Real estate investor Justin Pierce writes an occasional column about his experiences buying, renovating and selling properties in the Washington area.
On May 18, I’m scheduled to finalize the sale of my District Heights house. While I hope to make a good profit on it, turning around this property was more complicated than I originally thought it would be. But now seeing the final product and getting a good offer, I know my hard work was worth it.
When I first saw the single-family, bank-owned District Heights house last summer, it wasn’t in too bad of shape. My offer had been accepted and I began planning the basic work that needed to be done on the property — painting and upgrading the kitchen, bathrooms and carpeting.
But that changed after the derecho storm. I drove out to take a look at the house and found that the neighbor’s huge oak tree had fallen over, crushing the roof and knocking over the chimney. The hole in the roof let in the rain, buckling the hardwood floors in the living room.
I sent one of my best contractors out to give me an estimate on the work. He said it would cost $20,000 to make the repairs.
I informed the listing agent and asked that the price be reduced by this amount. But the wheels turn slowly when you’re dealing with a foreclosure. After weeks had passed, the bank came back with an offer to take $5,000 off the price. Meanwhile, the home sat completely unprotected through rain storm after rain storm.
Eventually, bank officials informed me that they would take the $20,000 off. But by that time, the house had extensive water damage and I needed a total of $25,000 off the price.
Eventually they accepted my offer of $70,000. I finally closed on October 15.
Then the hard work began. My team tore down the kitchen and bathrooms to the studs and completely renovated the spaces. They replaced the hardwood floor in the living room with a pre-finished Brazilian cherry, which was extended to the kitchen. The hardwood in the rest of the house was sanded and retreated.
They updated the outside AC unit and the main furnace and installed a new water heater. They replaced the electrical system, insulation, interior and exterior doors and all the windows.
They rebuilt the chimney and roof structure and replaced the roof shingles. They replaced the drywall in the living room and painted the entire interior. They finished the basement by building a family room, bedroom and a laundry.
They cleaned up the lot and added some landscaping.
The work took close to four months to complete. There were several hold ups because the chimney plan had to be reworked several times to satisfy the building inspector.
Within two weeks of listing the property, I received four offers. It’s under contract for above its list price of $198,000.
If everything goes according to plan, my investors and I should walk away from the closing with a profit of about $40,000.
Coming Saturday in the Real Estate section: A look at which home renovation projects can yield better returns in a resale.
Justin Pierce is a real estate investor based in Northern Virginia.Follow him on Twitter at @justinpierce1.