Welcome to the newest episode of our monthly feature, Investor Insights!
Each month, top 1% producer Eric Workman provides information that real estate brokers need to know about working with investors. In this episode Eric walks you through rehab costs room by room for a single family home. This is critical in order to determine if the real estate investment is going to yield a reasonable return on investment. We get into the trenches and discuss all costs so that you can better serve your clients (or your own investments)!
Please let us know which investment topics you would like covered in future episodes!
Eric Workman can be reached at 630-408-5582 and eric@renovofinancial.com.
Transcript
D.J. Paris 0:00
This episode of Keeping it real is brought to you by Lenovo financial Renaud Bo is Chicago’s leading private lender focusing exclusively on the financing needs of real estate investors in new construction home builders. Recently, renewable was rated by cranes as the second fastest growing company in all of Chicago, having provided over 350 million in financing and bringing a half billion of market value change to Chicagoland. We’re novos growth is fueled by an intense focus on customer service, and aggressively creating customized lending solutions for each investor, your goals or their commitment, Learn more at Lenovo financial.com.
Hello, and welcome to another episode of Keeping it real. The only podcasts made by Chicago real estate brokers for Chicago real estate brokers. My name is DJ Parris, I’m your host through the show. And this is another episode of investor insights with Eric workman of Lenovo financial. So if you’ve been a listener of our show, in the past, you’ve probably heard some of these the series. This is a series Eric has generously put together to educate brokers and also other listeners of the show of the investment real estate investment process. And we have gone through literally step by step on how to choose an investor. If you’re a broker, it’s sort of how to determine whether, you know that would be a good fit for you different financing options, and so forth. And so we will continue that in a moment. But I wanted to welcome Eric workman to the show.
Eric Workman 1:42
Thanks, DJ, always good to always gonna be doing this.
D.J. Paris 1:46
Yeah, and I want to mention a couple of things. First, Eric, tell us a little bit about the company that you work with renouveau financial?
Eric Workman 1:53
Sure, well, Renova. We’re a private money lender, and we only lend money to real estate investors. So we started in 2011. Coming out of the crash, you know, when there was a big gap between the cash that that investors had that they were able to do deals with, and then banks, because, you know, most banks had been hurt really bad coming out of that recession. And the idea of getting back into real estate investment loans was pretty much off the table for a lot of banks. So investors and developers, there were so many good opportunities out there for both raw land, foreclosures, you know, distressed inventory, et cetera. There’s so many opportunities out there, but there really wasn’t a good capital source for them. So we started in 2011. And it’s just been really an explosive growth over the last seven years of servicing the needs of real estate investors really all throughout Chicagoland, and this year, this year is has been no different from the years in the past. This the first four or five months of of our year so far have been just extraordinary, just the each month continues to be the biggest month that we’ve had. And we’re seeing so much optimism and really exuberance in the market from an investment standpoint, it’s a lot of fun.
D.J. Paris 3:13
Yeah, that is that is really exciting. And also Eric is aside from being such a generous guest but guest and co host of our of our show here is also often a speaker at an event. So just recently, he was at the Midwest real estate Summit, which was this previous weekend. And that was Bri Schmitz event who has been on on the show before, he has also regularly speaks at Andrew homes events, which is Chicago Ria. So also been a guest on our show. So if you are really interested in learning about, you know, real estate investments, Eric is shows up at a lot of these, these conferences, and he’s always super easy to to get a hold of. And by the way, before we get into today’s topic, Eric, if there is someone out there that’s interested in, in the products that renewable offers, how should they get in touch with you?
Eric Workman 4:04
Sure, well, my email addresses Eric EIC at renewable financial.com And my cell phone number is 630-408-5582. And, um, you know, I’m really glad that you brought up those, both Bree and Andrew, the the exuberance that I was talking about in the market just a couple of seconds ago. It’s we’re really seeing it from all sides. And if you’re a broker out there, and you’re taking a look at especially if you’re new, or if, you know, if you’re just looking for ways to grow your business, I mean, that’s why this whole series has been developed, right? Like how do you how do you as a broker, make more money, do more transactions, you know, have a bigger influence in the market. And I really think that you can and should do it by working with investors. It’s such an enormous part of the market that so many people don’t think about, but there’s billions of dollars of transactions just in Chicago alone and There’s so few agents who take advantage of it. But when you’re when you get started, or if you’re looking to get started the amount of information and knowledge and connections, and the network that you can build, by going to things like the Midwest real estate event, or like the, the Chicago RIA events, it’s really invaluable. Most of the events are free, or they’re they’re relatively low cost. And, again, just the the knowledge and the insight and the network that you can build is, is outstanding.
