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Wednesday, April 14, 2010

Extreme Makeover - Fern Hill Edition

Worst-to-First on Huntington

You're not likely to recognize the home pictured above -- 2820 Huntington Ave. South, in St. Louis Park's Fern Hill neighborhood.

And no, it's got nothing to do with the snow being gone.

Rather, it's because there are multiple dumpsters in front, and the place is swarming with contractors.

Extreme Makeover

What's going on?

The new owner, apparently a spec builder/remodeler, is doing a major addition upstairs (finishing the expansion, and bumping it out towards the back of the yard), as well as totally renovating the first floor and widening the garage from one car to two.

When the work is complete, the home is likely to be put back on the market somewhere around $800k, probably sometime in late Summer.

That's more than double what the buyer paid for it, $390k, and still leaves a nice profit even after subtracting what is sure to be $250k or more in labor, material, and financing costs.

Makeover Economics

Extreme makeover candidates share many of the same attributes as tear-downs, about which I've blogged numerous times previously ("Tear-Down Economics," "Contender . . . or Pretender?" "Attributes of Tear-Down Neighborhoods").

Namely, they have the potential to go from "worst to first" in a neighborhood where the ceiling on homes is much higher than the asking price. (I've also referred to this phenomenon as "playing tear-down leapfrog").

In this case, Huntington has a huge, 2,000 square foot foundation; sits on an almost quarter-acre lot; and is on a block where the top end is high six figures.

Check, check, and check.

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