I Spent $50,000 Fixing Up This Duplex | Full Walkthrough & Numbers

Hey, everyone. Mike yannies here@landscapebusinesscourse.com today, we're not talking about business. We're not talking about landscaping. We're talking about real estate. And a couple weeks ago, I posted a picture about this property that we rehabbed over the past several weeks and are now renting out for a much higher price. A lot of you asked, could you do a detailed walkthrough, actually show what you change in the improvements while spending $50,000 on the rehab and how we're able to raise the rents. So we're going to take you directly through the whole place. And this is Liz. She is the property manager that has helped me with all my properties, and I have 10 units. And. And again, the preface for all of this is the fact that I was seven, eight years in business before getting involved in real estate. And I always recommend get established in the business and make it a pillar financially to actually be able to afford investing. Don't get started in, like, your second year of you're running your landscaping business. Then I got to do real estate, then stocks. Like, don't get distracted. Focus on your business. Make sure it's profitable. And then when you have money to invest, that's when you can start thinking about something more passive, like real estate, which for me, is passive. Liz does all the work. She gets all her credit for this rehab. She's the one that's been working with the contractors and all the rest of it. So today I'm going to walk you through and talk about some of the numbers, but she's going to actually show some of the actual nuts and bolts behind what actually went on with the contractors. All right, so we're going to go ahead and go inside because it's raining. It's Bellingham. Welcome to the Pacific Northwest. But before we do, Liz, why would someone like myself want a property manager instead of trying to figure it out on their own?

Well, since most of our demographic is the landscape community, what we want to show is how that you can transition into that and have some other income besides. So just like we protect and guard and block for the estimator out in the field, we do the same for the property manager. Just like you say you're the estimator, we say that the owner would like, blah, blah, blah, and then the property manager is the one who executes everything the owner wants. So even if I'm making the majority of the decisions, I can always put it back to. Let me go back just like you would, and talk to the office. I Would say, let me go back and talk to the owner, Even though I'm making the decision myself, get right back to him with my decision. Always keeping the owner in mind. The property manager's role is to come into a property and do the bare minimum, to raise the rates to what the. What it should be in your area and bring profit to the owner over time so that he makes recurring income.

So, first of all, the exterior, the property, we had to spend quite a bit on just trimming the trees. These trees have not been cut back for a very long time. This property was built in the 1990s, so it's a little bit older than some of the other properties I've purchased. But we had to trim a ton of the trees back. They were touching the house. They were really making it quite dark. So quite a bit of trimming of the trees, installing some mulch, installed new gravel on the front of the driveway. So quite a bit of the expense of the 50,000 that we spent. Spent on the rehab was actually spent on the exterior, trimming the bushes, gravel molt, etc. Which is usually not your best return. But this definitely made this property a look a lot better.

Even during the renovations, people would walk by. It's important to do the outside first because right away you catch the attention of the public and they're already walking by, asking who owns it and appreciating what's being done, asking for the contractor's number. So the outside is what they see first, and it should be done first.

Cool. So we're going to go ahead and jump in, but at the end of the day's video, stick around because I'm going to walk through the actual numbers and the return on the money that we spent, because $50,000 is nothing to sneeze over. Well, it's quite a bit of money, and I want to break down why that was still a good investment in terms of how we were able to raise the rent and the value to the property because of that rehab cost. So let's go ahead and jump in. Yeah. So inside here, Liz, this was a fireplace. This is actually where people could potentially make fires. Why do we put the guard here? Why are we going to get rid of this? And why do we not allow any fireplaces like real fires?

It's just a hazard for an owner to have to deal with. Number one, the uncleanliness. But the danger is a huge thing. I don't want somebody practicing building a fire to roast their marshmallows and not knowing that there's a flue that needs to be open. You know, welcome to the world of no common sense.

So here we have obviously have new carpet. We've painted the trim and all of the walls. Why are the walls not perfectly white? What type of paint, in terms of just generic do we use? And why do we kind of go after the low hanging fruit like paint and carpet?

So number one, you want to avoid decision fatigue. So on every unit, I use the same colors on the walls. The kitchen, I use the satin for the kitchen and the bathrooms and things. But you'll see on the trim, all the trim is not new. And so when I receive bids from the contractor, they will try to throw in prices for all new trim and baseboards. They will try to upsell me on those things, but I know they're not a game changer and will not bring more value. So I painted the walls. I did a carpet. That's not the lowest grade because it is a rental and we want it to last 10 years. Typically, if you do a turnover, if you paint the walls and fix the carpet, that's not something you charge the customer for unless there's holes in the walls from the last tenant. But that is the lowest, easiest way to get the place up to looking good.

