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Tuesday, November 14, 2006

Spotlight: Condo Flipper in Greenwood

Found on Ziprealty.com: 633 NW 8th St, Ballard/Loyal Heights (98117)

A developer from California has purchased a 1978 six unit apartment complex and began converting to condos in June. They've been working on a unit by unit basis and appear to be close to finishing unit #201, listed 3 days ago.

There's no image posted on ziprealty, but I've posted a satellite shot here. Note the green barn-like pattern on the North face of the structure.

From Ziprealty.com:

Newbury north in greenwood is nearly complete & now selling! Beautifully appointed 2 bed 1.75 bath unit in a cozy 6 unit bldg in a great location near hip 85th & greenwood ave intersection. Stainless appliances, granite countertops, hardwood floors, fireplace, balcony, and designer paint. 10 minute commute to seattle via i-5, or take aurora ave or 15th ave. Walking distance to greenlake; a bike ride away from ballard and u.W. Don't miss out-quality at this price doesn't come along very often!
Records indicate the property was purchased on 06/23/06 for $800,000. Five of the Six units are 2 bed/1.75bt with 950 sq ft, while one unit is a 1/1 and 650 sq ft.

I drove by this unit a few weeks ago and noticed that they were installing cheap vinyl siding over the original 3-story rectangular 1978 concrete stucco. Property Shark lists the property in "average" condition and judging by what I saw, it requires a total overhaul. In addition, the building is 2 doors down from a self car wash and the overall area looks to be in general disrepair.

Let's be generous and say it'll cost $65,000 per unit, not including holding costs or realtor commissions. That would bring the cost of the project to about $1,190,000.

If the developer is able to sell all 5 units at $275,500, and the 1 bedroom unit for $229,000, that would be $1,606,500 - or a profit of $416,500. Not too shabby.

Comparable units for sale in the area:

8354 11TH Ave NW #2, 98117
$ 284,950 (reduced 10/19/06)
939 SqFt, 2bd/1bt
59 Days on Market
MLS# 26156431

8721 2ND Ave NW, 98117
$ 289,900 (reduced 10/19 - Bank Owned)
1370 SqFt, 3bd/2bt
37 Days on Market
MLS# 26169242

4102 Stone Way N, 98117
$ 229,500 (has been relisted)
Condo Conversion 1bd/1bt
Sq Footage not Shown
MLS# 26177048

On the surface it would appear that the pricing is considerably less (under $300,000) than other condos in the area. However, we're talking a conversion here and as the market tightens one could easily assume that buyers are becoming increasingly picky in their decisions. Still, I think he's got a good shot at turning a profit since these units are priced near the KC Median of $259,700. (down slightly from a high of $269,500 in August)

Questions for readers:

How much do you think the actual cost of a full renovation of this unit would be? Is NW 85th/8th Ave in Greenwood a desirable area? Are people willing to purchase a quickly thrown together conversion at these prices? Where can I find comparable units that have already sold in this area? (I'll add them to this post)

It's hip, cozy and has granite countertops! What more could anyone want?

13 comments:

synthetik said...

By the way, setting up an account on www.propertyshark.com is free and seems like a fairly good alternative to the county website, which no longer offers online viewing of warranty deeds.

OT - the flipper condo I rented in San Diego has no been relisted 3 times since March 06 on the MLS. (from $559K to $499K)

How can anyone expect to get real data when this type of thing happens regularly?

msrelo said...

That small stretch of Greenwood is really sketchy. Between the dumpy houses, strange all ages dance club, and closed businesses it's a wonder why they would even leave the building standing.

On another note, that is an interesting picture of the strange house that lies accross the street and 4 or 5 houses west. I have always wondered what it was. It appears to be a strange mish mash of delapidated add ons. In other words an eyesore...

Grivetti said...

Gawd... I forget who said it on this blog... but granite coutnertops are to the housing bubble as aero-chairs were to the tech-bubble...

Curious synthetik, did you take into accound the cost of letting 6 units stand empty for the renovation period?

Dunno, if you we're able to score $1000/month for each unit, the owner's taking a $6000/month hit by letting the complex stay empty... maybe they're kicking out renters piece-meal doing the condo-owner/renter mix, but it seems you couldn't do an adequite conversion if that were the case...

And Greenwood's pretty nasty, sidewalkless blocks just north of town, garbage cars a-go-go and a nightlife that centers around the weekly-motels just down the hill on aurora...

rentalbliss said...

Maybe this flipper should have teamed up with this guy.

http://seattle.craigslist.org/see/rts/234389080.html

"My expertise is what can make a deal unprofitable."

wreckingbull said...

It is sad to see stories like this. Sad that some well-meaning first-timer might think they need to get on the spaceship but instead end up in financial ruin.

I walked through a completely rotted-out house on 74th & 30th in Ballard. Took a tour right before it sold. The stench of rot was so strong that it almost knocked you over. A flipper bought it for 350K, spruced it up and sold it for $650K several months later.

Now on my early-morning run, I can see lights on and kiddie-toys in the yard. Sort of puts a lump in my throat thinking about the issues in store for them.

synthetik said...

>Curious synthetik, did you take into accound the cost of letting 6 units stand empty for the renovation period

Well, I said "not including holding costs or real estate commissions". The units rent out between $800-875/mo, so there's that, plus the $500-1000 to get each renter to move out, plus close to $100K in RE commissions if all goes well. Plus the cost of the bridge loan @ 10% over 8-12 months?

Yikes.

octopuswithafez said...

Now on my early-morning run, I can see lights on and kiddie-toys in the yard. Sort of puts a lump in my throat thinking about the issues in store for them.

Caveat Emptor

wreckingbull said...

Caveat Emptor

To some extent, true. Once siding and drywall go up though, not much is going to be found in an inspection.

This thing was so soggy that the inside wood trim was rotting. Since the flipper finished the basement, there was zero structural wood which could be examined.

Remember, we will all pay for this crap in the form of a massive GSE bailout.

Merger Dog said...

wreckingbull, when do you think that house will reveal its rotten self and cause problems for the new family? If the fixer is done right, is it possible that the old damage won't cause trouble?

stephen said...

These days completely re-modeled means that what you can see has been shined up, nothing more.

Peter Taylor said...

These days completely re-modeled means that what you can see has been shined up, nothing more.

If you're interested in the RE industry's opinion of "remodels", have a look at this post on RCGEG by Ardell.

One of Ardell's pithy quotes in the comments section:

Good quality at lower price beats best quality on resale. Unless best equals granite vs. laminate, something they can see, but not when best equals higher paid contractor vs. lower paid contractor, something they can’t see. Case in point, condo conversions.

Her basic thesis is that you should do the work as cheaply as possible using the cheapest components possible in order to maximize your "investment". That, and buyers are so stupid that if you do cheap work that looks good they'll pay many multiples more than the value of the work when they buy the property.

So I guess the moral of that story is not to be a stupid buyer.

synthetik said...

Is other some other kind of buyer?

morfydd said...

(Reading your archives...)

Greenwood in a few blocks in any direction isn't sketchy. On 85th itself, though, traffic is fast and loud. I've always figured one buys a condo because it's convenient to exciting places, which Greenwood isn't. SFHs are still relatively inexpensive in the area, so why buy a condo there?

And I *like* the house on the corner. It's quirky, which I thought was a *good* thing. And it's kept in immaculate condition, not dilapidated.