Adding Value: What Mistakes You Should Avoid

Welcome ladies to The Real Estate Investor Show, providing inspiration, strategies, and insight to empower women investors to live balanced and financially free lives. Now, here are your co-hosts, Liz and Andresa Guidelli.

So today's episode, ladies, we have Liz Young. We got into such a great conversation around adding value. I know we talk about that a lot in this business. but we talk about it in a very different way on today's episode. What I think you're gonna get a lot from this, this discussion is Liz has an amazing ability to look at for her deals before she even pulls the trigger on renovating what she's gonna do to add value, what the costs are, and then what the return is. And, and she gives some great ideas on how to do that and how she's done that for her own projects.

Yeah. And there's a misconception, right? That not every time that you're adding value to the property, you're going to get the max value for the property as a whole. If you are just doing renovations in different areas and you achieve your max value, not necessarily. Many times if you add value to the wrong place, you are actually decreasing the value of the property. So this is a must-watch show for you to do when you are looking to renovate and add value to your primary and to your investment property.

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Welcome back, ladies.

This is Liz and this is Andresa.

Welcome back to The Real Estate Investor Show, where our mission is to empower women to live a financially free and balanced life on their own terms.

Right, Andresa?

Indeed.

Indeed. So we have Liz Young on our show today. Liz, thank you so much for joining us today and excited to jump into, to you and all the great nuggets we're gonna kind of talk about when it comes to getting the most value from homes, which is everyone's interest, especially if you're investing. So thank you for being here today.

Awesome. Thanks, Andresa. Thanks, Liz. I'm, I'm thrilled to be here.

Yeah. Awesome. So as the, you know, women and men who listen to our show know, we just like to get connected to all of you, share, share a quick tip. Something that's coming up for us, and then we kind of like launch into our interview with our wonderful woman that we're interviewing. So it's my turn here, Andresa, right? I'm up on the docket here. So my quick tip here, or my tip or insight to share with everyone today is checking in with yourself. I think, you know, in the, in the busyness of everything we're doing, we sometimes forget to do that. And last week I had a great experience, not really great, but it ended up being a great experience afterwards. Just, just kind of going through a few things with my family and where my attention needed to be. As entrepreneurs, we sometimes feel guilty. We feel a little split. We know we're needed everywhere sometimes. So we're kind of feeling like we're just, you know, everywhere at the same time. It's hard to do that. And Andresa, you know, kind of, kind of called me out a bit about, you know, what do you need? You know, what do you need today? And it's a question that I don't think I ask myself enough. And I think it's a question that a lot of women don't ask themselves enough. So if you haven't asked yourself today, take a moment, keep listening to our podcast, of course, but what do you need today? What do you really need today to make today a day that you feel great about? And sometimes we just don't ask ourselves that enough. Some women are maybe great at it, but I can't say that I am always. So I've been asking myself more of that lately and, uh, wanted to encourage all you listening to ask yourselves that too. So that's the tip I have for you today.

I will add one more thing, and I don't want a woman to feel guilty about whatever they think The answer is to that, it is what it is, right? If you need more time or if you want to just be by yourself, if you want to, you know, eat a cup of ice cream, whatever, whatever that is. If you just need a vacation or if you need another property or whatever the need is, it is what it is and just stay with it. Don't try to suppress what it is. Don't try to judge what it is. It is what it is, to be quite honest, kids. I just need 2 hours by myself.

Thank you very much. I wish I could have 2 hours.

Whatever that is, right? Whatever that is, right? I think it's just many times we, we want to justify for ourselves our needs. So it's reasonable. So it pleases people.

Yeah.

So it doesn't feel that we are being selfish and just throw that out.

Window.

Yeah.

That really resonates with me. I'm like, we should empower more women to celebrate when they are just a little bit selfish and do something for themselves in a day.

Yeah.

And I've heard it once. I've heard it once. I like the way it's said is to be selfful versus being selfish, you know? So like, oh, I could be, I could be selfful. Not that I always do it, but because I don't want to be selfish. Right. Right. We don't want to do that. But anyway, that's great. Well, good stuff. So ask yourself that question, ladies. And guys, I know that we have a whole group of guys who like our show too. So ask yourselves, whomever you are, ask yourselves that question. So without further ado, Liz, thanks so much for being on today. We always like to kind of kick things off and we know you're, you know, wear many hats, but what led you to jumping into real estate and investing?

