The Great Pool Debacle of 2009: Part I

See what happens when you consult for someone else? Particularly someone who HASN'T SEEN THE PROPERTY? And someone who is a government official so whenever some crazy constituent calls the official jumps sky high and then lands on my shoulders?! I actually have a ton of respect for this government official; he is smart, has years of experience and a real love for his constituents. But he has not seen the house and he is currently tap dancing on my head about non-issues.

This is about the pool at the chalet. Yes, it has snakes in it, but it is in the country, people. There are snakes all over the place. There are snakes in the neighbors' backyards and in their pools too. Apparently this particular complaint was not about the snakes, but about the possibility of someone falling in the pool. The house, along with the pool, has been abandoned for 5 years. I don't know when, but at some point HUD sealed off the pool with a metal grid and plywood. A person could walk across the pool without getting wet, but some resident has been calling the county every 45 seconds about it and the county is understandably not trying to be held liable for hazards on a property they just bought.

So this is how the day goes down: my director (who hasn't seen the house) gets frantic calls and texts from the government official (who hasn't seen the house) about securing the pool. Of course, my director is customer service-oriented and she wants to put our client at ease. So she has another person on our team, Charlene, start looking for service providers who can drain and secure the pool. But Charlene calls me to get the address for the property and I immediately start arguing that this course of action doesn't make any sense. Charlene is used to ignoring my tirades and starts looking for vendors. So I call my director and tell her that I am directly contravening her orders. She can't imagine why I am so worked up about this, so I send her pictures of the secured pool. She says she just wants to make the official happy so could I please just drain and cover the pool? I don't want to do it. I think it's an unnecessary expense, but she looks at the pictures and says, "Well sure an adult couldn't fall in, but a TODDLER'S LEG could get caught...." O.M.G. A toddler? A toddler?! A toddler toddling about in the backyard of an abandoned house? FINE. FINE. YOU WIN. Anytime you use the toddler trump card you know you're in for a win.

I found myself purposely contravening direct orders from my director because I desperately want to keep all pre-construction and construction work at each property with one general contractor (GC). I am responsible for 84 houses and I am not trying to set myself up to have to have a contractor matrix for each one. Besides, I wanted to keep the pool; it could be a really cool feature and a great selling point.

I asked my GC about the pool and here is how he broke down the dollars:

• Keep the Pool: new filtration system, pump, refinish the concrete pool walls and repair the surrounding concrete deck = $10,000-$15,000
• Let the Pool Go: drain the pool, collapse the concrete walls into the empty hole, fill the hole in with gravel and dirt, plant grass seeds = $3000
  

Uhhh....now the pool is crowding out the interior modernization package. The pool is on shaky ground. Pools aren't even that big a deal with middle income families here and young families (the type that might need 5 bedrooms) will likely have young children or pets that will require an extra fence which is just more money to spend outside.

As I was coming to this realization, emails and phone calls kept lighting up all of my means of communication. The pool must be drained! What about the toddlers? Think about the toddlers! I gave him and ask the GC to have the pool drained first thing the next morning and we would move forward from there. Since I got him started, I get to keep him as my sole contact on the project. Score one for efficiency. The pool is still striking out and the saga will continue in Part II.

70s Style Ski Chalet: $1

Boy howdy, we are drinking from a fire hose now. One of our local jurisdictions just purchased a house from HUD for $1. Yes, you read that correctly. But before you get geeked and run over to your local HUD office with pockets bulging with dollar bills prepared to make it rain on some bewildered HUD employee, hang back. HUD's dollar house program is only available to government bodies.

I received orders to make an appointment to meet a contractor out at the $1 house to conduct an assessment of the house: demo or rehab; do we want to manage the process or not. Originally, I was going to the house with another staff member more senior to me and I was planning to relax in her shadow. But, as often happens to our overstretched little team, she got pulled in another direction and I was sent out to the house, some 20 miles away from the city center, by myself.

