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Saturday, March 31, 2012

Flipping Houses in Atlanta - Major Rehabs (3/3)


These series on flipping houses in Atlanta is about the different types of rehabbing and flipping opportunities you can find in this great city. In the first post I talked about the suburban areas located outside the Perimeter. The second part was about the opportunities within the City.

I did not go into the details of flipping in the suburbs because I have tons of that in the Flip That House page. In this post I wanted to go over a full rehab project in the City.


In the previous post I talked about Aaron McGinnis** and the rehab projects he does in the city. So for this post I wanted to go into detail on one of his projects.


Recently he bought this property for $74k in the East Lake
part of town: 


The house was originally a 2 bedroom, 1 bathroom at 1,200sft from 1947. It was on the market as a short sale and the previous owners where an elderly couple that had been unable to keep up with the maintenance of this house…for decades it seems:

 
  
Since Aaron is not one to think small he and his crew proceeded to tear off the entire backside and roof. Then added square footage towards the back and added a whole new 2d level. None of the original floor plan was preserved and he had to add additional foundation reinforcement to support the new 2d story. 
 

After all was said and done the final product looked like this: 
 


As you can imagine he needed an architect for the plans, an engineer to approve it and LOTS of permitting and waiting around for the City of Atlanta to approve everything. Then he and his foreman proceeded to run all the crews needed; from concrete and framing to drywall and flooring.

In the end though he had himself an amazing house with 2,300sft., 5 bedrooms and 2.5 baths, brand new everything, designer cabinets, granite countertops, hardwood floors, loads of crown moulding and high end finishes …

 

When all was done the house recently sold for more than $320k...Yep, do the math on that one yourself…There is definitely a profit here but also it’s important to understand that the whole project took a long time due to the complexity, permitting, etc.


Needless to say this is not for beginners but what I want you to see is the numerous possibilities for flipping houses in Atlanta. There is more than one way to skin a cat in this city…


Other things to consider when flipping houses in Atlanta within the city:


  • Typically houses do not have garages. They might have driveways or carports.
  • Both lots and houses tend to be smaller than outside the perimeter.
  • Walking accessibility to parks, restaurants, stores, coffee shops and downtown areas are a HUGE factor.
  • In lower priced areas being close to public transportation (train/bus) is important. In the higher priced areas is still a plus.
  • “Trendiness” of the area is important. You will see that there are some areas that are more “hip” and “trendy” than others. This will be important to single and young buyers that have a good income and want to stay in the city for the social aspect of it.
  • The permit process and dealing with the City can be a royal pain in the @$#... You need to factor in the cost/delays in weeks of waiting around for permits and inspections.
In all honesty I really like flipping houses in Atlanta inside the city because it’s challenging and interesting and the possibilities are endless. However, I have stayed away from it because as you can see the risk is significantly higher – more money, more complex projects, more uncertainty. On the other hand there is a lot of opportunity here because there is mostly no new construction, the population keeps growing and this is where the jobs are in Atlanta.

**If you are interested, Aaron McGinnis with Craftbuilt, Inc. can be reached at 404-788-3625.

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5 comments:

  1. Very neat project! The finish both inside and out looks incredible. Who does all the color picking and mix and match of materials and finishing touches? Do you hire a designer?

    ReplyDelete
    Replies
    1. Greg, I will let Aaron give you more details but he does a good job of envisioning the final product. I know he hired an Architect for the design of the house and he also gets help from his creative half (his wife ;-) ) for colors and other design features.

      I'll let him chime in with more details...

      Delete
    2. Hi Greg,

      We actually do have an in-house designer that we use. Yes, she is my wife. She's also a classically trained portrait artist with a serious vocational bend towards interior and exterior design.

      We (I should say, she) spends a lot of time putting together the 'visual texture' of these projects. For example, she has about 80+ paint samples sitting in a closet that get pulled out to figure out exactly which paint to use.

      We buy a lot of material from the internet. During this project, as lights, faucets, and other fixtures arrived, my living room looked a lot like a shipping warehouse. We actually had sections labelled "Receiving", "Lighting", "Plumbing"... well, you get the idea. We also have a rented (climate controlled) storage space we use if we run out of room. (Right now we have about 11 projects running concurrently, and having adequate space for finish materials is a serious issue)

      This project was very trim-heavy. Our designer spent probably a few dozen hours pouring through period design catalogs and bungalow architecture books figuring out the trim. (The dining room, for example, was lifted almost directly from a 1914 trim catalog)

      Then, the trim crew turned the house into a mill for about a week. (Normally a house of that size would be trimmed out in a day, maybe two. This one took about 7 straight working days... yes, it was a LOT of trim)

      The pictures of the bathroom show some creative use of granite elements (For example, we lined the shower door with granite pieces and had granite shelves in the shower wall soap niche)... this is a pain in the butt!! It requires careful planning all the way back to the framing stage of the project, and early involvement with the granite fabricator (The small pieces have to be on-site for the tile guy to work them in)...

      We can get away with this because we have close, tight working relationships with our trades... and can control the process from start to finish with a very precise touch.

      Delete
  2. So how much did it cost to renovate this house? I'm curious about the profit. $320 sale price, minus $74 purchase price, minus buy/sell fees and commissions, minus the cost (X) of doing the renovation, equals the profit ... so what value is X?

    ReplyDelete
    Replies
    1. Hey Paula, thanks for stopping by!

      I was not the author of this rehab so I don't have all the numbers. I will let Aaron chime in if he can. I do know that the buy/sell commissions and fees were low because of the arrangements Aaron has. Of course he still paid the 3% to the buyers agent.

      I am thinking that the entire rehab was in the six figure range but don't know exactly. After all this was basically a new home construction just using an existing foundation...

      Do bear in mind that what I wanted was to present what I consider an "extreme" rehab in Atlanta. I know of even bigger projects. The point is that flipping and rehabbing can be done at very different levels of complexity and $$...

      That is why I like this city so much, because there are many different markets!

      Delete

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