Say hello to our little friend! We have approval from the city to add square footage to the Aloha house and are in the construction phase as we speak.
I want to apologize for not posting more but we have 5 properties that we are buying this month
and have been as busy as one-legged man in an ass kickin contest.
In addition my wife and I are in Mexico for my best friend’s wedding until next Monday.
It was a much needed break and thanks to technology there is quite a bit I can actually do while gone but it really comes down to teamwork and poor Nick is grinding it out in the office while I start my first leg of my trip at our ocean front suite with a jacuzzi on the balcony, at the all-inclusive resort called dreams Puerto Vallarta.
When we got Shannon aka Aloha house under contract we noticed that the city records had only 2 bedroom 2 baths and 1775 square feet even though there was clearly another room above the garage.
This and the fact that the rear of the property was obviously added onto at some point made us go to the city to do a little more research since we were not willing to buy a 2 bedroom for the price we were under contract for.
We were fortunate enough to have a co-operative (bank) seller who gave us permission in writing to go down to the city to pull permits (the County of San Diego will not let you pull building records without the owner’s permission and many lenders specifically state in their contract that you agree not to contact the city about the property.
Brad went down to the city and once he got through the usual red tape and double talk was able to find out that in fact the whole structure was permitted. And
even better news was the fact that 1775 square feet did not include the room above the garage but that the room above the garage WAS permitted as a 320sq. ft. rec room.
Since the rec room was not under the same roof it did not count towards the square footage and was considered just a rec. room.
So long story short and a bunch of time in between we found out that the only way to permit the room above the garage and turn it into a bedroom was to attach it under the same roof..
Well since the seller stated they were selling a 3 bedroom 2.5 bath when it was really a 2/2 we pulled out the old 1,2 punch hail mary. ( We told our agent up front that we were not going to buy it for the price. We were under contract for because of the reasons above and let him know that we could either back out or try to get a credit but didn’t want to jeopardize his relationship with the other agent. He said let’s go for it).
Okay here is the 1,2 punch which is risky in the sense that you will spend some money, time and potentially lose the deal. (I told the agent up front that I was not buying this deal for the price. We were under contract for so this was not a surprise to him.)
- Get a professional building inspection
We get inspections on many projects before we buy them because It does a few things
- Sees things that I may miss
- Helps me come up with a list of items that are easy to fix but can scare buyers. I add this to my scope of work and I require my contractor to have these items fixed before his last payment. I bring the inspector out one more time before I put it on the market and make sure the work the contractor did was okay and have the inspector sign off that I completed the work.
- I give the building inspection and my termite report to any buyers before I let them put in an offer, that way they can’t come back and say they want a $5,000 credit because the electrical is not grounded. By giving them the BIR they already know this before they put in the offer. Remember a buyer can negotiate the price down at multiple stages, as a seller you get one shot, once you’re property is tied up the price never goes up.
2. Get a bid on the work that needs to be done in writing from a contractor, submit any information you gathered from the city the sellers maybe didn’t know about (now they need to disclose this info to the next buyer since they now know about it) and justify a price reduction.
This is risky because it takes a lot of time to do it correctly and not just look like your a grinder which only pisses people off and will make them say no, just because they think you are full of it!
So we submitted a bid and in addition Nick wrote a great letter (since he is smarter than me) demonstrating the reduction in value a 2/2 has as opposed to a 3/2
(about $14 per foot over the last 1o years). Here is a quick snipit asking for a $40,000 credit.
Okay so I digress (I write like I think. All over the place so bear with me).
We submitted to the city with plans to add 2 bedrooms (by adding closets to the œrec room above the garage and to the dining room since there was plenty of room to make a living/dining room) and one bathroom to the œrec room.
Well we got approval just after Christmas. By adding 2 walls, 40 square feet of roof and $6,000 dollars / $11 per sq. ft. we were able to go from 1775 sq. ft to almost 2,300. Not bad considering the average price per square foot is over $250 in the area.
Next time, I’ll tell you about some of our new projects and some pretty cool stuff we are doing including another place that we are able to get about 500 sq. feet added just by adding a garage which will give us about $100,000 in extra value!
Stay tuned to the same bat channel and no particular time except when this one toothed man in a corn-on-the-cob eating contest dude gets around to updating this site.
12 hours and I’m off to our second leg in our adventure, Cabo for our friends 40th birthday!
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