Episode 23: Fix and Flip with David Thomas #3

Scott Williams: Sweet Home Santa Barbara, where the skies are so blue. Sweet Home Santa Barbara, what’s worked for me can work for you.  

Jonathan: Welcome back friends to Sweet Home Santa Barbara. I’m Jonathan Robinson, your co-host and I’m with my co-host… 

Scott: Scott Williams. And today, Jonathan, we get our wrap-up session. 

with David Thomas. David Thomas is known to those who have been listening to our podcast as a man who has bought, fixed up, and resold 185 homes in the Santa Barbara area in his career. I know of nobody who has done anything close to that number of homes, and he is sharing with us his wealth of knowledge about this whole process of fixing up homes and making that profitable.  

So, we’re going to go back to Dave. 

Jonathan: Well, Dave, I’m curious. We talked about the business, we talked about how things have changed, we talked about some specifics of what smart to do and not smart to do when trying to buy and fix up a house.  

I’m wondering, in terms of when you’re looking for a place to buy, do you consider location very much? Obviously, real estate is about location, location, location. So, how do you tend to think of that when you’re buying a house?  

David: You know, I think over the years, I’ve tended to focus on the buy itself more than the location. Because I felt like I probably could bring enough to the table on a property to create some desire. So, it wasn’t the most important feature. On the other hand, I would say in Santa Barbara, there are so many wonderful little pockets.  

I remember buying a house one time on Plaza Bonita. It’s this charming little Cobblestone Plaza off at Grand Avenue on the lower Riviera. You wind into this Plaza, there’s a beautiful hometown in the center. A little lady next door her name, Mrs. Williams, who just so keep quite in the pond. And the place is just reeking her charm.  

You wander across these places I remember Torno Road, just a little quaint spot up in Mission Canyon. 

Jonathan: I lived on Torno Road.  

David: I did get several houses up there. Loved Mission Canyon. I’ve done dozen homes in The Hedgerows of Montecito. We named it, The Hedgerows, that’s how it got the name. No one had even called that before but when we went to advertise their first house, it was lined with little hedges. It reminded me of England. My dad is born in Wales, and I always loved England and the countryside and everything. We’ve done a number of homes there. 

But you can almost go anywhere and suddenly come across something that’s a surprise. I know one of our first house when Patti I were married 46 years ago, we lived on El Camino De La Luz, and we were right out on the point. And there was a little bridge that you could walk across the canyon and there’s a lighthouse across the way. And just the most charming little spot.  

And I think I’ve been really fortunate because Santa Barbara has all these nuggets almost anywhere you go. I mean someone can say Haley Street and they went, but if you go up to the very end of Haley Street, it’s charming. And you’re my Chiquita, you’re up there by Casitas, there’s some charming little old Spanish homes checked away, and you go, “Cheese” all of a sudden you go, I” like this. I’m surprised.” 

So, that’s the fun thing about Santa Barbara. I think it played to my favor because there were just so many opportunities and so many different places. And even like I said, my very first house that was off of at Milton Street and you go, “Is there anything good there?” and you go around the corner and go up this little canyon and all of a sudden there’s a story of a cottage studio. So that’s when the fun part of it.  

I remember one house that we did up on skyline circle and this kind of imperious real estate agent came through, choose from Montecito and she kind of had an attitude. I remember she came up to me on a broker caravan and she said, “Dave, I love what you do but why do you do it where you do it?” She said it with kind of an edge turmoil eyes. And what made me laugh is we sold that property for more than they got for a property that was on the market at the same time on APS, on the Riviera, which was a quote for proper location at the time. Because we had a really charming cottage, we had really pulled the stops out, it had an ocean view, and we have the last laugh.  

So, I really think in Santa Barbara, you have quite a bit of latitude. There are even places on the west side that you come across that you just wouldn’t think of it as being on the west side. We just did a property last year in Calle Poniente, it’s a really sweet little street, the dead ends and it’s on the end of Pollero. You just come across and it has a real country setting and we did really well on that people really like the real feeling even though it’s close in.  

I’ve just never been a complete bug on having to be in the golden quadrangle, I’ve owned properties on Picacho Lane and Mountain Drive and other places, but I never felt like I had to stay there. We always look at the potential of each individual property we’re presented with, and I felt like we had a lot of leeway because of that. 

Jonathan: But you’re finding that the charm is maybe more important than the location, that’s what I’m hearing from you. Is that what you’re saying?  

