Hey Race Fans! Welcome back.
We've been on the West Coast for this week. Meanwhile back in Dixie...
The stolen shingles have been replaced. And nailed down! Gather round and rejoice.
Seriously, the little cathedral ceiling cottage is coming together. The house wrap is going on and one can imagine that it is snowing instead of being "hotter than a monkey's bum" -to quote Mick Jagger at the Stone's Zip Code Tour last summer. Imagine the fireplace stoked and glowing. A bear-skin rug on the floor. A Bond girl. (Or Bond guy-if you like.) A repressed fantasy of being agent 007.
Wait! This is Durham.
Imagine a rocking chair or two on the front porch -high in the air overlooking the street below. A mint julep at hand. Or a Mohito for the lush-types in the crowd. A nice fan blowing cool air on you. And a Bond girl (or Bond guy -if you like) on the bear-skin rug in front of candles in the fire place... waiting for you. You, svelte devil, you.
"Things" are slow in general...
The market seems to have cooled a little in Durham... We'll see if that is true once Hazel is done.
A separate property, with a different company, we own, has not moved -even though it is priced well.
Our realtor is experiencing some website issues to the point that he might bring in a computer forensic company to find out if someone is sabotaging him. (We know, right?) And then prosecute or sue those responsible if possible/traceable, etc. (How wild is that?)
And the low-life types that rip off construction sites might be in for a surprise. We know one contractor that is arming himself. (How wild is that?)
However, as we may have mentioned before, we don't get paid for the solutions. We get paid for the headaches.
it is not the first time, and it probably will not be the last...
Hazel Lost about two grand worth of material last night.
This is what happens. Be prepared.
Ok. We've been in the Windy City for a few days... Day gig convention thing out by O'hare (Rosemont.). Soaking up the meetings, reacquainting ourselves with that whole Midwest passive-aggressive thing, and waiting for our flight back to Dixie.
Don't get us wrong, Chicago is a great town. And we are from the Midwest originally. So we appreciate the work ethic and can handle the bluntness. No worries. It is just that now (and for the last ten years) the Triangle area of North Carolina has been home. So, naturally, we miss it.
And, speaking of Raleigh-Durham-Chapel Hill, we have a little spec home (severely delayed) going up. Traditionally, we have been renovators. We have been transforming train wrecks into beautiful homes. However, in a market where inventory is low, money is plentiful, and everyone and their dog thinks that they are HGTV material, we needed to change tactics to a certain extent. Voila! The Spec!
We are still a few weeks away from the house being done, but we are starting to think about the next project. We have a lot or two in reserve, and we have a renovation project mothballed and just waiting for us to go all Rolling Stones on it and Start it Up. And then there is that little issue of actually selling the spec home.
We think that the way the house will sit on the lot -high and proud with a good view of the neighborhood-will be a strong selling point. We also think that the cathedral ceiling's combined with a good overall price point will be appealing to buyers. But, you know how it goes… It is never over until Mick Jager sings.
Specultion, musings, and odd mixed musical metaphors aside, we are still starting to think a little bit about our strategy for the months to come. Too often we are looking at tactics. We are wondering (dare we say it), if it is a good idea to possibly pull some money off the table? We are starting to sense something which we noticed before... back in, oh… say, 2008.
We think that instead of building the second spec home right away, we might want to do the renovation first. Our thought is that the renovation project is a much larger house. The profit potential is almost identical to the spec home. However, if we end up sitting on the project when it is complete due to a declining economy, we end up with a house that will rent for far more money than the spec home. (Due to more bedrooms.).
And that is the name of the game. If you cannot handle the worst case scenario, then you should not be playing the game.
Hope is not a strategy.
So, for today and possibly tomorrow, we are thinking that the next project will be the big renovation project. We already own the house. And, the cost of the renovation would be comparable to what we would pay to do the second spec house.
Of course, a lot of that hinges upon the current spec house that is under construction. "No sale" there would mean no starting on the renovation project -at least for the time being. (If you are new to this blog, we have a zero debt policy.). We are a little too diversified right now with acreage, spec home, lots, and renovation. And some of this will hinge on watching the various markets. At the end of the day, news is really only useful at a pedestrian level if one can use it.
So... It might be time to pull in the horns. Wait and watch for the wannabes to get out of central casting. Wait for the band to take the stage surrounded by abandoned wholesale signs, and a general loss of liquidity, equity, or both. After all, the real music, and the real deals, kick into a higher level during a recession. (The Blues always accompany recession or depression.) We might be way early on this, but either way we're telling ourselves, "You're going to want some cash for this concert."
Our realtor, Judson Vickery, snapped a few sweet shots of Hazel. Here they are for those interested.
Here are a couple shots of Hazel One being gift wrapped in OSB.
Concerning our loss (yesterday's post), we are refocusing on what we think will be the best position to be in for the next six months. Additionally, the lot on Drew was on the fringe of where we are working, and has not gentrified as quickly as we guessed it would.
Okay... We were wrong. Or perhaps not patient enough. Or perhaps, like the overgrown children we sometimes are, we overloaded our plate at the picnic and are full with, but not limited to: the new lot acquisition (yep, we are still trying to close that one), subdividing existing land/lots in Sanford, the pending renovation/transformation of the Main Avenue house, Hazel One, pending Hazel Two, etc... In other words, we are no longer hungry for Drew.
We have found this over and over: Greed always gets in the way of profitability. Big eyes lead to distended bellies.
Lesson learned. Again.
In the meantime we will continue to adjust our sequencing calendar to the realities of what we find and look at ways to maximize return on existing projects.
Our spec home on Hazel is going up. So far, so good.
However , on the other end of the spectrum, we are about to take our first loss-ever. And, to make it more confounding, we are taking this loss on purpose. We can't go into all the reasons here, but suffice to say that we would rather take the loss then suffer the "carry." The loss is relatively small ($1,500 or so -estimated), but the upside is exponential. And our carrying costs go to zero. It still hurts. 1,500 is 1,500. We don't want to give it away, but... We need to refocus, wrap up Hazel One spec home, take a look at the general market again, and then jump into Hazel Two, or Main, or both.
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