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_House #5 – Colter St: Officially On The Market

Monday 11/07/11 time 11:07 pm - Jay Khor » 1 Comment

Well, we wrapped up the final touches and the home is officially on the market. Before & after pictures will be coming soon. In the mean time,  let us know what you think!

Click here for the MLS link

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_House #4 – 12th Ave: Construction Update

Monday 10/10/11 time 9:09 am - Jay Khor » No Comments

In this weeks update, I’d like to discuss House #4 – 12th Ave. We’ve had this home on the market for a little over 30 days now. There has been a ton of showing activity and a lot of great feedback. After reaching out to all of the buyer’s agents, the majority of the feedback centered around the addition, which we didn’t construct. Prior to our ownership, this particular arizona room addition was converted into a storage room and an additional 4th bedroom. Aesthetically, the ceilings consisted of commercial grade tiling (which wasn’t consistent with the rest of our remodel and design). When Sean and I initially discussed the construction scope of work, we determined that this addition would be utilized as a pantry and office space. As a result, although we didn’t like the overall look, we decided that the commercial tile ceilings could be fitting for the aforementioned purpose of those rooms.

Analyzing the feedback, it was pretty apparent to us that the state of the addition was a determining factor in the sale of the home. We took the feedback to heart and decided to temporarily take the home off the market. This off market time would allow us to implement the desired changes that the buyers have expressed to us. In the past two weeks, we tore down the commercial tile ceilings, added 10 can lights, and sheet rocked the entire addition ceiling. By doing so, we have created additional ceiling height and changed the feel of the addition to be more congruent with the rest of the home. Please see the pictures below for the improvements:

Although these changes were an added cost to us, which ultimately decreases our profit margin, we strongly stand by our value proposition and how we truly want to create a positive home purchase/buyer experience. We are always looking for constructive criticism and how we can further improve on our product offerings. We hope that these added changes will make the future buyer happy and lead to the eventual sale of the home!

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_House #5 – Colter St: Construction Update

Monday 10/03/11 time 12:34 pm - Jay Khor » No Comments

The majority of construction has already been completed since we posted the Colter St: Virtual Walkthrough. One of the biggest changes you will notice since our initial walkthrough is our discovery of a non performing sewer line during the due diligence period. We had a plumbing company come out and video snake the waste lines to confirm the initial home inspection report. Their assessment was that the sewer lines had a remaining life of 3-4 years. Having this information, we had to decide our plan of action. Do we do the absolute minimum to maximize profits or do we do what is right for the buyer? Your typical fix-n-flip investor would decide to leave the pipes alone because when they sell it, the pipes would be fine. It’s of no concern to them what happens to the home after ownership changes. Even though Versutia_ would incur a bigger cost by replacing the waste lines, Sean and I strongly believed that to truly transform this house and create a positive buyer experience, it is essential that we change it out for the future homeowners. By doing so, we would be able to fulfill the value proposition of providing a turnkey home. Furthermore, what is the purpose of creating beautifully stained concrete floors if they have to be ripped up 4 years from now? The waste lines have been the only hiccup in the construction of the home. Throughout this process, we are actually enjoying quite a bit of cost savings due to the efficiencies we have achieved in the other two homes. Overall, this project has been pretty smooth thus far. Below is the scope of work for Colter St. as well as pre-construction, construction, and current pictures:

  1. Demolition (Roof, Flooring, Electrical, Plumbing, Waste Lines, Kitchen walls, Exterior Siding, Windows, Bathrooms, Duct Work, Low Ceilings)
  2. New Architectural Shingles
  3. New Energy Star Dual Pane Windows
  4. New Infrastructure (Electrical, Plumbing, Framing)
  5. New R-6 HVAC Duct Work
  6. New Drywall & Smooth Texture
  7. New R-38 Blown Insulation
  8. New Water Base Stained Concrete
  9. New Custom Paint
  10. New Master Bedroom & Closets
  11. New Bathrooms (Custom Showers, Vessel Sinks, European Cabinets, Solid Surface Countertops)
  12. New European Kitchen (European Cabinets, Solid Surface Countertops, Stainless Steel Appliances, Mosaic Back Splash Walls)
  13. New Landscape Package
  14. New Versutia_Home

 

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_General Updates

Friday 09/30/11 time 9:54 am - Jay Khor » 1 Comment

I’ve put a lot of thought into the direction we want to take this blog and decided to implement two directions:

1. Weekly Construction Updates (Updates on the progress of our projects — every Monday)

2. Monthly Knowledge Series (Business learnings, experiences, advice — last Thursday of every month)

We hope that you will enjoy reading our posts as much as we will enjoy sharing them with you.

