- A Landlord Case Study: Does it Make Sense to Renovate Your Rental?
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A Landlord Case Study: Does it Make Sense to Renovate Your Rental?
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A Landlord Case Study: To Renovate or Not
Brian Lucier – Brian
Richard Merlino – Rich
Douglas Quattrochi– Doug
Brian: Hand gestures as I go. The presentation we have for you tonight is Landlord Case Study: Does it Make Sense to Renovate your Rental Property.
How many people here know Daniel Pink as the author? Daniel Pink? Let’s see, Drive and Flow. In one of his books, he introduced what was called the Pixar Pitch. Is anybody familiar with the Pixar Pitch? Every film by Pixar goes by the same type of pitch. It’s the way the story plays out. It’s a really great way to communicate the story. I’ve used Daniel Pink’s Pixar Pitch to tell you the story.
Once upon a time, there was average apartment in Fitchburg on an average street collecting below average rent. Does this sound familiar to anybody yet? Two people, okay. Rented to a below-average tenant. The cycle went on, with the current property management putting in bad tenants, and both the landlords and the tenants were very unhappy.
Every month, there was a continuous batter with the tenant who did not obey the lease terms and conditions. They left trash and debris everywhere. It was very bad. It became a hassle every month, chased down the rent on the first of every month. The rent was never paid on time and never paid in full when the rent was due until one month—can you kind of see how finding Nemo came in through here—the landlord had had enough excuses, ventured out to find a new property manager to manage this rental property.
I’m going to stop there for a second. This landlord actually had two properties and two separate property management companies and neither one of them was doing what they were supposed to do. You will find out more about that later. The new property manager tried for several months to work with the tenant to correct the bad behavior until finally after several months, the tenants were gone and the apartment was now empty. A round of applause.
Brian: Because of that, the apartment was now empty, full of trash and debris, and the poor rental unit was in desperate need of repairs. This was actually really hilarious. When the constable went up to move them out, he went up there. He knocked and the family was there, eating waffles, and their response was, “I didn’t think this was really going to happen.” Oh, no, it’s happening.” He said, “You’ve got 30 minutes. Move your stuff out, take your clothes with you.” The girlfriend/wife locked herself in her bedroom to finish smoking her weed.
Brian: Yes, it gets better. New manager, and the landlord, we came up with a plan, what we could do to make some minor changes, lay out the property to make it a more efficient design. Because of that, the apartment was not going to be renovated. Simple plans were drawn up. I do actually carry my CSO, so I was able to pull the permits for that. Yes, we pull permits. Contractors, plumbers, electricians, everybody who came in, did what they needed to do. We moved doors, pipes, wires, and things were beginning to look up and take shape.
This is what we had. We ripped it all out. This was the bathroom door. This was where the sink was. Not the best-looking apartment. This is probably one of the most significant changes we did in this whole unit here. The sink was right there in this area and this was actually the door into the bedroom, so there was literally 2 square feet of countertop space.
How many people have cooked a Thanksgiving dinner? Okay, so it was like 1 foot or 6 inches X 2 feet on this side, 6 inches X 2 feet on this side. Turkey don’t fit? No, turkey don’t fit. Then we opened up the wall to put the bedroom door back here. We did a little bit to make it a little bit better. Here we are, looking at it the other way, we moved the bedroom door there. We closed off that wall, so we we’re going to have a lot more space.
Same kitchen, you can see. We actually had to move the bathroom door over just a bit, so we could some more counterspace. Lovely bathroom. Wonderful, huh? The 1920s were calling to get their wallpaper back. The only thing we actually kept out of this bathroom was the tub. Believe it or not, it was in pretty good shape. We were able to clean that up, and it worked out nicely. We did not leave the toilet bowl in the tub for the final renovation. The dream line was not large enough.
We did a little bit of plumbing. We fixed it up, started to put Humpty back together, drywalled, patched and paint. We patched and painted the walls. We really started to tear the place apart and we started to put it back together. Here’s one of the rooms, semi-finished. We had already put in the floors. We had started to work on this. Boy, I really hope the sound is going to work on this.
This was the front bedroom. We were going to hang ceiling fans, do some other nice things. We would start and get it all back together. We are going to get to the numbers. That’s where this really makes sense. This is that rear bedroom where we had moved the door, so we were able to make that a little bit more of a livable space.
Now because of that, the apartment was much better and happy again. The renovations were complete and the apartment was healed. I think that was one of those spells that we could put on, what is the spell to make the apartment healthy again. Yes, we use that website.
The average rental unit was no longer average by the time we finished and now demanded a much higher rent; also really important, a better resident. I’m going to hope that this works with the sound. Let’s see if it works. This was the finish. It’s a little video and it’s going to play through, show you what we did. That’s as good as it’s going to get.
Just pretend that you can hear the music. Bless you. [beatboxing] Everyone clap [beatboxing]. Pay rent [beatboxing]. Pay more rent [beatboxing].
Brian: Yes, that was fun. That was a labor of love for me. I threw that in for the landlord. Just because we have done so many nice details on this, I really wanted it to pop. For an extra $10, $20, we’ve picked up an extra tile pattern. It was no big deal. Brand-new gas stove, plenty of countertop space. Dishwasher, all stainless steel appliance. That was the only floor we didn’t touch. Everything else was floating floor. Bathroom came out pretty nice. That worked out well.
This is the detail we do on a lot of our surrounds. We always put the tile up above the surround. We’re never going to have mold, mildew, spongy dry wall, and it looks really nice. Easy to maintain and no damage down the hall.
This is actually a walk-in closet. Nice details for a walk-in closet. We always put the sprayer handles on. That’s a nice convenient thing. I like them when I’m at home. I’m sure other people are going to like that. We did take the toilet out of the tub. Much better, nice, clean. Yes, it gets better when we look at the numbers. We’re just about done with that.
Male Audience 1: Was the tub [unintelligible 0:08:33] you had it resurfaced?
Brian: We just cleaned it, that was it. The funny thing when the building inspector came in, the plumbing inspector, he says, “Well, your permit didn’t say that you were putting in a new tub surround [unintelligible 0:08:44].” We didn’t. We just cleaned it, so that kind of fun. That’s a really nice shot there. That shows you what we were able to do. Those are nice shots. Just by moving a few doors, you know that was a closet door, that was a bedroom door, we made all that extra counterspace, really turned into a functional space. We’re going to get to the numbers in a minute. Nice before and after?
Brian: But how much did it cost? Boy, it’s a long video. Yes, we really like doing these details. We have a saying in the office, “This looks very Belaire.” That’s what we like. Yes, that was a really simple feature to do. We had the space, so we just went with it. Okay, so now here’s the end of the story. Until finally, we got it rented almost 50 percent higher than it was previously getting. The rent for the three-bedroom went from $800 a month when we could collect it.
When I first did this presentation, it was $1,200 a month. It’s now up to $1,400 a month for that unit. That’s quite a jump. That’s $600 a month. That’s like adding a studio to this building, just in the numbers. The landlord was happy, the new residents were happy. I was happy because everything was redone. I don’t get maintenance calls there. Everything was closed up tighter than a drum. That was a lot of fun.
But what did it cost and was it worth it? Let’s find out. The math, the kitchen remodel, with the appliances and what we had to do there, $3,750. The bathroom remodel, the most expensive thing we did there was the vanity. Don’t install a four-foot vanity into a third floor apartment. It was not fun getting that up the steps. Yes.
The doorknobs, ceiling fans, CO smokes, locks, flooring, the flooring was the big number there, $3,674. Lumber paint and supplies, $950. The total materials $9,000; total labor $9,000; $18,000 to redo that unit. Okay, all right? Could we have done it a little better? Maybe but really happy with how it turned out. So, $18,000, that’s our number. Materials and labor, the holding cost to do this, the $800 X that, it took us six months to tear it down, put it back together, things took time. Third floor is always fun to work on.