I've always loved real estate. I was definitely, you know, one of those like kids growing up that I still to this day do this where I take a, you know, a real estate listings magazine anytime I see one at a grocery store or out and about. So I've always loved real estate. For me, it was like growing up in a house where buying a home was such a deep memory and such a big event for our family. Like we were renters and when our family transitioned in New Jersey, Liz, another New Jersey, fellow New Jerseyan.

Jersey girl.

Yeah, it was such a monumental event for our whole family. Like I remember us all dancing and celebrating when we bought our first house. So that really ingrained in me like the power of real estate ownership and how that can really change just your, your monthly finances. And it, it was this moment where our family went from like I, at least I perceived it to be, is like struggling to keep up to like really it being the first step towards getting ahead and not only be able to cover your monthly bills, but actually have extra money to invest in more real estate or other things. So that ended up informing a lot of my career choices and I ended up, you know, seeking out real estate in a lot of ways. I started, you know, investing as my side hustle in real estate properties ranging from single family all the way to multifamily. It became my day job where I started working in different technology companies, figuring out how you could bring innovation to the world of real estate with data and insights. And then it became my passion. You know, within my spare time, I do renovations. I buy properties that I think have a lot of potential, and whether it's for me or for someone else, I try to make them what I think, you know, is the best version of themselves.

Liz, so now it's great because I can call you both Liz and I don't need to think about the guest name. So Liz, here's the thing. A lot of investors, they, The first step is one of the hardest ones. And I believe that many women super, like, overthink the process. And many times they don't know where to start because they are thinking about investment as something else. And, uh, we talked about quite a bit before we started the interview that many times they are sitting on it. Their primary could be the one thing that propelled them to invest in real estate if they looked at it as an investment? So let's say somebody that they have a primary, right? How or what they can look at to evaluate options to start investing by idealizing their primary house?

[Speaker:Andresa Guidelli] Yeah, I mean, I always joke that I'm like, you can't live in your 401(k) or your like crypto portfolio. So I think that primary residences are the best way for people to ease into the world of real estate investing and get comfortable in a way that feels low risk because you're still living in the house. So I, I, I love and I encourage women and all people to use their primary residence as their entryway into the world of real estate to get comfortable with it. So I think first it's just starting to shift the way that you think about investing in your home. So when you think about your home, most people are, you know, investing in their home, whether that's doing a renovation or buying a piece of furniture because they want to enjoy something. They're basically motivated because they need something. It's like, I have a baby on the way and I need more space. Or I've always wanted to have that amazing backyard for my kids to play in. I, I want to be like the cool house in the neighborhood. But if you are taking a, the mindset of a real estate investor, you need to really start to think about not only what will I enjoy or what will make my life better, but also what will I recoup at the end of this? What are good home investments? So that puts a lot more pressure on thinking about one, what is the cost and what is the ROI on individual changes to your home? And, and being really thoughtful around like, hey, am I making a, a smart home investment. I think too, is I encourage people just to run the math in those situations on like, it's okay to make a change to your home to enjoy it. So let's use like a kitchen as an example. So say like, I love to entertain. I love to host big family dinners and my kitchen's old and I want a new, better kitchen because I spend so much time there. And that's going to cost me $50,000 based on, on where I live. So if you're purely looking at the home for enjoyment, you're just like, all right, that's $50,000.

That's that.

But if you start to think like a real estate investor, you say, okay, cool. This is going to cost me $50,000. And based on where I live, I can recoup what percent of that? And let's say in my area, I can recoup 80%. So I'll recoup $40,000 at the end. And I'm like, all right, it's going to cost me $10,000 to enjoy this kitchen. So if I plan to stay in this home for 3 years, 5 years, 7 years, I can start to actually calculate like, what is my cost to enjoy this kitchen on a daily, at a dinner level basis? Like, is it $3 a dinner, $4 a dinner? So I encourage people to really think about one, like, Am I okay with basically the enjoyment costs and what I'm going to get out of this, out of this investment in the future? And then two, make sure you're, you're picking changes to your home that other people will, will value as well. So like, it's like when you go to sell your home, making sure that you're adding features, adding space that have mass appeal. And, you know, are, there's a lot of different ways you can turn to. I mean, one way is honestly looking at listings nearby, looking at when you're seeing a home sell quickly on the market. What are features? What are attributes that you're seeing in that house that you can determine are like desirable, you know, just desired by people hitting the market today?