David: Early in the game I kind of decided that I would not buy track of properties that were in a track. I tried to find properties and continue here better more one of a kind. I think they’re harder to call that when you go to sell them. I think if you created something that’s charming, as a friend of mine used to say, movers, that people will respond to that, and I think you have a little more latitude in how you can price it. When you’re in a track a constant roll around you, you can only do so much to create value and I think you’re better off if you can get something that’s a little bit more unique. 

I’ve owned a couple of properties and tracks that just happened to come along and then we did all right with them. But I just prefer had a unique property and they’ve always been more intriguing to me, and it seemed to work better.  

Scott: It seems to me like you really romance a house. Do you think of it that way?  

David: I think the best way to create the right atmosphere is to ask yourself, how would I want to live in this home? And I think the details are what make a house special.  

And so, when I step into a home, if there’s no way to get outside, or it’s dark, or it’s really public from the street, I mean, you can be sure I’ve got a hedge going and about 30 seconds in a gate and something to text me in because I like privacy. And I like to feel that better properties kind of it has a quite kind of refuge feeling.  

So, we always trying to put our self in properties that, I think, when you do, I think they wind up feeling more personal. It seems today a lot of people that do fixer-uppers paint everything gray and they’re really sterile when you walk in, and they just feel really cold and uninviting, at least to my eye.  

So, I think if you take the time and the care to bring more to the table and people respond to that. It’s always been, I think, a signature of our properties is that they were warm and inviting. 

Jonathan: Another personal question. I have a house as a pretty old deck. It’ll probably exist for another 10 years. But when you’re thinking of a big project like that, how do you decide, do I want to really redo that or just give a coat of paint and hope for the best? 

David: You don’t want a future buyer to follow me through and sue me and I’ve never been sued by anyone. So, if there’s something that that is structurally deficient, you better deal with it. The cheapest thing you could do maybe is tear that thing down and put up a balcony if you just don’t have the money to rebuild it.  

But I think you want to determine whether it’s structurally sound. Sometimes all the supporting element underneath are sound, but the boards themselves on top are bleached out or that splinters and they’re old and cruddy looking. So, you might be able to just replace the surface for it and still have a sound deck. And I’ve used, we have a place on the Bluffs in the Mesa that we own, and we put in a deck because of the elements because we’re right on the water there. And those are not that much more than putting redwood down and you never have to repair it. 

And I think I would probably do something like that because maintenance is a big deal and a lot of people don’t want to get into that, understandably. And so, I would probably try to upgrade it if I was going to replace it, not just put down like floor something which is going to need to be painted all the time and not weather pretty well. 

Jonathan: Yeah, it’s helpful.  

Scott: Well, Dave, you’ve talked a little bit about using what’s there. But when you size up a property, you probably have some things in your mind, like this won’t work, or I don’t want to buy it for these reasons. Is that really that strong for you or can you make anything, any property work out there or there are some things that it just tells you, “I don’t think I should buy this one.” What goes through in your mind.  

David: I think the thing you want to avoid or high-ticket items that no one cares about and that you’re going to have to invest in case in point buying a property that has structural issues like with unstable soil. Maybe foundation problems where you’re going have to put in caissons. You’re going to get into a lot of engineering, maybe you need to put in a huge retaining wall. My next-door neighbor, spend fifty thousand dollars putting in a retaining wall.  

If the foundation is stable and you stabilize it, I mean most people walk in the door they don’t care about the foundation, they just assume that it’s okay. And if you say, “I just spend fifty thousand dollars on the location.” they go, but you didn’t do the kitchen, it looks terrible.”  

You got to put the money in the right place. So, if you get sidetracked by spending a lot of money on things that don’t show, then I think you’re in trouble.  

If I see a situation were like the door jams or all off in a house there’s a lot of cracking, those are kind of signals that, “Hey, there may be some big problems here.” If there’re really big problems, unless the property could be bought really reasonably and unless you have maybe approved plans that have already been bided out by someone and you know exactly how many dollars you’re going to be spending, then maybe you would take it on. But you’d have to make sure that you aren’t maybe kind of warns[?] because sometimes you can buy it and think, “I think we can just do this.” and you start and it’s just like a nightmare. It just gets worse and worse by the minute.  