D.J. Paris 5:34
Great. So what’s on the agenda today? Actually, let’s do just a short recap on what we’ve already covered, and then move into our topic today.
Eric Workman 5:42
Sure, well, in the previous episodes, we’ve gone over one, how big is this market? And why should you be interested in it. And like I just mentioned, one in every five residential transactions, is an investment transaction. So you have 20% of the overall market that is dedicated to real estate investors, and you have, you know, less than 1%, really, of the agents that are out there, who focus specifically on that segment of the market. So you have some really, really, really big fish. And then you have a ton of other opportunity. We ran some numbers here at renewal last year. And what are their there’s 40,000 Real estate agents in Chicago? Does that sound right? 42,000 42,000? Less than 100? did more than four investment transactions.
D.J. Paris 6:40
Yeah, that’s, that’s amazing, considering it’s 20 20% of the overall transaction market,
Eric Workman 6:47
right? I mean, it’s an ocean, right? It is, it is an ocean with, with more fish than you know what to do with, and only a couple of really big fishing boats that are out there, there’s so much opportunity in the investment space. And, you know, when I look back, when I look back at to, to how I got started in real estate, you know, I came out of school with this passion for investment, real estate. And, and I kind of needed to go into it in order to keep my interest and to do what it was that I really enjoyed. But I was very fortunate getting started in that one of the first investors I worked with, I ended up doing roughly 30 transactions in a row with with the same investor. And that’s only possible in the investment space. Right? If I if you’re a new agent, or if you’re an agent who’s looking to grow your business, it’s so much easier. And I know this, this might sound it might not sound right, but it’s so much easier to go get a million dollars worth of volume out of out of one client than it is to go land a million dollar listing or find a million dollar buyer. And I just I couldn’t believe in it more, you know, they’re
D.J. Paris 7:58
not Not to mention, aside from from that, which is clearly true, often a much less emotional buying or selling decision as well. So investors, often you are driving them around showing them, you know, dozens of properties, although that could happen. Typically, it’s let’s work the numbers and make sure that that’s attractive, and investors are more interested in that. So you possibly could argue it’s not that it’s less work, but it’s different work and possibly less emotional, dealing with people’s fears and things like that.
Eric Workman 8:35
It’s way less emotional. It’s it’s not necessarily less work from an amount of time, but it’s much more scalable work, right? You know, you the amount of time that you spend on on a client who’s either looking for or trying to sell a million dollar home might be the same amount of time that you would spend on you know, an investor client who’s looking to buy a million dollars worth of properties, but it’s going to be completely different. And you’re going to be able to scale that work. And you’re going to you’re going to find so many more opportunities and working with that one investor client than you are and working with the the one seller or the one buyer who’s looking for roughly the same amount of volume. And so we we’ve we’ve gone through that we’ve gone through, you know how big of a market this is, we’ve gone through you know whether or not you should, as an agent, look to get into this space. And if you if you are going to how you should do it. We’ve gone through business planning, not only for yourself, but ensuring that the investor has a business plan. One to make sure that you really are dealing with someone who’s worth your time, but to you have to understand their business plan in order to properly present opportunities to them. You know, there’s no sense in sending a single family home in Aurora to a guy who’s only interested in you know, multi units in Bridgeport. So, you’ve got to know kind of who you’re dealing with and what your clients looking for. or so we’ve gone through that. We went through financing, and how investors pick up properties and what all the various ways to get deals financed are. And then we went through, we went through calculations. And you know, when you come across a property, that’s going to be a good, a potentially good investment, either a flip or a rental, you know, how do you how do you calculate what that investor’s return is going to be? Again, going back to the whole business plan, you know, what are the minimum returns? Or what are the types of returns or sizes of deals that each client that you have is looking for? So how can you run those numbers to then no, yes, it’s a good opportunity, and then which investor clients of yours you should send it to? So that and now we’ve, now we’re kind of caught up through the syllabus, so to speak.