In other news, we sold the home on Pasadena in only 4 days! We were fortunate to have such great responses/feedback that we received multiple offers on the home. We had the opportunity to meet the buyers and are very happy that they are living in the home. We received really good feedback on their experiences thus far and hope that they continue to enjoy their new home. For those of you that have not seen before and after pictures of our projects, we’ve posted after pictures of all our projects on the Properties page. (Here are links for the before and after transformations: Pasadena and 12TH)

Now that Pasadena is gone, we’ve been diligently searching for more projects but the inventory has completely dried up! There are no worthwhile deals that will allow us to apply our redevelopment program and also see any profit. Furthermore, it seems that all banked owned (REO) and government (HUD) homes have placed a moratorium on investment purchases. REO homes require a 15 day waiting period and HUD homes require a 30 day waiting period prior to any investment offers. If any of you know any projects or any workarounds we would love to hear from you.

In our initial business model, we planned for and anticipated future economic situations that would negatively impact our revenue models. As such, due to the current moratorium and lack of inventory, we are developing in our pipeline a residential brokerage business. We think that there are a lot of synergies in our research, metrics, and processes that can readily be applied to clients. We are building a concept that we think will truly revolutionize the brokerage industry in the way that clients view homes. We think that this type of technology will allow for better home purchase decisions, eliminate the time it takes to acquire a home, and customize searches that really meet the needs of buyers. In essence, we are confident we can redefine brokerage and provide real service. If you guys know of anyone looking to buy/sell their home, feel free to send them our way as we will take excellent care of them.

Look for our next construction update this coming Monday. Until then, watch the ILLINI move to 5-0 and have a great and safe weekend!

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_House #5 – Colter St: Virtual Walkthrough

Thursday 07/21/11 time 2:29 pm - Jay Khor » 2 Comments

We recently acquired House #5 – Colter St which has very similar features to House #3 – Pasadena. Again, this home had multiple offers on it and we were fortunate to have the best offer. This home is very attractive to us because we can achieve great economies of scale as we are replicating the same structural and design changes that we implemented in Pasadena.  Please enjoy the virtual walkthrough to see what we are working with. Stay tuned for construction updates…

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_House #4 – 12th Ave: Construction Update

Thursday 05/26/11 time 7:51 am - Jay Khor » 1 Comment

It’s been a while since our last update as we’ve been pretty busy with the redevelopment of our current projects. At this point, we are starting to experience our first set of delays with contractors, quality control, and scheduling. It is definitely difficult to find the right balance between quality/reliability/speed/price. For those of you familiar and want to relive the days of business school, this is the epitome of game theory. Without getting into the technicalities of game theory, Versutia_ is essentially seeking the highest quality labor, most reliable contractor, quickest completion time, and lowest price possible. In a perfect world, we would be able to achieve the aforementioned desired results with every single contractor. Welcome to the real world as this is never the case!

From a contractor’s perspective, they want to complete a job as quick as possible with the highest compensation. If they focus on quality, their speed decreases. If their speed decreases, they make less money. Therefore, if they focus on quality, they will make less money as they are spending more time on the project at a fixed price (their dollar/hour will diminish). This doesn’t even factor in the notoriety of contractors and their aversion towards professionalism (phone call responses, commitment follow-through, etc.). By no means am I generalizing the construction industry as a whole so please do not deduce that all contractors are unprofessional. There is definitely a fair share of contractors that consistently overachieve. Anyway, I apologize for the digression.

