After all of this time more people are reading this blog and making comments to be moderated. We are in the process however of closing this site, reposting the comments, and starting over in Seattle.
There are a couple of problems with the servers that this site is hosted on that don’t allow for easy changes. As my experience with the web grows I hope to be able to provide better service.
The new address is www.SeattleFixerFixer.com and this address will be forwarded there when we complete the set up of the other site.
Thanks
In the spirit of locally owned and operated two great companies that have helped me over the years are Handy Andy and Aurora Rents. Between the two you can find almost any tool and the experience that goes along with using it.
In today’s economy you may want to consider renting tools as a money saving adventure. Some tools look easy, like a pressure washer, but are better left to a professional, but some of the bigger tools, or more scary tools, can save you a bundle of money.
The back hoe comes immediately to mind, along with a variety of lifts. I personally like the plaster board hoist. I use it to hang the plaster board on ceilings. You load the plaster board onto the lift and crank it into place. A ceiling doesn’t have that many cuts to it. So when the dry waller contractors starts talking about how expensive the ceiling is going to be I say, “I’ll do that, what’s the price for the rest of it.”
The other scary tool that has saved me a bundle is the Genie Basket Lift for high exterior work, tall tree trimming, or exterior painting projects.
What always gets me is the rock climbing executive who is stymied by a hard manual labor project that he can for sure figure out with the right heavy equipment. That is where Handy Andy, and Aurora Rents come in to help you add cost effective adventure into your life.
Aurora Rents has two locations in North Seattle:
SHORELINE
19022 Aurora Ave N
Shoreline, WA 98133
206-542-7506
1-800-600-7501
GREENLAKE
8800 Aurora Avenue North
Seattle, WA 98103
206-729-RENT
206-729-7368
Handy Andy is the most reasonably priced at:
Telephone: (206) 367-5050
Address: 10711 Aurora Ave N, Seattle, WA 98133
Here in Seattle there have been a couple of Real Estate blogs that people turn to in addition to redfin and Zillow. Seattle is kind of the home land for Real Estate technology. It may be Microsoft or it may be that Seattle is a tech savvy population. Another thing, Seattle is very diverse in terms of location, location, location.
While most areas sprawl Seattle has a defined set of areas. We have a variety of both salt and fresh water front. There are wooded areas, hills, peaks, and valleys. Each area has a set of charms. So the blogging can talk about general Real Estate matters and neighborhood quirks.
One of the things I’ve noticed is that blogging for business in Real Estate can make for some pretty tall tales. Controversy and content drive blogging. Nothing seems to rile up a bunch of folks more than telling them now is a good time to buy. This year the whole thing got to be so ridiculous I’m asking the question of what you think you’re going to learn about a home purchase from a blog.
I wrote an article last month about why I think people distrust Real Estate agents. The focus was that agents, whether they intend to or not, make stuff up. Some people will say anything, especially in hard times, to get you to buy something, anything. Right now when people talk about an $8K tax credit for a home purchase, and the government is giving away $4500 for an auto purchase, I don’t see the incentive. Maybe if we wait long enough we will get an automobile with the home purchase.
I know this is a blog that has to do with your Real Estate, but I think my perspective of paying a fair price for a good property is what a home purchase should be about. A lot of the talk about the “market” place is just hooey. Comparing Real Estate to the stock market is very wrong. Interjecting the term the “bottom” of the market is deceptive. The core value of Real Estate is it’s rental income potential.
There is a blog that I follow and comment on called the Seattle Bubble. It’s focus was and is the high price of residential Real Estate. A lot of the discussion is about the economic factors that drove the prices up. Long before the global economic meltdown there was discussion about the sustainability of the financial markets. The fact that a lot of the doom and gloom that was discussed has taken place adds to it’s credibility.
The fact is that in terms of true discussion about Real Estate matters there is very little said on any of the blogs that is information and most is pure entertainment. The Real Estate sites with forums are tightly controlled to direct you to use the services provided. I’ve made the comments that these sites are some of the worst in selling you something.
