Posts Tagged ‘philadelphia real estate’

Recap of Home Renovation- #1 Choosing your architect

Taking on this project was a huge leap of faith for me. Doing a renovation of this scale (the amount of $, the level of renovation, the time and details required) was a first for me, but I knew that in the end it would be worth it. As I’ve shared, we were on the hunt for a house for a LONG time and we were OK with waiting. To recap, the first time I made contact with the owner was in the fall of 2016. Giselle’s friend lived nearby and my eyes were immediately drawn to how awful it looked. “Could this finally be the ugliest house on the block that I’ve been praying for?” I have no doubt that Jesus took the wheel (I love that term because it’s so true… I generally believe we have control over certain things but at the end of the day, I’m just working God’s plan for me)

At the end of the day, I’m grateful for the growth that I experienced throughout this journey. My process wasn’t perfect and I made some mistakes (expensive ones too!)- which I’ll share- but my goal at every “bump in the road” was to move forward.

One of my intentions for this project was to document and share the progress because a) I wanted to have this process together for future projects and b) I envisioned the transformation to be seamless! When B didn’t happen the way I envisioned, I was hesitant to share because I was mad at myself for making stupid mistakes. The reality is, sharing my mistakes may help others avoid them (and my goal this year is to impact the lives of 100 people) so I need to get over myself and just do it.

So I can’t do this all in 1 post, but I will highlight different stages- share what worked for me, what didn’t, how I moved forward and what I learned.

First thing I’ll share is my experience working with an architect. This needs to be shared since I learned a lot from this process because apparently I was not aware of this important distinction. Architect does not = designer. This isn’t the case for everyone, but the sole job of an architect is to build a house based on codes that need to be adhered to. Every architect needs to create plans for houses that adhere to a code, but design is not an element of every architect that should be assumed. So in essence you need to be really specific with your vision or provide a similar model/plan to work off of, in order to achieve the design that you have in mind.

After we hired our architect and as we were going through the process to get the plans finalized- and even while we were in the trenches of the renovation after plans were approved- there were a lot of things that I assumed would have been considered based on the incorrect assumption that architects provide design- the pitch of a roof, the placement of lighting, the flow of a room, the ideal space for rooms, bathrooms, etc. exact placement of windows and doors (the height from which the windows should be from the floor, for example) turning radius to get furniture in/out of the house. My assumption was that these things were considered in creating the floorplans and design of the house. It was only after we were in the thick of working with the architect did we how much double and triple checking we needed to do. There are firms that provide this component, but when selecting your architect, be clear with your expectations on what should be provided and have it in writing. I didn’t know what to compare and honestly (as stupid as this sounds) I didn’t interview a lot of people because it was someone I knew. In the end, I am at peace with the choices I made. We spent a long time finalizing plans for various reasons, but I think the main one was that I expected much less back and forth because I expected more knowledge of design from the architect. Next time, I know that I will need to be really specific with expectations or expect to pay more money and factor that expense in at the purchase.

And to make clear, this isn’t a post to bash the architect I worked with because there is a possibility I would still work with them and there’s responsibility in my actions as well. My intention is to share what my expectations/assumptions were, how they were incorrect- and what I learned from that process so that I can avoid the same mistakes when I’m selecting an architect in the future.

Building intentional partnerships

I was hesitant on putting my past projects up here because I felt like what I’ve done in the past doesn’t align with what I’m looking to do with Legacy Collective going forward- but this is how my Legacy started so now I feel inclined to share it because it’s part of my journey. The point of me sharing this is so you can gain an understanding of my track record. Most properties that were purchased required building trust with a potential partner or investor. Going forward requires me to do much of the same- but I look to be more intentional on who I partner with.