Given Versutia_’s goals and the contractor’s goals, what is the typical outcome and what is currently causing the delay? From Versutia_’s perspective, we realize that there are trade offs that need to be made. Although the 4 variables are all important to us, we will absolutely never sacrifice on quality. Because quality is our main concern, we know that sometimes our trades may take longer on a particular job. Furthermore, it is extremely important for us to manage our budget and seek whatever will afford us the best quality at the lowest price. These two variables have really narrowed down our list of contractors available to us. These are the types of contractors that have a steady flow of business and are in the highest demand. These are the types of contractors that consistently overachieve. Most importantly, these are the types of contractors that are extremely scarce. Due to scarcity, when we are juggling multiple projects, we have to wait for the contractors to finish at one project before they can move on to the next. Situations where homes are idle due to contractor scarcity is identified as our largest bottleneck. The same can be said when these same contractors have promised their services to other clientele independent of us. Moral of the story is, if you know of any contractors that fit our criteria, we would love to hear the recommendations!!!

As we wait for the contractors to finish the Pasadena house, the pictures below show the home after the demolition, electrical, plumbing, and HVAC work have been completed. We are currently in the drywall repair stage.

Please see below for the full scope of work for the home on 12th Ave:

  1. Demolition (Kitchen walls, Exterior Siding, Windows, Bathrooms, Duct Work, Low Ceilings)
  2. Roof Repair
  3. New Energy Star Dual Pane Windows
  4. New Infrastructure (Electrical, Plumbing, Framing)
  5. New R-8 HVAC Duct Work
  6. Drywall Repair
  7. New R-38 Blown Insulation
  8. New 20×20 Porcelain Tile Flooring
  9. New Two Tone Custom Paint
  10. New Bathrooms (Custom Showers, Vessel Sinks, European Cabinets, Solid Surface Countertops)
  11. New European Kitchen (European Cabinets, Solid Surface Countertops, Stainless Steel Appliances, Mosaic Back Splash Walls)
  12. New Landscape Package
  13. New Versutia_Home
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_House #4 – 12th Ave: Old vs. New Design

Monday 05/02/11 time 12:10 pm - Jay Khor » No Comments

In our House #3 – Pasadena: Old vs. New Design post, I spoke to you about the two segments of design that Versutia_ focuses on: Aesthetic Design & Functional Design. When you see the floorplan drawings below for 12th Ave., you will notice that we were not really able to make a whole lot of functional improvements. The major functional improvement for this project involves opening up the kitchen walls and building out a kitchen island. This will result in more lighting to the entire communal area as well as greater interaction between the kitchen, dining, and living spaces.

5548 N. 12th Ave. – Old Floorplan

5548 N. 12th Ave. – New Floorplan

When the home is complete, you will see that a lot of the design component is geared more towards the aesthetics/contemporary design.

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_House #3 – Pasadena: Construction Update

Thursday 04/28/11 time 5:42 pm - Jay Khor » No Comments

Since we closed the home on 4/8/11, we have been broken into twice. In the first occurrence, the burglar ripped out the majority of the copper plumbing in the home. In the process of stealing our copper plumbing, they were very fortunate to disturb the asbestos insulation in the attic and expose themselves to the carcinogenic fibers.  In the second invasion, they kicked down the shed door and stole our washer and dryer. When reading this, you may think that the neighborhood is quite unsafe. In actuality, this is a common misconception as often times, the people breaking into these homes are drug addicts that are looking to fund their next quick fix. It is important to understand that these people only disturb homes that are under construction or vacant. This is also a pandemic that occurs throughout the valley, not only Central Phoenix.

With a close date of 4/8/11, we were supposed to start the abatement process on 4/13/11. Due to scheduling conflicts and contractor unavailability, we had to push the start date back to this past Monday 4/25/11. See pictures below of the progress thus far:

During this process, the abatement contractors wear respirators and hazmat suits while they completely seal off the entire home and demo the asbestos related materials in a tightly controlled environment. The abatement process should be fully complete on 5/1/11 when the home passes an independent 3rd party air quality exam. This exam will show that there are no longer any traces of asbestos in the home.

