If you're a regular reader of our blog, you know over the past two years we've been sharing our endeavour to purchase, tune-up, renovate, add-on and operate (remotely from Toronto, Ontario) a vintage triplex in Charlottetown, Prince Edward Island which we called The Tales Of Upper Hillsborough.
It started serendipitously when, back in 2008, one of my best pals and I bought this once-neglected severly-butchered triplex (pictured above), for $153,000, plus around $4000 in closing costs. Click HERE for the story on how it happened.
Since then, we've systematically tackled a top-to-bottom renovation including two additions (one three floors high!), to turn this into 3000 square feet of luxury accommodations both for ourselves and for tenants who will appreciate our commitment to quality.
It wasn't cheap though. Like anyone tackling a renovation, we spent a sum that more than doubled our original $275,000 estimate.
Yes, we're shocked too.
Here's a photo of the back of the house when we bought it, with its massive tacked-on 1980s addition:
For anyone who wants to own an income property, or take on a renovation, we thought it important to share how we came to spend a small fortune. After all, so many 'zines showcase amazing 'before' and 'after' projects but they don't admit to how costly this kind of undertaking can truly be.
So here we go:
One third of our overshoot on budget was because of those annoying surprises that come with any retrofit of a vintage house. For us, it included the existence of hidden knob and tube wiring, lead plumbing, and a leaking roof that left two walls a breeding ground for moisture and mold. We also made the decision to install a water management system and sump pump to ensure our high basement would always stay dry (we need the lower level to store our furnishings that rotate as our tenants' needs require), along with re-conditioning the entire heating system so that everyone would stay warm and cozy without burning $6000 a year in our oil furnace.
The second third of our over spending came when we expanded the project by enlarging the planned addition, and adding a second. We did this when we realized we require each two bedroom suite to have an optional third bedroom space. Why? Because when we're in town we like to extend the invitation to our friends and family. Once we realized that we needed more space, we took the plunge to expand the property to serve our needs for the long term. Here was the concept sketch for the rear of the property. Most of our sketches were done on napkins in restaurants but this one was emailed to our contractor:
Our final third of spiraling costs came with our indulgence in upgrades that were far above the mid-grade calibre we had initially intended. We fell victim to what every property owner who intends to occupy a space succumbs to.... the sheer desire to have the best of everything. We couldn't resist being committed to quality. As realtors who believe a well-built, well-presented, and well-cared property will always garner a high resale value, this property is going to be a true test of this philosophy should we ever decide to sell this as a luxury furnished vacation rental with optional owner's suite.
Our property tune-up, originally budgeted at $54,000 (click HERE to see the original post from December 2011) ended up being two and a half times our original estimate at $135,000. As we renovated the main floor we realized it was best to substantially upgrade or replace our plumbing, wiring, and heating systems rather than patch and repair. We also chose to upgrade for the long term by choosing materials which had a longer life span, including a steel roof (we removed that odd pitched dormer on the front facade too), a new chimney in black brick (the first black brick on Prince Edward Island), plus replacing and adding new double-thermopane argon-gas windows and three top grade remote operating skylights. We added extra insulation in the attic and had the entire shingle frame structure filled with foam insulation. We imported eavestroughs from the United States which were more elegant than conventional eavestroughs, and added the corner boards to create a sense of history with a house that had long lost its original charm.
We spent a further $80,000 repainting the exterior, replacing the front porch with a more elegant version, and landscaping the gardens. The front yard is dominated by black plantings, with a lilac hedge to soften the edge and provide a sweet scent on the side with the driveway, with sod and new cedar decks in the rear yard. Our landscape designer is the amazing Dan Nuttall, who did my gardens at The Button Factory and The Movie House in Toronto. We resurfaced the driveway in fresh asphalt, added a new gracious Greek Revival side porch that serves two of the suites (nearing completion), restored the single car garage and added a comprehensive inground exterior lighting system on a timer for security and beauty. This included placing spotlights in and on the 100 year old ash tree in the back yard to create a stunning focal point. We acknowledge we could have done all of this at a lower cost, but we believe the long term results of having "Curb Appeal" will serve us well in the long run. Here are a couple of photos of the house as it nears completion:
Our second floor suite received a $60,000 cash injection where the rent went from $600 per month inclusive to $1250 per month plus hydro. This included a new vintage style marble washroom, ensuite laundry, elevating the front foyer into a 'vintage reception hall' with marble flooring, adding an outdoor covered sleeping porch accessed by French doors off the second bedroom, and constructing a sun-drenched balcony off the kitchen for a gas barbecue. We'd love to show you photos, but this unfurnished suite has never been vacant long enough to take pictures. We call it the 'Captain's Quarters".
Our third floor suite underwent a $110,000 transformation and saw its rent increase from $580 per month to a rent of $1450 per month inclusive and furnished. The layout was reconfigured with a new kitchen with stainless steel appliances, an indulgent spa washroom and blond wood flooring throughout. We added 2 electronic skylights, a generous sky terrace and ensuite laundry. We furnished the suite in quality fittings and furnishings. You can see the Before and After photos by clicking HERE, and some photographs showcasing our attention to detail by clicking HERE. Since these photos were taken we converted the living area into an optional third bedroom with sliding glass pocket doors, plus upgraded some of the furnishings. What can we say? The fun never stops!!
The spectacular main floor Garden Suite is nearing completion after a significant $150,000 reconfiguration including two additions, a new kitchen, two new baths, and a lower level laundry room. We imported one hundred year old plank floors and barn beams for the open concept Great Room, and in the original house we installed marble mosaic, custom parquetry floors with walnut inlay, and had a number of custom built-ins to look like furniture. Fitted with designer furnishings, stainless steel appliances, quality window coverings, and all the indulgences of a boutique hotel, this suite is now available for rent as a furnished vacation suite. In fact, it's already getting one-week vacation bookings! You can see our ad on Airbnb.com by clicking HERE.
Total Cost including Acquisition Price (and around $37,000 in furnishings): $725,000
Approximate Income Stream: $58,000/year
Annual Expenses: $9000
Net Return On Investment: 6.7%
As investors, we appreciate having a turn-key investment property in top-notch condition. The Black House was completed to code with permits, and is zoned a Legal Triplex. We are the kind of people who 'do it right', as we aim for happy tenants, delighted guests and the belief that people will pay a premium for luxury living. Plus, we stay here ourselves when the opportunity arises, as the house is just a two hour flight east from Toronto with fares as low as $169 each way.
Want to know more? Don't hesitate to contact us if you have questions.
~ Steven and the urbaneer team