For years, people complimented Maggie Mulvihill on the remodeling she’d done on the homes she lived in. They told her she had a knack for making a house beautiful, that she should do it for a living.
A mortgage company sales representative by day, Mulvihill took the compliments to heart and tried renovating a couple of houses on the side.
Two-and-a-half years later, she isn’t with the mortgage company anymore; to date she’s bought, renovated and sold eight houses in the metro region.
“It went well enough to be able to quit and do it full time,” said Mulvihill, 32.
Thanks to low interest rates, a slim supply of houses and near-guaranteed profits, the time is prime for Portland home renovators — people who buy a house, spruce it up and turn it loose on a hungry real estate market, sometimes within a matter of weeks.
“The whole market is just on fire,” said Billy Grippo, a principal broker with Windermere/Cronin & Caplan Realty Group Inc. who’s been in the business for more than 13 years.
Thirty-year mortgage rates have been averaging between the 5 percent and 6 percent interest range for the past two years, and Portland’s inventory of available houses is at an all-time low. The Regional Multiple Listing Service, which monitors residential real estate, reported in May that Portland’s supply of available homes would be exhausted in about six weeks if no additional homes were put on the market.
Such factors, along with high demand for Portland homes and potential returns of between 10 percent and 20 percent, have driven up prices and made the renovation route an attractive — and sometimes lucrative — one to follow.
“It’s gotten harder to find the deals, but I do think there are more people doing it as a business,” said Erin Rothrock, a broker with Hasson Co. Realtors.
Some renovators live in the homes while they’re working on them, holding onto a property for at least two years to avoid paying capital gains taxes.
“When you’re in the space, you get to know what it is, what worked, what didn’t work,” said Jimmie St. Arnold, who’s on her second home renovation project, a 1930 English Tudor in Grant Park. “When you live in it, a lot of problems get solved.”

Rehabs come in all sizes

St. Arnold said the upgrade of her home, which she and her husband bought in September for $380,000, was too big a project for most homeowners — and not big enough for most rehabbing companies. She’s in the middle of a major kitchen remodel, stripping, painting and refinishing many of the surfaces in the home. She said the renovation could cost more than $60,000; she’s not sure yet how much it could sell for when it hits the market in a year and a half.
Others set about the renovation process with the vim needed to get the house updated, gussied up and back on the market in just a few months.
“The ones I don’t live in, I sell within two months,” Mulvihill said. Otherwise, “you have all the mortgage payments.”
She said she’ll often sink between $10,000 and $15,000 into a smaller house that needs basic work — things like paint, floors and fixtures — and then sell it for a profit of up to $20,000 before taxes. Larger projects can need up to $50,000 in work, for which Mulvihill hires contractors.
And she doesn’t always turn a profit.
“That’s when the savings account comes into play,” Mulvihill said. “It’s the whole risk overall. You take ’em (houses) when they come up. There’s no ‘I’m not going to buy that one because it’s a bad time.’ ”

Fixers go fast

Ryan Lynch has done remodeling work on other people’s homes, but he and his business partner are just about to purchase their first project house, a 700-square-footer in North Portland. They plan to put on a small addition, refinish the floors, replace the kitchen cabinets and otherwise get the place ready for move-in — in just three months.
Lynch, 27, said the house will cost $140,000, the renovation somewhere around $35,000. Real estate agents have told him that it could then sell for up to $220,000.
Though he and his business partner were able to find their house with relative ease, Lynch said he’s heard otherwise about the Portland market.
“When you find a fixer, you kind of have to jump on it,” he said, “and then it could go into a bidding war. I’ve seen those, and they just end up costing you money.”
According to Rothrock, remodeling and selling houses can be a wise and lucrative investment, but it’s not always as easy as some might think.
“It always costs more than you think it’s going to to do a good job,” she said. In addition, there’s competition from house rehabbing companies, buyers looking to move into and live in a house, and the difficulty of finding a good deal in the Portland market.
The last factor has turned a lot of home buyers into de facto renovators, whether they were looking for a fixer or not, Grippo said.
“Because there’s not a whole lot out there, they buy something that needs a little work, or they continue their search,” he said.

Suburbs see some action, too

Grippo also said he’s seen investors buy homes to renovate all over the metro region, from Hillsboro to Troutdale. The inner quadrants of the Portland, however, are still the biggest draws.
One fixer Rothrock sold in the Irvington neighborhood for $525,000 in December is expected to sell for more than $700,000, she said. Prices also are continuing to rise steeply in other areas like St. Johns, the Interstate corridor and North Mississippi Avenue, where new retail attractions have spawned a housing rush.
Home renovations in such transitional areas not only trigger neighborhood revitalization, but drive up housing prices even further, as well.
“You’re seeing housing prices over there (near North Mississippi) that are already a huge jump from a year ago because people are wanting to live there,” Rothrock said. “The prices are going way up because the area’s gotten so popular so quickly, which is frustrating to buyers.”

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