Journey Of A Small Remodel. Organizing Your Own Project. Resources. John B. Sines, Attorney At Law
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Bea Sines, Realtor
John B. Sines, Esq.
Purpose Of This Website
The information contained within this website details our experience which we would like to share with clients, friends, neighbors and other homeowners contemplating a small remodeling project. Even with our experience and knowledge in remodeling our own investment properties, the project was more time consuming than anticipated. We are not in the building trade and did not perform any of the work, except for supervisory and organizational in nature. This website is FYI only. We are not soliciting work as project managers. This property was part of a trust. I was co-trustee. The goal of the project was to remodel the home in order to obtain another tenant and generate higher income stream. My wife, a realtor provided assistance with selection of material and colors.
Decision To Remodel & Scope
The immediate neighborhood is comprised mostly of small single family homes built 45 to 50 years ago. The subject property had been a rental for many years and will continue to be a rental property for the immediate future; however, the property will be owner-occupied eventually. Due to accumulated deferred maintenance issues, such as extensive termite dry rot damage, outdated electrical system and plumbing pipes in need of replacement, a substantial remodel of the entire property was necessary. No work was done to the foundation or roof. The plan was to improve the property without expanding the perimeter (i.e. the footprint) of the structure, the garage or the patio area. In addition, no separate auxiliary structure was built. The choice was to remodel, let it stand unoccupied or sell the property as land value. The rental market in Palo Alto is slower than a few years ago but still very strong. There are few builders investing in new projects - construction loans are difficult to obtain. Remodeling was determined to be the best choice in protecting the value of the property. Under normal market conditions, for most home owners, another consideration would be selling and trading up rather than remodeling.
Quality of Improvements
Palo Alto rental rates and market values are in general 20 to 25% higher than the average in Santa Clara County. Because general cost of construction is high in this area, a bare-bones, rock-bottom, level of improvements with low-quality material would have been a waste of the labor cost. It was determined that the material used should be upgraded to what an average buyer would expect to find in an remodeled home in this area of Palo Alto (ventura Area).
Rental Value & Resale Value
The prospective tenants found the newly remodeled features very attractive. The cost of the improvements increased the property value proportionately dollar for dollar. In the "as is" condition, the property was originally appraised as "land value" only with no rental income. The rental income realized after the remodeling was completed in 2009 was $2995 per month. Subsequently the rent was increased to $3450 per month. For 2013, the market rate is approximately $4000.
This property was listed and sold in May 2013. Click here to see virtual tour.