Hillcrest is the second residence that my wife and I bought. Our first one, 5th Ave, we owned for 10 years. We bought 5th Ave prior to the 2008 bust, and saw it go under water for a while. Eventually it came back, though, and far surpassed the original purchase price!
BEFORE & AFTER
In 2014 we had enough equity that we could sell, combine the proceeds with other cash we had saved, and buy a house in a neighborhood that would better suit our future needs (namely better public schools and more walkable).
As I think everyone needs to do when buying a residence, we assessed the properties we were considering from an investor's point of view. We always look for what I like to call a “live-and-flip” opportunity. This is where you find a home that has clear value to be created, and you make mostly moderate renovations over the time you live there.
This house stood out to us for a quite a few reasons. First off, the price we (eventually) paid was, on a per square foot basis, well below similar homes in the area. It had room to grow in the short to mid term.
Another reason the house peaked our interest was that while it had been recently updated to a decent degree, much of it was done with bare-bones Home Depot materials. It was also only redone about 75% of the way. So, the house showed “weirdly” as it was, but much of the heavy lifting of improvements (like an updated kitchen, new carpets) had been recently done.
Additionally, this house was built with a strange concept. It was a four bedroom, with three bedrooms upstairs, along with a very large “upstairs rec room” that had open look-downs to the living room below (which made no sense). The fourth bedroom was located downstairs.
We could see that this rec room could easily be converted to be great master bedroom with soaring ceilings, thereby making it a sellable 5 bedroom with little work! We did that work, and then went to the county to have it officially converted be a 5 bedroom, so that it could be listed as a 5 bedroom when we eventually sold it.
There was also a mechanical closet adjacent to the master that contained the old heating air handler and the hot water tank. The house needed AC, so we had that upgraded, and then moved the air handler into the attic. We also moved the HWT to the garage and opened this space up to the new master for a “hers” walk in closet (you can see the door to the closet open in the photo).
Beyond that, we also saw a relatively easy opportunity with the official master suite. The master “bath” had an enclosed toilet and shower, but the double vanity was literally open to the room (like 1800s style, see photo).
We were able to enclose it all and also make a small closet. This allowed us to convert the master closet to an upstairs laundry room. This was not only massively more convenient, but it gave us the space to convert the downstairs laundry into an office.
We also did updates to both full baths in the house. We replaced the fiberglass showers with tubs and white title surrounds. We also replaced the floor tile and simply painted the existing vanities and kept the counters (which weren't our favorite, but we learned to like it).
Cosmetically speaking, we painted a lot of the interior, fireplaces, cabinetry and beams. We also replaced all the light fixtures and most cabinet hardware and so on.
For the floors, we finished installing engineered hardwood across the areas where the previous owner had decided to cheap out. And we also redid the floating (carpeted) staircase to a closed step staircase with hardwood (it was also safer for our new baby).
There are a handful of items that actually needed repair as well, which we received a lot of financial credits for at purchase. The biggest project was an un-permitted (ugly) upper deck, which we decided to convert to a small master bedroom deck and much prettier pergola. We also had to repair all three fireplaces and both chimneys. Not anything major, but issues related to poor maintenance.
There also were a bunch of things we did, that I wouldn't have done if it were strictly an investment, but we did because we really wanted it. One was a major project actually. We added a 10′ window into the family room to add a lot more light into the house. You can see the “before” window in the bottom left of the photo above.
This improvement was pretty involved structurally and required pulling all the stucco off the back of the house. So we took this opportunity to put in a bigger slider and a bigger kitchen window with a nice granite pass through to the patio. All of these improvements were super satisfying (even though we still had workers in our house for days when we came home from the hospital with our baby boy)!
In the end, we spent a total of 145K on renovations. Though, I figure about 40K of that was for work that was not really needed for price improvement, but items that were important to us.
Being this was our residence, these numbers are calculated on the premise that we were paying $6400 in rent every month. That amount does in fact cover what was our monthly PITI, but it's also an accurate rental amount for a house of this size, quality and location.
It's also worth noting that midway through living here I was able to do a refi and take 110K out of the house. So with that, our out of pocket costs were significantly reduced.
(This property has been sold)