I love that. So you were saying that the Jersey Italians should not be putting marble everywhere from head to toe in the bathrooms?

Yeah, maybe like not so much like crazy colored marble or we, we joke, we, you know, at, at our company we have tens of thousands of homeowners that use our insights and we see crazy stuff and we, we, we love to see that stuff, but like, We joke that like you can see based off of the year that the renovation was done, some trends that were maybe overly embraced and have lost their, their excitement or demand now. And you can see new stuff popping up. One I joke about is like, I'm like, this is the year of pergolas. We're seeing pergolas everywhere. Everyone wants like anything you can do to make the outdoor living space.

I do want a pergola. I do.

You're a pergola girl.

I do.

A lot of outdoor, basically like people are stuck in their homes. They want to make as much of their yard livable space as possible or usable space. So figuring out ways to make that exterior space more, more friendly.

Just following up on that very quick. Did COVID change or influence how people make renovations into their house?

We saw major changes with renovations in COVID. So a couple, couple trends that we saw, one is just a much bigger focus on outdoor spaces, period. When you're unable to gather at an event space or you're unable to, you know, go to like the local pool or country club, you're bringing that home. So you're like, wait, I need to now have this in my backyard. And we saw the, the types of projects people were interested in doing in their backyards range from something small, like a pergola all the way to, we saw outdoor living rooms blowing up, which is like a covered space with a TV kitchenette, built-in waterproof sofas. So we saw this really explosion of like outdoor investments, which is, is cool. And then two is we did see a refocus on your high-use areas. So we saw actually kitchen renovations increasing, you know, powder room renovations, the velocity increasing because you're using those spaces more than ever before. The last thing we saw, no surprise here, is just office needs. So people saying, okay, cool, my home was not the space I worked in before, it is now. So what are my options for making that more friendly? And that could be converting an existing space, which is a, a really actually cost-effective way to increase your home value and, and create office space all the way to adding secondary dwelling units in areas where zoning allows that for a standalone office space where, you know, the kids won't be asking you for help at, you know, when you're in the middle of a conference call.

Yeah. That's so important. I love that. And so you have a handful of projects you've done over time in terms of investing yourself. Yeah. So, you know, as investors, right, we're always looking at how do we, how do we get the most value out of this house? How do we put the most value in and not cost an arm and a leg, right? That's always the, the, the question mark we all kind of wrestle with, if you will. So tell us a little about how you've done that in your own projects and, you know, just some, you know, tips and ideas around that piece.

Totally. I'll start with adding space. So I think, you know, adding space square feet is, besides location, is the biggest driver of home value throughout the US. So my like biggest tip is like be creative and thoughtful in ways that you can add space. And that means how can you just increase the space or maximize the space as well as How can you add space in cost-effective ways? So to really understand adding space, you have to understand zoning data and zoning information. If you're a real estate investor, it's something that you should get comfortable with, which is basically sets of local rules that tell you where you can and can't build on your property. You think since you own the property, it's up to you, but it's actually up to your local municipality.

Yeah.

Right. You cannot go to the line.

The whole—

you can't go to the line. It's that first— my first tip would be is get comfortable with zoning information because one of the biggest, you know, pieces of value about one of the most important things to understand about a property before you buy it is how much space can I add and where can I add it in the future? So I always get really comfortable with zoning information. My current property, I purchased it because of its zoning, because it allowed for a lot more square feet to be built than any other listing nearby. So I was like, hey, even if I'm not ready today, I know I can build a lot more square feet in the future. So it's first like understand how many square feet you can add. The next is understand what your options for adding those square feet are. So I can give you an example is like, you know, you'll often hear a house quoted in price per square foot. Even if you go on any of these major listings platforms, you'll see that like this is the price, the price per square foot, but not all square feet cost the same amount to build. So it's much more expensive to build a second floor than it is to build a first floor. So if your zoning only allows you to build second floor square feet, I know my ROI on that is going to be way lower than if I'm able to build on the first floor, because it's going to cost me sometimes double to actually build that second floor square feet. Or if I'm on a slope, I'm going to have to level the land or actually build a much more significant like foundation and more structural support to support building a structure on that slope. So I'm always looking at like, what am I allowed to build and where can I build it? And that way I really understand my cost for blowing out that square feet. But if you can find properties that have You know, an opportunity to significantly change the number of square feet. Those are where I get excited. Those are where I'm like, here's an opportunity to drastically change the value of this, this, this piece of property.