The total project with the holding cost, $22,800. Okay, now we’re getting borderline. This is up there, expensive. For one unit, that was expensive. The old rent annual, $9,600; the new rent, $16,800. We’ve seen a little bit of a jump there. That’s a nice number. The annual increase, $7,200. If we divide that into that, we’re going to get our cash on cash; the project cost $22,800. The increase $7,200. We divide that, 3.16 years to break even, to get our money back on that. We had a cash-on-cash return of about 32 percent on that rehab. Thirty-two percent, pretty good return?
Audience: [unintelligible 0:12:52]
Brian: Okay, this side of the room thinks it’s a pretty good return. This side is wondering why they didn’t win the $27,000 lottery. Let’s dig a little deeper. Right now, our cash-on-cash is 32 percent. Long-term hold, right? We buy and hold that’s what we like to do. At the fourth year is when this is going to turn a profit because it took 3.16 years, okay so maybe about 3, 4 months into the year, so on that fourth year, it actually generated a $2,400 profit because now it’s paid for itself, the $22,800. Here we are at the end of four years, it has generated $31,200.
If a landlord decides to hold it for 10 years, the increase just on that one unit is $45,000. How many people plan to hold their property for about 10 years at least? Okay, so you’re in the category with maybe this is a good move for you.
What does that mean if we blended it all out, if we took that $45,000 divided by the number of years, that changes that increase to $4,560 per year. If we divide that by 12 that would give us the number that we actually saw on the bump over 10 years. Not bad. It’s okay.
What if we held it for 20 years? That’s $115,200 increase. Wow! Right. Right. I like this. I like this. This is good. Blended over 20 years is $11,520 per year; that’s just over $970 a month, which sounds like adding a one-bedroom apartment. That’s pretty good. I think that worked out pretty well. That over time increases the value of this property over 20 years, $230,000. I happen to know that this landlord bought this property for $85,000, a three-family.
He bought it, it was not pretty. That’s one unit that we did that in. The middle unit, immaculate, very nice lady, single mom, always paid her rent on time, showroom quality. We ended up bumping her rent like $50, $75 so she’s at $875 but we’re living her alone. Could we go up more? Yes. She’s my eyes and ears on that property, tells me everything that’s going on, really sweet, no complaints. It’s worth it. The landlord’s happy, I’m happy, she’s happy. That would be a win, win, win.
Then the first story on this unit, the first floor, we did a really light renovation. We put in new cabinet, countertops, changed some hardware, really light fluff and buff, some paint, maybe spent $1,300, ended up taking back that $800 unit and renting it for $1,300, so that was a really nice bump. I call that a micro-flip or a micro.
What happened here? We really increased the value of that property over time, $230,000. That’s nice, and we don’t get the maintenance calls and we collect the rent on time, and we don't have the headaches from a tenant who eats their waffles, thinking that they really weren’t going to get evicted and then the wife runs into the bedroom to smoke a joint. We laughed on that one. My constable pulled me and he says, “Dude! I got contact high just go into the bedroom.”
Things to avoid. (1) Bad tenants, no rent being paid. That’s not a good business model. (2) Units in disrepair means you will get bad tenants. (3) That is a vicious cycle of decline. You have no rent coming in. You will attract tenants that don’t want to pay rent. You’re not going to have the money to do repairs. (4) Your building turns into a revolving door; people coming in, people going out. It’s not the best way to do it as a business. (5) You just keep attracting the wrong tenant base. If you have a bad product, you’re going to attract people who can afford a bad product.
Things to do right. (1) Break the cycle. Fix it. Do it right. (2) Fix the property. (3) Get higher rents, better tenants, and increase your profits. (4) We actually raised all of the rents annually almost $22,000. That’s pretty good. That’s almost getting another property out of this property. That’s not bad. (5) Good property management. Look at the property. Know what you’re doing. Just think of it as numbers; what are you going to put into it, what’s going to be my end product, is this going to work in the long run. Am I going to get my money out?
This property is not in the nicest neighborhood. You should see the way it looks now. Red is her theme color. She’s got like a red toaster, the kitchen, appliances. You walk in. It’s like, “Wow! This is gorgeous.” I tell her all the time you keep a wonderfully clean, gorgeous apartment. She says, “Thank you very much. We love it here.” Cool! And she pays her rent on time.
This is where you get to pick my brain. Do I have to play drums now?
Rich: Yes, yes.
Brian: Okay. What do you got?
Rich: Hold there for a second. Brian, you mentioned permits.
Rich: What are those? No, I’m just kidding.
Brian: Do you like me to answer that?
Rich: Well, you know what, I was just kidding, but yes.
Brian: Okay. There’s IBC, International Building Code. If you have a duplex, one to two units, that follows residential building code. If you have three units and above, it follows commercial building code. Folks always trip this up because they say, “Well, if I go to my lender, I don’t have to get a commercial loan unless it’s five units and up.” Okay, that’s the lending world. But in the building department world, two units and down, residential; three units and up is commercial.
If you’re doing a commercial property, please, please, please get the permits. If you’re going to have exposed wires, you need permits. If you’re going to have exposed plumbing, you need permits. If you’re going to move doors or walls, you need permits. What do you not need a permit for? Flooring? Painting? If you’re doing anything major other than that, if you’re doing windows, you need permits. Roof, you need permits. Extensive drywall, probably you might want to look at that. Does that answer the question?
Rich: That was really useful information. This was a triple-decker in Fitchburg?
Rich: You rehabbed one apartment?
Brian: Yes, and then we did a micro-rehab on the first floor.
Rich: You did a micro-rehab on the first floor. What would have happened if you have done that same renovation in two apartments in Fitchburg with sprinkler with the fire department?
Brian: If we would have gone to do the other two units, then we would have exceeded the threshold and probably needed to put sprinklers in there. Now as it goes, we moved one door and widened another door. We didn’t open up any major walls.
Rich: Got you.
Brian: So we did have to hardwire the whole building at that point. Fitchburg is real funny on that, even any multi-three units and up needs to be hardwired. If we were opening up walls, definitely we would have to put a sprinkler system in there.
Rich: That’s a big consideration specially and every town is different. As far as how they enforce these things, I think Fitchburg is if you renovate more than 50 percent or more of the building, then that triggers it, which is why I said if you did a second unit. Every town is different, but that’s definitely something to factor into how many units you’re going to be renovating at a time. It might seem convenient to do two at the same time, but just to keep that in mind especially if it can cost you an extra $10,000 just to have to dig into the street, never mind the rest of the costs.
One thing I think Brian unintentionally glossed over was the changing of the floorplan, and I know we’ve mentioned it, but in order to be able to change a floorplan where you wall over your doorways and you put doorways in other places, it requires a certain amount of spatial intelligence, the ability to imagine things not as they are but as they could be, and only 1 out of 8 human beings has the ability to do this well.
Brian: I did not know that.
Rich: Because you’re an artist, that’s how your brain works. In case anybody in this room is 1 of the 7 out of 8 people who feels like that taking your brain from where the apartment is now to where it could be floorplan-wise is as simple as bringing a friend with you. Seriously, somebody who doesn’t know anything about real estate and just as they walk through this apartment, how should this be. It’s a really valuable question to ask because I don’t think most people when they’re rehabbing an apartment consider modifying the floor plan. They got the kitchen. They put in the bathroom. They do all that good stuff, but they don’t, while they’re at it, modify the floorplan, which might actually be the biggest change.