Here’s a few highlights of deals I’ve closed over the years:
Track record

Pay attention to the numbers, which are circled in red. I share this because getting into real estate doesn’t mean you need to have deep pockets. Most developers aren’t using their own money to fund their projects, and even if they are, you need to know that it isn’t the only way. There are many things I love about real estate- the potential to impact lives with what is created, the ability to give me time to be with my family and being able to use it as a vehicle to build generational wealth- which for a lot of people, feels so far removed and not even a possible. But along with this, comes the possibility of creating financial freedom to spend time with those who matter most and do the things that make our lives more meaningful- AND you don’t need to be a landlord or rehabber to achieve any of this. People keep their careers and do all this without crunching numbers, managing contractors, etc.

– Have you thought of investing in real estate as an additional stream of income but don’t know how to get started? If you haven’t, have you thought of building an additional revenue stream but can’t because your time is committed to your job and you can’t possibly take on another thing to do?

– Would you call yourself a socially conscious consumer? Are you mindful about the brands you buy because their goals and mission align with yours? If so, have you thought that you could also be a socially conscious investor? That money that you invest (whether it’s in real estate, an investment fund or some other vehicle) can support socially conscious businesses, while you receive a return on your money?

I’d love to hear from you even if none of this relates to you or is on your radar. Don’t hesitate to reach out if you have questions or just want to connect!

Antiques Roadshow Meets Hoarders!

Before this long post, let me get this out of the way. Pls take a look/share this link with those who you think would be interested. It’s the online auction for many of the antiques that were included in the sale of the house we bought in January: https://bit.ly/2IqmHYQ

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So it’s been 2 months since we closed on our future home and I thought it’d be a good time to post an update since I feel like we’ve made some decent progress.
When I made the offer, I thought I had an idea of what I was getting into, since I’ve seen it before. Buying a house full of stuff, where there was literally no room to walk is something that is pretty normal for rehabbers. The owner emphasized that there were a lot of antiques that I could resell, but there was no way for me to know the value of everything prior to making the offer and prior to buying the house. Because there was so much stuff, I’m not sure there are many people who would take the time and money to go through all the contents to sort through the trash and valuables, without actually owning the house. In addition, he was on a time crunch. The fact that we had been in touch for over a year, it took a really long time for him to trust me and it would have taken him just as long to develop the trust of another potential buyer. I honestly had not walked through the entire house to see what was inside prior to closing. There was no room for me to go up the stairs, so I just assumed it was full of stuff. The owner understood that and it was decided he would remove any valuables prior to closing and that everything else left behind was ours.

After we closed on the house, I did emphasize to him that if there’s anything in particular that he was hoping to keep, to let me know. The only thing he mentioned was his taxidermied dog! He ended by saying to not worry about giving anything, “at this point to me, it’s a gift.”

So, normally any developer who buys a property full of stuff usually goes in with the intention of trashing everything. Getting a dumpster and clearing out a house is a quick process- when receiving quotes for the cleanout, I was getting told it would take a few days at most. But the people who walked through told me a lot of the items could be salvaged, donated or resold. I personally don’t like the idea of just trashing everything. I understand from a developer’s perspective why it’s done. There are a lot of holding costs associated with rehabbing and every day that adds to the timeline of a project affects the bottom line. Since we still needed to work on getting architectural drawings in place, there was no rush in our opinion to clean out the house. We didn’t need it cleaned until the house was ready for the work to be done, which was a few months. So it was decided that mostly my husband (with the periodic help of myself, family and friends) would spend our “open time” on the weekends getting rid of the trash and sorting through what appeared to be valuable. Not to mention, that trashing everything is so wasteful, which didn’t make me feel good. To me, the less that I could keep out of the landfills, the better.

