Luxury for Fells Point; New career: Kris Olafsson is converting a historical warehouse into townhouses

THE BALTIMORE SUN

Kris Olafsson has been many things in his 34 years. A soldier in the Army. A guitarist for a progressive rock band. A school psychologist. And he's rehabbed a couple of homes in Harford County.

Versatile? Certainly.

Business savvy? Seems so.

But was he ready to convert an early 19th-century Fells Point warehouse into five luxury townhouses? You bet.

In 1996, Olafsson spotted a for-sale sign on the building at Wolfe and Aliceanna streets and suddenly he was off on another career.

The property, used as a tobacco warehouse and most recently as a musicians' rehearsal studio, certainly wasn't much to look at -- and still isn't with its blocked up windows and stripped innards.

But come this spring Olafsson hopes to unveil five upscale townhouses called Aliceanna Point.

Since November, he has gone from daydreamer to real estate visionary. He has joined forces with a clique of seasoned builders, contractors and real estate agents, who have created a new market for high-priced homes in trendy Fells Point and Canton .

"If you stand on the outside it's a huge beautiful building although it doesn't look that way," said Olafsson. "The trick in real estate is to see the potential and be an optimist."

If mortgage rates take a breather from their upward trend and the economy remains healthy, then Aliceanna Point should be one of the hottest new residential offerings on the market.

"I don't think that [high-end] market has been represented [in Fells Point] in the past," Olafsson said. "The demand is there obviously, so we are [satisfying] that demand."

This latest real estate gambit may be the wildest detour yet for a guy who had embarked on a run at being a professional musician only to settle down three years ago to pursue a doctorate in psychology while working as a psychologist in the Baltimore school system.

"It is a big task for him to handle with a job right now," said Steve Hessler of B & H Builders, who is the project manager. "I'm pretty proud of him right now."

Olafsson also teamed up with architect Ken Hart of Gant Hart Brunnett Architects on Mulberry Street. Hart's plan calls for the warehouse to be converted into a trio of three-story townhouses, plus a pair of two-story townhouses.

The finished warehouse also will contain a street-level garage for all five houses. Overall, the interior space will be expanded by 5,000 square feet to 20,000 square feet.

The five residences will range in size from a 3,500-square-foot home for $350,000 to a 2,500-square-foot unit for $239,000.

"When you walk into something that was once an old tobacco warehouse you should have some sense of its history rather than a suburban home where it's all cleaned up," Hart said.

Four of the five townhouses will have a courtyard. All will have roof-top decks and each of the floors will be tiered to allow skylights at each level.

Four bedrooms

The largest unit will have four bedrooms and 3 1/2 baths. A master bedroom, with large walk-in closets and a glass-block shower enclosure with soaking tub,takes up the third floor.

The two other three-story units will feature three bedrooms and 2 1/2 baths. All will have living room,dining room combinations with oak floors and staircases leading to dens and offices.

The two-story houses on Wolfe Street also will have three bedrooms, plus dens and a living room/dining room combination.

Three of the four townhouses will have patios. The largest home misses the patio, but gains a large first-floor family room, with a 20-foot-high ceiling and a wine cellar.

Olafsson said he isn't new to the real estate trade. He has rehabbed two homes in Harford County, but even those who have spent decades in the Baltimore renewal trade, say the Aliceanna project is in a different league , melding a contemporary design into a very old, very large building.

"There are some of the biggest beams I've ever seen," Hessler said. "We have to relocate some of the beams or expose some of the beams."

Used credit cards

Olaffson paid $210,000 for the building with financial help from the owner as well as $11,000 he charged on his credit cards to help pay for closing costs.

He almost thought the purchase price was beyond his means until the real estate agent suggested that he could easily get $800 by renting out the warehouse's old garage in an area starved for parking.

That would have satisfied nearly half his monthly $2,000 mortgage payment.

After minor renovations, he began earning money from the rehearsal space and recording studio. Maybe one day, he thought, he would turn the warehouse into office space.

"My idea was to purchase and build a music studio because Fells Point is already really good for music in my opinion," he said.

Olafsson loved the idea of owning the 15,000-square-foot warehouse. He loved the idea of owning property in the wharf-side community that inspired him as a young man.