I had an apartment like that and the contractor thought I was an idiot because he was one of the 7 out of 8. He didn’t tell me I was an idiot until the end [laughter]. Afterwards, he says, “You know, when you initially hired me for this. I was just going along with your drawing because that’s how you want it but I was like this is dumb.” He says, “Now, I can’t imagine the apartment any other way. This is the way it’s supposed to be,” because a lot of old apartments they’re like, you have to walk through a bedroom to get to the bathroom. Has anybody ever seen one of these things?” It’s a bunch of hands. If you’re going to renovate, that would be a good opportunity to get rid of that, right?
Brian: Make a hallway.
Rich: Yes. Make a hallway. Don’t just renovate the kitchen. My longwinded advice on that would be if you want to have the type of success that Brian had with that is to get somebody else’s opinion as to what the floorplan should be and even just ask that question. Would you agree with that?
Brian: Bring someone who cooks.
Rich: Bring someone who cooks to see how the kitchen should be laid out.
Rich: That’s smart.
Brian: Yes, there’s a triangle—sorry. There’s a triangle you should have. The refrigerator, the stove, the sink should be in a way that you can function. You want the refrigerator to be where you can take the food out and put it in the sink. That one failed that test. The only place we could put the refrigerator was on the far end, but all the food in the pantry and stuff was near the sink. The storage was near the sink. You turn 90 degrees, you’re at the stove. You have more cabinet, counters, so it worked out well. I think the only downfall on that one is we did have to put the refrigerator across the room, but the rest of it was functional.
That’s what you’re looking for: how hard would it be to cook Thanksgiving dinner there. If you only got a 6-inch countertop, yes, turkey’s going to be tethering on the edge and that could really ruin things.
Rich: Another question that I think a lot of people in the room are going to have and we’re going to have plenty of time to get to everybody’s questions, I promise, aside from where did you get that cool shirt, the other question that people are probably wondering is what are some ways to pay for what was it $22,800—
Brian: [crosstalk 0:26:04]
Rich: Because, look, a lot of people have been around for a while, and they’ve run a good business. They might have that kind of cash laying around; most of us don’t. If we did, we’d probably wouldn’t want to write a check for that amount. It’s extremely painful, right? Never mind what this particular landlord did, although that maybe relevant, what are some strategies in general to help pay for this sort of thing?
Brian: That’s a really good question, and the answer is my wife gets them at Robert Graham.
Brian: The rehab part? Okay. Yes, we’ve done this strategy and tactic for a really long time. How many people have the orange Home Depot card? There’s the black one and the orange one. Raise your hand if you got the orange one. Okay, you’ve got everything you need to pull this off. You know at Home Depot, they will do those sales from time to time where if you spend up to $300 or $299, you can push it out for six months. If—
Audience: [unintelligible 0:27:08]
Brian: That’s if you start spending over $2,000. That unit that we did there, all the appliances I think just got paid for because we put those on the special. We push them out for 24 months. The flooring, we push that out for 24 months. A lot of that $9,000 for all that materials, we bundled it all up. We sent it to the bid rooms, saved about $1,000 there and then we deferred out the payment, zero percent interest for two years. That’s two years of collecting an extra $7,200 so that was $14,200 to pay off $9,000. That worked.
Brian: Okay. That worked. Yes, we really like the Home Depot thing. Of course, we would have saved 20 percent on the paint. That was a huge thing, too. What else did we do that was smart on that? The backsplash tiles and stuff like that, we negotiated deals. When we bought those, we were looking for close out or clearance. We will always find those and it will be the new stuff is coming in, the old stuff is going out, and if you just walk in and buy everything they got on the shelf, say what’s the best price you can give me on that.
Negotiate, negotiate, negotiate. Every time you buy something—this is going to sound like I’m so cheap but ask to negotiate. Hey, is that the best price you can get? Last two Sundays ago, my wife and I were picking up pink paint. It was a special color we had to get. I walked into the store. It was a Sunday. Why five guys were standing around on a Sunday in a small local paint store, I can’t answer, but we went up there and say, “Hey, I’m a contractor. We do a lot of units and we buy a lot of paint. How much can you give me off this paint?”
He wasn’t part of the paint program, but I think we got about $8 or $9 off the paint. It goes about $10 we got off the paint. Not bad, Benjamin more, $60 a gallon, we got it down to $50. That’s a good savings.
Brian: Ten dollars aren’t much, but if you look at the percentage, that’s huge. Yes, always ask if you’re buying on bulk or something like that, ask. What am I forgetting?
Rich: Yes, so one of the things I would like as we go around and get questions from everybody is if you’ve done something like this, feel free to share your top three things to do or not to do, or how you financed it. Like real quick, for example, I had redone two apartments in one building, it cost about $50,000 between the two of them. That came out of a refinance. The loan payment went up $250, my rents went up $650. I didn’t actually spend any money out of pocket. I didn’t roll the costs and costing and all that stuff, so that just kind of paid for itself, even when you factor in not renting the thing and stuff like that. That was actually one those apartments is the lady I did replace the fridge for to move her and her sex offender boyfriend along.
Rich: Yes, he still threatens to kill me every time I go near that building. Why he’s always outside is beyond me. Because I think we all want to have nice apartments, right? One obstacle definitely is the financing, so please feel free to share those with the group. Now, because most of us, I don't think have the type of licenses that you have to be able to do you own work. If we’re going to do that stuff and we’re going to pull permits, we’re going to need licensed contractors to do this stuff.
Now before you are licensed, you hired contractors. Can you just talk a little bit about your perspective? Would you hire a GC to handle that stuff or would you consider quarterbacking the whole thing on your own, working with the plumber, the electrician, the carpenters, and how would you choose those people?
Brian: You asked me quite a few questions, so pull me back to that one, okay? That rehab, that whole strategy is forced appreciation. We raised the rents. There’s two ways that appraisers will look at it. They will look at the property and do comparable, or they will look at the income coming in and base the value off of that the ten times rule or whatever formula they’re going to look at.
By doing that to the property or raising the rents, we forced the appreciation also by making it pretty and nice and better than what’s in the neighborhood. We forced that appreciation, that part I did want to mention. Would I GC it or would I do it myself? Here is how I used to do it. I had a really good friend from my landlord association, Jeff Landry, he’s a contractor. He taught me a lot of the stuff as I was up and coming doing this.
My wife and I, we own a lot of buildings, and we own close to 60 units, so yes, done a lot of these rehabs. It got to the point where I would work with Jeff. He would show me how to do things. I got comfortable enough where I would say, “Jeff, I got this three-decker. I got this six-unit. This is what I want to do.” I would draw up my plans, show him what I want to do, he’d walk through it structurally. He’d say, “Well, if you do this, do this, and do this, I’m okay.” He would pull the permit for me. He would be the GC, I would do the work.
It got to the point three, four years of, “Hey, Jeff, I got another property. I want to pull a permit.” He finally just said to me, “Brian, why don’t you just go and get your license?” I said, “I can do that?” He said, “Brian, you’ve been doing this work rehab in five, six, seven years. You qualify. You could do it. Just learn how to take the test, go take the test and get your license.” I said, “Huh! I can do that, huh?” I did it. It took me three times to pass that test, but I did it.
I learned something very important: when you fail the first time, don’t go back to the same testing facility. They will give you another version of the test. If you do fail the test, go to another testing facility where they will give you the first version of the test because you failed and you know which questions you needed to look up and you did all that studying.
Then the third time, it’s like, “Oh, I studied all this. I know the concrete. I know the roofing, the paint, all that stuff.” Then I went through it, and I finished it I think at a really good time, less than like 20 minutes less than the first time I failed. For what it’s worth, you can do this, right?
How many people have been rehabbing your own projects for over 5 years? Yes, you can just go get all your license and pull your own permits. The guy who trained me, you take a course to learn how to do the test, he says, “Why would you ever do that because it puts you on the permit and it makes you the guy liable for the work?”