Going through everything was definitely gross. But there were so many cool things that we found. We couldn’t possibly take pictures of everything. But there were so many moments when we’d hear each other say “WHOA, CHECK THIS OUT!!” Paintings from the 1800’s. Leather bound 1st edition books of classic authors. Sconces- lots of sconces. Lots of silver. Lots of period furniture. French antiques. Signed porcelain pieces from Japan and China. Issues of Time Magazine from when JFK was assassinated. Lots of American and Pennsylvania history books and collectibles. Persian Rugs. When we initially went through the stuff, we thought the previous owner was just a hoarder of antiques. But probably after a month, we found some letterhead and receipts and learned that he owned an antique shop. Mind you, the items have been sitting in a vacant house for a LONG time. So we weren’t sure if there was initially any value since lots of items were in bad shape. However, there were lots of items that were in very good shape. Here are some pics of a few items we found:

After feeling like there might be some valuable stuff in the house, we sent a few pics to auctioneers and antique buyers and got some strong interest. But we didn’t want to set up time with various people and have them pick at everything. We wanted to get as much out as we could at one time. Additionally, since we had an idea that the items were valuable, we didn’t want random people to go through the house- and possibly let others know so that they’d just steal everything.. I know, I am a little neurotic and think about these things! And how do we know that if we got offers on these items, that we are getting a fair price? Do we get the items appraised and then sell them off to a collector? I would imagine 1 appraiser wouldn’t be able to accurately appraise all of these items. And once they’re appraised, it would need to be stored somewhere- which would cost money every month. The financial return to do all of this would need to be worth it for us to go through a process that could possibly take months.

We were not expecting this and it was quite the process- figuring out what we do with all this stuff. Asking for referrals to connect with appraisers, antique collectors and buyers. We paid a consultant to give us some advice, who told us we probably couldn’t get much because of the condition of the items. (Insert the theme music from “The Price is Right” when a contestant loses right here.) Here we thought we had some items that lasted over 200+ years and because they weren’t preserved properly, they’d die with us! I hated that feeling. But she gave us a few names of some local auctioneers, which is how we got connected with Michael Locatti.

Cisco was the one who managed this process of sorting through the trash and setting aside the items that appeared to be of value. And after he got through almost all of it, I had to do some aggressive nudging…. I mean… nagging- to make sure we scheduled auctioneers to walk through and give us their opinion, prior to being out of town for over a week. The first person who walked through was Michael and he immediately hit it off with Cisco. Cisco called me immediately after he met Michael and he seemed overly excited. I’m thinking… “This is the first person you’ve met. We probably should talk to other people.” But a huge reason why Cisco felt he was the right person to handle all of this was he immediately felt like he could trust him is because his wife is Filipino. Ha! Really though, he could tell that Michael saw value in the items and a great communicator. I needed to get on the phone with this person and see if I get the same feeling as Cisco did. And I did. Basically we’re asking someone to go through a house full of treasures and hopefully they won’t steal anything that could potentially have a lot of value. Through his experience, we could tell that the reason he has been doing this for years and gained the trust of handling some prominent estates because he was able to establish himself as a trusted resource. It’s a huge undertaking- to gain the trust of someone and build a team that you in turn trust as well. His team has been with him for years and in talking with them, they all have really great things to say about each other.

We liked Michael’s diligence to get the items out of our house as fast as he could. After that first meeting on a Saturday, he had his crew removing stuff from the house for the 4 days following our initial meeting. He took everything that he thought would be worth it to put up for auction. Now, there are still a lot of things left at the house that we could sell off, donate or keep. We decided to keep a few items- which is quite the treasure for us! It’s really gotten me to appreciate period furniture- and how these items have lasted for over 100+ years. My next step is to find out how I could use what’s left over in a way that feels modern.

Finally, since we received this “gift” we decided that after all is said and done- we’ll be taking a portion of the proceeds from the sale and will be donating it to a charity of the previous owner’s choice. He had a lot of people interested in buying this house, who would have likely paid more, but he stuck with me. He knew what he was doing, and we are extremely grateful!

To Buy or Not to Buy?

So a few people have asked me my thoughts on whether they should rent or buy. Generally speaking, most people come from a mindset that you should own a home as soon as you can vs. renting and paying someone else’s mortgage.

