Business

Tom Eblen: Four young partners flip headline-making house disaster into showplace mansion

Four friends, from left, Josh Despain, Bennett Clark, Ryan Clark and Michael Hogan spent 16 months and several hundred thousand dollars renovating the circa 1889 mansion at 515 North Broadway that was filled with trash and animal waste when a lender foreclosed on the previous owner last year. They sat on the front porch Oct. 9 with a photo of the house taken when they bought it. After a complete renovation, the house is now for sale for $1.2 million.
Four friends, from left, Josh Despain, Bennett Clark, Ryan Clark and Michael Hogan spent 16 months and several hundred thousand dollars renovating the circa 1889 mansion at 515 North Broadway that was filled with trash and animal waste when a lender foreclosed on the previous owner last year. They sat on the front porch Oct. 9 with a photo of the house taken when they bought it. After a complete renovation, the house is now for sale for $1.2 million. Herald-Leader

The business venture began innocently enough. Four young men with backgrounds in architecture and real estate decided to pool their money, buy an old house, renovate it and try to resell it at a profit.

They looked for a manageable project; perhaps a 1920s bungalow in need of a little updating.

What they ended up with was a three-story, 5,282-square-foot Queen Anne mansion built in 1889 that was such a disaster it made headlines. Over the next 16 months, this house-flipping project almost flipped them.

But the disaster at 515 North Broadway is now a beautiful, completely renovated showplace, listed for sale for $1.2 million. And the four young men have learned some valuable lessons about construction, historic preservation and business.

"This project literally was the epitome of everything: it took longer, was harder and cost more than what we expected it to," said Josh Despain, a landscape architect.

Despain, architect Michael Hogan and soon-to-be architect Ryan Clark work together at Ross Tarrant Architects. They spend most of their days behind desks.

"We were interested in the idea of getting our hands dirty and doing some construction ourselves," Hogan said.

And, as young married men hoping to start families, they were looking for some extra money, too. So they teamed up with Clark's cousin, Bennett Clark, a single real estate agent and builder who had been thinking along the same lines.

They had looked at several old houses when 515 North Broadway made headlines in February 2013. The Federal Home Loan Mortgage Corp. foreclosed on the previous owner. Authorities put her belongings on the sidewalk, almost stopping traffic as passersby picked through it.

Everything was filthy and covered in animal waste, prompting city health and code enforcement officers to step in. The inside of the house was even worse. The smell sickened almost everyone who stepped inside.

But the mansion was well-located, structurally sound and retained a lot of its original character. The lender got a dozen offers, and the four guys bought it for $195,752.

"Until we started taking out the plaster and some of the damaged areas, we didn't really know what kind of condition it was in," Hogan said. "But, structurally, we felt really good about it."

Also salvageable were most of the original windows, including some stained-glass ones, and most of the woodwork and flooring. There was a magnificent staircase that rose three stories through the middle of the house.

But the partners quickly realized that all of the plaster needed to be removed to make way for new insulation, plumbing, electricity and interior walls.

"We saw it as a unique opportunity to build a new house within the shell of an original Victorian," Hogan said.

Added Bennett Clark: "Our mindset was to make the house modern in the places that you need for a house to be modern, but bring back the formal areas to their original glory."

To save money, the partners did about 60 percent of the labor themselves — mostly demolition, basic carpentry, landscaping, paint scraping and other grunt work. They hired contractors for skilled work such as electricity, plumbing, HVAC, roofing and window restoration.

Bennett Clark, who was the general contractor, made the reconstruction project his full-time job. The other three worked nights, weekends and vacations there.

"Our wives hate this house," Ryan Clark said, as the other three chimed in about how their own homes were neglected during the project.

Because the house is in a city historical district, the partners had to follow strict guidelines on the exterior renovation. They weren't expecting any special treatment, either: the city's rule book pictures their house on the cover.

But they said it turned out to be a pleasant experience.

"If you're just up front with them from the get-go and you're not trying to hide anything, they're super easy to work with," Despain said.

The partners' challenge now is selling the house for enough to recoup their investment and make a profit. Although expensive, the price is within the range of similar downtown mansions, many of which have had less extensive renovations.

So, do they plan to do this again? They think so, but not anytime soon. Since beginning the work in mid-2013, the three married guys have all had their first children. They expect to have less free time in the near future for construction.

The partners said they learned that to be successful in the renovation business, it must be your business, not a hobby. A property must be chosen wisely, and the cost of purchase and renovation carefully calculated.

"It was the first project we had done together, so we wanted to make sure we did it right," Hogan said. "Not only were we trying to make money, but we were really trying to learn a lot about historic preservation. It turned out really well."

  Comments