D.J. Paris 10:51
Great. So what’s what’s next?
Eric Workman 10:55
Well, when you look at those calculations, one of the biggest areas, or kind of factors, in is this going to be a good opportunity for me is how much the renovation is going to be. Right, you find a great single family home, that either in distress or hasn’t been updated in, you know, 2530 years, and you know, there’s a lot of great activity going on around it. When you look at that property, and either you walk it, or you’re looking at the photos online, if you’re going to present this to an investor, you’ve got to be able to say, Hey, this is going to be a 25 or 35, or a $40,000. renovation. But if you put that money into it, it’s going to you know, the the value of the home is going to jump to x and then look at the look at the profit potential. But how do you do that? Right? How do you do that without, you know, taking the time to, to meet a contractor out there and go through the whole bid, you know, do all that process? Is there a way that you can kind of use a little bit of a cheat sheet and figure out a good rough number that’s going to be within within a variance that that your investor clients will accept? And the answer to that is yes, you know, we’ve got it, we’ve got a good cheat sheet here that we recommend investors use or agents use to calculate what a rough renovation cost is going to be on a property. And that’ll help you they’ll help you run your numbers and determine, you know, whether or not it’s a good investment, and which investors you should send it to. Great. So and this is something you know, what was it? I think, maybe November of last year, we went through my story. And yes, I’ve you know, I’ve done somewhere in the neighborhood of 2000 of these deals or so, you know, bought them, renovated them either sold them or kept them as rentals or rented them and then sold them as as rentals. So this, these numbers are from personal experience, and from and these are the the rough numbers that I use, whenever I’m looking at a deal, and trying to determine kind of what I think a project is going to cost.
D.J. Paris 13:08
Wonderful. Let’s get into it.
Eric Workman 13:09
Alrighty. So the first step is the kitchen. You know, everyone’s looking for a nice modern looking kitchen. And, you know, you hear all these stories about people who, oh, my kitchen is going to cost 15 or 20 or $25,000. And I think people well, they don’t understand how much of the cost it really is versus what the perceived value of it could be. Right the market or the market will pay another 25 or $30,000 for an updated kitchen, but it’s certainly not going to cost you that much. So first, we’ll start off with the cabinetry, cabinetry in a regular single family home if we’re talking about something that’s in the 2000 square foot range for a single family home, you know a nice buy level, maybe a split level etc. Something that something that can undergo a quick renovation and then you can get it back on the market. The cabinetry for a kitchen and in a property like that is going to be between 20 840 $500 depending upon the size. And then the countertops what I use is roughly 60% of what the cabinetry is going to be is what I expect my countertop cost to be. And that’s a nice installed modern quartz with an undermount sink and a nice backsplash. And that you know that will roughly get you there. So even on even on a big kitchen, the brand new cabinets and new quartz countertops is going to cost you $7,000 or so.
D.J. Paris 14:46
Right yeah that that’s that’s interesting. Why just out of curiosity, why is the countertop or roughly 60% Is it just because it tends to be a size thing that depending on the count on the cabinetry the size of the countertops are correlated.
Eric Workman 15:02
Yeah, it’s just a, it’s a square footage correlation. So the larger the larger the kitchen, the more base cabinets you have, the more base cabinets you have, the higher your cabinet cost will be, the more base cabinets you have, also, the more square footage of countertops you’ll need. Makes sense. Yeah. And then, you know, if it’s a big enough kitchen and you have an island, then you’ll have more base cabinets, and then you’ll have an island to contend with. But again, these are rough numbers, but they’re there. There is some science and some experience behind it. And it’s a it’s a close enough calculation that you’ll be able to tell quickly whether or not a potential property can work as a nice as a nice flip or renovation
D.J. Paris 15:46
is that include are we talking labor as well, or just materials, that’s for everything
Eric Workman 15:51
we’re talking, we’re talking materials for this, and then labor is going to labor is going to vary pretty wildly depending upon the quality of your network. And that’s why, you know, going back to the beginning of our conversation here, when you go as an agent to places like the Ria, or the Midwest event, you know, you’re going to run into so many different investors, contractors, general contractors, etc. You know, and, and you can really start to build out your Rolodex of of people. You know, you go to the, you go to the white pages, and you call a contractor and, and you can get some pretty crazy numbers, you really network throughout the investment industry. And you can, you can find skilled labor at really great pricing.
