Residential real estate in San Diego took a beating during the Great Recession, with many homes underwater and owners unable to upgrade. Cannon Christian came up with a unique idea: invest in a home while selling it. The result is Renovation Realty, a four-year-old company that recently expanded into San Francisco and has its sights set on other major markets in California. Times of San Diego spoke with Christian about his startup company.
1. Why did you start Renovation Realty?
I recognized that there was a niche in San Diego’s residential real estate market that needed to be filled. In looking at potential acquisitions around San Diego County, I found that there were many homeowners who could have increased their property values prior to sale had they renovated instead of selling to a “flipper.” I thought, if only there was some way to partner with these homeowners, by providing the capital and expertise, it would be a win-win for both parties. The homeowner could make more money with virtually no risk, we could take on more projects by spreading out capital, and turn to a scalable service model.
2. You invest in a home while also selling it for the owner. How does that work?
Renovation Realty is a licensed general contractor and real estate brokerage. As the general contractor we defer the cost of the renovation until the home sells, however long it takes. Assessing the homeowner’s needs is the first priority. Then, each property is evaluated individually on how to net the homeowner the most cash at sale. This can include listing the home as-is and working to get the homeowner’s desired number, updating with as little as $1,000 in safety items to become lendable, or several hundred thousand dollars in renovation work if the numbers make sense for both parties.
3. The company was formed in 2011. How did the Great Recession influence your business model?
In 2008, the partners began flipping houses after the recession. While purchasing, renovating, and reselling these homes we came across sellers in all types of difficult situations. But what stood out in each situation was that there was not an experienced guiding partner for these homeowners to turn to. Some needed to liquidate quickly, but didn’t have time to list on the market where they would have garnered more value. The majority knew that with any work done, they would have added value. However without the experience, time or capital, renovation work wasn’t an option. That is where the Renovation Realty’s service model was born.
4. Many older neighborhoods in San Diego are seeing a revival. Is that an opportunity for you?
Absolutely. Although we service neighborhoods of any age, the largest percentage of business is from older neighborhoods with homes built in the 1960s and 1970s. These neighborhoods oftentimes have original family homeowners downsizing or inheriting a property, and the age of the home hasn’t been an issue previously, but when you are trying to sell, it’s an extremely important detail. Younger generations are moving into these neighborhoods and expect modern conveniences and floorplans which adds to our value. With traffic commutes and work centers located in the mid-county, we see many buyers looking at the surrounding older neighborhoods because of more affordable pricing and central locations.
5. You’ve expanded into San Francisco. What’s next for Renovation Realty?
The Bay Area is our true coming out launch and scalability test. When we establish all the systems, recruiting, and management levels needed, the remaining major markets in California are next. We are a registered franchisor company and once California is operational, the franchising piece will be ramped up as well.
Times of San Diego, a startup itself, regularly writes about startups in technology, biotech and other sectors of local business. If you are a startup in the San Diego area and want to tell your story, please contact email@example.com.