May 30, 2006
Trying Not to Count My Chickens Before I Even Own the Eggs
While you don’t want to start fantasizing about a big payday before you’ve even closed on the purchase of a flip, you have to think about the resale value and profit to come up with a budget for acquisition and repairs. To the right is a summary
of the rough numbers I worked with to get to my original offer price. I’m hoping that every line is conservative and that I have a reasonable margin of error built in, but I have a feeling some of the numbers (like the rehab costs) might spiral out of control if I run into any unexpected expenses. On the other hand, I’m also hoping I low-balled a few numbers. The Target Sale Price, for example, was estimated based on the comps, but I have a (completely irrational) sense that the house is really going to shine when it’s all fixed up and break through the theoretical $399,000 ceiling in this neighborhood, maybe fetching something in the $410,000 - $425,000 range. Also, I’ve budgeted for 5% of the sales price to be lost in real estate broker commissions, but I’m contemplating going FSBO (For Sale By Owner) to pocket an extra ~$10,000. I feel like I’ve learned a lot over the course of the purchase process and could handle the logistics of selling the place myself, but who knows if I’ll be able to find a buyer on my own. I may go with a flat-fee service to get the place listed on the MLS and do some of my own internet marketing as well, but it might also be worthwhile to negotiate a discounted commission with my current broker and not take too many chances on my first project. At this point I’m just trying to convince myself that I would be happy with any four-figure (pre-tax) profit on my first project and treat anything below my target as invaluable experience bought at a discount.
I just posted another message at AT. I will convince you, one way or another, not to make any holes in that wall between the kitchen and the dining area. I’d be glad to email you all my endlessly annoyin…er…um…”helpful” suggestions. I already have the “ooooh, this is nice” feeling about the home, and you haven’t done anything yet. Not that I can buy it, unless you move the decimal point over to the left. Just one numeral is fine. hehehe. Please?
I have oodles of ideas, I always do, and would love to pitch them. I can also look up pictures of various rooms. Over on Better Homes and Gardens, there are tons of pictures. Also, you mentioned the kitchen cabinets. Please, PLEASE, do not paint them white. All it does is make a big mess for the new buyer.
If you’re considering replacing the cabinets, I’m going to recommend IKEA. Lots of reasons for that. Reason one, they rate VERY GOOD with Consumer Reports. And there are websites on just IKEA cabinets, like http://www.ikeafans.com/
Now, any buyer who chooses your home can then choose the style of doors they like the best for their new kitchen. And they can change the door style. You could even leave that part open, just have the boxes/bases installed, and have pictures of the various doors for the new owner to choose.
There are links on that page to take you elsewhere. There is a free IKEA kitchen planner that you can use on the IKEA site (Windows-only). Check it out and see what you think. Email me if you wish. Thanks!
I think Andree’s suggestion to allow potential buyers to select their own cabinet doors is a GREAT idea, at least to a certain extent. I, the hypothetical prospective buyer, would love the opportunity to choose my own cabinet doors. And I can’t imagine any potential buyer would be turned off by the idea or by the lack of pre-installed doors (assuming there is some sort of display in the kitchen highlighting the options available). However, is there a point at which this practice becomes detrimental to the flipper’s bottom line (does it cost more)? Is there the potential that a potential buyer would be deterred by limited options? I admit that I know relatively little about flipping, but it just seems as if it might not be worth the hassle.
Yeah, it might look “unfinished” to the buyers and might be a pain for the seller if ALL the right doors aren’t available. One of the things I suggest is to create a binder while redoing the house. Save those drapes that look undamaged, and let the new owners decide to chuck them if they want to. Save a picture of the windows dressed in those drapes, and put it in the binder. Put in the paint chips showing the color and manufacturer. Put in the brand and finish that was used on the floors.
No matter what color anything is, someone will want to buy it and change it, change something, to put their own mark on the home. So you can include a few colorized images, showing the kitchen done with white painted walls, soft yellow, neutral beige, etc.
The cabinet doors could be installed, along with the pictures of other cabinet doors from IKEA. With a comment saying “All these door styles will fit these cabinets” along with the specific measurements of the doors. Then if I wanted to pick up a new style, I’d already have all the measurements!
