Going on Spec

Brothers Ethan and Chris Landis, co-owners of Landis Construction, never search for spec remodeling projects. "They fall in our lap" at the rate of about one a year, says Ethan.

August 31, 2006

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The neglected façade was an eyesore. New roofing, tinwork, period-style windows, a brass kick plate on the door, vintage hardware and cleaned, repointed masonry brought it up to snuff without altering its historical integrity.
Photos by Yerko Pallominy

Brothers Ethan and Chris Landis, co-owners of Landis Construction, never search for spec remodeling projects. "They fall in our lap" at the rate of about one a year, says Ethan. If the Washington, D.C., design/build company's other spec remodels were lapdogs of the Chihuahua variety — buildings that didn't require much in the way of improvements —Landis's latest spec property was a mastiff.

It had so much going for it — it was a handsome 1900-vintage three-story rowhouse in one of the most prestigious and well-located in-town locations. Not only did the house sit in a historic district where Landis had done several projects and wanted to do more, but the redesigned and renovated house could be a showplace of the core work Landis does, says Ethan.

It would be no low-cost, quick-turnaround project. The owner hadn't lived in there since a small fire charred one end of the second floor 25 years earlier. Though sprinkled with fine turn-of-the-century features, the interior was hopelessly deteriorated and dated. Bringing the house back to life would require a gut remodel tempered with painstaking restoration of period details and reconstructing the two-story rear extension.

The project landed in Landis's lap after the owner died in 2004. One of the owner's relatives asked Landis to estimate the cost of remodeling the house, thinking she might buy it from the estate, then remodel and sell it. The relative decided not to proceed with the project, but Ethan couldn't pass it up. In October 2004, Landis took out a loan and bought the property from the estate for $600,000, planning to sell it quickly and customize the remodel with features and finishes of the new buyer's choice. That's not what happened.

Contractor as client

The third floor opens onto the new roof terrace.

Demo began in March 2005, but construction was delayed an additional four months while Landis waited for a permit to be issued from the backlogged city permit department. At one point early in the construction process, potential buyers talked to Ethan about customizing the remodel. "The people danced with us for a month," during which they went on vacation, says Ethan. When they came back they decided not to buy. "It was costing too much to sit on" the property, Ethan says, so he became both contractor and "client" and the remodel moved forward.

Anticipating the priorities of buyers looking to live in the neighborhood, he oversaw the design of a remodel that celebrated the old-house charm but created a modern, open floor plan. Every inch counted in the shoebox shaped house, which is only 16 feet wide and about 62 feet front to back. He pulled out first-floor walls to create a wide open kitchen-dining-living space. The second floor gained a bathroom and laundry area so that both the master bedroom and the second bedroom have private baths. Two rooms on the third floor were designed to be bedrooms or office space; they share a bathroom and a new third-floor roof terrace.

The basement presented opportunities as well as problems. Ethan wanted to raise the ceiling — or lower the floor — of the basement in the main house and the rear addition to add a versatile space the owners could use as an in-law suite, office, home theater or nanny apartment. In a landlocked rowhouse with access only through the front door or a narrow alley, this meant three days of digging by hand and lugging the dirt away bucket by bucket. "We dug out about 2 feet," down to the main plumbing line to yield 7½ foot ceilings says project manager Alan Hobbs.

 Before

Befor the renovation, a pantry cut off the kitchen from the living area. Large dressing areas wasted space on the upper floors but left some bedrooms closetless. Landis created an airy, open kitchen-dining-living area and reallocated the upstairs space to carve out an extra bathroom on the second floor and closets for all rooms.

Meanwhile, Hobbs had found that the old house had virtually no foundation. To underpin the structure, he and his crew poured footings every four feet along the party walls, toting in wet concrete by the bucket. Hobbs removed a basement beam to open the room, then doubled up most of the ceiling and floor joists in the house to carry the load.

Capturing the charm

Though white walls and shiny new fixtures made the interior of the house look bright and fresh, Ethan preserved as many antique features as possible. That included much of the antique heart pine flooring. Refinishing the floor and feathering in new, matching strips added a week or two to the job, but it was probably worth doing. "It's a charm thing," Ethan says. He was able to reuse the old stair treads, banister and many of the pickets, replacing damaged pickets with custom-made clones and putting in a custom-turned railing on the newly opened first floor staircase to match the old railings.

