Backgroundish

Back in 2010, I bought a house.

Cool story.  Quick plug for Redfin.  If you're like me and willing to do a bit of your own research and understand what you're doing, Redfin is the best.  The agents are great at negotiating and very efficient.  And did I mention you save money?  Think about it, a traditional agent has little incentive to get you a better price, since they get a higher commission with higher selling price.  Freakanomics did a good study on this.

So with Redfin, I found a nice 4 bed 2.5 bath in the Ballard neighborhood of Seattle.  It was a good deal at a low point in the market.  The house was originally built in 1912.  Recently the lot was split (you can kind of see the townhomes in the back yard) and the house was updated.

There was still a few things to work on, I redid the windows to vinyl, updated the countertops, did some painting myself with friends:

And redid the porch and paint trim.  Well the Seattle real estate market had turned around quite well by 2014.  Especially in Ballard we were seeing houses having bidding wars and selling for more than the asking price.  I decided to take advantage of the market and take some equity out of the house.  And I was looking for a new project as there was limited other things I could do on the house to improve it.  There actually was a few options, like keep the Ballard house and rent it.  But I was looking for a fixer project, so wanted to have the extra cash around to use.  

Of course that same market that was leading to getting a good price selling my old house, was making the buying market equally competitive.  Luckily I think the buying population in Seattle is looking for more of a finished product, not as much a fixer upper.  I looked at a few houses that needed a little work, made a few offers, but was outbid.  

First piece of advice for looking at fixer uppers: 

Get a good inspection!  Know what you're going into.

I used Pillar to Post inspection.  They were on the higher end of prices, but incredibly thorough and complete.  Also if you don't get the house they will refund a bit.

So after looking a bit I found this house that I had actually driven by and passed over.  It was a bit farther north in Ballard close to the Salmon Bay Park, and close to a few of my favorite places, Delancey and Essex, and the Waterwheel.

Looks gorgeous right?  It definitely needed work.  But there was potential there!  And the interesting part is that it came with plans and permits for an extensive, but not complete tear down of a remodel.  After a bit of research and running the numbers on what it would be worth after the remodel, I decided to make an offer.  As an aside... how do you decide the "value" of a house?

Here's a simple metric I came up with:  House Price / Zillow value = house value.

 The nice part about this is that Zillow estimates can be up or down, but they are generally consistently high or low for a neighborhood.  So if you compare the values for a neighborhood, the number computed above should tell you if your house is a good deal compared to others.

Next post... financing and pre closing on a fixer