The long set of opinions I have boil down to one thing: If you decide to buy or sell Real Estate it’s best to use a professional who does it for a living. You need to be prudent and hire some one with experience who you interview and find credible. Interview is the key. Go with what works for you, but seek out competent counsel to help you. From everything I look at the pricing for services comes down to you get what you pay for.
When I was a teen ager my boss would send me to the paint store or lumber yard and those guys always gave me a look like I was an idiot. I’m 56 and I still get those looks. It got much worse when I would go to the permit desk of the City Department of Planning and Development. In those cases the City could send out inspectors, or ask for changes, or deny a permit.
Those are the people off my property who are intimidating me. When I’m at my home, where the work is going on, the contractors are doing the same thing. They may smile at me, but when I turn back real quick I can see that look of disapproval. I’m such an idiot for wanting to see that my project gets done the way I want.
Have you noticed all the “I” statements in those comments. it’s true. I want things done my way, because if I leave even the most competent General Contractor in charge it is a crap shoot. It is a contest of wills no matter who it is, so in my opinion I chose to do it myself. There are times when you don’t have time. Some times though you have to make time, or at least get it in your head you need to make time. As sure as I’m sitting here I can tell you there will be a phone call in the middle of the day telling you to get home quick, because there is a problem. The worst is when they don’t call and you get home to find the problem.
What I’m saying is that you are involved in 90% of the cases. I do know a couple who hired a contractor, went away for six months and came back to a place that was absolutely perfect. The contractor had also found a way to do the project for less than budgeted. It does happen, there are good stories. There are also good stories about people who find sub contractors that are competent and capable.
The first thing I wanted to do is get used to being an idiot. We are idiots out side of our area of expertise. It makes no difference how people look at you as long as you are doing things in a reasonably orderly fashion so let’s concentrate on that.
First you need design work. before you hire an architect talk with a design consultant and get a grand vision. Think big and outside of the box. When you are doing a kitchen look at all of it. Look at the surrounding spaces. See how everything connects. Measure and draw out your ideas so they are concrete. Hire some one if you need to, but measure every square inch, it will save you time and money. Look at the systems and see where they go, or end up. Get very familiar with your electrical box, and plumbing stack.
Read a book to define your terms. Know something about the language of construction. This is where you can get stuck the worst. When the electrician asks if you want a double or triple gang in your box he’s going to have a twinkle in his eye. That twinkle is for how much he can charge you.
The system bids are what you want to get first. Everything will revolve around that. Structurally you need an engineer. An interesting thing that I just found out in the past couple of years is the architect needs to get an engineer to stamp the plans. It’s actually the engineer who is the one getting your plans approval. You need to know structurally if what you want to do is feasible.
Here’s the part people freak out about. After all the preparation and you know what you are going to do I say gut the space before you take bids. A phrase that comes up a lot in change orders is “we couldn’t see inside the walls.” What you discover can be either good or bad. If you’re not ready to take the plunge then continue to take bids and get comfortable. Once you make the decision it is cheaper and much more cost effective to get a dumpster, or rent a truck, and gut the walls. It can actually be very therapeutic.
Another reason to do your own demo, or to be present, is that the problems will start there. Finding a sloped floor, or crippled walls, maybe finding things are built too well, will be evident when you look inside the walls. Knowing what’s there will be a benefit as you go forward. This is the point where I take bids.
Once the work starts there are a thousand decisions that need to be made. No matter who you hire you are the person making the decisions. It’s best to have a clear vision of what you want. Having a consultant who knows the industry is a great a beautiful thing. That’s why people have architects. Some people hire project managers, your General Contractor certainly does. Keeping the books correctly can keep your project running smoothly. Put every thing, every receipt of day’s business, in a shoe box and reconcile it every week. Be prepared to fire any body. If things are going badly you need to communicate how you are feeling. You need to move forward with a project so be prepared to find some one else.
Finishing a project is the hardest part. I take finishing bids from finish carpenters and painters at the end of the job. When the sheet rock goes up you are half way done. That’s the time to start shopping. You can rough out all of your sub contractors in advance, but they may be busy when you want them. Your time line should be set before you begin then get to be flexible.