D.J. Paris 16:39
And also just to throw a plug in bigger pockets, which is a large, while there are a lot of things, but what will primarily there are a large forum of investor investors who talk to each other. And that’s another great place to scope out some some quality labor,
Eric Workman 16:53
you got it, you got it. Yep. The next part is bathrooms. And when I look at a bathroom, so I pretty much assign $1 value to each bathroom. And when when I’m looking at like a full gut renovation of a bathroom, and I’m talking taking everything old, that’s out, you know, the pink tub and the, you know, the oak cabinet, you know, vanities and whatnots. When I’m looking at brand new tile, a brand new new tub shower combo with tile surround, new toilet, new vanity, nice new either cultured marble, or even possibly quartz countertops, mirror, etc. I assigned $7,000 A bathroom to that.
D.J. Paris 17:42
So if you have to redo a bathroom sort of from start to finish, that’s about seven.
Eric Workman 17:48
Yep. One thing I didn’t mention in the kitchen was appliances. When you, you know, look, if you’re looking at a 2000 square foot home, you know, probably somewhere between three and 450,000, depending upon the area, you can get a very nice stainless steel set of appliances from someone like apt, or even Home Depot for under $2,000 or right around $2,000. And so you’re looking at a full kitchen, redone for under 10,000 bucks.
D.J. Paris 18:26
In your experience that could turn around and really be worth 25 or
Eric Workman 18:30
30k. Without question. Yep.
D.J. Paris 18:34
It’s pretty good investment. Right there. Yeah,
Eric Workman 18:35
it’s great. Same with bathrooms, you know, it, you know, how much how much would somebody be willing to pay for a nice new modern bathroom that, you know, it’s got all brand new tile and new vanities and versus, you know, something that’s 25 or 30 years old? And the answer is quite a bit. The thing that well, if we go back if you go back into my my story and my episode, where we just talked about me and I started my career actually in new construction, and then kind of morphed into the investment space. But that new construction time really taught me a lot about about what homebuyers mentality are whenever they’re looking at properties, and what parts of the home that that buyers assign a lot of value to, and the different touch points that you can create for them to one create, you know, nice emotional ties for them and to to help them perceive a ton of value. And so that kitchens and bathrooms, or kitchens bathrooms, we’ll get into this in a little bit landscaping stores, you know, the the style of trim that you use around the doors and the windows, if you you know, they’re relatively small investments that can make the buyer feel like they’re there inside of a custom home or at least a very modern, you know, nicely appointed did well done home. And that gives them the comfort and the security and the desire to pay for it. And when you create areas of the home and touch points in the home for a buyer that make them feel like what they’re getting is quality, they’re happy to pay for it. And that’s what’s what we’ve always done in our projects is spend the money in the areas that the customers perceive the highest value in. So that you’re able to justify and get the pricing that you’re looking for on the back end. Makes perfect sense. The next thing is Windows. So, you know, depending upon the age of the windows, a lot of times, this is another thing, customers or buyers, when they’re walking through will look in, if they’ll see if they’re brand new windows, they’ll automatically assign a, you know, number one a higher quality level to the property itself, they’ll they’ll get relieved that that’s not an expense that maybe is looming for them down the road. They’ll perceive the value from an energy efficiency standpoint, and a Windows to order a brand new window and then pay a contractor to remove it and put a new window in. I always assigned $350 per opening.
D.J. Paris 21:27
Three 350, per
Eric Workman 21:28
se for opening. And that’s labor and material to replace a window. Now, you know, we’re not talking the big picture windows or you know, different crazy arched type of things, we’re just talking about regular standard size windows that you find in homes that typically you’ll see good renovation opportunities. Okay, a new roof, a new roof for a 2000 square foot home with a detached garage should cost you $7,000. And if you’re I know, I wouldn’t be surprised again, if you if you open up the phone book and you call a roofer to come out if the number that you get is 10, right or nine or something quite a bit higher than that. But anytime that we’re looking at a project that we know is going to need a new roof. If it’s again, if it’s a 1700 to 2100 square foot home with a detached garage, we’re always thinking it’s gonna be right around 7000 bucks.
