Yes, it is still possible to buy and renovate property cheaply in Brooklyn, as the Times story about Pamela Capalad and Brian Kushner last week showed. Twenty-seven-year-old financial advisor Capalad and 32-year-old musician and playwright Kushner, who goes by the name Dyalekt, in August closed on a two-family rowhouse in Bushwick that needs a lot of work. They paid $190,000 for the property, a short sale, and borrowed an additional $145,000 with a 203K loan to gut renovate the place. As we mentioned last week, Capalad has been blogging about the experience here. We thought they would have some good insight into frequently asked questions on this blog.
BS: How do you find short sales and foreclosures?
PC: We quickly realized we shouldn’t spend our time on foreclosures because most listings required all cash offers and just getting the listings themselves cost money. Short sales we found all over Trulia. We weren’t even necessarily looking for a short sale, it just happened to be what was available in our price range. D: We weren’t looking for an investment property, so short sales were more in the periphery of our search. We didn’t want to get our hopes up, lest one of the
googleplex googolplex of things that could go wrong, went wrong. In order to survive a short sale, you must do all of the research (all of it), ask every question (add a grain of salt to all answers), and be prepared to take charge of things that everyone said wouldn’t be your problem. (Or, as Randy Savage said, “Expect the Unexpected, OOH YEAH”)
BS: Are these kinds of properties still available?
PC: We started looking in 2010, but ended up purchasing in 2012. It’s funny that you ask, actually, because Brian and I have been helping a few friends with their house hunt. They told us some of the addresses they had been considering making offers on and it turns out that I had looked at those exact houses back in 2010 when they were significant gut job. Now these same houses are fully renovated by investors and selling for $200,000 to $300,000 more! D: These properties weren’t available then either. While waiting in line for Shakespeare in the Park tickets, we randomly met someone who also just bought a home in the neighborhood. He was in contract for our house before we called about it. He didn’t want to deal with the renovation loan madness. We figure he unknowingly helped set the starting price for our own negotiation. PC: I wrote a blog entry about it here.
BS: How did you find your architect and contractor?
PC: We found our architect through our expediter, actually. He was able to professionally certify the plans, which means he put his professional stamp of approval that the plans are perfect an don’t need to be reviewed, which means we didn’t have to go through the DOB review process to get the plans reviewed, which usually takes months. (It also meant it cost an additional $1,000 to get the plans done on top of the existing architect fees. I’m not going to lie though, it was worth it!) Because the job is small, he hasn’t needed to be super involved, but has been really responsive when he has been. We found our contractor through our 203K HUD consultant. This was a real challenge to find because a lot of contractors don’t like how the 203K loan payout is structured and don’t want to deal with the paperwork. It was also pretty touch and go because the fact that we were also doing a short sale meant we had to get a contractor approved by our bank before we were even sure we were getting the house from the seller’s bank! D: “Short sale” is from the latin “Shortesis Salian,” which means “everybody gets a guarantee except you.”
BS: A lot of people on this blog would say $145,000 seems low for a total gut plus new facade. (Although there are a few who would say that’s too much!) How are you able to keep costs down and yet do so much, especially with an architect and filing fees?
PC: I think part of our low renovation price tag is the fact that the house is pretty small — it’s just over 1,600 square feet. Also, because of the 203K loan structure, pretty much all of our materials are required to be standard grade (very much “budget” material!), so we’ve been working hard to find little ways we can push the materials budget to still make the house unique. After going through just this first part of the renovations, though, we definitely think we could have used another $50,000! D: Six figures is still a lot of money. Luckily we both know how to finagle. We’ve had to make some compromises (no bidets or solar panels or Escher stairs), but we maintain that our house must still feel uniquely ours.
BS: As owners of a vinyl covered house ourselves, we are always interested in hearing about other people’s facade renovations. Did you consider Hardiplank, real wood, shingles or using the original exterior under the siding?
PC: The vinyl siding was actually another victim of our budget. Our contractor budgeted for the cheapest vinyl siding available, so that’s what we had to go with. Our options were literally, do we want to keep it white, or go with another color? We actually have a number of painter/artist friends who do murals, so we went with the white siding and we are going to have our friends paint murals on both the front facade and the sidewall. We’re hoping the sidewall could become a rotating mural gallery and art space for the neighborhood. D: I prefer my vinyl on wax and getting scratched, but we can’t all be Huxtable comfortable. One day, stones of brown.
BS: What is your vision and plan for the interior?
PC: I wouldn’t say we have so much a clear vision as broad strokes. We decided on a very dark hardwood for the whole house and will be working around that. I think we plan to put a ton of art on the walls and keep the “stuff” minimal. We do have a working theme for the kitchen: We want it to be vinyl/music themed, based on these light switch plates and this cuckoo clock. D: Like Shaq on the mic, we’ll be walking all over Black Mamba. I’m really excited to finally have a space for all the amazing art we’ve collected over the years. I’m even more excited at the prospect of matching furniture.
BS: What are you tackling this coming week?
PC: This week, the plumbing should be ready to be inspected, the electrical should be done, and the framing should be done. Our contractor has an issue with the subcontractor he used for the framing, so he ended up having to do all the remaining framing himself. Hoping they can put in the insulation and close up the walls by the end of this week or early next week. I think then we will really start to feel like the house is coming together. D: My band Deathrow Tull is leaving for a SXSW tour in about two weeks, which is a mite stressful considering the doneness of the renovations. I’m moving out of my apartment at the end of the month, and hoping I have a home to sleep in when I get back.
Photo by brokeMC
02/25/2013 11:00 AM