Well, I’m going to do it for my clients I’m going to do it for my buildings. That’s it. I don’t go out and do GC for the general public. I still have to have my HIC license and all that, but it is what is. I’m comfortable turning out doors, windows, doing what I got to do. I’m getting a little older now, so now at this point in my game, I will GC and I will watch my contractors like a hawk. We just had a plumbing quote come in that I know was 200 percent over what it should be because we’ve done so many of this, so we’re calling another plumber.
If he’s starting out to the point where he’s already charging me 200 percent overrated, “Okay, great. Thank you for your time. Thank you for your bid. I’m just going to find someone who speaks English and does math a little bit better than you do.”
What else did we do wrong? What else did we do right? If you’re going to rehab a property, I would start on the third floor and then work your way down because then if you put someone in the first floor, finish the first floor, and then rehab the second floor, you’re banging over their head, and then you’re banging over the second floor’s head, so we started at the top. We were respectful of the tenant, and once we got that all done, it worked out really well.
Curb appeal is important. Make sure the parking lot is clean. Make sure it looks nice and pretty because that’s the thing people are going to see when they come up. Before I forget, I do have sign-up sheets in the back. Last month, I did ask people to sign up. How many people got my free reports already? One of them was the market, state of the market, and the last one I sent out was the due diligence report. I got a lot of people asking me for the due diligence report, what you should be looking for before you purchase a property.
Can I go off on a little tangent on that one? Okay, one of my landlords is looking at a property and I’ll try to give you the highlights without making it too long of a story. It’s a three-decker, a couple moved into the first floor, and the rest of the building was vacant. because it had been vacant for so long, it lost its status as a three-decker because it didn’t meet code anymore. Now it’s a legal two-decker, so that couple tore out the kitchen on the third floor and they did some other undocumented work.
I used that due diligence report. I went down, visited the building inspector, said, “Can I see the packet folder for that property? I want to see what permits were pulled.” Nothing since they bought the property they pulled a permit for. They had new electrical. They had new plumbing, new furnace, new fire blocking, no pressure valves on the water tanks. If the fire department ever hooked up the hose to pressurize the hydrants, it would have blown up those water heaters. Boom! No problem.
Brian: Yes, there was a lot of red flags that came through. I went and checked it all out. Yes, the quote is somewhere between $15,000 and $40,000 for the sprinkler system because they took a commercial building, three units, did a residential building, two units. Now my buyer, my client, wants to put it back to a triple-decker, which means now it needs to be in full compliance with commercial IBC code. He’s looking at $80,000 to $90,000 to bring that back to be a three-family. I can’t talk him out of it.
Yes, that’s a big pill to swallow for a triple-decker that staged really nice but half the plugs in the building, don’t even work after having all new electrical put in and no permits were pulled. I spoke to the building inspector. I said, “What’s going to happen for the first person who buys that property?”
He says, “Well, as soon as that couple moves out, we know that they didn’t pull permits, the first thing we’re going to do is pull the occupancy permit. No one will be able to live there. It will be a vacant building again.” His only option is to keep it as a two-family and fix everything that wasn’t permitted or bite the bullet, $80,000 to $90,000 to bring it back to a three-family.
The moral of the story is if you got that due diligence report, read it, remember it, and if you’re thinking of looking at a property, just drive straight to city hall in the property that you’re going to purchase and just walk from department to department to department. I gave you a bunch of explanations on how you can handle all that. You could save yourself $80,000 to $90,000 and keep yourself from buying a toad.
If you’re interested in getting free information—can I ask them?
Rich: You can plug something free, yes.
Brian: Yes, okay free. I send out these free reports. How many people have gotten the free reports? Do I make any sales pitch in there at all?
Brian: Okay. Yes, I’ve got like 60 or 70 of these reports already written up. I’ve been doing this since almost 20 years, and it just documents stuff that I’ve been writing over time. If you’re interested in getting free stuff, just sign up out back. I’ll be more than happy to start mailing you free stuff to help landlords. Next question.
Rich: Actually, if somebody has a lot to contribute on this topic because we only have one microphone, we want to hear everything that you have to say, I wonder if it would be a good idea to actually just have you come up here. If it’s more than a sentence or two, that would be cool. But you mentioned you didn’t want to renovate the first floor and then move in brand-new residents, and then ruin their lives by renovating the second floor. I joined this organization when I was 22 before I had a rental property, and then I got one.
Brian: Three, no?
Rich: Yes, it was a while ago, way before it was MassLandlords. What was the point? Yes, I had to renovate the second floor. The people on the first floor got the Polish discount. The owner who lived there before was Polish, and she only rented to Polish people, and she charged them $300 a month in rent for a three-bedroom, seven-room apartments. If that a good deal?
Rich: By the way, it was a really good deal, then, too. It’s still very much. Rent has gone up, but they weren’t $300. Anyway, we told them like, “Listen, the rent is going to go up to $900. You just move along.” They said, “No, we like hanging out here and we like paying $300 and that’s what we’re going to do.”
Brian: What did you do?
Rich: Well, we talk a lot about notices and the housing court system and how do we evict somebody and I really didn’t know all that stuff yet, so I was like, “I will look into that later.” I started working on the second floor apartment. Lo and behold, after I did that about a week in me making running saws and doing things up there at 2 o'clock in the morning, lo and behold, they moved out. Totally unintentionally.
Rich: Yes, it could go either way.
Brian: You had the table saw on a timer?
Rich: It wasn’t. What’s that, Doug?
Doug: [unintelligible 0:42:35]
Rich: Does anybody have a lot that they want to say about this and want to come up?
Brian: Grow up or I will hit you with a laser. You, yes.
Male Audience 2: I was just stretching.
Rich: You were just stretching. Okay, does anybody over here want to stretch?
Rich: Yes. Come on up. He’s going to beatbox you a theme song.
Brian: Your name, what type of project, and your blood type.
Male Audience 3: I’m not talking about projects per se. What I wanted to bring to your attention, Brian talked about earlier using Home Depot and stretching the payment over 24 months.
Male Audience 3: There’s a catch in it. You have to make sure that you pay that balance before the 24 months. If you don’t do that, every month, you are accruing interest and you will be surprised. If you had paid $9,000 for your project and you put it on your card, you will be surprised to have an additional $3,000 in interest if you fail to pay that by the term.
Rich: This is why I come to these meetings. That’s really good advice.
Rich: Yes, a round of applause.
Brian: May I add to that?
Brian: My wife is Korean. She would never let that happen.
Rich: That’s an alternate strategy is to marry someone from Korea.
Rich: Okay, who over here has a story, a question, a tip, warning, admonishment? Yes, Rob.
Rob: Just a quick question.
Rich: Just a quick question, all right.
Rob: Thank you. If you’re starting your first project, it’s a rehab, a three-family rehab, the first thing you want to do is demo the place. Do you need to get a license to have one of the containers stuck in the yard, so you could fill it with debris and the things that are taken out of there.
Brian: Demo is not going to be the first thing you do. First thing you do is going to come up with a plan. You’re going to run your numbers. You’re going to figure out your budget. You’re going to get everything down on paper first, come up with an operational procedure. We’re going to do A,B, C, D, E, F, G.
When you pull your permit or your GC pulls your permit, there’s actually a line on there, how are you getting rid of the trash. If you’re going to have a dumpster company, put then name of the dumpster company. If you’re going to have Joe’s Come and Haul It, Do It, make sure because that’s part of the permit. All that’s going to be taken care of. You got to know all that. Okay, please, on the third floor, don’t just open the window and throw the stuff out.
Brian: No. You need to have a covered chute and it should go right into the dumpster or it could be your circus, but they’re not your monkeys. They’re bringing the stuff down in barrels and dumping it in. Don’t throw debris from windows specially on the Main Street where the inspector drives by. That’s never a good idea. Did I answer your question?