I would usually use my GPS for a trip like this but my GPS had just forsaken me on a trip earlier that day so I leaned on printed directions from Google Maps instead. I lost my bluetooth several months ago and I don't like talking on the phone while driving in unfamiliar areas. But people from work kept calling and every time I'd answer the phone I'd miss another turn. By the time the contractor called, I was totally discombobulated and 15 minutes late. He told me that he was at the house along with an official from the county (what?!) and two police officers (what? what?!!). At that point, I was totally turned around and was clear off Google Maps. He offered to come and meet me. I told him thanks but it would take Jesus to lead me out of these woods. Then I remembered that my faith tells me that G-d inspired man to create GPS, so I fired mine up again with a meek little prayer and lo and behold I was only 2 miles away! I started out again, a ball of frustration and nerves, cursing every driver or pedestrian with the temerity to cross my path. Thirty minutes late, I rolled onto the scene, tense (because I really loathe being late), furious because everyone else found the hidden house but me, and hot because it was 345 degrees outside.

I hopped out of the car all tightly-stretched smiles and apologies and immediately started taking pictures of the wrong house! Oops. The actual house had been abandoned for five years, has snakes in its abandoned pool and has been the subject of escalating neighborhood complaints. That's why the police came out -- to talk to the neighbors and let them know the county is dealing with the property.

We entered expecting to find a crumbling shell, but I immediately fell in love with the house. It was designed to look like a ski chalet and boasts 5 bedrooms, 3 bathrooms, a formal dining room, huge living room, family room and playroom.

There are two outside decks and an in-ground concrete swimming pool. The chalet wants a lot of TLC and updating, but its bones appear to be good and it reminds me of the student center in my beloved alma mater.

I have already started brainstorming on how to bring this house back to the market. We have to be careful not to over-renovate it because although it is in a neighborhood of large, generally well-kept houses, the area's home values are severely depressed. Completely rehabbed, we'd probably be pressed to sell this home at $200,000 (I know!), so I am having to tamp down my inner Vern Yip that yearns to cover the entire house in stained concrete and gold leaf, and rehab it to match the market.

I think I might also be able to make my black-wall-loving director happy by painting some interior walls darker colors. The interior space is so large that it could use some richer colors to warm it up. I would also like to bring the Brady Bunch-ski chalet look into the new millennium by covering some of the wood, particularly the banister, with drywall. We could go from this:

to this:









Nice, yes? Too nice?

I'll keep you updated on le chalet as we move along.

Crappy Old Crap Crap Market. Crap

This crappy old crap crap market is dragging my little jewel through the mud! This jewel is not like a Tiffany & Co. jewel, okay? But it's totally like the small birthstone ring a teenage girl gets when she's around 15. It's her first real gemstone ring and it's small, but it's delicate and shiny and serves the purpose of making her feel beautiful and sophisticated.

I have a house like that little birthstone ring. It's blue and white. It's cute and has flower boxes with flowers in them. It has 3 bedrooms, 1.5 bathrooms, a nice backyard and a huge kitchen. We made it eco-friendly with attic and floor insulation and low-flow toilets. We repaired the plumbing and electricity where necessary. The entire house has been painted, it has new carpets, new subfloors and new flooring in the kitchen and bathrooms. There are new light fixtures, a new closet and new hardware. We will buy a new refrigerator and stove for the buyer. This little blue topaz is surrounded by other cute birthstone rings. The house is just 4 miles from downtown and one block from an elementary school. It would be a perfect home for a young couple or family.

Look at it and try not to say, "Aww...."