If you’re doing Benjamin Moore Paints, try to choose paints that also have the color sample jar available. When folks move furniture in and out, sometimes there’s a bang or ding, marring the new paint. Wouldn’t it be splendid to just reach over and grab the color jar to touch it up? Not having to worry if it will match or who made the color or if you have to repaint the whole room because you have no idea what color was used on the walls.
Now, you say, what the heck do I need to do a binder for, and have little stacks of jars of paint. People will breeze in, think it’s too small, too big, too SOMETHING and leave. You want them to stay. You want them to take their time, feel like they’re at home. There’s a huge psychological impact on them, the longer they stay. Especially if they see the possibilities.
You get some coffee and tea. GOOD coffee. GOOD tea. Some biscuits, some kind of sweet snacks that aren’t too messy. Nothing sticky. Get them to sit down with their beverages, their snacks, and the binder. Yes, this is what it would be like when you move into your new home. You can sip your beverage, have a snack, and read a book. Read the paper. Browse a magazine.
We can recolor the smallest bedroom to make it a computer/study nook. A nursery (it would be a swell nursery).
Basements make for GREAT entertainment center areas. The last thing you want on your TV is glare. And any music played will be muffled a bit by the underground walls. It can be a swell kids play area, for cold/wet months.
The dining room, besides being the library, could also be a guest room. Alas, there’s no bathroom on that floor. That’s the biggest drawback of that floor plan. And I don’t know if there’s one in the basement.
Go on some other house tours, and see what little extras they offer. Probably nothing. Give them something to remember, the binder, the at-home feeling, the details. They’ll remember. They’ll see you did more than the next home seller.
Thanks for all the great thoughts, Andree (and Darron). You may have me sold on keeping the existing, segmented first floor layout (I think tearing down the drapes and exposing some newly refinished, shiny hardwood floors will have a big impact on the light issue), but I’m a little less keen on the cabinet strategy. I like the idea in theory, but I don’t know if I’m ready to be that innovative with my first project. I think the customize-your-own-cabinets approach could be a great distinguishing feature when I transition to a project in a ritzier neighborhood, but I’m not sure the buyers in this area would be as impressed (it’s a text-book middle class street on the fringes of more high-end neighborhoods a few blocks away). I’ll post more pictures if I’m able to take any when I visit the house again this weekend. Closing is schedule for a couple weeks from now and that’s when all the real fun will begin…
I’ll plug in a few pictures as I find them that you could use for the binder idea, if you want.
This is one reason not to tear into that dining wall, folks may rather have a dining room buffet against that one solid wall: http://tinyurl.com/l69rf
If folks think the dining area is small, be sure to browse the rest of the above slideshow and print out as many pictures as you want.
Like the picture on page 4. That’s about the same size as yours. Picture 8, another example of colorful that would be splendid in your dining, note the corner cabinet that could possibly be used in that corner by the kitchen (where you were going to make a hole!).
Having pictures of somewhat similar sized dining areas (as well as the other rooms I’ll look up for you) will plant the seeds of creativity in the minds of potential buyers. You’ll be leaving the binder with them, so they can just follow along, creating a similar space if they want to. Picture 9 has a different, more contemporary look, and yet more ideas for the space. You can start with the nice wood floors, and let them decide if they want to replace or paint the molding white around the windows. And that style of dining room CAN be an extension of the living room, where people can gather for conversation, not just meals.
Look at picture 13. Doesn’t look at all like yours…or wait…well, just a molding to windowsill height, paint the lower half, draperies all around, cornice all around (maybe just the two window walls, eh?). Voila. Totally new room. Er, and new chandelier too. People need to see that the room really IS their style. No matter WHAT style it is they like. I see ALL those styles in your dining room.
Lots of ideas. And that’s just ONE slideshow. You get these people to browse that binder with those ideas, and you might sell the house to the first person you show it to. Makes it really convenient. Hah! And they’ll LOVE you for putting together all those ideas. They got not just their new home, but they got designer consultations for every single room via that binder of pictures.