I'm curious though, Liz, cuz what you're saying is interesting. We, you, we often talk about like finding the right markets, right?

Yeah.

It's a big conversation. Yeah. And so many people talk about jobs and the economy and, you know, all, all those important things. I'm not to, I'm not to dismiss any of that cuz that's all relevant, right? Where are people moving, where are people leaving, and what's the job diversity, what's the job growth, what's the, you know, all those sort of things. But what you're saying is interesting in a sense of like knowing which areas are kind of, I don't wanna say zoning friendly. I don't know if that's a term, I'm making it up, but in a sense, there are probably some townships that are more open and inviting to what you're saying in terms of adding on versus other towns that they're, I mean, that's the reality of what we all know that. But I'm almost curious, you know, that's an important checklist piece on the checklist, right? When you're looking at a market, especially if you're trying to get creative. And I think now more than ever, that's the name of the game. If you're, if you're able to market, it's really hard to like buy this beautiful property on the MLS, not add any value and make all this cash flow. Like that's just, I don't know where that exists in that in and of itself. So I'm curious, how have you navigated the markets? That allow you to kind of like, okay, this is gonna be a little more friendlier to adding on or advancing versus these, this township is like, no, no.

Yeah. I think creativity is the name of the game. It's like, how can I add space? How can I add features that make this property something else? So that, that's spot on. It's, it's definitely tough. So I think one is if you are committed to investing in a specific area, and that might be because you live in that area and you wanna make sure you're near your investment or you're talking about primary residence. Then you are really limited to whatever zoning rules your local municipality has. And my best tip there is like, look for ways to get around the rules. And there's always exceptions. There's ton— zoning is the world of exception handling. So if you're able to identify those exception pockets, then you're often able, even in a complex zoning municipality or town, to still build the home you want. So I can give you an example. My, my current project is in a town in, in New York State that that is notoriously tough with zoning. It's like no matter how large your parcel is, they never let you build. Like the ratio of property to parcel size is actually quite small. They don't allow you to like build very heavily. But I knew that if you have a historic home, that that's a total exception. So basically if you have a historic home, a home that was built before a certain time range, the traditional zoning rules go out the window and they're actually a lot more flexible with what you can add on. As long as you don't mess with the, the existing structure because they want to keep that, like maintain that historical feel. So I was like, all right, cool. I'm only going to look at historic homes if I want to pick a house in this town because I know I need to be an exception versus the standard rules. So they might— my big tip there is like, one is try to prioritize an area that has more friendly zoning rules. But if you can't, for whatever reason, which in this case I couldn't, then figure out ways and exceptions to get around those. And the rules will generally call that out. They'll say like historic homes are an exception or this type of home. If you're on a main street, if you're this close to a shopping center, that's an exception. So I would say that just like get it, get in the, in the weeds in the code and find those exceptions. Mm-hmm. Because that's where you unlock the value.

I wanna just make a quick pause here because I think it's so important what you're saying in terms of due diligence, right?

Yes.

So many times we just get the property and we don't do our due diligence with zoning, neither with the potential of it. So I wanna share a couple of things and I wrote this down so I won't forget to share it with you. When you are looking at, for example, South Philadelphia, when you're looking in a block and you are looking like the side-by-side small townhouses that have 2 stories and then you start seeing 3 stories, brand new construction, all of that, that's already telling me that if I get this one over here that is a 2-story, Next door, there is a 3-story.

Yeah.

That's a given, right? Where the red flag is, is that the entire block is 2-story. There's nobody, nobody that had built a 3rd or 4th story there. Yeah. Doesn't mean that you can't, but I, Andresa, don't wanna be the pioneer there because I've been to community meetings. And if you haven't, ladies, go to one. It's fun. It's not fun when you are up front, right? If they had tomatoes and eggs, guess what? They would be throwing it at you. But that's what— listen, don't get intimidated by anything like that, but you got to get familiar with it and know your expectations. I'll go for it and I know what's going to happen. No matter what you say, they're going to hate it. Oh, but I want to convert into a residential. We don't want that. Oh, okay. So we want, do you guys want to convert it to commercial? No, we definitely don't want that. So you want to keep it vacant? No, the windows are falling. So I don't know what the hell you guys want. So just the reason why I'm saying this, because I think Liz, you were making a great point. Get the potential of it, knowing what's going on so you can leverage that going in. And I think that a lot of people don't do that. They don't look at the zoning and many times there's grandfather. There's a lot of variance.