Which is absolutely true, to a degree.

Here’s a fun flowchart that makes deciding a little too easy:
Should I Rent or Buy Flowchart: Business Insider

And a couple of recent articles on the topic:
Should I Rent or Buy a House? Marketwatch

In This Floundering Housing Market, Should You Buy Or Rent? Forbes

So before I start talking about this in more detail, I’ll put this out right now… I’m RENTING! (gasp…shocker!) 😉

There’s a lot of backstory behind that which I’ll save for another post, but long story short- we owned a place in the city, sold it at a loss and rented in Philly. When the time came for our daughter to start school, we had the opportunity to rent a house behind our closest friends. We had to pay minimally more (around $100/month more than what we were paying in Philly) to be in a bigger house, a better school district and behind our closest friends. So we hopped on it.

Now, although we rented our primary residence, we actually did buy/sell houses during the time that we rented. So we didn’t truly waste all of our money paying someone else’s mortgage.

Renting our primary residence has offered us flexibility that was extremely important to us. I’ve always known that I didn’t want our family to come across the need to move (because of school or work), and then have a hard time selling a house. Between my husband’s job, the kids starting school and being a city girl, we weren’t ready to decide on a place where we wanted to “plant our roots.”

Which leads to where we are today- after almost 6 years of renting- we might actually buy our primary residence.

Mind you, I’m being extremely selective on where we buy, knowing that whatever it is- our goal is to plant our money there and have it be a source of income for us. For example, if whatever we buy is worth $350k after all repairs, the plan would be to stay as close to $280k as we can, leaving around 20% in the property that will grow over time, as the mortgage gets paid down and using those funds to rehab/sell.

We’ve decided that whatever we end up buying, we want to:

1)Not pay retail. This means that whatever we buy, we will likely do a lot of work to it, which may include expanding it, allowing us to add value. This also means that if for some reason something happens and we need to sell, paying below retail will give us some room to price our house lower than the market so that it hopefully sells quickly.

Oh and by the way, just because you are offering less than asking price, does not mean you’re getting a deal. I don’t care if the house is an REO, foreclosure, short sale, etc. I won’t give a lesson here on how I calculate the value of a house, but what is considered to add/take away value to a house varies depending on your local market.

2) Buy in an area that is steady or growing, not just one that we can afford and the house fits our needs

3) Buy in an area where renting the house out will allow us to cash flow, giving us an extra source of income and equity line to tap into in order to re-invest.

So why all the criteria? Mostly, it’s the timing of everything. I’m not a financial advisor, but I understand real estate enough to know that buying a house just to buy because it sounds nice and not seeing how that house fits in with my long term financial/life plan is not ideal for me. Additionally, if all these criteria aren’t met but we get a homerun deal for a big house that probably wouldn’t rent out because renting, we are OK with that because we know we would be able to sell it.

I must share, the biggest benefit of buying your primary residence- is not having to pay capital gains tax- which you would have to pay on the sale of an investment property. You can sell your primary residence and avoid tax on no more than $250k in profits on the sale if you’re single, $500k if you’re married.

So how does this apply to you? What if you want the flexibility of renting, but want the benefits that come along with buying? Here are a few ideas:

1) Buy a multi-unit and live in one of the units.

2) Rent where you live and buy a property in an area that cashflows enough to cover the majority or all of your rent payment. For example, if you’re renting a place for $2k/month, consider buying a property that generates at least $2k amount in rent that you’re paying + more for cash flow- ideally $2500

3) If taking advantage of your local real estate market sounds appealing to you, but you feel it would take a bit of time to understand your market in order to make a move, consider partnering with an investor you trust or has been referred to you, who has the real estate experience you lack. And do your homework on them. You can generate extra income using funds you would have used to buy a house and instead, just lend on a project.

Well there you have it. Now hopefully I didn’t get you more confused on whether or not you are ready to buy!