You do that with all the homes you want to work with in the future, and you’ll get a reputation (a good one). People will be interested in knowing what Viridian is going to work on next and what kinds of ideas you’ll show them for the homes. You may have to chain the binder down though. It could get stolen.
Andree-
Where do you find the energy for all this great thinking? I think you need to find a similar project and channel all this creativity into executing your vision.
Wait. No. Nevermind. Scratch that. You should stick around on AT and other blogs dispensing your ideas for all on the interweb to see. That would be for the greater good. In fact, it would be downright selfish to focus on a project of your own. Keep the commentary coming!
The story has been told many times before. I hurt my back a few years ago, and now have horrible back/shooting nerve pain down my legs. Making me pretty much a living, cranky paperweight.
I don’t work. But my MIND is still fine. My mind does more than ever. It’s like seeing your rooms, or other people’s rooms, and it’s a fireworks explosion, with bright light ideas heading off in a 3-D space and I try to catch each one before it’s glimmering light goes out. I was on the BHG Decorating boards for many years. Doing what I now do a lot of on AT. Which is annoying people with long posts, and plugging in ideas and links.
I’m poor, so I won’t be focusing on any project of my own. I just like to leap into other people’s projects and give them ideas. They don’t have to use the ideas, just that I have so many pent up ideas that I’ll never be able to use, that they just HAVE to go somewhere. It’s not just the money. Stuff I used to be able to do, like wash the windows monthly and keep up with laundry including ironing just about everything, well, those days are gone. I guess the forecast was “greasy” from my view out the windows and the laundry seems to be turning into a compost heap.
But I tell you, giving this wonderful mind a little something to chew on, and the next thing I know, I’ve forgotten all about back pain, and I’m solely focused on visions of the room and all it’s potentials. I don’t have the skills to do everything I want in the Painter program, but a little attempt in that, and some links, and pretty soon, there’s a few ideas that might work for someone.
Sometimes it’s not even the person I posted the ideas for. A new person will post or will email me, saying that the link I posted or the ideas or the mock-up room is EXACTLY what they want to do in their home. Online, you never KNOW how many people you might be helping.
Hah. 135 people have looked at this picture I made using the posted picture on AT-NY in Hot or Not, and I don’t know 135 people. 135 people didn’t post. Who’s looking at the picture? The comment is from me, mentioning ideas and the kind of frame I was thinking of. People that looked at the message and followed the link, that’s who those people are. http://www.flickr.com/photos/96179754@N00/159068229/
After people have seen what I did, I generally take the pictures down, sometimes only the Balcony picture is there, because people shouldn’t get an empty page. The stuff that shows up there is linked to from the message boards, but isn’t back linked from Flickr to the message boards. Only the people who’ve visited before or read that message should be coming. And the pictures are done just for the person who’s home it is. Everyone else is welcome to stop by, but they are specific solutions for specific people.
Okay, so that’s the story. And all you have to do is print out the pages from the links, making it a lot easier on you to put together the binder. Each one should have a printer-friendly link on it (I think). I’m not sure if you can have the web address show on each picture, but that might be helpful too. So people know where it came from and can go browse at their leisure if they want to.
Do the top two bedrooms actually connect, or are those back to back closets (in the floor plan)? Is there a sloped ceiling? Here’s one idea for the smaller room, like I said, it would be a swell nursery, babies don’t exactly NEED a lot of space:
http://tinyurl.com/nax2b
Keep browsing that slideshow, again, more ideas. Page 7 has a view that would be similar to walking into the smallest room. Works FINE. Looks GOOD. That small room is the total bonus room on the second floor. That’s where the babies could go. Then they could be moved to the adjecent room if more come. Egads.
It would make for a splendid small guest room. Close to the bathroom, separated by closets from one room and not against other rooms. It makes for a great office too. Because it won’t disturb anyone, really. And the set up with the windows…PERFECT!!! You HAVE to point out that there is a window opposite every door on that second floor, and a couple of extra windows. You have mega-cross-ventilation when there’s a breeze.