Exactly.

There, there are grandfather in it. So I love seeing the knots on it. When I see knots, it's like, oh, this is complicated. That means to me that there's a lot of potential there. And I like that you are in tech and you use a lot of data in order to back up your information. How do you make your decisions besides zoning? What other data are you taking consideration when evaluating an investment property?

Yeah, a couple things I look at. So I look at zoning to tell me, you know, how many square feet can I add, right? Because I always want to look for a property that I can make it as, as basically as big as makes sense, bigger than it currently is. The next thing I look at is what features can I change about this property? And what you mentioned about looking around the block is a great example. So if you're like walking down an area and you see that a ton of people have circular driveways or have pools, or have a detached garage or have, you know, a second structure, an accessory dwelling unit in their backyard, that likely means that you're able to do that too, right? It's a good, it's a good hint. Like this seems to be allowed in this area if multiple people are doing it. And we know that a lot of these features can be ma— have a massive impact on home value and therefore the ROI of an investment for a real estate investor. So I'm always looking at basically areas that I can, I call like up the number of features or amenities on a property. And that's exciting to me when I'm like, all right, cool. This is a single-family lot that doesn't have a pool or a pool house or a detached garage, but 25% of the houses around here do. To me, that's dollar signs. That's okay, cool. I likely can add these features and really enhance the value of the property and make it something significantly different.

Yeah, absolutely. And then you're able to really optimize your sale price and what have you.

Yeah.

I'm curious though, How have you navigated, because I think about like obviously adding value to multifamily is this, you know, adding value to a single-family home and multifamily in and of itself is critical. How you do that is totally different, right? So, you know, how has that shifted for you? Because sometimes, you know, with certain, I don't know what kind of multis you've bought, but yeah, certain multis are a little more, what can I say, confined in terms of what you can do because these structures are a little older. So how have you gotten creative with some of your multifamily properties?

Yeah. With some of the multifamily properties we've gotten creative and just like looking for ways that we can basically move into a, like an additional higher tier of rent demand or rent, we basically demand higher rent prices. So when I see a multifamily property that gets me excited, it's one that again has potential. But to your point, it's like, I'm probably not going to add like a detached garage or a pool. So it's one of two things. It's either I can add more units, I can basically increase the number of units on the property, or two is I can significantly increase the rent roll, increase the per unit rent. By improving the quality of those units. And in those areas, especially when you're talking about a one-bedroom or a two-bedroom rental unit, often relatively like low-cost cosmetic changes to kitchens and bathrooms can have a huge impact on what you can charge from a rent perspective. So that gets me excited on the multifamily side. I'm like, is there capacity to add more units? Yes, no. And within the units that there are, are there low-cost cosmetic changes that would make it feel nicer and therefore, you know, basically make my rent roll significantly higher.

How have you learned to build that skillset list? Because I think that's a skillset that a lot of women who may have done a couple deals, they're still improving. They're still, they're building that muscle, if you will. And I think honestly, that's probably one of the most important skills, whether you have it or someone has it on your team, right? So in other words, assessing, okay, this renovation's gonna cost X, my rent bump is gonna be Y, And, you know, what's the ROI and how quickly will I make that money back? Like, how did you, you know, obviously you're very data-driven, but, you know, were there any tools or just, I don't know, practice? What have you done to kind of build that muscle? Because that's a, and that's a muscle that we need to build so you can move faster, right? So it's not like, let me—

You kill the ego first.

Yeah.

You kill the freaking ego first.

Yeah.

Right.

Because it's not your, your, right? You kill the ego first. Totally.

I mean, There's a couple things. I think one is just like play to your strengths out of the gate. So I often encourage people, if you're talking about your first investment, whether it's going to be your primary residence or your first multifamily, is like, what is your advantage? Why are you going to be better at this than someone else? So like generally that means like pick an area that you know really well, like that you have a unique information advantage. We always say information asymmetry is how, how you win in real estate, right? So it's like pick something that you have a secret sauce. And that might just be like the town you grow up in because you know better than anyone else that like that Dairy Queen or that Wawa, pulling a lot of South Jersey things.

Yeah. Wawa. I love Wawa.