The living room/dining room area:


The master bedroom:


The 2nd bedroom:


The full bath:


The third bedroom:


The 1/2 bath:


The kitchen:

Tell me that furniture doesn't make you just want to move in yourself. But now I feel like a pig just pooped on my peridot. The original broker price opinion for the house after rehab was for $88,000. The house appraised for $90,000. We listed for $87,900. No traffic. $85,000. The market remained unimpressed. Now we are down to $83,000. $83,000 for allllla that!! Still, I think we are going to face the same stony silence. Why, you ask? Because the comparative market analysis showed that nothing but foreclosures and unrenovated wrecks have been selling in the neighborhood. The average sale price is down to $25,000. Even though my house is a sassy little sapphire, people in this area are very fretful about purchasing and with other houses selling for pennies down the street, they think that something selling for more than 3 times the average should be a palace. Expectations in this market are completely insane. I don't think $80,000 woud buy a palace even in Kabul. Sigh.

Plus, I just found out from a neighbor that the last owner of the house was an investor who had a family renting the home. They were paying the rent, but the investor was not paying the mortgage. The house went into foreclosure and the family was evicted by the bank. They had been there only 6 months. How I wish I could find them now. We'd give them a great opportunity to own and never be at the whim of an irresponsible owner again.

Crappy old crap crap market.

4 Facts of Life of Low to No Margin Real Estate Work

There are several facts of life I am learning about working in low to no margin real estate development. I could also just call this post "4 Things that Blow in Foreclosed Real Estate Development", but that's kind of crude.

1.) It can be lonely. By necessity, we have a very lean operation. Each person on our team wears multiple hats and we all work very hard. Although we like to cover the work as a team, often there is only one person available to do any given task, and that's how I often end up alone, overseeing the moving of model furniture, viewing possible acquisition homes or doing any number of things. Supervising the move of the model furniture from one house to another can be particularly lonely because once the movers leave, I am left in a very quiet house trying to set up accessories, put sheets on the bed and make the finishing touches on a home. The loneliness is amplified by the fact that....

2.) You can never find a place to pee. Foreclosed houses or houses that haven't been occupied in a while never have functioning plumbing. It may work if it's turned on, but most houses are winterized when they are abandoned so that means no running water, particularly in the bathrooms. Men don't have much problem with this. They just tinkle, tap and keep on stepping but it is not as easy for women. There's never any toilet paper and if there is toilet paper it's normally inexplicably stained or moist and ewww. Being by myself with a full bladder and driving all over G-d's creation only exacerbates the fact that:

3.) With or without GPS, count on being lost. I've been lost with printed directions; I've been lost when I "knew" where I was going; and I've been lost with the GPS calmly intoning the wrong directions in my ear, "At the first opportunity, please make a legal U-turn." Our days are so full that it is hard to leave early enough to get lost and still make it to places calm, cool and collected. So there I am, alone, mumbling to myself about how much I have to pee as I make endless U-turns. When I finally arrive at my destination and talk to neighbors or potential buyers, I find that even though I am working in the public interest, people are so jaded about real estate investors, brokers, and builders, that....

4.) No one trusts a word that comes out of my mouth. Neighbors regard me with cold shoulder distaste at best and loud mistrust at worst. Other people think I am trying to sell them something they could do themselves (go for it, honey) or that I'm involved in some other nefarious developer plan.

While this experience is sometimes trying, through all the complaints I love being busy, being out about away from my desk, the process of creation and the fact that almost every day holds a surprise. But I do think I will start traveling with toilet paper.

6 Tips to "Reassigning" People to "More Appropriate" Roles

Today I had to reassign one of our consultants to a different role. Managing consultants and staff is not something I am used to, but I think I learned a little bit about how to reassign a person according to his strengths somewhat diplomatically.

1. Praise the person's current work. Everyone does something well. If you are not actually having to fire someone, you can always start out with praise for the part of the job that has been done well.

2. Let the person know that you want her to have more time to do the work that she is so good at. Remember, this is not a firing, but a reassigning for the good of the project.

3. Don't use the "death knell" voice. If you think your tone of voice would be best accompanied by funeral bells, change it.

4. Stop procrastinating and just do it. Starting tough conversations is like ripping a band-aid off. You just have to start and at the end you'll probably look back and decide that the anticipation was the worst part of the entire ordeal.