I realize this space is much larger than the small room, but look at the IDEAS:
That room could be a great office for working at home, a great reading room. a great study room for kids or adults, has privacy to facilitate concentration and limited distractions. With the bathroom right there, you can even have a coffee pot up there. Hey, I’d never have to leave the second floor or that little room again.
http://tinyurl.com/qagl5 The small room as office could have a wall of shelves with the desk built in below. There could be a “chair-and-a-half” that folds out into a single bed, with matching ottoman to store bedding. Yes, be sure to note the built-in table that has a dog bed underneath. Nobody knows where to put the dog, and I think pets should be spoiled rotten.
Again, it takes the small room and turns it into something I’m positively bubbly and excited about. I wish I could show the home for you. LOL! The potential buyers would be saying “Gee, do you think she’s on drugs?” to each other as they decide how they want to pay for the house before someone else grabs their gem. Meanwhile, I’d be a whirling dervish in another room, spinning around madly saying “And you can do this or this or this and this and over here, notice this, which you can do that to, look at the picture here, people, come on, try to keep up with me here, and then LOOOOOK at the VIEWWWWWW and we could put flower boxes and ….”
Wait, I’m not done with the office. Here’s another one: http://tinyurl.com/gxs9p
Again, more bonus FREE stuff for that room. There’s an IKEA in N.J. somewhere. Online, IKEA has a FREE interactive tool for OFFICE PLANNING. This means you could make up a couple layouts of that small room, using IKEA products, and print out the results. MORE stuff for the binder. With the actual room layout pictured.
Oh, and let’s say you did go with french doors in all openings (kitchen/dining, kitchen/living, dining/living). What about the door to the basement? You don’t want to put on a french door there. Ahhhh, but what about a mock french door?
http://tinyurl.com/gkmos
Oh yes. That is what your view would be like from the kitchen. You’d have a regular french door next to the faux french door. The mirrored one would expand the space of the kitchen, just like it does in the picture above.
Back to the office. This is what happens when I browse. http://tinyurl.com/oo6db
That one is off a kitchen, and yeah, it could be done on the wall in the dining room. But again, I’m thinking of the small room (which I finally found in your pictures), against the door wall. It’s NOT a typical office feel. And again, you can put pictures and the chair and a half under the slanted wall, and hang pictures on the slanted wall (yes you can hang pictures on a slanted wall).
Are we having fun yet? I am. You?
Geez, ya know, if I could sit still and just write and not wander off around the apartment, the messages would probably be shorter. Anyway, made you a picture of the smallest room upstairs. I was going to do the chair and a half, but they’re like 4′ wide (including the arms!). Too big. Too big if there was going to be an office in there.
So I scampered over to JCPenney, swiped a chair, a rug, and a window treatment (even the wall color came from the page of the window treatment). The rug is drawn, not pasted. Can’t really see it under the chair. And the chair appears to be floating. Sigh.
But, still, look at your own picture and the one I did, side by side. THAT is the kind of stuff you can show people too. YOU don’t have to paint it cinnamon, or install those window treatments, and you sure aren’t going to be furnishing it for people. But that IS the room, and that IS what it would look like with new paint and a window treatment that is different. I don’t think you can actually get the chair to float in space, but it would look something like the picture.
With no further ado, drum roll please…..
Before: http://tinyurl.com/zgkyn
After: http://www.flickr.com/photos/96179754@N00/159880194/
I don’t know why, but the TinyURLs are not working. I will try to refind the above slideshows and post the direct links. What a pain in the butt. They were SUPPOSED to be “good forever” and they don’t work. None of the TinyURLs work that I found posted (by me). Maybe I’m “disabled” by TinyURL? I sent them a note asking about it. I’m hoping it’s due to some vindictive moron, rather than a total site failure, because then it would be just MY TinyURLs and the all the TinyURLs made by people all over using that service. Oh, gee, can you imagine? Says there are 20 million TinyURLs in use. That’s going to be a lot of annoyed people! Yikes!
Andree -
Thoughts on that little room have been great. I’m particularly stumped as to what I should do with that strange shared closet that links those two bedrooms. It’s not big enough to divide into two individual closets by installing a new wall where the current clothes rod is, so I’m trying to think of other ways to close off those two rooms from each other and still have some closet space in each room. I’m currently thinking about dividing in half and closing one side off in each room to make for two narrow closets in each room. Not a lot of space for people with big wardrobes though!