D.J. Paris 22:26
And I just want to make a quick point about about roof we this is slightly unrelated, but I was on the condo board for our 33 unit a 33 unit property I lived at for some time. And so 33 units, it’s in the city, and we needed a new roof and the lowest estimate we got was 80,000 We had three estimates, and the highest was like 160,000 It was it the variance was so insane, that I think your point about finding a network of people that can push you in the right direction to find the right labor is really important. Yeah.
Eric Workman 23:01
Yeah. And again, it’s like the difference between the price that you get out of the phone book and the price that you get from a network that you’ve developed is going to probably be anywhere from 25 to maybe upwards of 50% and and that’s why you know it’s not it’s not impossible for two different investors or two different agents one with a good network and one without to look at the same renovation and one person say we can get this done for 35 and the other say this is going to cost 60 or 55 and then in one case the numbers work and then the others it doesn’t and so the agent with the network and the knowledge of what things really cost that presented to an investor and say this is going to be a $35,000 renovation that agent gets gets that deal right they they get the buy side whenever the whenever that investor buys the property and then they also likely get the list side whenever that project is done. Yeah,
D.J. Paris 24:03
there’s more transactions that that the contractor would likely obtain from from a broker who’s doing these types of transactions whereas back with my condo association, it was just a one time it was a one got it. Right so if if he knew that we were going to refer them to five other buildings immediately following ours and they were going to learn that business that hopefully fee would have come down so this is that’s a good example of of why to get that no sure.
Eric Workman 24:27
For sure. You know, it just network knowledge. It all builds into it all builds into opportunity. And you you just be surprised at the at the amount of opportunity that comes to you whenever you become an expert in this space. Because there’s a ton of transactions there’s a ton of money, so many people are interested in being in this space. And it’s not difficult to stand out from the rest of the brokerage crowd as an as an expert in this particular area.
D.J. Paris 25:02
And it’s not and it’s not a crowded space. As you mentioned earlier 100 brokers do more than four investor transactions per year, which is
Eric Workman 25:13
a staggering lot of opportunity. Exactly. Yes. Flooring is another area that typically you’re you’re going to be replacing, replacing or updating all the flooring in a project, whenever you’re looking at doing a flip or a big renovation on it. Existing hardwood is going to cost you about $3 a square foot to refinish. If you’re putting in new hardwood, it’s going to be about $6 a square foot. Okay, a lot of the quality of the laminate flooring that’s out there these days and how good it looks how durable it is, how easy it is to install, is it’s jumped considerably in the last seven years or so. So I’ve seen a lot of projects where investors have gone to a snap together, hardwood floor, but that acts like a laminate and that’s going to be somewhere in the neighborhood of probably $4 a square foot. And then carpet, you know a quality carpet, either done by Home Depot or done by a, again, a network carpet provider is going to be in the three to $4 a square foot range as well.
D.J. Paris 26:28
And I’m sorry, does that include are we talking labor as well, or just material for carpet and
Eric Workman 26:33
we’re talking on labor, we’re talking to labor for all that stuff. Yep. Perfect. Now, the last the last two buckets. This is where we get into kind of those those customer touch points, that when you when you have these people as they’re walking through the property, again perceive either a higher level of customization a higher level of quality, you know, modernization to the home, and they feel better about the price that you’re asking and their own desires to live in it. So the first is trim indoors. And in in 100% of the properties that we’ve done in the last, I would say three years, we’ve replaced all the trim and all the doors in the home. And you know when you go from what what what used to be standard, which was two inch trim. And now kind of the standard modern look is three and a half inch trim around the casings of the windows and the casings of the doors. And you go from three inch trim on the baseboards to five and a half, which is kind of the the new norm, you make such an appearance difference to the room. And such an appearance difference to the doors and the window openings. And it just again, it gives the customer something to see and touch and feel. And something that that as they’re walking through, they’re perceiving such value in. And it’s really an inexpensive way to add a ton of value to a home. So whenever I’m looking at whenever I’m looking at a property, and I’m thinking about replacing the trim the trim around all the windows, I do $100 A window. And that will cover me for the nice new modern trim. It’ll cover me for the carpentry of cutting it down and getting it installed. And it’ll cover me for the painting of it all as well. And then I do
D.J. Paris 28:32
Gotcha. So for if we’re doing Windows replacing the window and the trim, you’re looking at 450 or sciatic Yeah, altogether opening,
Eric Workman 28:39
you got it. And then each door on the inside, I figured $200 a door. And that’s for the cost of the door. And for the cost of the again, the labor of having it installed. You know, cutting and installing all the trim around it and then painting, painting it all as well.