When I reread all of this it seems like a lot of stress and it is. There are a lot of things to consider before tearing into your property. It’s more than just a matter of money. You want to be, or in some cases need to be involved. You should get your mind set on that before you start a construction project.
I will make a caution that some people read a book or start a project then get in the way. You may be alienating more people than you are brining in. Remember you are an idiot and you should listen even if you disagree. You can be the smartest person in the world, but when the kid in the paint store tells you to use an oil based primer, they may know something you are about to learn.
In 1992 my second wife wanted to have work done on our house. I had already proved to be slow, along with my good buddy Montana Dan the Man. Dan’s work is perfect. There is no question about that. My work is way above great, but I did realize that perfection was unattainable in the 1980s. So there we were, she wanted work done in the kitchen, so I told her if she could find contractor we would hire them.
She went immediately to our good friends who had an extensive remodel done on their home. she checked the contractor’s references, checked his work, and after meeting with a couple of other contractors she accepted his bid. Holy Cow, what a mess and it only took him a month to push a normally very level headed woman into a shouting match. He of course turned to me for support and I told him he needed to pack up. Between you and me I was tired of the guy after a week.
So there we were with a half finished project and you have not lived until you are taking bids for an incomplete project some one else has screwed up. First bid was for twice the price of the original bid. Second bid was for about the same price as the original plus a little to fix what had been done by the previous contractor. Last bid was somewhere in between and we took the lowest. We liked the guy. Within a week his wife had left him. When you deal with contractors family issues come up a lot.
We finished the kitchen project ourselves. She and i working shoulder to shoulder was fun and it was more fun for years as she explained to people how we did it ourselves.
Years later I was taking bids from contractors for a project way beyond my comfort level. The first contracting experience still very much on my mind I took a bid from a high end company that has done extensive work in our neighborhood. They had a project going down the street which I had been watching. One day while the siding was going up I recognized the two guys doing the work. They had worked with me a few months before. They were from the Millionaire’s Club which is a non profit day worker center in down town. This was the beginning of my blog.
Instead of hiring the contractor I started doing the project with the help of day laborers. My neighbor who is a retired contractor came over to help and we did the whole thing ourselves with casual day laborers and another retired contractor. Even during this project I hired contractors at my neighbors insistence. The dry waller was a disaster and we need to remove a lot that he had screwed up. When I refused to pay him to finish the job, but paid him to date, he came back and broke a window. I hired a guy off the street who fixed everything for half what the contractor was going to charge me.
After the project was finished and we put the house on the market the Real Estate agents thought it needed more. Again I hired a contractor who in turn hired another contractor. I had to fire him after a month of his working off the $14K deposit I had foolishly given him to start work. I was grinding my teeth every day as he had one guy, in my house working when I needed to get the thing back on the market. He could care less, he already had my $14K deposit. Toward the end he did send more people to work, but he was obviously too busy to be concerned. I forced him out the door with him threatening to sue.
I personally know some contractors that are good, honest, stand up people. They know me, we have a good relationship. The first is Lau Loon who immigrated here from China. The other is George.
George is actually why I posted this. He is a very straight and narrow conservative contractor who has three full time workers who are Hispanic. Lau has five Hispanics working for him. For what ever reason there are more Hispanic workers available who consistently show up to work.
There are other posts concerning getting a project started with casual labor. Having the demo work done and cleaning a site before you take bids is something that makes sense, is something you can supervise, and gives you a clearer picture of what you want to do. Beyond that you would need to have a working knowledge of construction. In these past five year I have been able to do extensive work by hiring people from an organization called Casa Latina Day Worker Center here in Seattle.
People end up on the street for a variety of reasons. The Millionaires Club has many people recovering from drug or alcohol addiction. The same is very true in the Hispanic community. People with skills can usually find a job. There again this is a network. A person from the center may know some one, or may be between jobs. We have had great success finding people willing to work for cash who are highly skilled.
There is a debate about worker documentation which I have found to be kind of a fifty fifty deal. Some workers have all the documentation to work in the United States yet are culturally challenged. If you think about it there are restaurants and for a while there were construction crews who hire predominately Hispanic labor. With the construction slow down there are more and more people out of the labor pool and working odd jobs.
