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How do you take a tumbledown $458,000 house in the Beaches and sell it for $1,155,000 10 months later?
For two entrepreneurial young builders, the feat involved uncommon vision, a fight with city council, constant appeasement of the neighbours and one very hot and gritty summer spent digging out the basement by hand.
Steve and John Michelis recently played hosts to about 250 neighbours with wine, cheese and a chance to wander through the redesign that had been a flash point on tranquil Bellefair Avenue for months.
"Everybody wanted to take a peek — they've been dying for 10 months to see it," says Steve. "People thought it was the horror house, it was so dilapidated."
Steve Michelis, left, and his brother John in the living room of their home in Toronto's Beaches neighbourhood. (PHOTOS COURTESY OF GEYER STUDIO)
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Once the party was over, they listed the three-bedroom detached for sale with an asking price of $1,099,000. They sold it less than a week later to the highest of three bidders.
"It worked out really well," says Steve.
As the run-up in Toronto real estate stretches into its eighth year, the Michelis brothers have found that even a market where the easy money has already been made yields opportunities to exceed the expectations of two burgeoning capitalists — who were fairly audacious to begin with.
After all, anecdotes abound about houses that sell above the asking price with a bevy of offers — no matter how rickety, hastily-renovated or close to the highway or sewage treatment plant.
The current market conditions make it that much more difficult to find an overlooked gem that can be transformed.
In the end, Steve Michelis had to outdo several other bidders when he paid $458,000 for the tired old home at 42 Bellefair Ave.
"I bought it without my brother even seeing it," says Steve.
When the elder Michelis saw the property his younger brother had purchased on the fly, he had a hard time envisioning a smooth transition to a nice, saleable family home.
The house had been sadly neglected by an elderly war veteran who lived there alone.
"Most people saw it as land value," admits Steve of the rival bidders.
But Steve saw a traditional beach cottage that could be elegantly restored — especially with the help of John's carpentry skills. They planned to do a rear addition to expand the kitchen and provide a walk-out to the garden. They also decided to finish the lower level by digging down two feet to create eight-foot high ceilings. They added water-proofing and a new bathroom.
Did they know going in that they would need to dig out the basement? "We knew," admits Steve, "but we didn't realize how hard it would be."
The brothers are not neophytes in the building trade: this is the fourth house that they have flipped. The first was a Cabbagetown rooming house that was sometimes used as a crack den.
After some of their previous projects, an elderly gentleman's house in the Beaches didn't seem so daunting.
But it turns out they were not able to bring in the heavy machinery needed to excavate the basement. So the Michelis brothers and their team of four employees dug it out by shovel from the rear and heaved all of the earth out to the street so it could be carted away.
"We had to move everything from the back to the front," says John.
We were going to try to save the house as it was and basically we just saved the façade," says John.But they stuck to plans to save the original wood trim and refurbish it. The decision meant having to move piles of wood from room to room as the work progressed on the walls.
The brothers figure they each lost 10 pounds over the course of the reno in sweat.
"Last summer we were probably in the best shape we've been in for eight or nine years," says Steve. "I was ripped."
Upstairs they found more surprises. Vermin had moved into the top floor while the owner lived down on the main.
"The raccoons were having a field day," says Steve.
They also found six layers of shingles piled onto the roof.
"The old guy was getting ripped off by the roofers," says Steve of unscrupulous workers who didn't bother tearing off the old layer before adding new.
"When we took the roof off the house popped back up," says John.
Meanwhile, the removal bins, trucks, noise and general commotion caused tension with the neighbours. The brothers tried to mend fences figuratively and literally, but they felt added pressure to get the job done as quickly as possible. At the same time, the brothers were fighting with the city for permission to put in a parking pad.
If they had torn down the house and built a new one, they would have had a much easier time getting a permit, they say. Even tearing the porch off the old house would have let them meet the requirements.
"Why should we be penalized for restoring a house that the neighbours thought was coming down? They thought it was a goner," says Steve.
After much wrangling, they got the permit.
"It would have been a financial disaster if we hadn't," says Steve.
While Steve was fighting red tape, John was painstakingly restoring the wood inside the house and building a wood-panelled dining room stained a deep espresso brown.
Economically, that kind of restoration doesn't make sense, they say. But they knew they couldn't find wood of that quality today and John — who's first love is carpentry — couldn't stand to discard it.
John powered through many different grades of sandpaper to get the finish just the way he wanted it, then rubbed the stain on by hand.
"If you can make [prospective buyers] think that this was here, you've done a good job," says John of the gleaming new dining room.
And if the brothers didn't know themselves how time-consuming that work would be, they could have listened to their father and mentor. Michelis père is a builder of new homes.
Many family discussions have revolved around the irony of the older generation building new while the young guys are restoring century houses.
"My father thinks we're crazy," says Steve.
John worked in the family business for a time but he preferred to set out on his own. He makes more money that way, for one thing.
And the two brothers admit to a certain amount of sibling rivalry too. John is the elder and the builder at 34, while Steve is the rookie at 31. John started the business but it really took off when Steve gave up his job in the computer industry and the two started buying properties together.
"I wasn't as productive before Steve because I couldn't stay on the job site — I had to do all the running around," says John.
Now one of them can always be at the job site to make sure work is going smoothly.
And now their Dad — who was rather skeptical when the pair set out — boasts about his sons' success. They don't hear that from him, of course, but from the people he's bragging to when they're out of earshot.
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