5. Don't imbue the interaction with the importance of nuclear war. We all have our strengths and weaknesses. Giving feedback is one great way of helping a person to maximize the former while minimizing the latter. Besides, the reassignment may not be the big deal for the staff person that you think it is and you are unnecessarily making a mountain out of a mole hill.

6. When all else fails, pawn off the dirty work onto someone else. See if you can't convince a co-worker or boss to do the deed. I tried to get my director to take care of the reassigning, but she just wrote back "LOL". Still, it was worth a try.

Now as I finish this list, I realize that I have been totally reassigned! I got schmoozed out of my first role into this project management one! Thank goodness, because I could not stand the client interface/training/tax appeals part.

HA! Evil brilliance. Well played, Director, well played.

Which Houses to Buy and Why: 2 Policy Options

Lately we have been having policy discussions about which houses to purchase and why. There are many houses that don't need much work outside of some paint, carpet and appliances to be habitable again. We could buy them, do the minor repairs and turn them around in a jiffy. These houses would be a quick win. The drawback of a non-profit doing easy houses is that it's not necessary for a non-profit to turn those houses. They are cheap and don't require tens of thousands of dollars of work. A family that plans to occupy the house could buy it and use their own sweat equity and cash to renovate it to their liking. Shouldn't federal dollars be used on houses that no one wants? We can buy the clunkers and spend the time and money required to make them desirable again. We're not going into decimated neighborhoods, just damaged ones. We should buy the worst houses in those neighborhoods, not the best ones. The market will take care of the best ones particularly once we clean up the eyesores, right?

Perhaps. The other side of the argument is that the federal money doesn't just give us the opportunity to buy and renovate, we can also provide deep subsidies to lower the mortgage for low to middle income families, allowing them to purchase homes that would normally be out of their price range. "Whoa!" I hear you say. "Wasn't putting people in more home than they could afford the train we rode into this Great Recession? Stop. Stop. I'm getting off now."

Please don't hop off too hastily. You are right that outsized mortgages with complicated and misleading repayment schedules were the drum majors in the global march to Skid Row. However, the subsidies I am describing will permanently lower the price of the house for the buyer without adjusting, ballooning or otherwise becoming unmanageable. Here's an example. Say we buy a house for $85,000 and put $15,000 of work into it. We are not permitted to sell it for a profit. So our sale price is $100,000. Let's further assume that the median income for the area is $70,000 for a family of four. The rules require us to sell to a family making no more than $84,000 or 120% of the area's median income. Finally, imagine that a family making a total of $50,000 loves the house and wants to buy it. Their finances will not allow them to borrow more than $75,000 for the purchase. We can provide a subsidy of $25,000 that will act as a silent second mortgage at 0% interest and requiring 0 payments as long as the family lives in the home. They will only have to borrow the remaining$75,000 on a fixed-rate, 30 year mortgage, subject to whatever down payment requirements the lender may have. The second mortgage in some counties will be forgiven entirely over the passage of time. In others, the second mortgage will be repaid upon resale and the county will recycle the funds for new buyers. With the subsidy, the family effectively pays $75,000 for a house that is valued at $100,000, the street/neighborhood gains the stabilizing influence of an owner-occupied house and the government can turn a house and show success quickly for a small investment when a more involved rehab would require a much larger investment of time and money.

As an aside from a former housing and school segregation junkie, the subsidies aren't just about allowing a family to live in their dream house even though they can't really afford it. Better neighborhoods mean much more than prettier houses. Usually more expensive neighborhoods have access to higher quality public education options, are closer to employment opportunities, have broader transportation options, and have neighbors who can provide helpful introductions to newer and better economic opportunities. Making it easier for people to live in stronger neighborhoods can produce short term gains, but also long terms gains like changing the trajectory of children who are no longer stuck in neighborhoods with failing schools and negative role models.

My company is balancing the two policy goals, clearing clunkers out of the market and turning nicer houses quickly, in our work. I think of it a little like a well-balanced dinner plate: lots of veggies and protein, with room left for dessert too.