D.J. Paris 28:59
Good how many doors on average? Do you end up replacing in the this the home that the fictional home we’re using as an example?
Eric Workman 29:07
Normally, it’s somewhere between seven and 12. Okay.
D.J. Paris 29:13
Gotcha. So another 14 to $2,400. Roughly,
Eric Workman 29:18
you got it. You know, you’re gonna have three bedrooms, three closets, they’re six, you’re going to have two bathrooms. Typically there’s eight. And then, you know, how many other closets do you have in the property? Is there a separate laundry room? You know, those kinds of there’s, there’s those types of things to consider.
D.J. Paris 29:37
How often are you swapping out the front door?
Eric Workman 29:41
So probably 70% of the time. Gotcha. You know, if it’s been replaced recently and it’s a nice door, we will we’ll we’ll either paint it or we’ll refinish it to match whatever the current, you know, customization that customization will what the current kind of color palettes are. But I would say seven 3% of the time, it doesn’t make sense to replace it. Gotcha. And the last thing, and I always recommend this to people and they it’s typically either something that’s left out of the budget, or it’s it’s cut. But his landscaping and the the perception difference, that $1,000 worth of landscaping gives to a home, whenever you drive up to it is worth, I think 10s of 1000s of dollars to buyers. When you have a property that’s nicely edged, nicely mulched, there aren’t weeds growing, and you have a lot of color. It makes people feel good whenever they get out of the car.
D.J. Paris 30:49
And then it’s the very first impression, it’s the very
Eric Workman 30:52
first impression, you know, someone who I, I’ve never understood someone who’s who spends a ton of money on the inside and spends literally $0 on the outside. Because when you put yourself in the mind of a buyer, and have a call it a regular real estate agent, who they’re on their fifth showing of the day, and they’re driving around, and kids are tired, and you know, the buyers are frustrated, because they’re just not seeing what they want. And they pull up to a property. And even though they liked the pictures on whatever app it is that they’re using on the inside, when they pull up and they look at it, and they see nothing, or a blank slate or weeds or you know, just a little bit of mulch, they get let down. And they feel it’s a it’s a it’s an earth feeling whenever you’re walking into a house. And from personal experience, I can tell you whenever I walk up to it and look at it, you know, as the person who does a lot of the landscaping work in my own home, I I’m before I’m even walking through the door, I’m just looking at a ton of work that I’m going to have to do, or a ton of money that I’m going to have to spend. And there’s a project that we have going on in Naperville. Right now the yard was a mess. And the way the property looked from the front was was part of how and why we were able to get it you know, get it at the price that we were able to get it at. And for $700. of mulch, we’d stop weed spray and landscaping labor, we have turned this property into into just a great looking home on the street, you get all the weeds pulled, get the weeds stop laid down, you edge around all the mulch beds, you edge around the trees, you pull the weeds, you let the flowers come up. And now this home, it just it looks it looks absolutely beautiful. And for 700 bucks, you can change it from an eyesore into somewhere that anybody who’s driving down the street would be proud to live there. And that’s such a difference from a from a buyer standpoint and in being able to achieve the pricing that you’re looking for.
D.J. Paris 33:05
Yeah, and even if it’s a even if it’s a buy and hold and you’re renting it out, it’s it’s you know, obviously this for the same reasons you would want to keep the landscaping up.
Eric Workman 33:15
No doubt. And that’s a lot of what we do these days. I actually don’t remember the last house that we sold. I’m trying I don’t. So in this particular instance, this is a house that we’re that we’re renting. And you’re you’re right like most tenants, you know, even in, you know, higher end rentals, the last thing they want to think about whenever they’re looking for a property to move into is how much lawn maintenance they’re going to have. And, you know, more and more people are actually renting these days, you know, you find you find older and older renters and you find more and more people who are interested in renting either for the flexibility that that it gives them or because you know, there was a whole generation of people who were coming out of school during the downturn and careers got started later families got started later. And most folks aren’t looking at wanting to do a ton of lawn work whenever they’re looking at moving into a rental, but also people who are starting families. You know, they’re still they’re still people there. They’re proud of the home that they live in. And they want to they want to be proud whenever they invite friends and family over. And the way that the property looks on the outside is it’s well worth the investment. And for less than $2,000 You can make a house sing from the outside.