But it wasn't until Olafsson was ready to sell the warehouse 18 months ago that he started to explore the possibilities of residential development.

By this time the novelty of owning a historical property had given way to the reality of being a landlord. A broken water main and roof repairs resulted in surprise costs.

There were late-night calls to go down to the warehouse because the door wouldn't close. He also found himself arbitrating cat fights that erupted among band members.

Many headaches

"For three years it was one headache after another," he said.

He contacted Frank Lanham, an agent with O'Conor, Piper & Flynn ERA. One potential buyer wanted to convert the warehouse into homes but his financing fell through.

Noticing the interest from speculators swarming the area, Olafsson felt he may be missing an opportunity. Not only was Lanham encouraging, he had experience with a few luxury Fells Point/Canton developments, such as Canton Crossroads on Essex Street, a five-unit development where homes, priced in the mid-$200,000 range, quickly sold.

Olafsson contacted Hessler of B & H Builders, which built Canton Crossroads. "He [Hessler] felt it was such a real good area [and] that it was a doable project," said Olafsson.

Canton Crossroads' success confirmed Hessler's belief that luxury townhouses, with garage parking and in an urban historical setting, was a winning combination.

Problems guaranteed

But Canton Crossroads was built on an empty lot -- which meant that costs were more predictable. Aliceanna Point is a historic reconstruction project where the crew is preserving as much of the building as possible, which all but guarantees unforeseen problems.

Hessler also said he felt responsible for Olafsson, who was a cousin of a good friend. Instead of being the general contractor that oversees the construction, Hessler agreed to be the project manager. Olafsson would in essence be the general contractor having final say on each stage and approving all bills paid for each job.

"I wanted to make sure this man didn't lose his tail on this job," Hessler said, adding that he thought it best that Olafsson know exactly what the costs would be for labor and materials. As general contractor, Hessler believed Olafsson would learn how a project comes together.

But the plans changed as the job progressed. When they went to work on the roof they found that to move a steel beam running the length of the warehouse would cost at least $10,000. Solution ? Leave the beam exposed but give it a new coat of paint.

"It'll be a talk-piece," said Hessler.

11% financing

Meanwhile, Olafsson needed to find financing for the project. A local bank was offering a competitive 9 percent loan, but the red tape was taking too long.

Olafsson was convinced he had to have at least some of the homes ready to sell by spring to take advantage of the hot residential market and ride the coattails created by other Fells Point niche developments.

He placed a classified ad and found a private company, Gourley and Gourley, to back him.

The Virginia firm, which specializes in short-term financing, agreed in November to provide $600,000 at 11 percent within a three-week period for the first three homes.

At a later time, the company would provide another $400,000 for the next two homes. The immediacy of the funds was worth the higher rate for Olafsson, who had spent $20,000 of his own funds just getting the demolition started in November.

"The longer it takes for you to do a project the more money it's going to cost you and the more you're at risk of having everything collapse on you," he said.

Hooked on history

Rather than boasting about the salability of Aliceanna Point's spacious homes, he'd rather show the basement that the crew discovered while building a wall.

He became hooked on the building's history when a demolition crew discovered hundreds of pounds of tobacco stuffed atop the ceiling. The discovery only confirmed Olafsson's suspicion that the warehouse was older than the 1909 date he was told.

Dean Cichorz , owner of New Faces, the architectural conservation company hired to do the masonry work, can read the patterns in the brick like a medium contemplating tea leaves.

The other day, he stood outside in the cold staring at a corner of crumbling brick.

"That brick was never suppose to be exposed to the elements," said Cichorz, who quickly describes what he believes were the cornices and wooden front of a store that has long disappeared.

Cichorz also determined that the site of one of the Wolfe Street homes was once a stable or a blacksmith shop, and he is convinced that other parts of the warehouse were used to store tobacco, because there's no sign of rat infestation anywhere in the building.

"Rats are smarter than humans," said Cichorz, who said the rodents dislike tobacco.

On the second floor -- half-demolished, half-framed with new walls -- the psychologist-developer resorts to self-analysis to explain why he took the plunge into the high-risk arena of luxury home development. He uses phrases like: "Type A personality. A need for stimulation and high tolerance for feeling overwhelmed."

But his best explanation is this: "Maybe I'm lacking in common sense to take on a project like this. It's still exciting."

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