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House Talk

No. 3 - July, 2002

 
The Art of Home Restoration
  
A talk with Landon Dirkson
 


How many of you have often said how much you’d like to buy a “fixer-upper,” do the necessary work yourself, then turn around and sell it?    In this article, you’ll learn how Landon Dirkson, a client of the Glass-Sabine team, has done just that!   And to prove once again that the world is indeed a small place, the Glass-Sabine team’s Judith Glass recently caught up with Landon when he was on holiday in London, England.

GST     So, Landon, after all our adventures in East Bay real estate – from the flats of Berkeley to a parkside setting in Piedmont -  here we are discussing it  over a cup of afternoon tea in London.  I know our readers would love to hear about the process of buying, restoring and then re-selling homes.   What led you down this path?

LD        Well, as you know, I have a rather demanding “day job” but I still have a lot of enthusiasm for the home restoration process.  And I really want to emphasize that what I do is restore, not remodel.  It is an incredible release for my creative side and for me, it is a very feasible second occupation.  For a “type A” with a lot of energy, it works very well!

GST     Your restoration of houses definitely takes a lot of energy – and time!  We’ve watched you in action and know how hard you work at your so-called avocation; it is very time-consuming, and really all-consuming.  You hardly stop long enough to eat a meal – we’ve seen all those fast-food containers in your waste baskets!   You were not only working during the day at your regular job, but you were working as the general contractor of your project.

LD        That’s true, however, that role has changed with each house.  Determining what it is that I could do on my own, and what I needed to hire out is always different with each project.   With the first house, I frankly wasn’t sure what was going to happen in terms of the scheduling, the work, the cost – you name it.  Obviously, with each subsequent house, my revenue pool has softened up, and I’m able to pay for more outside contractors and craftsmen.  I always assume the role of general contractor but interestingly, I have discovered there are some things that I can do well – and actually prefer to do myself. 

GST     Like what?

LD        Well, for one thing, plumbing!  Plumbing is probably is the one thing that, next to electrical work (which I never do on my own, by the way) is the job that most people find terrifying.  But, frankly, if it leaks and water comes out, you can see it and know that “it’s broke.”  Plumbing problems can be relatively easy to repair, and often much less expensive or difficult than you first think; sometimes it’s just a trip to the home improvement store and the job is done!

GST     Many of the homes that you have bought, restored and re-sold have been in Berkeley, and you always have proper permits.  From working in real estate, we know that many buyers assume that there can be difficulties with the permit approval and inspection process in the City of Berkeley.  Has this been your experience?  

LD        Well, basically, before you even purchase a house, you have a clear idea of the condition of the house and any potential problems  There is always a Pest Report, indicating any damage from termites or decay.  Very often, problems that are included in a pest report are located in areas that I will be repairing or replacing anyway, so when you review a pest report and break it down into smaller pieces, even if the numbers seem staggeringly high, it is often not nearly as bad as it first seems. 

            Anything that you are hiring out, of course, needs to be inspected.  But as I prefer to think of my projects as restoring, not remodeling, there have only been a couple of occasions where I’ve needed to have inspectors come through and look at my work when I have made additions above and beyond what was there originally.  As you know, I don’t move mountains;  I restore.  So when you are restoring, you eliminate a lot of the inspection aggravation. 

GST     Well, I do remember a house you bought in Berkeley’s Thousand Oaks district and I know you added a full bathroom to that house.  So how did that work out?

LD        That house was a great find.  The owner had recently passed away and the house was in a state of disarray, but it had been in the same family that it was built for in the early 1900’s.  Right away, I had a very good feeling about the house, and of course, the setting in that wonderful, quiet neighborhood.  However, in terms of modern conveniences, the house was lacking a second bathroom.  So in that case, in order to create a master suite, I was able to rearrange the doors a hallway that was actually too long and served no real purpose.  I moved a door to connect the original bath to the master bedroom.  Then at the end of that same hallway, I used an oversized entry closet to create a second bathroom.  In terms of getting the permits for the new bath, the trick was to pull a permit for just exactly what I was doing which was plumbing.  I pulled a plumbing permit for a new toilet and was able to obtain the permit  over the counter at the City of Berkeley office; unlike an overall building permit needing design review and other requirements, a plumbing permit is simple.  In this particular case, I had a sub-contractor who worked with the building inspector on the placement of the fixtures.  We were a little tight for space but because it was a one-on-one conversation between the plumber and the plumbing inspector, and because we weren’t adding any square footage to the house, the inspector was able to sign off on it right on the spot.

GST     I’ve seen you in action, and I know that when you are looking for your next project, you have a really good eye for seeing the potential of a house.  You also have excellent taste and a built-in sense of what constitutes a good buy in real estate.  However, your projects still have to make good business sense.  So when you “do the math” before you buy a property, what is your criteria?  Do you apply a certain formula?

LD        There is no particular formula.  There’s the cost of the house, the cost of money during the renovation period, and the cost of necessary improvements.  Of course, the cost of improvements is a skill you learn very quickly as you go along!  There’s no magic because I pretty much know the price of fixtures and appliances at the beginning of a project; the unknown for me is always the time factor and whether I’ll be able to do all the work myself or end up hiring someone else to help out.  In terms of the end result, there’s no equation.  It’s all about the neighborhood, and making the house be as attractive and inviting as possible to potential buyers. 

            Regarding the gain, it’s always different, and I’ve always been surprised and very happy with the result!  The trick is not to be greedy – and you have to be willing to finish your project – and move on to the next!   Part of this is accepting the fact that real estate values are going to continue to go up.  As I’m sure you remember, the first house I restored in the Berkeley flats sold for $275,000 a few years ago.  I was happy with that result and made a nice profit. It’s now on the market for $445,000!

