Why the HECK are you remodeling your kitchen RIGHT before you need to relocate??? We got this question a lot. Like, very frequently. Especially right after we totally gutted the entire kitchen! (Insert nervous laugh here.)
You see, we found out in late December of 2019 that we had 6 months before we need to relocate to AZ for Tyson to start his new job! We announced it to the wonderful world of Facebook shortly thereafter and everyone was all excited for this new change (for the most part). To prepare for this move, I glued myself to Zillow every spare moment I had tirelessly memorizing every neighborhood within a 30-minute commute of Tyson's work and analyzing each home under a highly judgemental microscope!
Although this helped me ultimately decide on what neighborhood we should move to, it actually led me to a complete breakdown in early January - well, not literally, but kind of! I broke down because I had no idea what our house would sell for, would we actually have a decent down payment on our next house, I also had no grasp of what our income would look like which meant I had no idea what kind of house or neighborhood we could afford! Window shopping for a house was fun and all, but what the heck was our PLAN?! I began to panic.
With Tyson having his first big-kid job and releasing me from the formal title of "Sugar-Mama" (his words, not mine), and hoping I could find a new job in AZ with similar pay, was just too many moving and unfamiliar parts for me to wrap my brain around. Where do I apply for jobs if I don't know where our home-base is? I don't want to land an incredible job 1 hour from his work, making the house shopping more limited! In order to process, plan, and execute, here's how I finally broke down our next steps:
Step 1: Jessica needs to find a job so we know our total income and where to look for homes. I would intentionally look for jobs that were within 45 min from Tyson's work. Seeing that I had already done EXTENSIVE research on the area, I had a few neighborhoods already picked out and would try to shoot for jobs in those surrounding areas!
Step 2: Determine what our house could sell for
Step 3: Determine how much we had for a downpayment
Step 4: Determine a neighborhood so we could start shopping
Yes, you read that correctly, everything was contingent upon me finding a job. GREAT.
Goodie for me that was miraculously checked off the list within about 2 weeks. Which was not as hard and stressful as I made it out to be! Ha! Typical. I posted my resume on Linkedin, and a cousin of my then co-worker saw the post, gave me a call, and offered me a job! The best part - I GET TO WORK FROM HOME! This means picking a house is no longer contingent upon my employment and we finally know what our total income would look like! Oh, and I get to be at home with my sweet baby girl all day, I don't have to commute, we can save on gas, and lunches, and... I could go on!
Now, as for Step 2 - how much would our house sell for? This was on my mind from the second Tyson told me he got the job and I realized we'd be selling our home. We had no idea. Technically, depending on what else we did to the house in the next 6 months would determine the sell value. I put a pin in that thought and jumped to step 3 - the down payment. We originally planned on staying in Rexburg and Tyson finding a job in the surrounding area so our savings was NOT prepared (nor even equipped) to fork out a downpayment on a new home. In fact, money was limited as we had just had a baby 5 months prior, lots of medical bills followed which were all set to the lowest monthly payment possible, 3 months of maternity leave without pay (as the breadwinner), and of course, our car was having major i$$ues.
This down payment was not going to come from our bank account. What other option did we have? If we leveraged this ID house to our advantage we could potentially walk away with a good chunk of change! We didn't know how much we needed, but 40k seemed like an honorable goal! That goal quickly embedded into my mind and I needed to figure out a way to achieve it in the next 6 months! Let me invite you into the "Always-Calculating Brain of Jess" where, when presented with a problem, options to solve them formulate and innovate like inter-woven tree branches, each option meticulously analyzed like a guilty conscious; each option held innocent until I uncover it's flaws, finally (by process of elimination) one solution is proven invulnerable, rising from the rest like a masterpiece finally blessing me with peace of mind and a good nights sleep! If you think I'm being dramatic, then you must not know me very well!
Here are just SOME of the thoughts that I recall frequently circulating my brain:
Bought the house for 185k with 5k as a down payment. Worst case scenario if our house sold for 185k, we would at least get our 5k in equity back. But that will go straight to closing costs and leave us at $0. BAD.
We've paid off about 10k on the house; so, assuming our 5k initial downpayment (and a small amount of personal savings) will be set aside for closing costs, we should have 10k cash in our pockets when we close. Which isn't a profit, that's just getting our money back. BAD.
But, we did renovate the basement (that's a story for another blog - needless to say it looks MUCH better). So, that should profit us at least 5k. Which, worst case scenario we get our 10k back and profit another 5. Leaving us with 15k to use as a downpayment. GOOD... BUT NOT GOOD ENOUGH.
It's been 2 years, home values have gone up! Maybe tack on another 5k-10k - I really have no idea. So, that could leave us with a total of 20K - 25k. GOOD... BUT NOT GOOD ENOUGH. I needed 40k. How am I going to get another 15-20k?
Note to Self: We need to make sure we sell the home after April 12th so we don't have to pay taxes on the income we make from the sale of our home! If we do it before April 12th (our 2-year mark) we will be screwed.
Then the wheels begin to turn. Based on my observations, the only thing that gave us a profit was time (2 years) and renovating the basement. What if we looked at this as an investment opportunity? In case you haven't caught on to this theme yet, every time Tyson and I have this thought, our minds become clear, our decisions are decisive, and we make more financially-aware decisions.
