I narrowed it down to 4 properties and took Mark (my brother & superintendent) to look at them.  We narrowed it down to one property and I went to work.

The first thing that I do when we decide on a property is a really quick cost estimate.  I have a tool that I use that allows me to determine the highest price I should pay for a property.  I used the tool and made an offer below asking price for the house we decided on.  The house was a foreclosure owned by Deutsche Bank.  They rejected my offer and countered with a price that was too high.  I made a different offer, they rejected that one as well.  (The house is still on the market and is now listed for less than my first offer, banks are weird) Depressed I rescinded both offers and tried to figure out what we were going to do next.  This was on a Wednesday.

On Friday I received an alert on my phone about a price change on a property that I had on my watch list.  I had pulled it when it was listed at $99,000 but I didn’t go look at it before because it didn’t seem to meet the parameters as well as the others.  The alert was a stunner, the price was dropped to $74,900.  Suddenly this property was a must see.  Saturday I went and looked at the property and put a full price offer in immediately after running the numbers and previewing the property.  I knew that I wasn’t in any real risk putting in the offer because the bank that owned the property offers a 10 day risk free option period.

The next day I brought Mark, John (husband/retired crew), and the Investors (otherwise known as Mom and Dad) to look at the property.  Everyone thought it was a good bet.  So we let the offer stand.  On Monday we received news that there were multiple offers.  I let my offer stand and sweated until Wednesday, when the other Realtor called.  By this time I had pretty much convinced myself that we didn’t get the house so I was shocked when the Realtor said “you got the house”.  Apparently my offer was lower but it was cash and cash talks, thanks Investors.

So we’re scheduled to close on December 15th although I’m trying to speed things along.  Over the next few days I’ll post a video tour of the house, go over the plans for the renovation, and the steps we take while we’re waiting for the house to close.  Once the house closes the fun will begin, I’ll take you on a day by day journey of resurrection and restoration.

  Yesterday I talked about how I had a vision for the company of providing affordable housing.  Well like many first time visionaries, I stumbled on my first attempt, (the 2nd and 3rd attempts as well truth be told) I did buy a cheap house, and it did have a lot of problems.  It was also in a middle to upper middle class neighborhood and the neighbors really need it fixed because it was affecting the property values of the whole neighborhood.  So far so good.  Then things really went off the rails.  I had a vision of what the house was supposed to be.  I had a vision of who the buyer would be.  And I based all of my decisions on what I would want if I were living in the house.  And none of those visions matched my business plan or my vision for the company.  Finally, I made the worst mistake of all, I ignored what was happening in the market.  I bought the house in August of 2008, and finished the renovations in March of 2009.  Yep, right at the beginning of the biggest real estate slide in my generation.  I’m a realtor, I had no excuse for not watching what was going on in the market and recognizing the beginnings of a stagnating market in October, November or December of 2008.  But my attention was elsewhere, I was busy with the renovations and I had a vision that would not be denied.  And come hell or high water I was implementing my vision.  Which I did: Unfortunately, it came at a price.  When I initially was running the numbers on the house I thought I could sell it in the $225,000 – $250,000 range but it took 5 months to sell and I ended up selling it for $198,000 and taking another property as part of the transaction (which I really lost money on).  However, I am still in the renovation business and here is why:  1.  This first project was really an amazing project (click onto the “Renovation” page for slide shows of the before and afters  2.  While I lost money on the house that we took as partial payment for the Cedar Hills House (mainly because of a change in focus halfway through) I renovated and sold that property in 4 months, after less than 2 weeks on the market, validating my original business model, and 3.  I really loved the whole process of renovating a house.

This process is what I intend to share with you on this blog.  You see 3dog Properties is right at the beginning of another project “Mesa Verde” and I want to share the journey with you.  We’re supposed to close on the property on December 15, hopefully sooner and I want to take you with me.  Misery loves company right?

Yesterday I told you a little bit about how I came to a place in my life where it seemed like a good idea to start a residential investment and remodeling company.  Before I get to the nuts and bolts of how I got started and what we stand for I should mention a couple of other things about myself.  First my husband and I renovated four houses before I jumped into this business and second, my professional background is in construction management.  I had almost 20 years’ experience doing commercial layouts, designs, and managing the construction projects for large companies.  So I had an in-depth knowledge of the construction process if not a lot of hands-on experience of working with the tools.

As I mentioned in a previous post we moved to Texas to a foreclosure we purchased site unseen over the internet.  It was so bad we needed to stay in hotels for 6 weeks until we had the place habitable enough to move in.  This is a loose definition by the way, I was still showering and cooking outside when we moved.  This relocation provided me with the time and the money to think about what I wanted to do next.  My husband suggested I get my real estate license as a way to learn the market and get a first look at any deals that hit the market.

I did just that, I spent about a year and a half in a local brokerage office learning the area and the ins and outs of the market.  I still hold a real estate license, and despite popular wisdom I still find my deals on the multiple listing service.

I had spent a lot of time thinking about what niche I wanted to fill.  I knew that I wanted to provide the opportunity for people in the lower and middle classes to be able to own their own home.  I wasn’t interested in the high end properties.  I wanted the run down properties in safe working class neighborhoods.  I wanted to provide quality materials and workmanship at an affordable price.  I was going to achieve this by purchasing properties at a modest price and keeping the cost of my remodels affordable by smart shopping, good planning, and affordable labor rates.  At least that was the plan.

Tune in tomorrow for a taste of what actually happened.