5 Tres Cool Ideas for Recycling Chic from NYTimes...and 3 Questionable Ones

A friend of mine who lives in Paris and is always on the edge of all things chic and fabulous sent me this article from the New York Times about a man making affordable houses in Huntsville, Texas out of recycled goods. Some of his ideas are really interesting and could be great additions to a home. Others, well, just aren't my cup of sweet tea.

In my estimation, here are the five best from incredibly fab to delightfully fun:

1.

"Stained Glass" Dutch Door. I have not been able to stop thinking about this door since I saw it. I love the shabby chic stained glass effect of the wine bottles and I can't get enough of the dutch door style. This is a definite yes and look for an off-shoot in an upcoming house. I am geeked. And isn't the homeowner attractive? Her face is perfectly symmetrical!

2.

Wood Slice Counter top. This counter top is rustic without being old-fashioned. I could see it bringing a grounding warmth to a streamlined modern stainless steel kitchen. I'm pretty sure I would not be able to get any of my contractors to do this within budget, but I really like the look -- anything to free me from the monotony of granite and granite-look laminate.

3.

Wine Cork Floor. I really had to struggle to decide whether this cork floor should be #3 or #4 on my list of faves. I think it would be so witty in a wine cellar or entertainment room that it won out over...

4.

Mosaic Tile Bathroom Floor. I am a sucker for mosaics. While I don't particularly love this mosaic, I do like where he is going here. Talented and imaginative artists can make so many pieces of broken tile look a million times more luxurious and unique than the best pre-packaged tile. Plus, this could be really fun to do. Imagine laying out a design of yellow fish or duckies with your child for your child's bathroom. Fun! Bonding! Eco!

5.

Picture Frame Ceiling. This one had to battle its way into the top 5. Of course, what you see before you is fuggerific, but imagine if all those frames were shades of lightly brushed gold and silver? That would have a very pretty and striking effect.

And now for the 3 pieces that make me never want to recycle again, listed from the worst to the merely unforgiveable.

1.
Cow Skeleton Chair. Seriously? A chair made out of cow bones? Tim Burton would be creeped out by this and it's his genre! I mean really, it's far too literal to rest my bones in bones, to match a cow's spine vertebra to vertebra with my own. Gross.

2.
Cow Bones Address Numbers. Second only to the dead-dry-bones-as-art chair are the dead-dry-bones-as-art house numbers. Al Gore just called. He said that recycling *everything* is a terribly obtuse way to interpret "An Inconvenient Truth" and that he can buy carbon offsets for his private jet but there isn't yet an offset market for creepy. So just stop already.

3.
"Story Book" Roof. I really wanted to like this. But no matter how I tried to reimagine it, the only fairytale his "story book" roof reminded me of was how the witch's house in Hansel & Gretel must have looked to her juvenile victims as they were gorging on her gingerbread shingles and gumdrop trim. That crazy zig zag rag tag roof would be the last thing they saw before falling into a sugar crash coma and becoming a witch's dinner. Not appetizing, is all I'm saying.

There you have it folks. Pop over to NYT to check out the rest of Dan Phillips' save the world design elements.

Let the Bidding Begin!

We've just completed our first round of bidding on foreclosed houses in the county that I talked about in this post.

There are a few websites that allow qualified buyers to bid on foreclosed properties at great prices. We all know the thrill of online shopping. This is competitive online house shopping. It is awesome. Although we're buying houses with other people's money, I treat every dime as though it were my own, and people, I am stingy.

During the first session, 5 of us sat around a table with a laptop, a pile of appraisals, lists of target houses, color-coded maps of the county and a mandate to buy homes for at least 10% off the listing price. To come up with our bid price we poured through inspection reports and appraisals. We argued with each other about whether the comparables were any good and we plied through our memories to pull up images of the neighborhoods.