Is, is like, is, is the hotspot, right? So I think one is like play to your advantage where you have information asymmetry. Two is you have to develop a good network of service professionals. And given the supply shortages and how tight the, particularly the renovation labor market is, is like that requires real effort. Put that effort in upfront because you're going to learn the most from having a good relationship with professionals that will collaborate with you out of the gate. When you're saying, hey, look, I'm looking at this property, come with me. And like, what could you do? How much would this renovation cost? You know, how long would it take us to do this? So, you know, how long you'd be without rent for. And if you can develop, I call it like your bench, your, your little team, not your full-time team, but your team of professionals surrounding you. And you really like can help them see that they're going to benefit from collaborating with you too. You're a straight shooter, you're honest. As long as you treat them fairly and do good quality work at a fair price, like you'll give them, you'll give them that work, it can be a huge advantage because you're going to get work done faster at a better price. So I, I would really see that as like, use your information advantage and like, don't be shy, drop your ego and like acknowledge what you don't know and what you might need third-party professionals to bring to the table for you.

[Speaker:ASHLEY_KARP] I think that, you know, no matter if it is your primary or investment property, when you are looking at adding value, You really need to check yourself at the door and say, is this something that I want or is something that other people would want? And bounce ideas with the real estate investor community because many times we think, oh my gosh, this is going to cost so much. But I think you made a great point a couple of minutes ago when you say it feels like it.

Yeah.

It's going to have to cost. Light, right? It's just a vibe. Many times in order for you to quote unquote, let's say you don't have space outside. So how can you create space inside? It's illusion, ladies. It's all about a freaking illusion. So if you cannot just knock it down, entire wall, how about half wall? How about, you know, whatever you can do. To open up the space. I just finished up the last kitchen renovation in my house where the space looks much open because we created an open space where there was a wall that was basically blocking the flow of things, right?

Yeah.

So many times that might be the case. Many times it's a matter of lighting, window. Many times it's about having recessed lighting because your room looks so dark. The walls are dark. You have freaking carpet on the floor. So light them— light that up. And, and it's not— I think many times we shoot ourselves in the foot because we're thinking, oh my gosh, 6-inch, you know, hardwood floor, totally cost that much, or different things. And I think that it's all about the illusion.

Totally.

And bringing a professional in the mix can bring that to life, right? So like, that's a great example of like, people love open spaces. Everyone wants bright open spaces, open floor plans. They want, you know, the kitchen, you to be able to be cooking in the kitchen and talking to the people that are over at the kitchen table or at the bar. And that's been the trend now for several years from a kitchen layout perspective. But if you're looking at a space, whether it's multifamily or single family, and it's really closed off and boxy, like I can say I want that to be an open space. But if I have a trusted contractor with me, someone that I've invested in building a relationship with, they can quickly assess like, is that a load-bearing wall? Is that a load-bearing wall? And really say, okay, like Liz, I have your vision here. I get it, open space, but what are we able to do in a cost-effective way? And then present you the options. And it just makes for such faster decision-making. 'Cause then, you know, it's one second visit and you're like, all right, cool. Now I know my options to achieve this goal.

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Yeah. And I love that, Liz. I think we all want those contractors, right? That's what we seek for. And, you know, when you poll so many, so many women renovating, right? It's like, how do you find a great contractor? Like, that's a big still, you know, obviously concern, challenge. And there are some great contractors out there. We've talked about that, you know, how to vet and how to find them. How have you done it? How have you personally been able to, You know, get the right team members, someone like you're saying, that's actually going to, you know, hear your vision, get your vision, present options, be trustworthy. Like that's, that's what we all want. So how have you personally been able to navigate that and do that in your own business?

Yeah, it's interesting. I think that there's always this like feeling of, hey, I don't know if I can trust a contractor, which is, is a fair feeling. I felt that feeling before from homeowners, home investors. But as you know, construction has evolved over the last 5 years and we have this huge shortage where contractors are in great, great demand, have all these long waits, there's actually just the same amount of skepticism and fear coming from the contractor side. So what contractors hate doing—

Yeah, that's a good point.

