Monday, January 28, 2013

HOW TO: Hiring a Contractor Series - Part 1


So you are ready to remodel your home but you have heard multiple horror stories about contractors leaving your house a mess or not finishing the work that they started. Well my friends, I am here to help! I am going to give you the lowdown on hiring a contractor, getting great results and with an experience as enjoyable as possible.

Let's face it, remodeling your home is not going to be rainbows and unicorns! It is an invasive process, and if you live through it you need to be prepared for some stress associated with the process. Demolishing existing materials and fixtures, covering and moving furniture, and dealing with lots of construction dust is inevitable. However, if you are aware and prepared for this ahead of time and your contractor is considerate of your personal space, you will get through it and end up with the beautiful home remodel of your dreams. 

Over the next several weeks this series will provide you with some insight on how to hire a contractor and get the best results! 

  • Ask around town for referrals. This is one of the best way to find someone reputable; however you can always find someone through advertisements. A contractor who has invested in advertising their company and has a web site and/or various social media outlets is most likely here to stay. Look for an updated web site, Facebook page, Pinterest account, Blog, and/or Twitter account. Basically look for investment in advertising beyond a Craigslist post (there is nothing wrong with Craigslist... but it shouldn't be the contractors only source of advertisement). 
  •  If you are calling a contractor from an advertisement make sure to ask them about work they have previously done and if they have a portfolio to share with you. For example, Investcove makes 'before and after' videos of their completed projects. Demonstration of work gives the client a visual and provides a portfolio of work in process and available to be viewed at any time. If the contractor does not have anything to show, keep searching.
  • Make sure they are licensed and insured. There are laws in place to protect both the homeowner and the contractor, however, no laws will protect you if you hire an unlicensed person or company. A contractor should be able to provide you with their license, worker's compensation insurance or exemption, and general liability insurance. If your contractor does not have these items, you need to find one who does. 

Blog post by Aja De Los Santos, GM & Head Designer at Investcove Properties

Monday, January 21, 2013

The "F" Word

Not too long ago I went on a little vacay with my husband and some friends from grad school. We drove down to Key West for the weekend for a little R&R. It was a group trip and so there were some people there I had never met. One of the guys (a friend of a friend) asked me what I did for a living and I explained that in addition to working with clients renovating their homes I also worked with investors who purchased distressed property, renovated it, and resold it. He thought it was pretty cool and said that it was something he was actually interested in doing. Another girl I hadn't met before, his sister, overheard this and got up from her sun bathing position to vehemently rip me a new (((you know what)))! "You FLIP houses?", she said. I said, "Yes".

Her stance on "FLIPPING" is that it ruins the market. She proceeded to lambaste me, explaining that "people like you" hurt the market. She continued to state that we are the reason that the market is the way it is today. While I believe that everyone is entitled to their own opinion, I must respectively (unlike her retort) disagree.

Look... in any business there are bad apples. People who do not do the right thing and make the majority of people who are doing the right thing look bad. This is true in contracting, real estate, and every other industry. And then there are those of us who stick by a sound code of ethics and go about each day ignoring the negative and believing there is good in the world. However, some people wear their opinions on their sleeves or shove them down other people's throats. So, I tried to reason with the girl from Key West but she did not want to hear it.

My rebuttal... house "flippers" for lack of a better term, actually help the market. We do not take houses away from people who could otherwise purchase them with a home loan. Why? Because people who obtain a mortgage for their home purchase cannot purchase the types of properties that we do; these properties would never pass an inspection or appraise for a fair market value. We are not buying houses that need some paint or maybe some carpet replaced. We are buying houses that are in severe disrepair or have specialty issues that a normal home buyer would have no idea how to fix or even where to start. For example, the last house we purchased had: no floors in one of the bathrooms; open electrical wires throughout the entire house; no electrical panel to regulate the power; multiple roof leaks; and no functional showers or bath tub. Additionally, it also had a dangerous and structurally unsound exterior with multiple holes in the walls. When all was said and done the house needed to be completely rewired, re-plumbed, in addition to several structural repairs, with renovation costs over $100,000.

So imagine a street with ten houses, a nice neighborhood with two of these houses in foreclosure. Since the people who lived in them before the foreclosure were experiencing hardship they did not have the opportunity to invest money into their home for a very long time. Vacant houses, exposed to the elements without care from anyone fall into disrepair very quickly. Not only can this bring crime and vandalism to a neighborhood but what is happening to the property values of those other eight houses? They are falling, and quickly, because now the neighborhood is in decline due to the foreclosed, vacant homes.