There are various rules for the bidding. The longer the house has been on the market, the lower you can bid with a hope of being successful. A house that has just become available will carry the lowest discount even if it's no good. This means you can be presented with a shell needing a gut renovation that lists for $100,000 and your bid for $20,000 won't be accepted as a matter of course because it's new to the market and the seller won't consider anything less than $90,000. On the other hand, a relatively intact house that has been sitting on the market for three months might sell at a 70% discount.

The auction is also conducted sealed bid style. You only get one bite at the apple. If you bid too low and someone else outbids you, you can't go back and increase your bid. You also don't want to bid too high, win the auction, and go out like a sucker who now has to either lower the rehab budget or sell for a higher price. The seller can also decide not to accept any of the bids if its reserve price isn't hit, and of course, we don't get to know the reserve price. Our entire strategy hinges on getting very low acquisition prices but we can't bid so low that we shut ourselves out of the market.

One unimpressive house came up that the Seller listed for $41,000. I remembered touring that neighborhood. It was riddled with For Sale signs and the house needed a lot of work. If we bought that house, we'd be competing with all the other for sale properties, bumping up against the rentals, and generally be killing ourselves with disposition of the completed house. So I yelled out that the seller has got to be crazy and I wouldn't give him a dime over $20,000. Everyone just kind of looked up from their papers and maps and stared at me. "Oh. Too much? I'm chill." And we moved on to the next house.

I love the bidding. It's a rush like playing the scratch-off lottery, bargain-hunting, and being a contestant on Price is Right all at once. Except if we don't win a fair portion of these bids, we won't just go back to the status quo of our everyday lives. If we don't win bids, we won't be able to purchase enough houses to meet our goals and deadlines. If we don't meet our goals and deadlines we'll lose the grants. If we lose the grants, I'll lose my job and my house will be next foreclosure up for bid. So yeah, it's kind of high stakes.

I think we'll be all right, though. I chose the bid price for a house just before I had to leave the room to take a call about loan documents (yawn). We won the bid! It was such a rush! I flexed the matrix right there in the office (which I do about once a day anyway-- the flex is at minute 1:47). Now the due diligence begins and soon we'll have a house!

Where's the Beef? Or the Houses?

Smug food and drink recipes??

My poor reader, you must be wondering like Clara Peller, Wendy's 1980s era spokeswoman, "Where's the beef?" Isn't this a blog about housing rehab? (For those of you who want to relive those times or who were too young to remember them, click the quote for YouTube link to the 1984 commercial)

Foreclosed to Fabulous is about housing rehab. But sometimes you need a little filler while the main event gets ready. The garden and food posts are a little like the old school boxing girls who walk around the ring half-naked holding a sign while the boxers regroup. In truth, I thought we would be moving much faster in the acquisition stage but like so many other government programs, the Neighborhood Stabilization Program (NSP) is extremely paperwork-intensive. Thus far, my company has been awarded contracts in 5 jurisdictions and we have applied to 3 different non-profit loan funds for money that will match the NSP awards to make the government dollars stretch even farther.

I didn't think you'd be interested in the travails of learning the different rules for five jurisdictions or the horrors of closing 3 loan funds. At one point I was so frustrated that I carried my ire across state lines. While on a leisure trip out of town I happened to be near the office of one lender. Ever the model of maturity, I kicked the exterior of the building and took an angry-looking picture standing near their sign. Hee! Immaturity is fun and cathartic. My boss didn't think the picture was all that funny, but those people made me do about 500 versions of the same spreadsheet! I could have done much worse. I contemplated making a welcome mat out of chewed up bubble gum. But I didn't because I am a grown up. And I need my job.

ANYWAY, we finally have the all-clear to get started on houses and I have been assigned to project manage 3 jurisdictions out of 5 for a total of 84 houses! It's feast or famine here people, so get ready for lots of posts and pictures as I get out of the office and into the starting block. I have to get at least 5-8 houses completed in a neighboring county by Dec. 31. OMG.