Male Audience 3: Thank you.
Brian: Okay. Somebody else? Give me a tough question.
Rich: We have one right over here. By the way, what happens when the inspector drives by and you’ve got a dumpster up front, and you don't have any permits?
Brian: [laughter] You’re shut down.
Rich: You’re shut down. That’s what they look for.
Brian: Your job stops.
Rich: They’re looking for a dumpster that they don’t know anything about because that’s a sure sign that something is going on that might require a permit. Come on up, Robert.
Robert: I went to the Marlborough meeting last night. The topic goes on lead paint, and fortunately, I was surprised to learn that firstly doing any work on any property requires an inspection for lead. So where do you go with this one?
Brian: What if it’s a vacant building?
Robert: My understanding was that I bought a duplex in Oxbridge and did substantial renovations to it. What you said was there was distinction between doing renovations or doing lead abatement. In this case, I maybe off the hook because my intention was to do renovation, which was a complete replacement of the electrical system, plumbing system, heating system, and ripping out some walls. But apparently any demolition, which you in a position that you need to have somebody come in to do a check on the lead to get this in compliance. The problem is when you go to sell a property, somebody looks at the records and you don't have that. I need to look into this a bit more because it was confusing to me to what you said.
Brian: Okay. I can speak to the project that I did. I went in with the plans, discussed it with the inspector, told him we’re going to do X,Y, Z, had him come out. It was not a lead abatement job. The biggest thing is we were moving the door and I needed to make sure that with the bathroom door was going to be compliant, so lead never came into the issue. Moving that one door, what is it 9 square feet? If you displaced 9 square feet, something like? Six?
Robert: [unintelligible 0:48:27]
Brian: This was a contained space. Yes, I’m not sure if we should have had a lead abatement permit.
Robert: There’s the question if you’re renting those potentially have children as part of the housing rule.
Brian: I don't know off the top of my head if that property was already abated. I would like to do a follow-up on that and see—
Robert: RRP, you mentioned RRP.
Brian: Yes, renovate, repair, paint. RRP if you’re going to do any substantial renovation, disturb 6 square feet of dry wall, then you should be an RRP licensed contractor to do that work. That’s a good one. I don't know the answer.
Robert: Basically, the tenant, the people who are doing work in a property that’s disturbing a minimal –the RRP is basically for people who are doing minimal work in a property that involves disturbing something so that you don’t have to go through the whole lead abatement procedure, so if you’re doing some minor electrical work and you’re tearing out some walls, some of the plumbing that you’re doing, some of those walls there, which would be fairly minor but unfortunately disturbing some lead paint. It’s surprising how small a piece like your fingernail-size piece of lead paint is enough to cause lead poisoning they tell me in children, so it can be very serious.
The other thing that we talked about last night was moderate risk deleading, which as a property owner, you can do some of this yourself, which is covering up some surfaces like friction surfaces like doors—
Brian: Doors, windows.
Robert: Yes, stair treads if they have. I don't know who paints stair treads but some do get painted, and those could potentially have lead paint. Unfortunately, you have to have somebody come in and test all this stuff because you can buy a test kit at Home Depot, these little things, but if you’re really testing something like around a doorway, if it’s painted on one side and then on another side with a different color, you have to test all of those surfaces, so it will get very expensive very quickly to buy those test kits.
But then you don't have the certificate of compliance where somebody came out with an XRF, which is an x-ray camera which cots like $15,000, $25,000. It takes like, I don't know, 200 –you have to be certified by somebody that’s done all this stuff. It’s not something that you can do and you can’t do it on your own properties. The moderate risk is something you might look into. I think Dave Burgess is somebody that’s advertised with MassLandlords. You can look into that. It’s fairly straightforward.
Doug: I would like to [unintelligible 0:51:42] on that. You’re both right about deleading and RRP. In a nutshell, here’s how it’s supposed to work. There’s a federal regulation that say if you’re going to disturb stuff to do renovation work, you’ve got to contain lead dust. There’s a Massachusetts law that says if you want to have a deleading cert and avoid strict liability for lead poisoning, you’ve got to follow a deleading procedure.
The best advice is before you do this, if you want delead certs, get your inspection, have your deleading plan be the demo that’s going to result in your finished unit. You get the lead inspector involved each step of the way, so at the end of the project, you come up having done RRP0compliant work with the delead cert, but it sounds like the delead cert didn’t matter to that landlord or wasn’t on your radar.
Brian: It wasn’t on my radar. To alter these numbers, if I were to have it inspected and then re-inspected, it maybe would have added $1,200, $1,400 to the overall budget, which—
Robert: [unintelligible 0:52:42]
Brian: Well, to come in and do a lead inspection would be $800 give or take, and then the follow-up inspection, $400 to $500 something like that because I’ve had that done before.
Male Audience 4: Doug, that wouldn’t be a bad idea if [unintelligible 0:53:00].
Doug: Sure, yes.
Male Audience 4: Brian was talking about renovation, but he talks [unintelligible 0:53:02] ago. That’s something that everybody here—
Doug: Yes, if you’re interested in hearing a full course on deleading, let us know on the yellow feedback cards. Other questions for Brian?
Male Audience 4: What is your protocol for expressing, hiring [unintelligible 0:53:25] contractors?
Brian: [laughter] My protocol. Well, first, I’m going to do a Google search. I’m going to go on the Better Business Bureau. I’m going to look for reviews. I think I learned this one from Rich, but something we do is I want to ask to see their last five invoices in sequence. The reason is ask for that is I have to give your invoice to a landlord to explain to them what work you did. I want to see the level of detail that you put on your invoices. That is not the reason I want the invoice.
I want to get those five references of those people in sequence, in order, call each one of them because the name, the address, everything is going to be there. “Hi! James Smith. I see that Bobby Contractor did work, billed you this date, this amount. I got a few questions, and if it would be okay with you, I’d like to come by and see the work he did.” I’m going to do that through those five invoices. And of course, I do want to see that it’s a clean-looking, professional invoice, not something that was written in crayon. That’s one of the really hot things I do because you got to check them out.
If I ask you, “Hey, give me five references,” you will say, “Okay, what are my five best clients? There was one I did three years ago. One I did six months ago. Then I’m scratching my head, trying to think of the best ones I did.” I want in sequence, invoices in sequence, matching work order numbers. What else?
Male Audience 4: You Google search. How many do you reach out to?
Brian: Until I find one that I like.
Male Audience 4: Then how would you price in? Do you get more bids? You get more scope of work and have each one bid on the same.
Brian: One scope of work and have everyone bid on the same thing. I will draw up the plans, tell them what I need. I’d probably figure out my materials’ list already and I ask them to bid it. I ask them to bid it. Brian, how many plumbers did we pull into Market Street so far?
Brian: Seven, so we’re on our seventh plumber until I find the right one. I’m telling them, “You know, I’m not a one-time client. I want to build a relationship with you. I’ve got more work coming, but I want to find the right person. I don’t want to cause myself brain damage. Anybody else? Yes.
Female Audience 1: Brian, you seem to deduct all of your expenses off your tenancies?
Brian: The landlord could, yes. Yes.
Female Audience 1: That’s a big difference right there.
Male Audience 5: [unintelligible 0:56:30]
Brian: Yes, the landlord was able to deduct those expenses off of their tax return. Simple repairs would have been that year, capital expenses 27-1/2 years. But even still, it’s a nice little kick in the pants on your taxes, so that’s another factor that we didn’t even put into the slides. Huh?
Rich: That’s 27-1/2 years, it’s all taken off now.
Brian: Well, a roof, that’s for capital capex.
Rich: It changed.
