Livin' La Vida Luna y Luca
A beautiful day in Grandpa's neighborhood.
Introducing Project Girard 🏡
Project Girard has a quirky origin story.
This property was on my mailing list because it was in probate. The owner passed, and the children were trying to sell.
My direct mail partner sent me a text around 2pm on Tuesday, June 10th, telling me the sellers called on our Fake Check Mailer.
Later that same day, I was talking to my builder partner and telling him I had a lead and wanted to get his take on an opening offer.
He said, "Wait, ## Girard? I got that lead yesterday, and I already made a verbal offer."
"Okay... so what do we do now?" I asked.
These types of situations come up semi-frequently. When someone is willing to sell, they make a dozen calls in an attempt to get the highest and best for their property (as they should).
In these cases, we work the lead from two angles. We go at it individually, and whoever builds a better rapport with the seller will be the one to take the reins on the transaction.
I went to my appointment a few days later and fell flat on my face. I've never had such an unproductive first walk-through.
I met with the daughter-in-law of the deceased, and she pushed our showing because another party was walking the home and taking their sweet time. I arrived 30 minutes later than our originally scheduled meeting, but the other party was still roaming around the backyard.
Looking back on it now, I should have rescheduled for a completely different window. She didn't feel comfortable having two separate parties in the house at one time, despite both of us knowing her intentions: sell the house for top-dollar.
I also think she felt "unsafe" with me, which was shocking. I could very well be wrong, but as I toured the house, she said things like, "Make sure you stay in front of me." Or "My son's in the backyard with the other interested party, so I'm not alone here."
At that point, I suggested we stop the tour and just talk outside on the front lawn. "You know what? I don't need to see the house. I'm going to tear it down anyway. Let's just talk outside so I can better understand what you're looking for here."
The conversation was like chewing glass. I'm pretty good at schmoozing, but I simply couldn't recover from the scheduling conflict and awkward walk-through.
My builder partner, on the other hand, drove by the house to put eyes on it later that same day and ran into the son of the deceased. He was driving a classic car, and they bonded over it.
I made a soft offer of $950K via email and stepped aside.
My builder partner sat down with the son a few days later and made an NFA (Not F*ckn Around) offer.
"What's it going to take to get this done?" my partner asked.
"$975,000", the son replied.
"Ok. $999 it is." *Sticks hand out*
"What? 999?" The seller asked, confused.
"$999,000.00, and you don't shop this offer to whoever else you're talking to."
🤝
The Numbers:
Let's quickly run through the numbers here.
We'll start with three buckets of expenses and end with our expected After-Repair-Value.
Acquisition Costs:
Our purchase price is $999,999K. After closing costs, prepaids, and fees, we'll be all in for $1.063M.
Cost to Build:
We're building a ~6,000 square-foot home (including basement). At $160/ft, we're looking at a build cost of roughly $960K. We expect another $110K in interest expense. The total cost to build will be just under $1.1M
Cost to Sell:
Look at that new line item: Mansion Tax. It'll be 2.5% of the sales price in this instance. Total cost of sale is $236K, which is absolutely bonkers.
After Repair Value
- 2.7M - Conservative
- 2.750M - Base Case
- 2.8M - Aggressive
We have one comp, and it's on the other side of town. It took longer than expected for them to go under contract, but they also hit the market well before they finished the house. I assume they'll print at $2.750M.
Our lender's appraiser, however, thinks we're worth quite a bit more: $3,235,000.
I put our chances of achieving that number at roughly 1%, but it's nice to see our financial backer believes in the deal on paper.
What's Next?
We're figuring out the floor plan with our architect. This lot is roughly double the size of what we're used to in this town, so we're having trouble with all the extra space.
We're set to close in mid-September, and funds are already in place.
Looking forward to closing on this transaction, developing this home, and handing the keys to a family that will get to enjoy it for years to come.
🙏🏽✌🏽
What I'm Working On...