—is wasting time. And for a contractor, the worst thing they can do is spend a bunch of time going on site, taking measurements, and drawing up a bid, which takes hours and hours of time if they're doing like an accurate assessment there for someone that's either not serious about doing a project or can't afford to do the project or is unsure what they even want to do. So basically my approach is make sure I eliminate those concerns for the contractor out of the gate so they prioritize me. So first, I always start my contractor searches by saying, okay, I want to work with a contractor that's worked on similar types of projects before, because at least then I'm like, they're going to have a similar skillset. So I always turn to building permits. I look for what are contractors that have done similar projects nearby so I can see that, you know, kitchen renovation project on a similar priced home that was 10 doors down, probably a contractor I should speak to. And again, if you have a neighbor, like if you have someone you can get a referral from, I always highly suggest that referrals are great here. But if not, look at the building permits, find people that have done similar projects. Then once you get that person, make sure that you stand out so that they, that way they're going to prioritize you. So make it clear, like I'm going to do this project, I have financing or I can secure financing and I'm not unrealistic about scope or timeline. And that then they know like, it's worth my time. It's worth going on site and investing in this person. And that will get you most of the way there. And like invest in the relationship. I, I had a contractor meeting this weekend. The contractor dedicated some of his time, came to my current renovation project. We did a walkthrough and the next step was him coming back to take a lot of measurements. But he said, look, I want to make sure you're comfortable with my quality of work. So can you take 30 minutes out of your Sunday? And come to one of my active projects. And that way, if you're comfortable with it, I'll come back and do all these measurements. And I did it and I showed up on time. I respected his time in return and he did those measurements yesterday. So I'm going to go from like first reach out to this contractor to getting a quite detailed bid in the matter of a week because we both made sure, you know, each other was comfortable and trusted each other. Well, you're speaking my love language.

And I think that we have talked about like, a lot about how to vet a contractor and everything else, but I think that we have the wrong expectations because we have like, oh, they should do this, this, and that for me. And oh, they never came back. And I think we need to start looking at what are we doing too in order to provide a clear picture of what we want. If you don't know what you want, get that done, prior, like the vision, or if you get stuck on a couple of things, it's major if you just want to do a quick lipstick or if you are doing major renovation, right? So the basics, you need to come out. And I think that sophisticated contractors, when I say sophisticated, I mean people that really know their stuff. Yeah. They are out there, but then we want to pay very little to it. You get what you pay for. Yep. You get what you pay for. And I do hardly believe that when you are paying for a cheap contractor with intention to save money at the end, I guarantee you, let me look at the, your, your final numbers. You paid more. Totally. You paid more because it took longer. They did a ton of change orders and the quality is not there because they needed to do twice the job. So I love what you're saying because it then it brings the power back to us in terms of, okay, How can I create something that works for me, for them, and that sets ourselves for success? If it is on my primary or if it is on my investment property, the goal is to really, like, really knock it down. Like, what do I need to do in order to add value? And most important, how can I get that back? If it is through a HELOC or refinancing it, whatever, whatever that is. What are the biggest mistakes that you have seen it when people are renovating? We talk about the marble, but besides that, yeah, what are the most recent mistakes that you see? Like, oh, that it was just a waste, you can't recoup.

Yeah, a couple. I think on the contractor side, the biggest mistake is not agreeing, not setting expectations up front. Everyone should be aligned on like, what is success for this project? Is it achieving a specific budget? Is it achieving a specific timeframe? And just calling that out, out of the gate saves everyone a lot of stress in the future. So that's, I focus my time on like upfront expectation setting with contractors. From a renovation project side, the biggest mistake I see across the board is people over-renovating. So what I say by over-renovating is when you invest too much broadly in the renovations and you basically hit what I call like the maximum value pretty quickly of the home. So my joke is like, you never want to be the nicest home on the block. I always encourage people not to be the nicest home on the block. Why is that? Because there's just a limited number of buyers that are willing to pay that premium. Like not that many people want to have the fanciest home on the block. So generally the big mistake we see is over-renovating. So what does that mean? It could mean one, overbuilding. It could mean like, hey, I've either actually added too many square feet or I've thrown off the ratio of rooms. This is a funny one that we see a lot. Like some people will just want to indefinitely add bathrooms. But the ratio of bedrooms to bathrooms is more important than the total number of bathrooms. That's so true. That's so true. So if you have like, if you're like, oh, this is awesome. I have a 4-bed, 2-bath house and I'm gonna add 3 bathrooms. I can almost guarantee you that, that third bathroom, because it'll flip the ratio to more bathrooms than bedrooms, will be negative ROI on the property. Because people just don't want that ratio.

