Just an Obsevation Regarding Time & Rehab

“Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish.’ --Luke14:28-30 NIV

I've recently completed another renovation on my personal home in the District of Columbia (aka Washington, DC) that took 3.5 months once the building started and 8 months before that to get the architectural drawings, permits, permissions (a step below a variance) and financing in place. This was just to replace the crumbling rear walls of the house (where the kitchen was) and add a bedroom on top of it. A neighbor started a project well before I even thought of mine, moved his family and still has not completed it. We gather he's going to try to make it a million dollar home (we've had one house sell for that in the neighborhood) to sell. Because his house has been gutted and vacant for well over a year the city is trying to tax him at the higher vacant/nuisance rate. When asked what is taking so long, money is the answer.

His isn't the only one. There is a flip in progress that I can see out my back door that is taking forever, something that started months before my construction did, that is still going on. The only thing they've added was a deck, most of the work has been inside, but they look close to finishing. It's Sunday and they are still working on it. The foreclosure was purchased at $500K, and the general prices for homes like that go for $750K-$800K, $900K if it is really special.

There is another interesting (has bold modern architecture) in-fill townhome a block or so away that has not hit the market. It's nearly going on a year and it has not been put on the market, the permits are still in the window, and it looks like work has hit a complete stop. It looks mostly done, and I don't know what's up with it.

I've been here long enough to see a lot of rehabs, flips and conversions as my previously scary sketchy neighborhood has gone from "up and coming" to arrived. The houses are old (100+ years) so they require work and I've seen too many examples of people who have gotten way over their head and ran out of money. Actually I remember a house where the investment group ran out of money when one of its members died and the house sat as a near shell, vacant. They tried to sell it for $500K, it eventually sold for $300K, finally got rehabbed but I can't find a sales record.

The many examples of many who could not complete their projects in a hot can't lose real estate market concerns me, as a one who wants to buy distressed properties to buy and hold. I have been very fortunate. With my house in Florida, it too is an antique (with asbestos shingles and all), I was able to make it a livable space with a couple of thousand dollars of work and new appliances. My own 19th century private home, with the 4 renovations, I've had the same contracting company do all the work and he's good at being good & quick when he starts. I'm also good about keeping on top of costs and constantly asking how much a change order is going to be.

I hope that when I do wade into Baltimore, or near Baltimore waters, I can keep the same ability to know what the costs will be so I may complete each project without ridicule.