A stylish ranch-style home in Castaway Cove II that’s on the market for $749,900 illustrates both the pitfalls and potential of whole-home renovation projects, a phenomenon that is on the upswing on the island.
The home’s nonprofit developer, Florida Housing League, which has renovated more than 400 homes statewide, bought the property out of foreclosure in June 2016 for $318,000, intending to do a mainly cosmetic rehab and flip the house for around $380,000.
Once renovation began, however, hidden problems came to light that required expensive additional fixes and the project morphed into a whole-house reno, according to Jeff Flick, a banker who volunteers his time to help the Housing League.
“Once we started the remodel we found we had to do quite a bit of engineering work, including new strapping for all the roof trusses and a special heavy-duty anchoring system for exterior walls.
“That required us to remove all the drywall and insulation and once we went that far, we decided to hire an architect to maximize the floorplan and give the look and feel of a new house.”
Flick says the project, originally budgeted for less than $50,000, ended up costing “well north of a quarter-million dollars.”
That took that value of the property past the parameters of the Housing League’s mission of preserving moderately-priced homes and showed how challenging it can be to successfully remodel a house on the island on a tight budget in an era of ever-stricter building codes.
On the other hand, even though there were some expensive surprises along the way, the Housing League seems to have stumbled into an outcome that is the highest and best use for the property. The finished product is a residential gem in a desirable neighborhood that feels like a new home – which is what many buyers want – but is well below the cost of a new build in the same location.
The 2,250-square-foot, 3-bedroom, 3.5-bath home evokes a sense of classic American suburbia at its best. Post-renovation, it has a wide-open floor plan and bright “transitional” look, with high-end finishes and ingenious architectural touches.
It has beautiful woodwork, tile and stonework inside, along with all-new plumbing, electric lines and HVAC systems. Combined with new roofing, siding, paver driveway and enlarged, storm-resistant windows, the renovations make the house “like a new home for insurance purposes,” according to listing agent Sally Daley of Daley and Company Real Estate.
“The renovation at 1090 Windsong was done nicely with many of the latest finishes and concepts in mind,” says Joseph O’Neill, a Realtor with Coldwell Banker Paradise who with his partner Joseph Schlitt has developed a number of spec homes on the island. “A fully updated house in Castaway is always desirable as it is one of the most convenient and sought after neighborhoods on the barrier island.
“To build a new house with similar finishes [in that location] your ‘all in costs’ would be similar to the asking price of $749,000. Then after you factor in commissions, closing costs and potential profit you would have to advertise the house for closer to $895,000-$925,000, which would be a difficult price to achieve.”
Even at $749,000, Daley says the house is pushing the upper end of the market in Castaway Cove II but she believes the “house shows the future of the barrier island, from Central Beach South.”
“Most of those houses were built from the 1950s through the 1990s and they are badly outdated,” says Daley. “They don’t have the kinds of floorplans, features and finishes that people want today. They are totally out of fashion.
“The target buyer for this house is someone who doesn’t want the hassles and uncertainty of buying an older house and remodeling it themselves, but who also does not want to spend $1 million or $1.2 million to tear down and build new,” Daley says.
A whole house reno saves the money it would cost for demolition, a new foundation and a new wood or block frame. Landscaping costs and impact fees are lower, too, and the process is quicker.
Christine McLaughlin, broker/owner of Shamrock Real Estate Corp., agrees that a whole-house renovation is likely to be 20 percent to 30 percent less costly than knocking the same house down and building new, and says it can be a good option. But she sees potential disadvantages, too.
“If someone does not want to spend $1.3 million for a new house, they can save money by renovating, but it will still be an older product and may not be a structurally strong as brand new.”
The rapid rise in land values on the island is the main factor pushing the whole-house reno trend. As non-waterfront lots push past $300,000 and approach $400,000 in many cases, the final cost of a new home built on an empty lot or after a tear-down can be prohibitively expensive for homeowners and developers alike.
Waterfront lots, where builders can get higher-end prices, and where homeowners know there is great ultimate value, the added cost of building new is not so much of an obstacle.
Daley and Flick are convinced the Housing League’s renovation in Castaway Cove II has hit a sweet spot, with much of the appeal of a new home in highly-desirable neighborhood but at a substantially discounted price.
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