Construction/Rehab in the Bay Area - What are you doing/seeing?

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600 sq. ft. is the answer for CSJ. Adding additional bed and bath is a common theme in the last 12-18 months. With prices so high now, new construction is variable again. Homebuilders are taking the approach of building less houses with higher profit margins.

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I also want to post this unrelated note. If you have a master degree of any kinds or higher, you can be a broker at no time. No need to have 3 or 5 or whatever years of a Realtor experiences. Many people in Bay Area are highly educated. Go for it if you want to be a broker!

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I knew a flipper who turned 2/1 into 3/2 in 3 months. No structure change. They just turned a laundry room into a new full bath and a den into a bedroom. They got the permit over the counter. Bought at $600k, selling $800k.I was told that it is easy to get a permit if the addition is under certain square footage in San Jose. Do your research.

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How about this one? I just saw somebody bought the 3rd lien for 143K, and there is about 300k of equity it this condo. The condo was built in 2000, so probably needs some cosmetic updates. Pretty good flip if the owner cooperate with cash for key.You have to be very careful as buying junior liens can be very risky & you need to keep the senior liens current so they don't foreclose. Also, if the senior liens are neg amt loan, then the owing principle might be higher than the original loan amount.Anybody bought second liens here? Please share your experience.StageRadar IDStreetCityZipStateTypeSq FtBedsBathsSale DateEst. ValueEst. BidSold to 3rd5114696241150 FOLSOM ST # IT3SAN FRANCISCO94103CACND120011.0009/02/2014$899,551.00$143,809.00

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I know the old saw in Real Estate is location, location, location and I think that makes sense in a lot of ways. In practice, my experience in residential RE is that the mantra should be location, size, and sex appeal. The location of a property cannot be changed. The size can (often) be changed. The sex appeal can always be changed. In San Francisco and other high price towns, the planning environment is strongly biased towards preserving the status quo. Residents don't want new big houses if they are happy with a neighborhood of small houses. Residents don't want cute craftsman homes knocked down to build Dwell boxes. Buyers though, do want big houses and do want Dwell boxes. For a developer the question is how to give the buyer what she wants in an enviroment adverse to change. You can't change location.You can change size. That's easier to do with an addition than demo. Real Estate pricing comes back to $psf. Add square feet, you add value. You can change sex appeal. In Andrew Eaton's thread someone posted a link to a house in Pacfica that was recently flipped in a short time with only cosmetic improvements. A great short term turn. This is relatively easy to do (though good deals are not easy to find!). In San Francisco, this process is yielding lots of older houses that are pretty and original on the outside and inside have very austere modern finishes. For example, at the very high end: http://www.2040jackson.com/If anyone is interested in flip/remodel trends here, good places to start are socketsite or sf.curbed.

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I met a couple of Rehabbers in San Jose that were snapping up 2/1's and spending 12-16months to add the extra 1/1 on it, and selling at crazy profits. They wanted money partners but I got scared away because they are riding an appreciation wave, and overly improving the properties. But I do like the idea of increasing value by adding sqft and utility when doing long term higher profit flips.

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Nice to e-meet you @Kyle Zaylor. I'd love to get together with some fellow Oaklanders. Let's make that happen!I'm seeing that the increased housing prices are making new construction viable again, especially in an urban infill situation where you can get the land at a good price. In the easy bay, I'll echo @J Martin, definitely seeing more second story additions, and other creative ways to turn the surplus 2/1s into 3/2s.Down south is another story. I've seen more tear-downs in Palo Alto this year than I can count. Also full basements because the square footage doesn't count toward FAR or max lot coverage.

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This is all anecdotal but I'm getting a sense that new construction, while time intensive in some sub-markets, is becoming a more viable option for those that meet the risk profile. I've heard of and seen a few too many developers aggressively looking at multiple tear down opportunities and simply getting priced out of deals by a retail buyer (or many) that can pay all cash, come in with little/no contingencies, and have a short due diligence period. These scenarios are mainly in North Bay and Silicon Valley markets (but they also seem to be common Bay Area-wide). Others are having to find creative ways to develop available vacant parcels. For those that have gone through several Bay Area market cycles, I'd be curious to hear about what commonalities and differences this current cycle has to previous ones. There seems to be a general consensus that this current market is hot (likely an understatement). However, I wonder if there are characteristics, tendencies, and trends emerging that are moving you towards or away a specific strategy.

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I just learned today that Oakland over the counter permit is 1000sf and under from a developer. Please verify it yourself.

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Based on my limited exposure to the new construction space:Big time builders/developers are building at $70-90/sqftInstitutional restoration companies rebuild at around $100-125/sqft High-end prefab is going at about $150-190/sqftMulti-family prefab is going at $140-220/sqftWe have bids for high-end customs ranging from $210-250/sqft (just building to shell). All of that makes building so much more viable now.