Scotland was our 15th real estate purchase, and also our 3rd residence. As I always say, I consider ownership of your residence a real estate investment like any other. However, I also (always) say that you do need to approach it like an investment. You want to try to find a good property, that could maintain itself as a rental if need be, and that has some opportunity for value increasing improvements.
BEFORE & AFTER
First off, I’ll admit that I broke my rules a little on this one. This house was a good investment and has plenty of long term upside, but I spent some extra money on renovations I wouldn’t have done if it was a strict investment. But we’ll get to that.
To go back to the beginning, we saw this property on Zillow while we were planning our quick escape from Austin TX. If you are not familiar with that story, you can read about it here.
Anyway, we saw this house on Zillow, and it looked like it could be cool, but needed some serious updating. What was really fantastic about it was that it was in a stellar location and walking distance to the town. So we had our realtor go down and take some video.
The video confirmed that there was a good amount of work to do. During this time they had reduced the price from 535K to 525K. We were planning on visiting Dunedin in the coming weeks, so we decided to make a bold move.
We offered 425K all cash before even seeing it. This price was based on what we thought the house would be worth fully renovated, less our rough estimate on renovations, and then less a little hopeful profit.
To our surprise, they countered at 440K, and we settled at 430K. So we lined up an inspection for two weeks later, when we were going to be there. We went in and met the inspector and checked out the house.
Luckily we loved the house overall and the location. We just had to decide if we wanted to do another renovation. I was literally finishing the one in Austin at the time…so I was kind beat. But in the end, we did it (obviously).
We spent about 235K on the renovations, but basically have a brand new (old) house. New windows, HVAC, plumbing, electrical, kitchen, two bathrooms, landscaping…everything! As I mentioned above, we also probably spent an extra 50k on stuff we may not have done if it were a flip.
We did mange to add some SF by converting half the two-car (tandem) garage into a laundry room…adding about (sellable) 240sf. The top of the market could support a price of 350/sf or 785K. I think minimally it would sell for $725K. I do also think the house will appreciate well beyond average over time.
That said, we love the house and think we will be here for a while. I’ve decided to keep the cash in the house, but was able to get a 500K HELOC if I decide I want to put the money to work elsewhere. I should have dropped the whole 500K in the S&P in March 2020…man that would have been awesome! Oh well:(
(I still own this property)