Brian: Even better. Rich is saying that you can take it all off that year. Cool. Now, if I have the invoice for $3,600 for appliances that I haven’t paid for yet and won’t be paying for within 23 months, gee, if I got an invoice and I submitted on my taxes, I’m taking that benefit now, right? But I have the invoice that it was paid for on the credit card, but they don’t see my credit card statement whether I paid for it. They just see the invoice.
Rich: I think that’s nice, Brian.
Brian: Is it?
Brian: It’s just a delayed payment. It’s deferred tax. That’s what it is, yes. Have you stopped recording yet?
Rich: [unintelligible 0:57:57] on cash, so might as well just pay the rent.
Brian: Okay. Anybody else? Yes. Hold on. That young lady first.
Female Audience 2: I was just going to say one of the important reasons to pull a permit when you’re doing work is if you’re changing doors, it lets the fireman know where those new doors are. When they go into a burning building, they know where to go.
Brian: For anyone who couldn’t hear that, one of the main reasons you want to pull a permit if you are moving doors, later down the road, if there is a fire or fire officials have to come in during a fire, they’ll know where those doors are, if you’re taken out a main entrance door or something and they’re trying to go through a wall. Good stuff. Yes, sir.
Male Audience 6: [unintelligible 0:58:55] evaluation that you could have included was the fact that you didn’t have to place the tenant on the rent that’s a voided cost. What counts the increasing rents that you could have put into that, too, so that would—
Brian: Well, we did, the $7,200. That was the increase in the rents.
Male Audience 6: No, but each year, our client, the rent is going to be continually going up.
Brian: Two percent, that’s my lease. Yes.
Male Audience 6: [unintelligible 0:59:26]
Brian: Yes I keep it simple. I didn’t want to hurt anybody with compounding calculations.
Male Audience 6: It’s also avoiding maintenance that you’ve been doing, have to be doing [unintelligible 0:59:39] could be there, too.
Brian: That’s huge, yes.
Male Audience 6: Those are some other factors that would go into that financial evaluation where necessarily [unintelligible 0:59:48].
Brian: Some of those things in and out, being that they were out, did it make sense to renovate?
Male Audience 6: I would say so, yes.
Male Audience 6: Because you would have much nicer property, that’s [crosstalk 1:00:05]
Brian: We didn’t take into account the taxes, the less brain damage from having to chase rent, the increase that we do at 2 percent, which compounds that up over the 20 years, so yes, those extra little jammies, and freckles, and frostings just make the cake taste so much better.
Male Audience 6: Right.
Brian: This was fun.
Expensive Looking Facelifts that are Easy on the Budget
Joel Bienvenu - Joel
Rich Merlino - Rich
Joel: I’m very impressed. I really didn’t know what to expect. When Rich invited me to come, I asked him what do you want to hear from me, so he suggested talking about some projects that I’ve done and some things that I’ve done for some landlords in the past that have given them some pretty good bang for the buck. First, I’d like to define what a handy person is and that’s the politically correct gender-neutral name for me.
Joel: It’s a person skilled in a wide variety of repairs, typically around the home. They include trade skills, repair work, maintenance work, both interior and exterior. We’re not general contractors. I’m actually in the process of getting my license. Just to add a little value to some of my projects, primarily more on the private side of things, but we’re not the person who comes to your house and rakes your leaves, unless you want a really expensive leaf-raker.
Now we’re generally perceived as being a little more cost-effective than hiring a general contractor to some of the same types of jobs that a contractor would do. As a matter of fact, I do work with contractors specially when it requires pulling a permit.
In why we’re considered a little less expensive is because we often –
I skipped ahead one. Sorry.
We often operate as a one-person LLC, so we are pretty low overhead. Pretty much my office space is my basement, a 1,400-square foot shop. I can fabricate things. I can build things, but we also have the experience and the tool to handle a lot of different projects. In the last year, I spent probably $3,500 in tooling—compressors, nail guns, portable saws. Nail guns are very important on old, old homes specially that have the plaster and lath.. You try to hammer something into a wall like that, plaster falls down. You hit it with a nail gun, it doesn’t happen.
We specialize in the small to medium jobs, the jobs that the general contractors are too busy or don’t really want because there’s not a lot of money in it. In addition to actually fixing the problems, I think many of us can bring to the table more of a complete project management. We do the work. We can bring in subcontractors. We can pretty much start to finish get it done.
In the year and a half that I’ve been doing this, I’ve developed a lot of contacts with other handymen in the area and specialists. Plumbers, they can sometimes be a little hard to get stuff done with, but I got a couple that I work with that because I’ve developed a relationship with them and I’m kind of their advocate when it comes to say you hiring a plumber, if I call them, he tends to respond to me sometimes a little better or not.
Okay, the good, the bad, and the cheap. I think a lot of you have probably seen this slide before, pic 2. It’s pretty much try to do three, that rarely exists. This graphic says it doesn’t exist, but you can almost get there. You want it done good and fast, it’s going to be expensive. You want it done fast and cheap, it’s not going to be good. You want it done good and cheap, it’s not going to be fast. Makes sense? That been your experience?
Joel: Okay. I’m also a property owner and a landlord, and I understand this is your business. You want to make your properties as appealing as possible. You want to have repairs and remodels done inexpensively, but you want quality work. Throughout the years, I’ve found some little tips and tricks and things that kind of give you a lot of bang for your buck. Now finding that balance, it’s three things. You have to be creative in what you do. You have to do your research. Then most importantly, you have to have the skills to do it or find somebody with the skills to do it.
Now I promise that this is my one and only what I would consider a fairly high-end remodel. This is a 15-year-old contractor-grade white laminate, really ugly, absolutely no appeal, poor lighting. That’s the end result.
Now the components I used were solid maple cabinets. They were solid maple, black granite. I had a custom standstill plate cut, that’s $45. That’s a little high. Pretty much everything including the lighting and the appliances, I used a standard cabinet built into a closet, wired it up. There’s a microwave in that, so a little more custom work. Guess how much that kitchen costs? Anybody venture a guess?
Male Audience 1: Seven.
Joel: Seven! A little more than that.
Female Audience 1: [unintelligible 0:06:00]
Female Audience 1: Thirty-five.
Joel: Thirty-five what? Hundred or thousand?
Female Audience 1: Well, I think it’s $3,500 because you said that cheap [laughter].
Joel: Well, this one actually when I went to do this project, I had three contractors come in and they all quoted me up in the range of around $20,000. I said, “They’re out of their minds.” I was at Home Depot one day and this 12-year-old came up to me selling cabinet refacing.
Joel: So I said, “Come over. Take a look.” A couple of days later, the kid shows up, looks at it, gives me a quote to reface all the old particle board pieces of crap, new drawer fronts and doors and hardware. No countertops, nothing else. Just the cabinets. Twelve-thousand dollars. I said, “You’re out of your mind.”
Joel: I ended getting that kitchen done for about $1,200 or $1,100 and that’s including appliances, a little more than $3,500 but a lot cheaper than what a contractor was going to charge to do it, and a lot better end result than if I had gone with something like a Home Depot refacing or reface them myself. Again, that’s the one and only kind of high-end thing that I’m going to present tonight.
This is a rental unit that I have in Florida. It was built in 1961. It had galley kitchen with pink countertops and plywood cabinets. I basically reused the cabinets as many as I could, added a few, re-laminated it, new doors, new appliances. The countertop, I actually just replaced the laminate top sheet, reusing the existing bases because they were plywood. They were in great condition. They were well made. There was no damage on them, so they just needed a cosmetic facelift. This whole kitchen, somebody want to venture a guess?
Male Audience 2: Six.
Female Audience 2: Eight thousand.
Male Audience 1: Seven.
Male Audience 3: Thirty-seven.