Please see below for the full scope of work for the home on Pasadena:

  1. Asbestos Abatement (Demo Insulation, Roof, Windows, Flooring, Cabinets, Bathrooms, Interior Walls)
  2. New Architectural Shingles
  3. New Energy Star Dual Pane Windows
  4. New Infrastructure (Electrical, Plumbing, Framing)
  5. New R-38 Blown Insulation
  6. New HVAC Duct Work
  7. New Exterior Siding
  8. New Master Bedroom & Closet
  9. New Acid Stained Concrete
  10. New Two Tone Custom Paint
  11. New Bathrooms (Custom Showers, Vessel Sinks, European Cabinets, Solid Surface Countertops)
  12. New European Kitchen (European Cabinets, Solid Surface Countertops, Stainless Steel Appliances, Mosaic Back Splash Walls)
  13. New Landscape Package
  14. New Versutia_Home

 

This entire scope of work has a projected completion date of 6/3/11.

 

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_House #4 – 12th Ave: Virtual Walkthrough

Wednesday 04/27/11 time 8:24 am - Jay Khor » No Comments

Enjoy the virtual walkthrough that we filmed this past weekend. Looks like we are set to close this Friday and will start construction on Saturday. Stay tuned for more updates…

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_House #4 – 12th Ave: Paradigm Shift

Saturday 04/23/11 time 8:44 am - Jay Khor » 4 Comments

Two weeks ago, Sean and I went to view 21 properties with the goal of adding to our portfolio.  Out of the 21 potential projects, we were able to find two properties that fit our acquisition criteria. Upon speaking with the listing agent, we learned that there were 4 other offers on the property and were entering into a highest and best scenario. For those of you unfamiliar with House #3, this is deja vu. Find out about our bidding strategy by reading our previous post: House #3 – Pasadena: The Art of Negotiations Part 1. Long story short, our offer was accepted due to our favorable terms.

In this segment, I want to discuss our typical buyer profile and our mission to lead the change in buyer tendencies and their paradigm shifts. According to the U.S. Census Bureau 2009, 54.1% of the Greater Phoenix population consisted of people between the ages of 20-59. Contrary to popular belief that Arizona is a destination intended solely for senior citizen retirees, with an average age of 33.7, Greater Phoenix is actually the 5th youngest metro region nationwide. So what’s the relationship between age and a buyer’s homeowner needs? The old adage of our parents generation is more square footage = a better home. The inherent problem with this school of thought lays in the trade off between more square footage and the location to which more square footage is available. Most of you may know that the current expansion pattern of the Greater Phoenix area trends outwards away from the city core (Naturally this is the only way to construct a new home on land that has not yet been developed). Therefore, living in a larger new build requires you to be further from the city core. When this expansion hits its critical mass, at some point consumers will reach their threshold for outer city limits living and that larger home is no longer worth the commute back into the city. We at Versutia_ believe that Generation Y has reached that threshold and we want to lead the change and bring awareness back to inner city living.

In the past couple years, there has been a strong push for environmentally friendly, energy efficient, green products. The greenest building is the existing one. An additional component of green living includes quality of life improvement. We believe we can tastefully fuse green living and great design to provide an amazing product that future homeowners will be proud to call home. Reference House #4: 5548 N. 12th Ave:

These types of homes were typically block construction built between the 1920-1960s. Most of these homes are twice our age and everything except for the shell is obsolete. For example, these homes contain aluminum wiring, galvanized plumbing, cast iron waste lines, plaster walls, single pane windows, outdated fixtures, etc. Over time, all of these items will fail. Currently, many of our fellow Gen Y’s are already shopping for homes in these neighborhoods. These first time home buyers will most likely encounter two scenarios:

1. Old everything – The home has never remodeled. At some point they will need to go through the daunting task of remodeling the home on their own (over spending, unreliable contractors, etc.).

2. Investor “remodeled” – The home has a lipstick makeover. Investors will paint and carpet the floor, cover up structural issues, leave old wiring and plumbing, and call their finished product a “complete remodel.”

For homeowners that don’t know any better and purchase one of these homes, everything will fall apart thereafter. These are the types of experiences that push people to live on the outskirts. Versutia_ is extremely passionate about changing the old adage of more square footage = a better home.  We want to prove that homeowners can work with smaller spaces provided the floor plan has been reconfigured for a higher and best use. We want homeowners to improve  their quality of life. We want homeowners to help the environment. We want homeowners to cut down on energy consumption. We want homeowners to live in great design. We want homeowners to enjoy a hassle free ownership experience. We want homeowners to have a Versutia_Home.

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