I had an arsenal of renovation plans mentally set aside, dreaming of the day I could get my hands on them! 1) I had figured out a way to reconfigure the entire basement (small den, laundry, and full bathroom) that would normalize the awkward, unnecessarily oversized bathroom, provide much more storage space, and add 3 feet to the also awkward sized den! Let me tell you, this reconfiguration was brilliant! But it was also costly and possibly unnecessary considering the circumstance. 2) There was a way to reconfigure the upstairs to ADD a master bathroom and a walk-in closet; both attached to the master bedroom! Adding a bathroom would for SURE increase the value of the home! This new layout was also sheer genius - shout out to my dad who thought of the schematics! But this could be risky dealing with old plumbing and tearing up floors on the second story. It might take too long, especially if there are hiccups in the process. This option was mouthwateringly attractive but also very daunting. Which leads me to the last option: the kitchen! Everyone loves a good kitchen! And this one was far from it - ha! Don't get me wrong, it was cute! I actually adored it. But the cabinets were also original to the '60s; there was water damage, drawers were not on any kind of tracks, drawers would get stuck, cabinets wouldn't stay shut, hinges hanging on for dear life from the screws being stripped, caked-on paint from years of attempting to cover their old age and damaged edges from banging against other cabinets' knobs/handles. We had Formica countertops - don't let the fancy word deceive you, it's literally just cheap wood slabs covered in vinyl - and the backsplash was porous travertine that was not sealed properly (or sealed at all for that matter) so oil would instantly absorb into the tile when cooking. It gave you the early 2000's vibe. Kinda vintage, kinda Tuscany, kinda hard to live with. And from a financial standpoint, it didn't bring any value to the home.
Here's proof that I'm not being dramatic:
So many options! So much potential! I wanted to DO THEM ALL! But, sadly, so little time and so little money (HA!). It was clear, despite my desperate craving to get my hands on such rewarding and space maximizing projects, the kitchen was the money maker. I had also done a lot of research of other houses in the area and what our house could sell for. I'll explain these crucial steps in another blog (coming soon).
Sidenote for flippers: hypothetically, if we had dumped a crap ton of money into this home to do all of the projects I listed, that doesn't necessarily mean we would have turned a larger profit, let alone gotten all of our money back. If you're going to take on a long list of major projects like the ones I listed above you'll need to do a lot of research to ensure it's worth the investment; houses cap out at a certain value. In this case, the whole house was old and we knew if we did just one more major project we could turn a good, yet safe profit.
I have to explain that 90% of all this strategic planning was done between me, my mom, and my dad. They are amazing soundboards, wise business people, and they are humble enough to advise you against making similar mistakes they made! I love them so much! If it weren't for them encouraging and counseling with us, we would not have done anything more than entertain the idea of renovating the kitchen!
So, I got a crap ton of quotes for counters and cabinets, I started shopping for hardware and light fixtures! After hours of researching and design planning and narrowing down our quotes here's the general figures that determined the budget for the project:
$2,500 for cabinets
$2,500 on new granite counters
$250 on a new sink
$300 on light fixtures
$300 on hardware
$150 on backsplash
TOTAL: $6,000 (But we prepared for $7,000 - always round up!)
With a budget that small, we KNEW we would turn a profit with this renovation! We felt good about this decision and were excited to leverage this opportunity to reach our goal of a 40k downpayment on our next home! So, we informed my parents of the green light, they came up 2 weeks later and we embarked on our "February Flip"!
Here's the before video for you:
Shout out to our lovely Volunteer, Dad!
We posted progress pix to The Book of Faces (Facebook) and I think we confused some of our friends hahaha! We got lots of questions like: Is this your new house in AZ? Wait, I thought you were moving? Why are you renovating if you're moving? Doesn't it suck to do all that work just for someone else to enjoy all your hard work? Which, for the record, were all valid questions! The workday following my FB update on the kitchen demo, my boss at the time transparently expressed to me what a sketchy decision he thought it was. Like, as if all the questions didn't make you second guess this CRUCIAL decision, your boss sure will! Haha. He meant well - but that really gave me cold feet for a second there! My husband and parents reminded me that we had done a lot of research and reassured me that this is a smart decision! Also, we were mid-project so there was no turning back now! Just own it! And that's exactly what we did! We owned it.
Before I wrap this up, I'm sure there's one lingering question: How could we afford a $7,000 renovation if we were already tight for cash? Short Answer: We almost couldn't! Haha! Long Answer: Lowes offers a credit card where you can either choose 5% off or 6 months with no interest on your purchases. You also get an additional 10% off your very first purchase with the card. We bought everything we possibly could within our first purchase on this card. The items we didn't purchase through Lowes (granite countertops and installation, tile, hardware, and light fixtures) were paid for outright.
The card was paid off within 4 months and we reached our goal of 40k in our pockets upon selling our house! We invested $7k into our kitchen to get an additional $20k out of it; totaling 40k with the 2 years of equity, a basement renovation, and good staging. Despite what others said, doubts shared with us, and the funny looks we got this was the best move we could have made before we actually moved! Thanks, mom and dad for cheering us on every step of the way!