Joel: Thirty-five hundred. A little more in line. Just on so many individual components, I can re-laminate a good condition countertop for about $500, $600, depending on the size. I’m also in the process of doing and I’ve done this in the past, one thing, the new laminates, the Wilsonart stuff is bulletproof. I was going to bring some samples here today with a hammer and let you beat on them, so you could dent them. I tried it; I couldn’t do it.
Granite tiles is another good solution; very thin grout line. A granite tile goes for about $5.50 a square foot. You can do a granite countertop or laminate countertop for about the same price. How much do you think it would cost you to do that countertop in granite tile?
Female Audience 3: [unintelligible 0:09:10]
Joel: About $600 labor included, all in all done. Laminate is going to cost you pretty much the same. The Wilsonart stuff is not cheap. That would require just a 10-foot sheet, which costs $150. That buys a lot of tile.
All right, refinishing floors. You have old properties. They have nice hardwood floors. They’ve taken abuse all the years. Typically the abuse is in what area? High traffic areas. Instead of doing full refinishing, I’ve done a lot of partial refinishing basically with a hand-sander, a hand VAC sander, basically scooped out the polyurethane, touched up any problem areas, and then urethane the whole thing, so instead of doing the $5 or $6 worth of refinish, to do it for about $1 or $2 per square foot, depending on the condition and how big the floor is.
I do quite a bit of this and I want to say a lot of my work is done private residences. I have a couple of commercial clients, who Rich is actually the first guy that hired me to work on some of his property, but since then, I’ve gotten more out of state landlords that can’t do their own work. They need somebody to be on site when they need them there. They need somebody they can call and they’ll show up.
I also have a sorority that I work at it, Worcester Polytech, that drive my wife nuts. She thinks I’m working in a tool mill in a thong.
Joel: And that’s not the case. I love this story. A homeowner called me and said, “Hey, my shower is leaking. It’s ruined my kitchen ceiling. It’s blown up the life fixture. It’s starting to ruin my floor. Can you come and take a look?”
I went to look. He had three plumbers in. They all want $10,000, $12,000 to replace the showerhead. Nobody ever asked him what preceded the problem. I mean the shower was like it’s 6 or 7 years old. It wasn’t there that long. I said, ‘Well, did it leak for 6 years?” No. “So it’s probably not your shower panel.” He goes, “Well, we had a clog.” “What did you do try to fix it?” We took the drain cover off. My wife went in with a screwdriver to try to clean out the clog.
Audience: [inaudible 0:00:00]
Joel: Then I went down and I see that the drain pipe and the….what do they call it?
Male Audience 4: Trap.
Joel: Not the trap.
Male Audience 5: The elbow?
Joel: The ring basically that fits into the downpipe, it had been epoxy. She chipped out the epoxy. It had a quarter-inch gap all the way around the pipe. Also when they installed the shower, there was a lot of missing caulk. There was…
Male Audience 6: Grout.
Joel: There was grout when there should been caulk. There was missing caulk, missing grout, missing a lot of things, so basically I spent an hour and a half cleaning it up, resealing it, epoxying that pipe again. I did this in April. I called the guy a couple of nights ago just to see if he was still happy. He was still happy, no problem. Guess how much does it cost him to fix that?
Male Audience 7: Three hundred dollars?
Joel: Three-hundred fifty. Close. He was tickled pink. If I had known they were going to charge him $12,000, I probably would have charged more than $350. Actually, when I charged him $350, I kind of felt that I overcharged him a little bit because it only took me a couple of hours o get it sorted out.
A lady, 1950s mid-century modern house, really cool, a lot of really offensive colors and things like that, just like bright, bright, bright yellow. This vanity front was yellow. There was no conditional issues. It was in great condition, but it just was yellow. She liked shaker designs. I said, “Okay, well before I repaint them, I have some wood. I’ll cut it strips. I’ll put a little raised edge on it to make it look like a shaker design before I paint it.” Basically it cost her nothing in supplies because I had the wood. I worked extra hours, so it cost maybe $50, $75 to add that little pocket. It was just nice little think about adding a little bit of pop to some of your stuff.
Materials – two skylights that I trimmed out. They were brand new. This one actually had two of them. They wanted a 1x6 tongue and groove. The material was about $300. The second one, the lady had just spent $1,000 to have the skylight installed. She didn’t have enough money to really do them up in the tongue and groove, so I used a wainscot, a quarter-inch pine wainscoting. Material is less than $100. They also saved about $100 in labor. If you ask me, I’d like the look at that one better.
Okay, another thing I do is repair appliances. Yes?
Rich: I don't have a lot of skylights in most of my apartments, but I get the overall point they were talking about that just because somebody tells you something [unintelligible 0:15:150] that doesn’t mean that that’s your only option. What would you recommend to landlords who are given a high price because I think every price is high regardless of what it is?
Joel: No kidding.
Rich: What advice would you give to landlords who are given prices about things, how to find out what the breakdown is, what materials are being used, and how to save that money because if they don't have you in their house and we’re not fixing tiles.
Joel: Right. I always ask most of my commercial, residential customers like, “Do you have a budget in line for this? What do you want to spend? What do you do? What do you spend?” This woman with the other skylight said, “You know, I just spent the money. I don’t really have a lot. I want to get a lot of extra money to do the trim work. I want to get it done nicely,” so that’s when I kind of went and did the research on the material to offer a more cost-effective choice.
Yes, I like to ask the questions is this – I don’t really know to phrase this, but do you want a Cadillac repair or do you want a Pinto repair or remodel?” I can go somewhere in between and try to get you more towards the Pinto price.” But I just made it myself because not too many people know about Pinto price.
Joel: But I’ve been described as the ultimate cheapskate and I’ve done a lot of things on very, very tight budgets, and I’ve got some pretty good results, so squeezing a nickel until a bottle cracks.
I had refrigerator customer, a guy. It was an older one. He’s like, “Well, I don’t really have the $2,100 to replace the stupid thing.”
I tell you, on any higher-end appliance, 99 percent of the time, if it fails, it’s the stupid controller boards. Model dependent, you can get a new board for like $40 to $90, some of them maybe $110, but somewhere in that range. It takes less than an hour to replace it, so this was repaired for less than 10 percent of what was replaceable. I did that a couple of years ago, and no complaints, no failures yet. I’ve done the same for dishwashers, dryers, washing machine, anything with a brain or controller. That’s usually a pretty obvious failure. It loses its mind.
This is a job I did two weeks ago. I call this, this was an exercise in stupidity. It was a 1955 laminate bathroom countertop with an under-mount sink. To me, that’s the trifecta of stupid because anything under-mount, they’re going to get water up in here. It’s particle board. What happens when particle board gets wet?
Audience: [crosstalk 0:18:30]
Joel: [crosstalk 0:18:32] it swells. But this house was a 3,900 square-foot six-bedroom three-and-a-half baths, 1955 midcentury modern that was designed by a fairly influential and well-known architect named Irwin Regent in Worcester. She wanted to keep it. I said, “You know, it’s going to probably be cheaper to replace.” “Nope. I want to keep it.”
So, I rebuilt that and guess what? First thing I had was a broken downspout, so that means I got drill it, got to [unintelligible 0:19:08] it, and I got to put a new pipe in. None of the rebuild parts were made anymore. You can find them, but it will take time, so I had to fabricate new parts out of light or similar modern parts.
Particle board had to be scraped, epoxied. This area has been [unintelligible 0:19:28] reattached. The hole for the faucet had fallen apart. It had to be rebuilt, re-epoxied ultimately. It was bare because whoever designed that sink was not a plumber and there was very little access unless you actually took the sink out, and I was afraid to do that because of particle board.
I ended up, guess how much it cost me or her to fix that sink?
Male Audience 8: Three hundred.
Joel: Six hundred. She was tickled pink, but for an extra $400, she could have gotten that. Like I said, I mean the customer is always right. She wanted that sink repaired and that’s what it took.
