We never intended to live on Spruce Avenue when we bought the home in 2012. We planned on fixing up the sad little home and then turning it into a rental. And sad is an understatement:
But then, something unexpected happened; we discovered that we liked the street…
Letting Loose On Spruce
The first thing we liked about Spruce Avenue was the location. It was a dead-end and backed to open space. Our young children would have low-traffic pavement to ride their bikes on:
And our evening family walk ritual would be much more enjoyable in the open space.
And then we discovered that we liked the people.
Three months after moving in, Longmont experienced epic flooding. The St. Vrain overflowed its banks and some folks’ homes were completely destroyed by the never-ending deluge. Bridges were washed out and the town was a dumpster fire. Except the opposite because everything was soaked. A dumpster flood? Halfway through the hellish week, the police knocked on our front door and told us that we had to evacuate. Scary:
But at one point in the middle of it all, we met many of our new neighbors. There was a spontaneous party one night and we all bonded over hardship. I liked the people. Even the unusual ones with the most interesting side hustle in the world.
Mindy and I made the decision to stay on Spruce Avenue. This is the place we’d live for at least the next 15 years while we raised our children. Or so we thought…
Now, our plans had changed. Instead of just getting the house ready for renters, we’d gut much of it and even add on to accommodate our family of four (a home with one toilet wasn’t going to work for us). Over the next six years, we rehabbed the property. We didn’t go about it the right way, but you don’t get trade backs in life. The house turned out well though:
And something else happened; Longmont real estate went bonkers.
We bought our place for $176,000. That was cheap at the time, but the home was in poor condition. Since then, three homes on our street have sold for over $500,000. One sold for almost $600,000. And our home is just as good as those.
And then something else happened; our friends moved.
One of Mindy’s best friends was a neighbor a couple of doors down. Their relationship was casual and easy; our neighbor would just walk into our house if she needed eggs or milk and we would do the same. The neighbor had a young daughter that our children absolutely adored. Then, the husband took a job transfer out of state and that was the end of that. Mindy was quite sad and our children cried for a long time. Other neighbors who we liked moved on too. We had found a community, but then it left.
So, that brings us to the present day. Here we sit in a pricey home on a street that we don’t enjoy as much as we once did.
The way to make money in real estate is to put time into understanding the market:
- Find an area you like.
- Review every home that comes on the market. Look at the pictures, price, condition, and square footage.
- Go to open houses and walk through homes.
- Keep track of home sale prices, price reductions, and market time.
After a couple of years of doing this, you’ll be able to analyze any home that comes on the market in less than a minute. You’ll know a good deal almost immediately. That’s exactly what we did.
First, we identified an area we wanted to be in. We had friends in this part of town and the homes are in the right time period to need some work, but still modern enough to have a good structure. I welcome pink toilets, but not knob and tube wiring.
A home came on the market in this area for $465,000. We went and looked at it almost immediately, but we thought it was too expensive. The home was dated, smelled like cigarettes, and had a pool (not a positive in Colorado). And, the pool was in rough shape. No thanks.
Then, the home price was reduced to $449,000. Still, no.
Then, it was reduced to $425,000. Now we’re talking.
We made an offer at $405,000 and let the other agent know that the seller could keep the commission.
Side note: Mindy has an agent license which is a must if you do a lot of real estate transactions. You save money (in Colorado, about 2.8%) on each side of the transaction.
The seller accepted the offer.
Then we had the home inspected and discovered radon and a clogged sewer line.
Then we had the pool inspected and discovered it was in need of very expensive repairs.
We thought the deal was dead, but then the seller agreed to lower the price by another $40,000. Done deal.
The Finances (How We Came Up With 365K)
One of the things that helped us get the home at a low cost is that we told the buyer we didn’t need a mortgage, so we could close quickly. Here is how we funded it:
- $199,000: We borrowed from our current home’s line of credit. We are currently paying 5.75% interest on this money.
- $166,000: We sold the Acura NSX for $45,000. We then used cash and stock sales to fund the rest.
We could have paid completely in cash without tapping the HELOC, but then we’d have to sell more stock and pay a load in capital gains taxes. Instead, we’ll sell about $100,000 in stock on 1/2/2020 and another $100,000 a year later to pay off the HELOC. Selling slowly will allow us to avoid all capital gains. There is also the chance we’ll sell our current home before 1/2/2021 which would pay off the HELOC too. (More on the fate of our current home later in the post.)
So, we’re going to fix up this home. I’ll:
- Install new windows (fall 2019)
- Remodel the office bathroom (fall 2019)
- Finish the basement including adding another bathroom (spring 2020)
- Install a new deck (spring 2020)
- Remodel the kitchen (fall 2020)
- Remodel the master bath (spring 2020)
- Remodel the other girls’ bathroom (spring 2020)
- Install new flooring throughout (spring 2020)
Sidenote: I’ll be documenting the home remodel on YouTube. For updates, subscribe here.
And then there is the pool. I’m not sure what we’ll do about it. I’ve actually owned a home with a pool before and enjoyed it. However, this one is in rough shape:
It will be expensive to fix, possibly $15,000 to $20,000. It needs to be replastered. If this same pool were in Florida or Las Vegas where pools are everywhere, the job would cost $5,000. Because no one has pools here in Colorado and contractors are scarce, I’ve been told that it will cost about $15,000.
Side note: Anyone know how to replaster a pool and want an all-expenses paid trip to Colorado for a side job?
Side note #2: While I’ll be doing the work myself, I’m looking to hire a skilled assistant to help out with replacing windows and finishing a basement. Anyone?
I may try to do the work myself. Others have done it and posted the videos on YouTube. What could possibly go wrong?
On the other hand, I could rent a jackhammer for two days and demo it too. $150 for the rental and $1,000 for dirt. Done.
For now, I’m going to assume that we’ll fix the pool. Here is my budget:
And Then There Is My Time
Of course, I have to account for my time too. However, I think about this a little differently than most because of this:
I really enjoy the work.
I think that it’s loads of fun to take an ugly space and make it beautiful. At heart, I’m a builder and the act of creating gives me deep satisfaction. I’ll do the work when the girls are in school and at a leisurely pace.
The Main Reason We’re Moving
I think we’ll make a lot of money from this home when we sell it. If my budget is correct, we’ll have about $465,000 into the home when it’s all done. I’ve seen a smaller version of this home sell for $600,000. Great! However, this isn’t the main reason we’re moving.
I have fond memories from my childhood and the neighborhood kids. We’d ride bikes or play baseball all day. I want my children to have the same memories. Perhaps I’m silly, but the happiness of my children is really why we’re moving. And that’s also why the pool may get a stay of execution.
Back To Spruce
There’s one more crazy part of the story and it’s this; our current home still needs some work. Also, fall isn’t the time to sell. Luckily, we have a solution.
Mindy and I have some good friends who need a place to stay for the next six months, so we are going to rent to them. After that, maybe we’ll sell the home. Or maybe not. A good friend who is an expert in Airbnb rentals let us know that we can make good money with our house. So, maybe we’ll hold on to it after all…
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