Man, I’ve really put writing this one off for a while! **Spoiler alert** this property on Alston Avenue was one of the most overwhelming projects to date and tbh it gives me anxiety to relive the experience through writing this post. How can a newly (and beautifully) remodeled home be SO overwhelming to resell, you ask?
The Backstory
Well, let me take you back to April of 2021. Covid has been around for over a year and we’re all still adjusting to this new norm. Craig received a “buy” call from an investor who inquired about selling a property he’d already purchased and rehabbed. They spoke on the phone briefly and Craig said he would call him back after doing some research on the property. We made the assumption this lead was a waste of time since the seller was an investor who’d already bought the property at a discount, renovated it, and now wants to sell it for a profit. We weren’t sure how we’d be able to help in this particular situation.
The following morning, Craig looked up the property and saw it was listed for sale. The price had been dropped over the course of a few months, by almost over a hundred-thousand dollars. This was really odd! Craig called the seller back and ended up getting the full story on this house on Alston Avenue.
The investor purchased the property in early 2020 right around the start of the pandemic. His contractor had applied for the necessary permits through the City but everything was put on hold due to the Covid lockdowns. Instead of waiting for the inspections department to open back up, they decided to go ahead and proceed with the rehab. The seller and contractor agreed they’d reapply for permits after the demolition stage was complete. The City must not have reopened by that point, so they just kept going AND GOING. According to the seller, it wasn’t until they finished the remodel and contacted the gas company, that they realized how big of an issue they had on their hands. The gas company refused to hook up the gas because the house was fully renovated and there were no permits pulled. Even with this information, they still listed the property and tried to sell it. The problem they found was that banks won’t finance a mortgage on a property that can’t be lived in (gotta have electricity right?!) The house sat and sat and he just kept lowering the price. By the time he contacted us, the seller had dropped the price by almost $100k.
Not even sure if we’d be able to help him out of this situation, we reluctantly scheduled a walk through at the property. The house was completely finished and even had brand new gas appliances. We knew retroactively applying for permits would be a pain (see Our Second Flip House to relive the drama of the permitting process) so we reached out to our subcontractors to confirm if this was even achievable. All the subs agreed they’d work with us to remedy the permitting issues, so Craig went back to the seller and negotiated a price that suited both parties.
Now the fun part…
Since the house was completely finished, our budget was pretty light, around $20k. The scope of work included adding a fence in the backyard and any necessary drywall/painting work after opening the walls up for the inspectors. First things being first, we applied for permits. We decided to pay for a reinspection simply so a Durham inspector would come out and give us some guidance as to where to begin this process. Unfortunately, the inspector told us we’d need to cut more holes in the walls than we were expecting. In the end, we removed about 40% of the sheetrock on the inside of the property so they could inspect the exposed plumbing pipes and electrical wires.
The bigger issue we encountered, that not one of our subcontractors thought to mention, is that subs don’t like putting their license on another company’s work. Meaning if my plumber commits to being the plumber for this project, he is responsible for all the plumbing work that’s completed. If something goes wrong down the road, he or she will be held liable. Needless to say, it was a lot more difficult getting the subcontractors out to do the work and sign off on the permits than we’d originally expected.
The first subcontractor we scheduled to help us was the HVAC company. We immediately started off on the wrong foot. His assessment was that we needed to replace the whole system which would cost $20k. Whaaaat?! 20k was our entire repair budget! We definitely should have had them look at the HVAC system prior to purchasing the property. Hindsight 🙂 Apparently the furnace was gas powered which can’t be used in a sealed attic space. We had to completely remove the system and install an electric furnace. We also had to run new ductwork since the existing ductwork was poorly installed. Gut punch! There goes our whole budget and we’re just getting started!
Fortunately for us, the plumbing inspector did not make us rip out the tile in the 3 bathrooms to reveal the plumbing connections, nor remove any of the cabinetry or countertops in the kitchen to reveal the plumbing pipes. This would have been catastrophic! We only had to remove a few pieces of drywall to show the rough-in valves for the shower fixtures. We were honest and upfront with all of the inspectors and I think they may have felt a little sorry for us. They definitely could have made our lives more difficult through this process.
We had some code issues with the electrical inspections. The biggest issue was that the main power line coming into the house was too low. We had to disconnect the power to the house so the electrician could install a new, taller connection pole at the top of the house before reconnecting the power. Luckily, the electrical work on the inside was up to code, so we just needed to cut holes in the sheetrock in order for everything to be inspected.
Now that we’d passed all the rough in inspections, we were clear to put the house back together. This was probably the worst part! The painter spent several days just patching the holes in the sheetrock. Sanding sheetrock in a finished house was a nightmare. It created such a mess. I don’t think there’s enough prep work you could do to keep the dust under control. Covering the floors would have been a good start but of course, we didn’t do that! Again… hindsight! The drywall mud and dust became embedded in the planks of the LVP flooring (see photos below). We even had the house professionally cleaned and still spent two full days mopping the floors over and over in order to remove the debris left behind. I think we went through 120 Swiffer sheets in those two days. Hey, at least we learned our lesson on protecting the floors and we’re pretty good at swiffering these days!
we knew we still had our work cut out for us
Final #s & Photos
We purchased the property in April of 2021 for $240k and sold it in February of 2022 for $385k. You can see the listing photos below. Unfortunately, the refrigerator, dishwasher, and bathroom mirrors were stolen from the house during the rehab. We replaced the dishwasher because we couldn’t pass inspections without it. However, if you were wondering where the fridge and bathroom mirrors went, that’s just the cost of doing business in this particular area of Durham!
In the end, we held the property for way too long, paid a small fortune in interest, and went over budget by $40k. Fortunately, we listed the property at peak bubble and were still able to make a profit. If we tried to take on this project today, I’m certain we’d have lost money. We learned some valuable lessons on this flip!
Meredith Worrell 