Rich asked Doug about using things like Trex and composite woods for treppe. I said, “I’ve never done that,” but I have used Trex for some other fun projects. This is going to fall into the “slow” because I always look for bargains. Twenty-five years ago, I would buy that little want ad advertiser magazine every Tuesday or Wednesday, and I would go through it like it was my bible, and I found great deals.
Now that that we have the Internet, buying stuff on Craigslist and Facebook marketplace I think is great. I went there the other day. I find a guy selling 15 x 12-foot Trex decking plus he’s installing the whole backload of 4, 5, and 6-footers for $150. Well, that sounds like a bargain. I emailed. I said, “Do you take $120?” He’s like, “Sure.” That’s $8 per board. Retail on that is about $30 a board. I just saved $330. I’m going to build myself a deck.
Yes, I’ve actually found very nice kitchen cabinet sets on there for $150; very short money. A couple of times, the stuff that I’ve actually pulled out of old kitchens I cleaned up and donated to Salvation Army, the Thrift Store place. Try to be civic minded.
This is kind of my ego page and we can do this quickly because Doug had mentioned the Trex. He mentioned the guy using it for trim and he called it, “The house of a thousand splices,” and that made me think about some of the things that I’ve done and I built a house on a lake. It took me 20 years to build it. This would definitely fall in the “good and slow.”
Joel: Because good and really slow, but I bought all my lumbermill direct, saved myself about 50 percent off what I would have to obtain that say at Home Depot. The want advertiser, I found a contractor selling. He had 200 sliding glass doors. He had big condo complex, replacing the model with French doors, sold to me for $50 apiece; I needed four, I bought eight. I sold four for over $200. All the windows were free. The heating was pretty much begged, borrowed. Everything was begged, borrowed, or stolen. I built that for about $25,000 in material costs. This is a couple of pictures of the insides, 4x8, 2x6 tanning room, 1x6 tanning room. It came up pretty well.
A couple of years ago, I bought a trunk load of Trex for $20. I used it to build outdoor furniture. It’s got to weigh 800 pounds, but it’s not going to rot out, nobody is going to steal it.
Joel: I have a ton of used brick in a pile in the back of my property. Then I have a bunch of extra blue stones, just kind of half buried in the middle of nowhere and I don't know why they were there. It’s natural stone. A day’s worth of work, no material had to be purchased. I built myself a patio. Did the job. Put in bamboo flooring. I wanted a plant stand, so I used the bamboo flooring to fabricate a couple of shelves, so that’s enough for my ego wall.
Now how many of you guys own properties there like in the 80- to 100-year-old range? That’s pretty much almost everybody.
Joel: I’m going to be honest with you. I mean those things aren’t easy to work on sometimes, and I know some of my handymen friends will automatically factor in one and a half times what they think it would normally take in a newer home or building. I don’t do that, but from my experience, yes. Things aren’t square or level, or even say whole size as some of the more modern structures.
I run into this a lot. You have an electrical service replaced. They run new wiring up to a junction box and the hard part is the wiring going from the junction box into the light fixture. A pain in the butt, so they don’t do it, so I’m going to change a light fixture. The first thing is the box is not compatible with any of new sort of light fixture. Then I ran into rotting cloth wiring, electrocute myself.
A lot of times, it has to be fixed. Cast iron and galvanized anything, rots from the inside, clogs up, rots up. If it’s 100 years old, you’re looking at some replacements, and again nothing is square. Certainly nothing is square. I don’t think I found anything that’s been level yet, and a lot of times, there’s been previous work done that is kind of a Band-Aid, and you know what a Band-Aid is? You put it on a wound, a couple of days later, it falls off. You put another Band-Aid on until the wound is gone.
That’s great, but Band-Aids in the house don’t work because the wounds don’t go away typically on their work. I’m going to ask you questions. I’ve actually thought about when I went into this business, what are people looking for and the feedback that I got from some customers over the last year and a half or so, you’re looking for somebody that can perform a variety of repairs.
I can replace a toilet. I can replace flapper valve. I can replace minor plumbing. I can do minor electrical. I can do pretty much a whole assortment of things.
Now I think some of your concerns are quality of work. You want good quality, you want to pay a lot for them, and the bigger frustrations of course – no show, bad work, incomplete work. Any others that I could add to this list? What you don’t like about ? What are you looking for?
Male Audience 9: Competence.
Female Audience 4: Clear communication.
Joel: That’s a good tip. Clear communication. That’s a very good tip. I sometimes overcommunicate. There was a Seinfeld episode where Jerry hired a guy to redo his kitchen and he asked them 100 questions daily, do you want this way, that way, this way. I can sometimes tend to bore on that, but I like to give details to my customers on what I said I was going to do, what I did, give them a little detail. Let them know exactly what were done. That’s my pet peeve.
Rich: What kind of questions should someone ask their handyman in general like what’s a good three or four questions in order to inspire clear communication with the handyman?
Joel: Tell him upfront just keep me informed of what you’re doing. People don’t ask me that; I just do it. Maybe they’re [unintelligible 0:28:10] but I do it anyway. Three or four questions? I don't know. If I were to hire a handyman, and I’m too cheap to, I’d ask them what they’ve done before, possibly ask them for what is the best solution that you come up with for one of your customers? How did you help them out of a kind of sticky situation or bad situation? How did you approach that problem? That’s a very good question.
Now my pet peeves. I know you guys have emergencies and I try to be very responsive to emergencies. If you got a leaky pipe and I’m painting a wall, I’m going to put the paint brush down and go on to look at a leaky pipe. If you’re scheduling work, try to schedule either maintenance or other jobs or other projects in it, try to give me a couple of hour because the worst thing I can do is break up a day and go and do an hour’s worth of work if I have an hour’s worth of driving, and half an hour to do a setup.
It’s more cost effective and it could give me three or four things I could do instead of driving 40 miles to change a lightbulb. Make sure the tenant is ready and knows what to expect. I’ll communicate that to you that I’m going to replace a kitchen faucet, make sure there’s not two weeks’ worth of crusty dishes in the sink and the cabinet is piled full of cleaning supplies. Just help me out there because I run into that quite a bit.
I’m here to help you keep your investments and hopefully help you come up with some decent solutions on how to make them look better and not really cost you a ton of money.
Rich: We have about 1-1/2 minutes left. Does anybody have any questions about maybe a specific project that you might have that you might like to pick Joel’s brain about, materials, strategies, or anything like that that we can all learn from? Why even? Does anybody want to talk about marijuana or pit bulls?
Rich: Okay, yes. Joel still has a question.
Male Audience 10: Do you have experience with refinishing cast-iron bathtubs [unintelligible 0:30:38]?
Joel: I’ve done the prep work. I’m sorry. Refinishing cast-iron bathtubs? I’ve done the prep work for it basically the acid wash, the sanding, and all of it. As far as having some of this spray ready-to-do finish, I call in professionals to do that. Yes, sir?
Male Audience 11: I prefer a phone call versus a text message. I find that texting is very impersonal, and that you miss a lot in communication with the contractor and whoever is doing the work through a text message whereas if you speak to him in person, he knows exactly where you’re coming from and what you expect of the job.
Male Audience 11: Competency is a [unintelligible 0:31:30] subject for me. I was a former facility manager in a research and development company for 15 years and dealt with a bunch of all nationalities and people and all kinds of experiences and education and stuff, but when it came down to common sense, they just don't have it.
Joel: Right. You heard the question.
Male Audience 11: So it’s invaluable.
Joel: Yes, it’s funny. Common sense is not that common sense is not that common, and I think Rich is here to give me the old [unintelligible 0:31:56] but I’m going to leave my business cards up the table there if anybody is interested. I would suggest you call me because the email address on here it not active yet but thank you very much. I appreciate you guys having me.
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