GST     You’ve been quite creative with the location of some of your purchases!

LD        Well, when I evaluate “neighborhood and location,” I include a lot of factors.  For example,  a smaller house in a transitional neighborhood close to a BART station is absolutely perfect for a single person who commutes to San Francisco.  If you’re restoring a larger home that will more than likely be purchased by a family, the proximity to BART is not nearly as important.  I try to identify the proper house for an area and sometimes you can be surprised!   I restored a very small two-bedroom house in Piedmont (where the market is almost always geared towards families), and although my partner and I toyed with the idea of expanding the little house (by remodeling the garage), we decided to restore it with the original footprint, and the surprise was that it sold immediately to a single person! 

GST     Landon, your projects always attract good buyers – it is such a joy to see how that happens.

LD        My goal is always to finish a project so that buyers to walk in the door and immediately visualize themselves living in that space!  And, of course, I have excellent and savvy realtors!

GST      Well, thanks!  But this is about you, so let’s stay on track!  What do you remember about the first house you put on the market?

LD        Well, what I remember the most was preparing for the first open house and going through the house room by room, wall by wall, identifying what needed to be changed, and I was really proud of myself because you two (the Glass-Sabine team who is definitely strict about how a house presents itself to the marketplace) said everything was just fine!   Then about half an hour before the first open house for the brokers, as Sheila was making a last-minute adjustment, she said, “This mirror needs to go up two inches.”  So, moving the mirror made everything perfect!

GST     What about pricing your homes once they are ready for the market?

LD        Again, as you know, I completely depend on my realtors to set the price.  I feel so strongly that sellers just cannot (and should not) set the list price for their properties.  You need a price that is actually slightly below what buyers expect to pay for a high-quality product!  Potential buyers walk into a house that sparkles with good taste and good design and if they do not feel the price is outrageous, that’s when a seller will get a good result – the selling price will usually be pushed to the limit of what the market will bear.  Since good realtors know the recent list price/sales price ratios better than anyone else, they are the ones to set the final list price.   The correct list price will move the property; I always want my properties to sell as quickly as possible since staying on the market is poison, in my opinion.

GST     OK, so back to the “nuts and bolts.”   What would you say to someone who’s thinking about jumping into the rehab/restoration game?

LD        Honestly, I don’t know why more people don’t do it!  It is definitely a lot of hard work, but it’s very rewarding!

GST      You have one unique approach to the actual restoration process: you almost always move in and occupy the property while you’re working on it.  That is definitely not for everyone, since being covered with plaster dust, and washing dishes in the bathtub gets real old, real fast!

LD        True, but I can’t stress enough how involved you have to be.  If you’re not living there, you lose a lot of steam!  I mean, if you haven’t had a hot shower at home for four days, you’re extremely motivated to get the hot water heater installed.  In other words, my projects get finished much more quickly because I am there.

GST     One thing I remember so well is that in one of your houses, there was a neighbor who used to walk around her back yard in her bathrobe in the middle of the night.  Now, although there is nothing wrong with this, the vision of her was a bit unsightly, and if you had not been living in the house yourself, I don’t think you would have known about her nocturnal habits.  So you built a very attractive and very high redwood fence on that side of the property line!

LD        You’re so right.  Of course, it’s nice to have a back-up – like a friend with an extra bed and a shower, but as much as possible, I am on site for the entire restoration period.  For one thing, the other workers on the project can see that I’m there working as hard as they are, and it really keeps things moving along.

GST     Even though I know your projects are done extremely carefully, are there any places to cut corners?

LD        Sure, there are a number of ways to keep costs down.  One thing is to find a place that sells the absolute highest quality kitchen appliances – but where you can buy last year’s models, for example.   On the other hand, two places I don’t cut corners - I use the top grade of kitchen cabinetry and flooring, and I refuse to buy or use cheap paint.

GST     So, from the swing of the first sledge hammer to the last finishing touches, what sort of time table are we talking about?

LD        Well, of course, it depends on the size of the house, but I can almost always count on 90 days from closing the escrow on a house to restoring it and getting it back on the market.   An important point here is that I always have a “master plan” so that if suddenly we’re delayed in the kitchen for some reason, we move right to the back yard landscaping without skipping a beat or losing any valuable time.   If money is really tight and you can’t hire help for certain parts of the project, it will take you longer and cost you more money.

GST     Since you tell me that you are looking for a new project, I guess you still have enthusiasm for this hobby! 

LD        Right.  And I still emphasize to anyone who has an interest in taking the plunge to “just do it.”  There’s no guarantee, but you learn a lot as you go.  It’s great to have a partner whether it’s a spouse, business partner or whatever – because it’s crucial to have a second pair of eyes to look at a property, and someone to bounce off your ideas about a purchase.  And, of course, since this is often a business venture, I have learned that you definitely need to have a good accountant, tax planner, possibly an attorney and, again, I can’t emphasize this enough, a good realtor!

GST     What about the financing for your projects?

LD        Well, frankly, that is the one area that can be a little tricky.  My best advice is that if someone already owns a home and can get a good-sized equity line, they should use that money to buy the property outright if at all possible.  However, right now there are some fairly creative short-term loans with low interest rates that are perfect for a restoration project since, hopefully, you’ll be paying the money back within a short time - as soon as the property sells.

GST      Any last thoughts?

LD        Even though this is ultimately a business proposition, I like to think that I have restored the beauty of a few East Bay homes utilizing consistency of design and integrity of workmanship.

GST      Landon, I couldn’t agree more – thank you so much!

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For further information or questions for our House Talk column, 
please contact Glass/Sabine by email:  Sheila@GlassSabine.com
or call us at 510-326-5055.

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