2 back yards of debris later and we are still removing the old, getting ready for the new.

With our plans approved, demo got underway this week. A couple photos can be found below. As the project enters its ugly, rip everything apart phase, we’ll post a few photos here and there, and once the project starts to really take shape, we’ll be back with more regular, complete updates.

With minimal wrangling of city officials, we received plan approval today on the first submission attempt! This means that after a couple days of legislative paperwork (read: paying the city), construction should begin by the end of the week. Now that the project is entering construction phase, we’ll post regular photos along with significant milestones. Check back for weekly updates on how we are transforming the property into the highly sought after rental units this neighborhood needs.

For a full set of the final plans, click here.

Finally! After weeks of waiting on escrow and the seller to get their acts together, escrow closed today. The good news is that we got two free weeks to work on plans, finalize scope and get ready for construction to begin next week. Happy New Year!

In response to a thread on Bernalwood regarding Bernal Heights real estate, Cirios put together some simple data for single family home sales over the past three years. Monthly data is inherently choppy and seasonal, so we prefer to look at rolling 3-month averages. The table and graphs below help paint part of the picture of the Bernal Heights real estate market.

But what the data don’t show, and can only be known by actually being close to the market, is that sales mix,  more than true value drops are pushing average sale prices lower in Bernal. 2011 has been a wildly volatile year, and consumer sentiment and confidence has tumbled thanks for geopolitical uncertainty (Europe, Arab Spring, etc) and domestic problems, both political and economic. As a result, fewer traditional (ie, non-distressed) sellers have put their home on the market in Bernal Heights, an area with all sorts of fundamentals going for it.

It makes sense — why would they? If you don’t have to sell, it doesn’t make a lot of sense to do so in an area like Bernal. Far better to rent and hold if you need to move. Distressed sales, be they probate, short sale or bank owned are often smaller, cheaper homes, and the sales drag down averages. To wit, the few high quality, larger homes that do come on the market in Bernal typically sell above list with multiple offers.

Data makes for nice blog posts and flippant analysis, but it rarely tells the entire story.

One of our favorite aspects of this investment is the location. While South Bernal is certainly not as posh as North Bernal, it continues to become more desirable every day. To wit, we were pleased to see a new cafe pop up on Richland at Mission, just two blocks south of 103 Park. Cafeto, noted here by the local Bernal Heights blog Bernalwood, opened just days after another new cafe popped up by Precita Park.

As hipsters continue their inevitable march south from the Mission, Bernal is just getting more popular. South Bernal in particular is largely undiscovered, and the idea of owning property in this area is an exciting long term proposition.

To give investors a better feel for their investment, we have started private tours of the property. We want to make sure everyone who invests in this project can see as much or as little as they want, starting with the property itself. As we progress through the project, private tours will continue, along with scheduled tours of the project at key points so everyone can see how far along we’ve come. Given the property’s current condition, the before-and-after photos should be remarkable.

If you would like a tour of the property, contact Andrew Jeffery at ajeffery@ciriosre.com.

Mason sent over a first draft of plans, which we reviewed and provided feedback. Those plans can be found here.

As we finalize our desired scope, we will begin walkthroughs with our preferred contractors to get a better sense of how much of our scope we’ll be able to fit into the budget. Our initial budget estimates are primarily based on experience from previous projects and an initial visit with one contractor. Most contractors are happy to offer their time in exchange for the chance to bid a project, but abuse this and you’ll quickly stop getting called back.

Contrary to what most people believe, good contractors are not desperate for business. Labor and material costs have come down from the peak, but quality work at a reasonably price remains not easy task to consistently find.

The first step in any project is to get As-Builts from your architect. These are required to not just understand what your dealing with inside the building and out, but the city will need the As-Builts to sign off on the proposed project. Click here to see the As-Builts, which help give a sense of each unit’s layout and will provide a starting point for our proposed changes.

We aren’t planning any major structural changes to the building, the biggest items are moving some walls to open layouts and open up the bottom rear unit to the patio. Those changes and the rest of the scope will be finalized in the coming weeks, prior to sending plans over to the city for approval.

Per usual in REO transactions, the combination of sub-par escrow services and unresponsive banks delayed escrow. We are ready, our lender is ready but no one else is. We extended escrow through 12/28/11 with the full goal of closing early, but particularly with the holidays you just never know. The silver lining is that with access to the property, our architect Mason has been able to get to work. And since the loan hasn’t been funded yet we are saving a couple bucks on interest charges. A small consolation to having to sit around waiting on a couple signatures to close!