The possibility you can find some one to work with is greater today than it has been in the past. As far as undocumented workers go, I don’t ask. My personal opinion is that all people should be able to work to feed a family. I do ask about family. To me a person taking a risk to work to feed their children is doing a good thing. We could then debate about some one’s right to have more children, but we would be going way beyond the concerns of a blog.
In a later post I will talk about how to manage a casual labor project. For today I just wanted to point out that there are pit falls to whatever you do when hiring some one to work at your direction.
This selling season of 2009 started me thinking about the home buying process. What most agents are missing today is the ability to carry low ball offers. Agents want easy deals. Offering list price for a property seems to be what agents think they should do. No one wants the reputation for being a bottom feeder. Agency seems to have gotten so sophisticated that no one wants to offend any body.
I’ve looked at a lot of properties that sold for more than retail. In checking numbers for the Seattle area 2004 and 2005 pricing seems to be what properties are selling for. In some cases properties bought in 2004 and 2005 are selling for those purchase prices plus 10%. It’s absolutely crazy.
For all the talk this past two years about a Real Estate Bubble people are still paying over inflated prices for properties. What really gets me is that good value properties sit on the market with an over inflated asking prices. No one makes an offer. Agents don’t even look. Agents make up some rational in their heads about a property and avoid it. I had such a listing this year that I will post about more in the future.
My real point was that the web 2.0 experience of having listings and tax information on the internet was supposed to make the process more transparent. Consumers, armed with the sacred Real Estate agent information were supposed to get better “deals.” It looks like with all the information people are paying too much by doing the work themselves. The Real Estate information is still gathered and sent out by the Real Estate community. Where is that a benefit to the consumer? How much experience does the consumer have to interpret that information?
Let me go on to my own personal rant. I have been asked to leave a couple of Real Estate offices because I deal with investors. That’s a nice way to say that I am a bottom feeder. In the world of bottom feeders some people consider me the bottom of the bottom feeder barrel. I have no system, no tapes to sell you, no books for you to read, and no get rich quick scheme to promote. I see a good deal and some one should buy it, or I should buy it. Getting scammed by the FICO scores or what the bank wants is for the rubes. I buy the bones. If I can’t buy it I get some one who will buy it for me.
The point of this post is that this Spring and Summer selling season, after all the talk on the internet, people paid more than full retail for properties. Even the internet providers of Real Estate information admit there is a lag in data of home prices trending down. Consumers ignore the information, and the data, to believe that the low interest rates, and tax credit will compensate them for paying premium prices for properties.
Just because a property is priced below 2007 levels doesn’t make it a bargain. I’m going to bring in some data for you to look at because in my own way I feel pretty vindicated for my career.
The key word in laying paving stones is screeding. That’s the method of making the ground level and compacted. Compacting is first. Make sure you have a good solid base to lay your paver, or stone on. Many people put sand and tamp the ground with a machine or a post with a 6X6 or 8X8 square on the end. Smashing the earth down is easier if you put a layer of sand, not much, just enough to spread out the dirt you are tamping.
I also use crushed rock to give the earth some stability, again not too much.
Once the dirt is solid and even you will need to screed out the imperfections. You will need a level and three 2X4s. Eight feet works fine, but for smaller areas and paths you’ll want a smaller cross piece. For the eight foot areas, as an example, you will set up two “rails” a little less than 8 feet apart. You will bury the rails so the tops are at the height you want. You’ll set the “cross” 2X4 on top of the rails and level to that. Once you are at level you will set stakes on either side of the rails to make sure they are secure.
Now you can attach stakes to the 2X4 rails first and pound them into place, but some people, myself included feel they are buried already so it’s easier just to stake them in place.
Then you level the rails both direction from the cross piece and up and down the rails. Setting up is the most important part. Getting it level will put the whole project in perspective.