So not adding means you're adding value. You adding the wrong place might be reducing the value actually. Totally.

So it's like you've either added too much stuff, so square feet, or you've thrown off the ratio is mistake one of over-renovating. Mistake two is just investing too much in an individual room or like line item of a room. So let's use a, you know, a $350,000 house as an example of like, you probably shouldn't put marble countertops in a $350,000 house if we're talking about purely ROI because in that area, the cost of those countertops isn't going to be able to demand that return in the market. So I think you have to be really honest with yourself of like, for the type of asset I'm working with, price point, area, et cetera, what is the appropriate like quality at the material level, at the appliance level for this home? And it might, it's probably not like, it's probably not the really fancy Viking stove if we're talking about, you know, a relatively affordable one-bedroom apartment.

Hmm. So powerful. I love that. I love that. You know, we always talk about how it's so important to be so different in, in our business and unique. And, you know, I love what you're saying. Like, what's— I, I just love how you're pulling all this together around not over-renovating, you know, looking around, just keeping your eyes open. What, what's working here? And then how do I make this a little different? I just, I love all those pieces. This is great. Good insight, especially right now. Right. And that kind of like, what's going to be that unfair advantage? I love that concept as well that you said, and I call it the unfair advantage, right? And where can you move? And an unfair advantage is where can you move quickly? You know, where can you move quickly? What do you have? What do you bring to the table? Andresa and I talk about that. What do you bring to the table where you can move quicker than other people in your competition? So I love, I love all these pieces. Great, great insight. And please, Liz, as we wrap up here, please share with the ladies where they can learn more about you. I know you have a tech company, do a lot of neat things around data. and helping. Yeah. So please share that and we'll get to our, our last few questions. Yeah.

The best way you can learn more about me is by downloading our app. So I'm the founder and CEO of a company called Realm. We're venture-backed. We've raised $20 million. So I'm really excited to connect with other female entrepreneurs and we give home insights so we can help you navigate a lot of the things we talked about today. Understand what your zoning is, what's allowed. We give you ROI at the project level. We have billions of Customized ROI calculations. So go to the App Store, download the Realm app, enter your address, enter the address of a property you're looking to buy, and, and we'll analyze it for you for free.

Awesome. And you guys gonna find the link for the app on our show notes. Now we're gonna transition to our Fabulous Week questions. And the first one, Liz, is what's the most powerful book you ever read?

Oh, that's such a hard one. You know, I think like a lot of the, I subscribe to a lot of, a lot of the startup literature. I, you know, as, as an entrepreneur, I love the Hearing other entrepreneurs' war stories. So this is like a, a classic favorite for me, but I, I love The Hard Thing About Hard Things. I don't know if you've read that, but when you are, you know, going through experiences as an entrepreneur, whether you're a single person just buying your first property or building a big tech company, it's a, this book is a good reminder of like just to take a step back and really get value out of some of the toughest situations. Like those will be the most fruitful for you in the long term.

I know sometimes we can laugh or we can cry about the same subject, right? Behind the scenes. Yeah, completely. That's entrepreneur life. The second question is, what's the most powerful routine that you do to create a financially free and balanced life?

Whatever balance means to you. Yeah, for me, it's, I would call it financial discipline. So I'm really disciplined about what percent of my income am I dedicating towards a resource that will, or an investment that will make money for me in the future. And I'm very committed to passive income and real estate's a huge piece of that. So just saying, okay, given the amount of money I'm making in a given month and given my expenses, what percent every month can I set aside and discipline myself to, I'm investing this in something that will, that will make me money in the future. And it's been really powerful because just like you, a lot of people do this with their 401k. If you do this with real estate or with other assets, it's a way that you can really get ahead financially.

Wonderful. The last question is, which woman, famous or not, has inspired you the most?

Oh, I mean, there's so many, you know, like badass women, particularly in real estate and tech. So for me, I think I look at a lot of the, the women that have founded major real estate, successful real estate companies, like ranging from, you know, CEOs of major real estate brokerages all the way to CEOs of big tech companies. So I would just say broadly female entrepreneurs. There's many that I, I look up to and aspire to be like. Great.

Liz, thank you so much for being on our show. Thanks for sharing all your great tips and ideas around adding value that makes sense and, and doing it in a, in a kind of creative way and doing it in a different way, right? And so thank you for sharing your insight and good luck with everything. Thank you for being on our show.

Thank you so much.

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