You don’t want that to happen either because you’re the one stuck having to pay for all of it. So, I would say structural issues or something, certainly to avoid. If something has an awkward floor plan, I remember we bought a house in Carpinteria one time on Shamwari and it was a 3,000 square foot house. And for Carpinteria that’s pretty substantial.  

I remember going into the house to look at it. These people had a pit bull and they said they were going to contain the pit bull in this one bedroom, but I opened the door that thing start lunging. I mean, I’m going to die on Shamwari and cry for real. How did this happen to me? It was totally funny. But I want to buy the house and they rented out all these rooms, so they’d compartmentalize, it didn’t even have a living room downstairs and all these bedrooms. 

But I realize that we could knock out all these walls and create a nice living room. And we would have a really good floor plan in the house. Then when we end up buying the place and it turned out to actually be a good little project. And the market was really iffy at the time. Interest rates are high, and I was trying to be careful but that turned out to be a good little project because there were simple solutions.  

You just don’t want to get into something that takes a lot of money and there’s just nothing positive about it that someone gets excited about when they’re walk the door. You want to put your money where it shows. 

Jonathan: Sky, you have any last question for Dave? 

Scott: Well, what if you think about your ideal, you buy house and you want to fix it up and resell it. How much time from closing the escrow to the cell sign, going and in front of it again? What do you really like to aim for? How quick?  

David: Like I said with what’s the market being the way it is and people wondering how long this can go on, I don’t really want to take on something that I can’t be out of them maybe three or four months. We’ve completely rebuilt a property a few years ago on Cortez Well and I work with another wonderful designer, Jeff, today and we created this house look like something Liberace would have loved. It had old mansard roofs you’ve seen the Scott up and Miller Knowles that the some of the original ones are horrible and we turned into this really wonderful Mediterranean house. 

I was able to get a really good buy because this guy had gutted the house and then want to sell. And so, somebody had to pay cash for it but Jeff and I worked on it and it turned out to be great and took about a year to do that project.  

But I didn’t have any indication of the time that the market could be changing or shifting, and we paid 707 thousand, we sold it, I think, for a couple million. But it looked really great, and Jeff has actually table booked out of all of his design work and there are eight or ten pages devoted to this particular house in that book. But it was fun to do. But normally I would rather have a short fuse than the long fuse 

Scott. The last question I have for you is sort of in this carrying this on. Do you make any difference in your mind between working with contractors, architects, handymen? Does it make any difference to you?  

David: I’ve come across one architecture whose also an engineer. And that’s really streamline things when I wanted to get something to wind up  because I didn’t have to pin take it to an engineer. And one guy that I used to travel all the time and I get my plans and take it to his office but then he’s in Africa on a safari, and I got there well that’s not going to help me get my plans through.  

I’ve tried to streamline stuff like that. I also have kind of a core group of guys that I give advance notice to when I’m going to start a project so they can save some time for me. And if somebody doesn’t have a really good attitude, it isn’t fun to work with all kinds of weed them out. Because I really want people that love what they do, bring their own passions to the job, we don’t have loud music going, it’s just kind of a quiet atmosphere where people are creating things and just everybody’s on a team and we’re all working together to accomplish something.  

So, I have some really good people that I draw on and I think that’s 

made it a fun enterprise. Because I like to have an atmosphere, this is conducive on. 

Jonathan: Yeah, it’s true it’s good to enjoy your work and it sounds like you have, you’ve been very successful at it. So, Scott, if people want to contact you or know more about Dave, how can they best do that?  

Scott: Email is the best way to reach me. I’m Scott at ScottWilliams.com. You can reach Dave through me if you’d like to contact him or have a look at a project, maybe to buy from you. And I want to say from the bottom of my heart, thank you, Dave. You have shared yourself very wonderfully here. You’ve been very vulnerable about what you do and how you do it and it’s a great blessing to Jonathan and me and to all of our listeners. So, thank you very much, Dave. 

David: You’re welcome, Scott, it’s good fun.  

Jonathan: I’ve learned a lot and it’s always fun to learn new things. Thank you, our listeners, for this episode of Sweet Home Santa Barbara. Keep on listening so you get good tips from Scott Williams and other guests about how you can make money in the real estate market. Till next time. Take care.  

Scott: Thank you for listening. Please subscribe to our podcast on your favorite app. If you know someone preparing to sell their home, please tell them about the podcast. Visit ScottWilliams.com to contact me and download the two free E-booklets: “Is My House Saleable Now?” and “How Not to Buy a Money Pit”. Thank you for listening.