VOL. 46 | NO. 38 | Friday, 09/23/2022
2008 Natchez Trail
If only home builders – and the rest of us – had crystal balls. Builders who finished building homes in 2020 were thrilled to finally have the homes they started building in 2019 completed before the age of COVID arrived. They had survived lockdowns, closures, labor shortages and fears of the unknown.
Little did they know Nashville would hitch its wagon to a real estate steed that would take the city on the wildest real estate ride ever. If homebuilders like AE Construction’s Adam Epstein had known that the home he built at Natchez Trace in 2008 and sold for $1.225 million in March 2020 would sell for $1,737,500 a little over two years later, he would have maybe rented at this time.
He would have made more money than building another house. However, like other construction companies, Epstein is used to the ebb and flow of the market and manages to look ahead rather than cry over spilled nails.
Known for the quality of its construction, Natchez Trace’s 2008 home sold six days after Shannon FitzGerald, one of the superstars at Keller Williams, listed it.
FitzGerald — now more of a trademark than a typo — was fairly familiar with the home, having sold it to the current owner two years ago. She described the residence as a “beautiful modern farmhouse,” adding that the property includes the “most delightful coach house over the two-car garage, ready for our electric vehicle.”
She noted that the home has an open concept and a “HUGE” bonus room. The new owners, she added, could “have coffee on the peaceful, screened-in porch.” All Epstein brands. The home is 4,500 square feet with five bedrooms and five bathrooms.
Caroline Dean, a name that often comes up in sales of this size in this area, represented the buyer for this beautifully presented home. Caroline is with VILLAGE selling numerous homes in the Hillsboro Village area as well as other parts of town.
The seller had bought during the time the market was changing and the price this sale fetched for his sale speaks to pre- and post-COVID home values. Well-built, Epstein-like homes in good neighborhoods seem to appreciate in Nashville regardless of national trends.
Selling for $1,225,000 in 2020 and $1,737,500 grossed $512,000. It behooves builders to have stories of appreciation on their products, but it must ask the question, “What if I had it in my hands?” flow through Epstein’s mind as visions of dollar signs dance in his 2018 mind.
Some buyers prefer new homes to existing homes, and with the recent surge in demolitions and development of lots formerly known as tiny homes, there are more new homes than ever.
In the case of 2008’s Natchez Trace, Epstein purchased the property in August 2017 for $382,500, began construction in 2018, and completed the home in 2020 for a total investment of $390,000 leaving $835,000.
Many sales are up to 7% to close and – at a selling price of $1.25 million – that total would be $85,750, which would be the bottom line, giving him $749,250 to build one house and hopefully profit remained. This does not take into account property taxes, insurance, utilities and interest.
It’s doubtful anyone could build that house for that money today, hence the appreciation. Caroline Dean’s clients bought a home for less than could be built today, and the seller made more money than Epstein could possibly have raked in from the original sale. In most cases where a developer buys a demolition and builds a single family home, the property has a high value.
Stone Oak Builders and their real estate agent Richard Bryan have taken that philosophy to a higher level, buying lots for as much as $2 million and selling for as much as $5.7 million.
In the case of 1018 Stonewall Drive, Stone Oak bought land for $850,000 and built a home that sold for $2.8 million in 2020.
The buyer-turned-seller sold the home two years and two days later for $6.5 million.
From a tax standpoint, holding the home for two years reduces taxable income from 40% to 20% and therefore some of the 2020 purchases are held for at least two years, reducing the tax by 50%.
Richard Courtney is a licensed real estate agent with Fridrich and Clark Realty, LLC and can be reached at [email protected]