I use sand, play ground grade is fine, but fine sand is best. I lay out as much as I can easily pull with a 2X4. Two people are best, one on each side. That way you have no knee or crawling marks in the middle of your surface. I have done is both ways and used pavers or blocks in the middle as a path way. Some times i simply do what I can on either side then screed a small section where I have messed up the middle as i laid the pavers or stone. After all, it’s a patio.
Are you getting the idea you are smoothing imperfections as you ”rake” the 2X4 across the top of a thin layer of sand that sits on top of comapcted earth? Can you see you are dragging the cross peice 2X4 that sits on the rails to give an even and smooth surface to lay your pavers or stone on?
Now the tricky part is laying the weed barrier. Two people are best to stratch it and lay it flat on the working surface. Some people set the weed barrier fabric when they are leveling, but I think closer to the surface gives the most protection and strength.
Once you are compacted, leveled, screeded, and covered with fabric you can lay out your stone of paver. In a perfect world you have already measured out a pattern so you can start at one end and work to the other. Some people lay out sheets of ply wood cut in half to two foot widths and in some cases four foot lengths because they want to start in the middle.
No matter what, you want to stagger pavers or stone so there is more distribution of weight when you walk. You want a pattern that is going to be pleasant and compliment your yard.
Now if you want to pour concrete the steps I have out lined are also the same for a pour. The stakes attached to the 2X4s is what you would make a frame out of. You would check the level of the concrete form and also measure diagonally to determine if the area is square. Make sure to stake outside of the conrete pour and that the interior is firmly in place.
I’m sure I forgot something, but leave a comment with corrections.
Your real estate holdings will need to be paid down in order to get equity. Paying on the principle balance now will go a long ways in amortizing your loan. Debt, or better put, leveraging to create more debt is getting to be extremely risky. Rents will become more reasonable as more property owners are competing for quality renters. I’ve seen a lot of people with dogs moving into houses. In case you are wondering how that applies, most property owners would rather have non smokers, no kids, no pets.
Now you’re probably wondering where the renters are coming from. Many people who wanted to buy are becoming discouraged. Many of the people who bought are stuck with property they can not afford. Many people in turn will try to rent out their houses, move to a cheaper rented houses, and pay the difference on the house that they still own.
All of the old tricks of keeping property will apply for the next five years. Those who have a problem holding on will let the property go into foreclosure. The foreclosures are the true story of the future.
As more and more foreclosures go back to the banks the banks have more and more of an obligation to deal with the problem. Right now banks are sweeping foreclosures under the rug, keeping them under wraps, holding them off the market. The illusion seems to have plenty of people buying in this Spring of 2009. Banks are making loans and refinancing more loans. The life blood of the mortgage industry seems to have stabilized.
Next year, when the new wave of credit crisis hits, cash will be a much more desirable thing for banks to have. Seriously by next year I think banks will have enough good loans on the books to dump property for pennies. Divesting out of real estate will make sense as the new investment strategies shape up around energy, education, and health care.
In 2010 there will be a real estate market correction. By 2012 real estate will be a distant memory as an easy sure thing investment. By that time we will be gearing up for the next Presidential election and either loving or hating Obama. Real Estate will be that hard working man’s way of building a retirement plan and a portion of your portfolio as a hedge against inflation.
My mortgage companies are Wells Fargo and Bank of America. I have had Wells Fargo loans for the past ten years and Bank of America just bought Country Wide. In this economic crisis my banks should have something better to do than to call me or send me letters offering to modify my loan.
I did want to modify my first position loan to get a lower rate and found my loan had a fifteen year balloon payment. When I talked with my lender he said that was correct because I usually refinance or sell within fifteen years. He was right, I forgot, but times have changed. Now I need an exit strategy.
If I could modify I would need to qualify for a new loan. The loan modification, as near as I can tell, would still cost me about 1%. They have a whole lot of conversation around the fees but it adds up to about 1%. So a new loan for about 1% seems kind of like business as usual for banks.
Even though I could, in theory save 2% in interest I have heard that the really good rates take an exceptional set of qualifications.