D.J. Paris 34:38
Great. So let’s let’s let me recap here. I took some notes and you can correct me if I get get this wrong. So in this example, Eric, were Eric mentioned this is a single family home around 2000 square feet or so. And you know, we want to talk about renovation costs. So just to recap, go in no particular order here but we start with the kitchen And, you know, anywhere for the cabinetry, you know, anywhere from three to $5,000, roughly, countertops being about 60% of what the cabinetry would be to to replace, then we move it into bathrooms. So you know, Eric assigns dollar values to each bathroom. If you’re taking it everything out and putting it all new, nice stuff, you’re probably looking at the $7,000 range. Oh, I’m sorry, back to back to the kitchen as well replacing appliances with with nice, but modest stainless steels, you’re probably looking at 2000 or so if we move up to the roof, the exterior, if you have to replace it, it’s around, you know, budget at least seven grand for that. Back inside the home, when you’re replacing opening windows, meaning taking the old ones out putting new ones in, you’re probably looking at 350 per opening. And then if you’re going to add trim to that, it’s about another $100. Replacing the doors inside are looking around 200 per door. And there’s usually anywhere from seven to 12 doors inside a single family home of that size to the flooring. If you’re using hardwood, you’re anywhere from three to $6 per square foot, which is including labor, a lot of what I’ve talked about been including labor, laminates about $4 a square foot and carpets anywhere from three to four per square foot. And then off to the landscaping, which we just finished on is you know, Eric says anywhere from 700 to $2,000 will increase in increasing the value. So all together when you renovate a home like this, what typically is your renovation, do you have a just a general ballpark of what a home like that might actually I didn’t add this up on a calculator. But what what you probably would be putting in and what you’d see as a result of that on the on the return?
Eric Workman 36:58
Sure. Well, when you do, when you do add it all up, it’s going to be somewhere in the neighborhood of probably 45, roughly $45,000, you can do a tremendous amount of good to a project for 45 grand now that’s that’s something that needs all new windows, a new roof, you know, two new bathrooms, new avenue, everything. But again, it wouldn’t surprise me if you just got a bid from a contractor. And that was 70,000. You know, or 65. And again, it all kind of goes back to if you’re going to be an agent who gets into this space, develop a great network, because that network is what’s going to allow you to again, get a job done for 45 instead of 70. And getting that job done for 45 is what’s going to allow your client to pick it up versus not. And And now you’ve gotten very likely to sales out of that one out of that one opportunity. So well. That’s
D.J. Paris 37:57
great. Well, I think this is a great place to pause. Eric, this is such good information. And again, this is for coming from an individual, Eric who has done over 2000 of these personally. So his his numbers are not not to be taken lightly. And so Eric is also again with Renaud vo financial, they are a private money lender. Eric, if there are investors who would like to speak to you or brokers who work with investors who would like to learn more about renewable again, can you give us that your contact info?
Eric Workman 38:29
Yep, it’s Eric er I see at renewable financial.com and 630-408-5582 is the best way to get hold of me.
D.J. Paris 38:39
And Renova was RENOV. Oh, just like it sounds. Yeah. So this is a great place to pause. And I want to make a point. So Eric, it was really funny, Eric, prior to the when we started recording, Eric said, Have we got any good questions? And I said, sadly, we haven’t yet Which isn’t to say that people aren’t listening because they are it may just be that you’re explaining it so well that there aren’t questions, but we do welcome investment related questions. So if this has been helpful for you, but you want us to go into a particular topic, or rather Eric to go on a particular topic, or if you just have questions about anything that we’ve discussed, please send those to us. You can send it via Facebook. You can find us at keeping it real pod on Facebook. Also, our website is keeping it real pod.com. So you probably already know that so send us your questions for Eric will touch in a future episode once again. Thank you, Eric, for your time. This was so incredibly valuable, and I will see you next month. That was great. Thanks for having me.
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