The interior still displays the patina of age but, served by all new plumbing and wiring plus high-efficiency HVAC systems and insulation, it offers a level of comfort unheard of when the house was originally built.

After decades of neglect, the house's façade regained its standing in the neighborhood. Landis cleaned up the front door, fitted it out with period hardware from a salvage store, and installed energy-efficient windows that look like originals. Hobbs pulled out and reset a masonry panel under the bay window, replaced the copper gutters and formed new decorative tin fascia around the third floor balcony. When he removed water-damaged limestone bricks from the third floor to replace them, he was surprised to discover that they were not bricks at all but cinderblocks with a concrete veneer. Landis set up a little "brick factory" on site, dipping about 50 brick-size cinderblocks in concrete and slipping them into place on the historic façade.

Attracting a buyer

As soon as Landis finished construction in March 2006, Ethan listed the property. After three weeks, the house sold for $1.57 million, $21,000 more than the asking price. The new owners were expecting a baby and bought the house for many of the reasons Ethan had predicted: the in-town location; the nice, friendly neighborhood; the old house; the light, bright, open spaces. For the new owners, the house is a smart investment.

Was it a smart investment for Landis Construction? "I would seriously consider doing it again," says Ethan. "I wouldn't jump at it." Chris puts it this way: "You always have to look at the cost-benefit analysis. We would have made more money doing other things for clients and getting paid as we went along. Ethan would have been out selling more work. But it's a great-looking project. We're going to put it on our Web site" to spread the word about the good work Landis Construction can do.

 

Landis Construction was able to preserve much of the rowhouse's original antique charm, indlucing the heart pine flooring, while updating most of the walls and fixtures.

The Financials

In fall 2004, when Landis Construction bought a 3,000-square-foot rowhouse for $600,000, Ethan Landis estimated that renovations would cost $550,000 and take about 11 months. As it turned out, "We did more and we spent more," he says. The tab for the full renovation, plus the cost of holding the property three extra months due to delays, eroded gross profits by several percentage points. Nevertheless, on a square foot basis of around $206, Landis says the $620,000 final construction cost was "actually pretty good."

Ethan and his brother, company co-owner Chris Landis, "ran [the project] through our books at close to what retail costs ought to be" to remodel the house for an outside client, Ethan says. But after selling the house for $1.57 million in 2006 — the going rate then for fully remodeled houses like this in sought-after, in-town locations — they determined that it would be better from a financial standpoint to declare the income as a capital gain, taxed at 15 percent, rather than as business profit.

To ensure preservation of the historic façade and reap additional tax benefits, Landis Construction donated a façade easement to a local nonprofit architectural conservation group called The L'Enfant Trust. The donation cost Landis about $15,000, including processing charges and the fees paid to an appraiser and an expediter. The appraiser calculated the façade to be worth 9 percent of the value of the house. Ethan and Chris donated the easement as equal partners, so each could claim a one-time tax credit of 4.5 percent of the property value.

Budget History
Initial estimate: $550,000
Change orders: (additional underpinning and structural work for rear addition, wood flooring, basement water protection) 70,000
Final price of job: 620,000
Cost to produce: 492,000
Budgeted gross profit 30%
Actual gross profit 21%


Snapshot

Remodelers: Ethan Landis and Chris Landis, Landis Construction Corporation
Location: Washington, D.C.
Type of company: Design/build
Staff model: 20 office, 25 field
Years in business: 16

Sales history:

2002 $3,000,000
2003 $4,950,000
2004 $5,590,000 residential
$620,000 commercial
2005 $7,300,000 residential
$1,170,000 commercial
2006 (projected) $9,000,000 residential
$1,010,000 commercial


Annual jobs: 55-60
Workweek: 40 hours
Software: AutoCAD, Master Builder, Microsoft Office, 3D Sketch, Photoshop, PageMaker, Illustrator, Corel Draw, Dreamweaver
Contact: 202/726-3777, www.landisconstruction.com


Products List

Bathtubs: American Standard. Dishwasher: Bosch. Heat pump and gas furnace: Carrier. Insulation: Icynene. Interior door hardware: Baldwin. Kitchen cabinets: Crystal. Whirlpool tub: Americh. Windows: Weather Shield.

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