Here is where the "flipper" comes in. Investors are people who have cash. They are able to purchase the property, renovate, and resell it. Because a cash buyer does not need an inspection or appraisal in order to purchase the property they are able to purchase a house in any condition. Most investors look for a ten percent return on their investment. This means if they put $100,000 into a house they would like to make $10,000. When you think about the time, money, and risk involved, ten percent is a very fair return on investment. This differs for every investor of course but from my experience this is the norm. So they will purchase a house at a discount (as compared to market value), because it is in disrepair and then renovate it, and resell it at fair market value. The neighborhood is now stabilized without the possibility of additional price drops because the foreclosed homes have been renovated thus all of the houses on the street are now at the same standard (relatively speaking).

Look... I am not trying to claim Super Hero status here, this is a business like any other business. The investors I work with are looking to make a profit; however, they also assume a lot of risk and they have a solid moral compass. They choose to turn a quality product without cutting corners. They have experienced profits and losses like any other business, but in almost every circumstance the house is sold to someone who finances the property with a FHA or conventional mortgage. They were able to purchase a house that was completely renovated, passed inspection, and appraised at fair market value.

My argument with this person fell on deaf ears. She had her opinion and was sticking to it! I felt bad... I was trying to defend my passion but to her I was the bad guy. At the end of the day it doesn't matter what other people think, you have to do what you love with strength and passion. So the moral of the story is; house flippers are people too and no matter what others think you should never let anyone get in the way of your passions and dreams. Cheesy but true!

Blog post by Aja De Los Santos, GM & Head Designer at Investcove Properties

Friday, January 11, 2013

Where it all began...

This old ranch style home was abandoned...discarded just like an old pair of running shoes. I try but cannot understand why people treat their houses so poorly. These wood or concrete structures start out as houses but become our homes. We LIVE in them, we create families, marriages, babies, and memories. We leave them to travel and explore but we always yearn for that familiar feeling of home. Coming home from a long day of work to my home, my sanctuary, or as my husband says, "our sacred place", makes me happy.

The abandoned three bedroom, two bathroom house had no flooring, no kitchen, no air conditioning, and to many people who looked at it, no potential. This was the first home I purchased for myself to live in... and at 21 years old I had a major project in front of me. My friends called me crazy but I had a vision and knew that I could make it a home.

My family had been in the construction industry for many years. All of my uncles on my mother's side of the family owned and operated their own businesses and they learned the trade from their father, my grandfather. Thus, I was a third generation family member with building and design coursing through my veins. At this time I worked for a construction company handling all of the accounting, payroll, financial reporting, and helped organize the project managers and construction schedules. I guess it really was in my blood because I enjoyed watching projects go from conceptualization to realization. I would watch 300 plus single family home communities being built at an alarming rate but without creative focus. So, once the structures were up, I started to pay close attention to the finishing details, often wondering why builders weren't more involved in what I thought was the most interesting But, these builders were rushing to finish to move onto the next job. They were more interested in getting the project done quickly and as inexpensively as possible. In their speed, they missed so many design elements that would benefit the buyer tremendously yet still wouldn't cost a lot of extra money.

So...back to the ugly brown house in the above picture. When I purchased the home I had decided that I would renoavte it little by little starting with a new air conditioner and some flooring. Whenever I had enough money to add something else I would. The next project was windows and doors, then the kitchen (I did dishes in the bathtub for quite some time), the new bathrooms, and finally the exterior. The process to most would seem frustrating and annoying but I found it fun and exciting. I was amazed at every transformation and how much the house would change after each new installation.

Finally, the finished product. When my friends and family saw the end result they all said the same thing, "Wow! I would have never had the vision for this!" This of course was quite a few houses ago and there have been many design challenges and lesson since. However, this small ranch home will always hold a special place in my heart because it was where I discovered my love of transformation. 

I continued to work in the residential and commercial construction industry for several years. I would occasionally purchase a home and renovate it then resell it. What set me apart from other "house flippers" was that I would really think about the end user and how they would live in the home for years to come. After too many years in a taxing South Florida commercial construction industry, I knew that I was not happy and it was time to do something I would truly love. I decided to find partners to work with and started to purchase distressed properties, renovating and reselling them as a full time career. 

Today, I continue to work in the distressed residential renovation and development market with my investors who insist, and with whom I agree, on turning a profit with a quality product. Additionally, I assist individual clients/homeowners who want to develop their own renovation and design visions. With my background in high end construction and real estate and my connections to obtain exclusive materials and have it expertly installed, I am able to create homes, not just houses, and on a budget. 

I love what I do. I learn something new everyday. This industry is both challenging and satisfying and my work days are filled with hard work and passion. And at the end of the day, I am able to go home to my own "sacred place". 

Blog post by Aja De Los Santos, GM & Head Designer at Investcove Properties