Let me also outline some of the programs for people who are behind on their mortgages. So you can’t make your regular payment but they will let you get “caught up” on your loan by adding 1/6th of your payment amount per month and get caught up in six months. What a deal. Or you could add an extra payment to the end of your loan, but you have to provide all your financial information, or declare Chapter 13 bankruptcy. Either way it is a little short of an act of the Almighty.
All in all the programs you read about are refinances. The new trick is to have the property appraise for the 80% loan to value ratios. With property prices declining that gets harder to do. In order to get the good rates you need good equity. Most people with good equity don’t need a loan modification.
What I think is a solution to the entire mortgage mess is to make all loans 6% or less, thirty year fixed, and fully assumable. In that way we would have performing loans from any one who wants to make the payments. It would be a choice if, as you go forward, you wanted to take advantage of the program and have six months to implement it, or do it in stages over a year or two.
It could stabilize the market of today. Of course there are problems. There will be fraud and default, but we have that now.
By making loans assumable like they were years ago you would also have to safe guard the transfer of the loan. That’s what was missing before. A regular escrow could cure this with fees for title transfer, escrow, escrow accounts, and lender notification. A sub agency could be set up in Brokerages that for a fee of say $1000 they could facilitate the trasfer with escrow. I can see online search sites with menu services fitting this business model.
The second half of that would also be concerning debt with banks. All consumer credit should be capped at 14% to 16%. Now that the second position loan market is pretty much dead the bank added incentive to get a consolidation loan should go also. By capping fees and interest on consumer credit more money could be applied to mortgage principles or debt payments in general.
If banks want money this is how they can get it. If investors want returns on investment this will generate more cash payments. Banks can do this themselves and if they are smart they will. Otherwise i don’t see a reason to play the credit game at all.
As the number of sales for June 2009 come in it is obvious the price homes sell for is less than a year ago and about 20% less than two years ago. Sales volume was low comparatively speaking, but much higher than I would have thought. The surprise was the number of foreclosures were neck and neck with the number of closed sales.
In the Wall Street Journal there was an article last week about the correlation between declining or negative equity and people walking away from a mortgage. From thier poll 47% of people who walked away had no or negative equity in the home. In the same week Bank of America anounced it has put into thier short sale addendum that the bank will want to collect defeciencies. The difference between what a bank is owed and what a bank collects in a foreclosure has no recourse in the State of Washington, from what I understand. Second Mortgages are a different thing.
I can see that the banks want to make people pay the mortgages. It makes sense that the more money banks take in on interest payments the less of a loss they will take when they eventually sell the property. The fact is that as prices decline people will be less inclined to pay for an asset that is worth much less than what they paid or borrowed. The lower prices will continue to work through the Real Estate market and in my opinion that will happen more rapidly this next year.
There is a sub section of the Real Estate market after the foreclosure auction called Real Estate Owned, or Bank Owned properties. From what I have heard out of 1600 home sales in King County in June 253 were bank owned. That may be short sales and REOs combined, I don’t really keep track, but the per cent to closed sales is pretty high. Like with the foreclosure auctions there is a limited number of people in that buyer pool. Banks are notorious for letting properties go vacant for extended periods. It takes some imagination to get a buyer to look at REOs. Those properties tend to sell at a discount.
Each year a certain number of people have to move. As those buyers work through the process they generate a new set of statistics used for Comparative Market Analysis. Those number will show a lower over all sales price. At the same set of statistics the price per square foot went up. That was do to the number of smaller houses being sold this year. The below $500K market was the driving force and a lot of houses below 1200 square feet were sold. Smaller houses have a higher price per square foor than houses over 2600 square feet. It’s a market equalizer.
The trend is unmistakable. The market dynamics are like a car rolling down hill. Banks continue to collect foreclosed properties. Banks selling at a discount to a shrinking buyer pool. Home owners who are trying to collect equity before it’s gone selling at a discount to compete with banks. The process may be slow, but it will pick up speed.
The thing to watch will be rents. Rent trends will show us where the price of property will end up. Mortgage payments compared to what you can rent a similar property for will determine the market mind set. Is owning worth it? Is the cost of taxes, insurance, and maintaining, worth the claim that some day the property will be paid off?
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