It's all about what we can do to raise the rents. And if someone potentially has better baseboards, probably not gonna raise their rents. Cause they're looking at things like bedrooms and just overall cleanliness.

Yeah. So this place is about 2,800 square feet. And so to put trim and baseboards in all this place was gonna be a few thousand dollars. So I just said no on that part. And there were nice vertical shades here. And so that was a plus. I didn't have to replace them. Some units you'll have to replace these. The faux wooden blinds are really the best bet. And we'll show you some of those as well.

And then in terms of paint color, we don't have perfectly white. Is this eggshell? What's kind of the best?

This is flat, but it's a really high quality gray. And then a satin you should always use in the bathrooms and in the kitchen. And if you have to paint the cabinets, you also do them that as well. You'll see that the PA do look white, but they aren't. They're a very pale gray. And on the exterior of the buildings, I also avoid decision fatigue by always using the same thing at the end of each job. I always replace the lock and the deadbolt. You never know what copies of keys tenants made and would try to come back. So, for instance, I don't have to change the electrical, but I had them change the plates because they looked really bad. Cream to match cream. If it's white, match it to white.

So I think the big. The big takeaway, too, is just making sure it's renter grade. Right. So whether it be the quality of the materials, the, you know, if they're expensive, like just making sure it's renter grade. So, for example, here, we didn't change out all the cabinets and everything. We just changed out the handles, the mirror, and the light fixtures. Why do we kind of focus on changing out the things that people touch?

Well, typically I would use satin nickel because it's nickel plated, because it's a little more inexpensive. But here I needed to paint the cabinets because they were so bad. And the hinges, Hinges were already here. So in order to save a lot of money and not replace the hinges, this time I went with the bronze, and I was able to buy in bulk, and so I was able to get it cheaper. We also have a Lowe's for pros account, so online you can get a 5% discount on everything. So I have it all delivered to the store. And then this was just a flat mirror. I wanted a file medicine cabinet, but the wall's depth was because there's a shower behind. Once they drilled in, they couldn't go that deep. So I did a flat mirror, and then I changed out the light. So we usually do quartz in some of them, but this was in pretty good shape. There's no cuts or anything in this here. It's all sealed off. Nice. So we saved money this time, not having to do countertops, but just painting and basically refacing the look of it. And then I matched all the accessories with that. And the reason I did that also is because the floor, it ties in the tan. The tan, the tan. And then also just comes right over into this amazingly huge laundry room with the same accessories here and a new dryer. And then we have these wave contour shades. Now, you might ask. This is completely clean, and there's a film in here, but it's not. The seal would be broken on the inside, but it's not causing any bleeding of water, anything. And it's not an expense we wanted to do right now since we spent the 50,000 on everything else.

So typically, we would be changing the windows into vinyl. But again, as soon as you take the window out, you're going to have to replace siding. The exterior trim the whole inside, it gets a mess. So again we're trying to what not lipstick like we're trying to do good quality product, making sure that it's going to be tenant proof but we're not going to tear out windows in a massive like this. This unit here is three bedroom, two and a half bath. It has like almost 2,000 square feet. There's a two car garage on top of that. It's pretty big. So this is one of the first bedrooms downstairs, kind of almost downstairs could be like a suite, like a mother in law suite for example. This used to be like a walk in door to a closet. What's up with this one?

So you'll see there's no door here. And what happens is a door is in the way. And when I've had tenants come in, they ask that the door be removed or they remove the door. So if you want to come and see in here, this is an under stairs storage. It had two types of horrid laminate in there. We just pulled it out and ran the carpet into here too. It gives them a lot more storage space. And one thing I'll mention is that when you have properties that are rental, they are graded. So you could take an A, that's really the highest quality, where you would put the highest quality products in down to a D where you know there's rope cockroaches everywhere. So this is not an A. So you are going to attract clients, tenants that would fit in this demographic, maybe a family. You can never use the word family or anything to that effect because it's considered discrimination. But this I would say would be probably a C. And so we have made the necessary improvements to raise the rents and bring a good demographic of people.

