Jamie and Denny’s heritage home renovation project at 405 2nd Street in New Westminster has sold! They are excited to share their interesting experience in hopes of helping other buyers with their renovation ventures.
THE ORIGINAL HOUSE
This 3-level character home was built in 1932.
– Good size
– Great neighborhood
– Simple but classic look with lots of charm (original features and light fixtures)
– Original lot could be subdivided into two lots – promising way to make a profit
– Very few updates made in the house
– Wet basement/drainage
– Knob and tube wiring
– Plumbing had to be replaced
– Oil tank on property
Jamie and Denny bought the house for $1.53 million in April 2018.
They faced some difficulty trying to find a lender because of the negatives listed above but ended up going with a private banking firm. They paid 35% down and had some additional unexpected fees.
Total renovation cost was $575,000 – $600,000.
Approximately $500,000 was spent on renovation costs for 405 2nd Street ($350,000 was expected and added value, $150,000 was a surprise spent on issues as they arose)
APPROXIMATE COST BREAKDOWN FOR THIS PROJECT
- $75,000 was spent in servicing fees to the city: sewage, storm, water
- $40,000-45,000 spent on cabinets
- $35,000 spent on drainage (quality outweighed cost, wanted it done right)
- $30,000 spent on electrical
- $30,000 spent on paint
- $30,000 spent on mistakes (don’t expect this value to ever be $0, budget for at least $10,000)
- $20,000 spent on plumbing
- $12,500 arborist deposit (for the high value trees; this is given back when the project is complete if trees were protected during construction)
- $11,000 spent on appliances
- $6,500 for design costs for the construction, renovation, etc. (normally ranges from $5,000 – $50,000; you get what you pay for)
- $4,000 spent on oil tank removal (no oil contamination meant less cost, could be up to $100,000 if there is an oil leak)
- $2,000 spent on easement (subdividing the property and servicing the back lot – survey and lawyer fees)
It is key to remember that you are making money from market gain: approximately 5-10% market gain is needed to break even. This will cover the property transfer tax, loan set up, commissions when you sell, and legal fees.
The house sold for 2.315 million in June 2020, making a profit of approximately $100,000 after renovation expenses.
Thought to be a good investment, but also a great way to learn more about the process so that they would have a better understanding when talking to clients who may want to do a renovation themselves.
Flipping houses is not as glamorous as the TV shows makes it look
Be clear with your lender about how much down you need (originally thought it would only be 20% and it ended up being 35%)
Get 3 quotes from contractors and find out what their commitment level is and when they can start; recommendations are a great starting point
- Want contractors who have experience working on the kind of home you are renovating (new build contractors may not be familiar with the type of issues that can arise with older homes)
- Certain contractors are meant for different price points
Plan out in advance who is financially accountable for mistakes when they arise
Renovations are great when it is your principal residence and you can live through it – not the best when you are trying to flip it and sell it for a profit
Renovation permits for more than $100,000 in New Westminster sets off a trigger for homes over 40-50 years old so that all new connections on the street to the city must be completed. This is frustrating because some of the renovation costs can be purely cosmetic and have no bearing on whether the connections need replacement or not. This cost must be covered by the owner.
Ensure that a thorough plan is in place when subdividing a property so that both lots are properly serviced before any sales go through (especially before selling one lot that is needed to service the other)
The serviced empty lot with plans in place for a 2-bedroom home sold in 6-7 days! A lot of people are looking for land to build on
Listen to The Garbutt and Dumas Podcast: Restoring a Heritage Home episode to learn more about this renovation project in greater detail.
Do you have questions regarding heritage home restoration, subdivision or assessing a lot? We would love to hear from you – contact us and we can help you with some of the specifics.