House Rehab Update & Info For The First-Time Buyer

Some of you asked me to keep you posted on the progress as our rehab goes to market. Well, I'm happy to say that we have sold the house after one day on the market! An offer was made that was 5% less than our asking and we countered and came to an agreement.

We made a decent profit and attracted the attention of an investor that wants to fund our next project, so this is a big step forward in our budding rehab business. It will be nice to have some financial backup; it was a bit stressful putting most of our assets on the line in this downward market. I don't even want to tell you the numbers, because many of you in other parts of the country will be aghast at what a 1000 square foot house sells for in the Los Angeles area.

Despite what the newsspapers and pundits say, there is still short term money to be made in the real estate market if you buy in the right neighborhood, for the right price. Of course, I want our experience to inspire the budding investor, but, more importantly, I want to stress that this is one of the best times for the first-time buyer to get into the housing market. I can remember when we got our first home in 1996, during a recession, right after the Northridge earthquake. Those factors put us where we are today, and we would not have been able to have our own house or the rental property that we own today, if we had not bought when the housing market was in crisis.

The current market crisis is really a perfect storm for the first-time buyer. With prices down, inventory up and interest rates at the bottom, it would be crazy not to buy if you have been looking for a home for a while now. Please don't try to time your purchase so that you buy at the very bottom of the market; you may end up missing the boat and find yourself priced out of the market when prices and interest rates go up. Long-term ownership of real estate is still one of the best ways to build wealth, so, even if prices continue to drop after your purchase of your first home, they will eventually go up beyond your projections after 5 or 10 years; you won't be throwing your money away paying rent, and you'll get the substantial tax benefits. Again, all of this is dependent on buying in a good neighborhood for the right price.

Here is the original article that I published, documenting the progess of the Rehab

We're finally finished rebuilding our investment property after 6 months of hard work. Because I've been spending a lot of time at the house the last couple of weeks, I haven't been as active on Gather as I had wanted to be. Here are some before and after pictures, organized in photo essay form.

When we bought the house it had been abandoned for three years and boarded up, an eyesore in an otherwise lovely neighborhood. I really don't like the term house flipper; we actually restored and saved this house from being torn down or continuing in it's state of disrepair, dragging down the neighborhood.


Although we bought it at auction, we did visit the house beforehand, making sure that there wasn't any major structural problems. I explored the crawl space and we took a look around all four sides. There's a lot that I like about these houses, built in 1949. With a really beefed-up, raised foundations and cedar framing, they are built much better than the McMansions that are replacing them.

Now the house on Gaviota went from the bleak dog to crowning jewel. With a reconfigured floorplan, new insulation, plumbing, electrical, flooring, walls; it's a new house, retaining the old charm of the original structure:

The inside was in much more disrepair than the outside, but it did make it easier to reconfigure the floor plan to make the space seem bigger in this 980 square foot structure. This is a view of the inside as you enter from the front door, before we cleaned out the debris left from the previous owner:



We reconfigured the living room and kitchen to allow for a bigger kitchen and a comfortable, open plan feeling.


With maple floors, black granite counters and cabinets from IKEA, we built a luxurious kitchen without spending a lot of money.

Here's our carpenter, David, fitting the laundry closet with a pocket door to save space. Previously, the washer and dryer was outside. Behind him is the back wall of the kitchen where the window and sink are in the "after" photo above:

Here's the completed living room:


The third bedroom or office has a fireplace and some great woodwork, including a vaulted ceiling that we were able to save.



The final results of the third bedroom:


Here's a view through the master bedroom closets of the bathroom.


And the final results:



Bathroom with white subway tile, granite floors, seperate glass shower and deep, soaking tub.

The backyard was equally neglected and included chain link kennel stalls that we had to haul away. This is photo was taken after we cleaned it up.

With a redwood deck off the kitchen and my wife's beautiful landscape design, it's a peaceful oasis, ripe for entertaining:


Even in this tough market, one can make some money resurrecting these depressed properties, and have a lot of fun doing it. It's going on the market this weekend, and my wife has already started looking for the next one. I'll miss it when it transfers to the new owner.

Warren Keating is an artist living in Los Angeles. His wife is an incredible business woman and real estate visionary. His work can be seen and purchased at KeatingArt.com. For more information, go to WarrenKeating.com.