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Brigitte Gassee so enjoyed the process of remodeling her home in University South that she decided to do it again -- and again. Only this time her intent is to buy a clunker, fix it up and re-sell it, ideally at a profit.

Rosemary and John Wardell have been flipping fixer-uppers for 40 years, sometimes living in them, sometimes not. Their current home, an Eichler built in 1959, was to have been one of their last.

But the current slow real-estate market has forced both Gassee and the Wardells to shift their thinking about fixing up homes for resale -- and profit.

Rather than selling quickly, the Wardells' Eichler languished on the market since last summer. In early November, they were seriously considering pulling it off for the holiday season, then bringing it back on in 2010.

"The market is very different today," Rosemary Wardell said. "When we first started doing it, the market was very solid. People had to qualify for loans. You knew what you were getting into."

Wardell is an interior designer and her husband a building contractor. Together they fixed up and flipped eight homes, mostly Palo Alto Eichlers. "We lived in them, raised kids in them. Just as a house got done, we had to move," she recalled.

Before, the longest it took to sell a house was 45 days; a house on Clifton Court was open only one weekend. "Most of them we didn't have any trouble selling," she said.

Wardell gets plenty of positive feedback for the home, which was on the Eichler Home Tour benefiting Habitat for Humanity in 2008. But because she was thinking of it as her home, rather than as an investment, she and her husband "put in a lot of extras. You don't put in the most expensive (when you're investing). You put in good quality, nice stuff, but don't go overboard," she said, regretting the $400 interior doors, $3,000 front door and Italian kitchen cabinets.

"We wouldn't have done that if we were planning to sell. It jacks the costs up too much, and you need to pass that on," she added, noting that at $1.675 million, they're asking a couple of hundred thousand dollars more than nearby houses because of all the extras. And they've already reduced the price from $1.995 million in September 2008.

In the meantime, the Wardells are shopping around for an Eichler in need of their loving care. "They just clean up so well. They just come to life.

"We love getting ones with mahogany walls because they're dark and you brighten them up. Some have been added onto or different things done so they don't have good bones anymore," Wardell said.

Wardell says she's loved working with her husband on these projects, and she's happy they can wait for the right price for this one. A few people have shown interest, but if they don't get their price, they'll just take it off the market for the holidays.

"Fortunately, we're in a position to do that. We couldn't have done that in the 1980s," she said.

Gassee thought long and hard before embarking on her first investment in re-development.

She and her business partner Dumitru Mariuc of The New New York general contracting, the contractor who helped her remodel her own home last year, purchased a "shack" at 1119 Hopkins Ave., in the Community Center neighborhood of Palo Alto. As with her own, Gassee chose to honor the neighborhood's architecture by recreating a traditional exterior with a modern interior, with a 3,626-square-foot, 5-bedroom, 3.5-bathroom house on just under a 7,000-square-foot lot. The house is across the street from Rinconada Park, so the front vista extends forever.

And the home is on the market for $3.298 million, reduced from $3.475 million back in September.

"I like to fit in the community. More traditional is more homey. To live in, modern gives you more space, nicer flow, more light. It's a more rational layout," Gassee said.

Even before the Hopkins house went on the market, Gassee was scouting for another project. And she's done the math, to see what will work in this community.
For starters, she's learned from her first experience to choose a house on a larger lot, with more potential for adding on.

She and her partner found a 2,200-square-foot home on Webster Street, what she calls a "vernacular house, a cottage with a balcony." They paid $1.85 million -- or about $840 per square foot. A new house, extensively remodeled, can cost more than $1,000 per square foot, Gassee said, or about $2.2 million.

If Gassee were working with a contractor who was not a business partner, her construction costs would be about $300 per square foot, she estimated, or about $660,000. Add that to the $1.85 million and they'd have to sell it for $2.5 million just to break even -- and that doesn't count broker's fees, closing costs, property tax, insurance or a line of credit to finance the project, she said.

"The only way to do it is to buy as low as possible on a big lot," she said -- and dig a basement.

"We add quality material and my vision of design. This is the most added value I can do," she said.

Although they haven't sold the first one yet, Gassee is optimistic that the uptick in the stock market will make a difference. "The stock market is about confidence," she added.

Because she has a business partner, Gassee can spend part of the year in Paris, where she and her husband have another home.

"I can work till 1 a.m. on plans, or on the Internet," she said. And Gassee, who is a painter, finds the process very creative with only one down side -- she hasn't had time to paint in a year.

"It's been a ball for me. If only the market works and I can continue, I'll be thrilled."