Cool. Let's head upstairs. On the way up, let's talk about this unit. What it was renting for prior to the rehab and now what is it renting now?

So there was a family here and they paid $1,500 a month. And the rates in this town where we are is close to the hospital, nice restaurants, fast food, spas, anything you can think of is basically within riding your bike distance. So it the that price was way too low for what we have here. Even a one bedroom little studio would go for 12 or 1300.

Yeah. And so for those of you watching like that rent is crazy because now we're charging 2,800. We're going to be renting this out tonight.

The reason it's 2,800 is because we live in Bellingham. Bellingham is a coastal city. And typically you're gonna see on the coastal, like Florida, California, Washington state, where we're at, there's typically a lot higher rents and higher property values because there's a limited supply of coastal living. So if you're living in Ohio, yes, this is a very expensive property I purchased for $617,000 a year ago.

And it's a duplex.

And it was bid up like 15 or 20,000 above the asking price. Yeah, it's a duplex. So this unit is exactly what's on the other side of the wall. We'll talk about that one when it comes to the numbers. But this is the living room. Kind of the same thing. Trying to bring as much light in as possible. You can kind of see from here all the trees that were trimmed. This used to be very, very dark inside of here. So really just opening this up on a nice day, you can actually see all of Bellingham city. Actually see little glimpses of the bay. So really nice. But all of these, you know, arbor via have to be taken down like three or four feet. I hope we never have to do it again for at least 10 more years. But it's definitely a one time cost just to bring the light in and make this look a little bit more inviting, a little bit larger. So let's head into the kitchen now and again.

You want the colors to be neutral, you want them to be able to imagine their, their furniture in here, their photos, their family when they come to view it. I'm home.

Cool. So in the kitchen, where a lot of times you can spend a ton of money, this one we went with a little bit less. Usually, like you said, we would do quartz countertops because they're basically indestructible. But when we came to this one, we already knew we were spending a lot on the exterior, just because there's a lot of improvement needed, painting the entire place, etc. But we did not go with quartz. Why did we not go with quartz? Why did we go ahead and paint the cabinets and tearing this all instead of making this like HDTV's incredible kitchen makeover, taking out cabinets and all the rest of it. Why did we just kind of paint them, put on new hardware, etc.

So again, look at how many hinges there are in this kitchen. So if I replaced those, it would be so expensive. And you've got to watch your contractors because right away they're like, oh, we want to replace all of this. And so I said no. So you can have cabinets that are incredibly good shape. These cabinets are just beautiful. So it's basically just refacing them. And we didn't have to replace any of the doors either. They were in great shape.

So.

So I just bought large packs of these and put them throughout the house. Another reason is the browns in the floor. The hint of gray is in the walls. It doesn't seem like it, but it is. This is eggshell. And so because of that, I have this piece of laminate that has nothing in it. No burns, nothing like that. And if there was a piece in here, you can't really repair it. And that would be why, if there was even a big piece here, we'd have to replace all of it. And quartz is really an upgrade. That is wonderful. And so there's nothing on this piece. The only thing in the entire kitchen is one small piece here and some burn marks here, which, when I do the move in walkthrough, will acknowledge those that it's not this tenant's responsibility. This is not new, but they cleaned it up incredibly well. And then this piece, when you think of having to clean, clean something that gets this dirty, it is cheaper to pay $100 to buy a new one than it is to have somebody deep cleaning this for two or three hours.

Now, there's certain things that we kind of spend a little bit more on go a little more higher end. Why do we spend, like, what is probably 80, $100 for this thing. Why do we spend so much on this but then, like, not do other little things? Why is it that it's something that we touch? Like, why is that a big deal?

Yeah, so the things that tenants touch are the things that you want to do something with. So this is very nice. But it also pulls in all the knobs and the hinges in the kitchen. There's also the pieces, the drain pieces inside that I buy, not just the plugs, but the whole little mechanism. This place had a garbage disposal. And as a property manager and owner, you want to disconnect that. So the contractor wanted to repair replacement, and that was going to be pretty expensive. But it's not a hazard you want in a rental. So as the owner, we disconnect it. But everything in there is new and shiny. So this is the same. And I just upgraded the whole thing by replacing this one piece, putting this beautiful contour wave a blind in.

It's pretty cool. And so this is perfect either for a family.