Hey you're about to learn a lot about real estate and if you want to learn everything, that's on my mind about real estate check out the real estate rental renovations program and the zero to millionaire investing program on real estate. Investing link down below there's a black friday, coupon code, expiring black friday, 11 59 pm, hey. Everyone me kevin here, welcome back to this project. It has been just over a year since i bought this property at the end of september, which is pretty sad because usually i, like my renovations, to go and be done within 45 to 60 days.

Yet it's been a year and we're still in renovations. So in this video we're going to talk about this 1.3 million disaster, we're going to talk about problems, we're going to talk about how to prevent those problems in the future and things that we've learned and things that we're doing in the property. So, let's head on in take a look one of the first things that i want to say is. I have never owned right on the water before and it is mind-blowing to me.

But this is new hardware as of about six months ago, and you can already see rusting on the hardware specifically right here, where sort of the hardware meets the door and it's crazy, because it's so salty the air. It's like this corrosive air that just blows around outside here anything metal, just rusts and decays out here it's insane, but to think that you know a nice quality, quick set. I mean it's quick set, smart key, that's that's! The higher quality version. Uh hardware would just uh corrode this quickly.

I mean eight months and you're already corroding. Imagine what this will look like in a few years: pretty wild, i'm not sure if they manufacture, uh, corrosive resistant hardware that'll be something to look into. But honestly, if this is, you know a 20 30 kit here or whatever for a single door set, is it going to make sense to spend 100 or 150 on some special fancy? Anti-Corrosive kit, that's probably going to corrode anyway? Probably not - but i don't know - maybe i'll google it so come on in. Let's take a look around here, so this uh.

This is our project. Uh, we'll uh we'll show on screen some before images uh from our matterport of kind of what the place looked like before, and this is really the theme we're going for here. I like to call this a level two and a half style renovation, so level two is where you get your a rental grade. This is where you're doing uh nice quality work, you're, making things safe, but you're, not overspending level.

One is kind of a little bit in the direction of i don't wan na, say slumlord, because it's not true, but uh. You're gon na leave a lot more product in a level one renovation level. One renovation is usually where you might be in, like certain parts of the midwest like ohio or idaho, where you're getting five six hundred dollars in rent for a house. It doesn't make sense to go in and replace the oak doors or the grass handles it.

Just it's not gon na be profitable. It doesn't make sense. So that's going to be more level one. Sometimes people confuse that with being slumlord.

In my opinion, a slumlord is somebody who doesn't repair things that are dangerous to health and safety like a leaking roof or electrical problems. Right. That's that's slumber! That's like negative level. So level one is, is really low, rent where you're capped level two rental grade uh.

When you get to level four you're doing high-end custom, spec builds and between level two and two and a half is where you wan na be for a rental level. Three is going to be like i'm living here, but i'm not specking it out like a multi-million dollar home. I just want higher quality stuff for myself so for rental grade at the beach i'm gon na go step up from level two. I'm gon na go with a level two and a half i'll show you some things that would define a level two and a half.

So, for example, right here, we wanted to open up uh this this wall right here, uh, the loads are really sitting on the left and right of this wall, but we had to go through a permitting nightmare. Just for an opening like this i'll talk more about permits in a moment, but this opening this up is a really good idea. We will generally do this in a level two renovation as well level, one i wouldn't touch this but level, two renovation. You know regular rental rents for two to five thousand dollars a month, not super high spec.

We're definitely going to want to open this up, because people like people want to feel like they can live in a more open concept. That's obvious at this point: the fact that we're going with new cabinets here is also a version of two and a half, usually we'll just paint existing cabinets that are still in good shape. However, in this case, there were no cabinets. We bought this property ripped down to the studs, which that opened up a whole can of worms in terms of permitting nightmare.

We'll talk about that soon but, as you can see, we've really got a nice modification here to the way the kitchen flows compared to what it previously was when this was all closed off and you'll see that in the matterport scan will throw up. But something else, that's i think very nice to do is is adding your crown to the cabinets up here. This is just a little bit of an extra detail that i think is is really representative of a two and a half uh rental renovation. If we were gon na do crown molding on the actual property walls, that's gon na bring us more to like a three three and a half now we're starting to get a point, so we're overspending generally for a rental.

You don't want to go to three. Even for a flip, you don't really want to go to a level three because you're going to be overspending so i'll point some more things out. As i see now, another thing that we did on this property is we upgraded the electrical to obviously the gfci, the new white tamper, resistant, decora outlets and switches here, but a new code would actually probably have had us add another two or three outlet receptacle boxes Here, which we did not do because we're not replacing the electrical system in the house, the place was built in the 70s. You've got three prong copper electrical.

It's not necessary to upgrade all of that, and this is sometimes where you have to fight with the building inspectors a little bit, because the building inspectors will say oh well, property's down to the studs you've got to add more outlets. It's like no we're, not updating the electrical system, we're not going to spend money doing that because a there's, no health and safety issue b. We don't need to rebuild the home to 2021 specs, because then nobody would ever be profitable on real estate and again there's no health and safety concern right. So sometimes you have to push back a little bit on some things that are grandfathered in and again there's nothing wrong with the electrical system.

The way it is, if anything, we're improving it by going through all the receptacles again and upgrading them. This is something that i'll do for almost all of my properties. Now, if i were going to do a level one renovation - and let's say i had ivory outlets here - i'd probably just get cover plates that also cover the actual outlet itself and make it look white. So now, instead of hiring an electrician to spend, you know thirty forty dollars an outlet to replace these, which, obviously you know a lot of people are like.

Why that much, i can do it for ten dollars an hour or whatever. I understand it's, not that hard. Uh doing it correctly takes some skill, though so you don't wan na devalue electricians and having somebody do it properly, but you on amazon, maybe we'll put a picture of these up on screen. You can buy these plates.

Actually, we should put a link down below as well. You can buy these plates that literally cover not just the frame plate like it actually covers the outlet to where it all looks, white and you can plug things in. It is really ingenious. I would use something like that on, like a level one level, two that might look a little cheesy, and so you want to be careful that your renovations are consistent.

So, for example, in my opinion, this is going to be a very consistent level. Two and a half rental property, if i uh, if i started doing things like level, one things like putting that plate in over here and the rest, you know i put crown on the cat on the new cabinets. Now, it's like you have this mismatch. You have some level one thing, some level two and a half things doesn't make sense.

So i always like to stay bracketed within within these brackets of levels. Another thing is: adding lots of cam lights. We we probably added somewhere around 25 to 30, can lights throughout the property here because it felt dark, especially once you get past 12 o'clock, we're filming this at about 11 a.m. Right now, once you get past 12, the sun's over you and the sun actually sets on the other side, so you're known as having an east facing dock over here.

This is where you get morning sun, but once you get past 12, it starts getting dark in here. So it was one of the reasons we decided to add: candle lights and lighting. If i was gon na do a level two renovation, which would be a lot more like uh, maybe a twenty two hundred dollar twenty five hundred dollar rental - this is gon na, be more like a five thousand six thousand dollar rental uh then uh, i probably wouldn't Be adding canned lights, i would let a tenant just plug in extra lighting if they wanted to, but i probably wouldn't spend the extra money uh, okay, so so uh, you might be wondering what left this property uh essentially vacant for so long, because not only do You lose money of opportunity, cost i've got a 900 000 loan on this. I bought it for 1.33 million, so i'm in it for about 437 000, plus some of the work that we've done so maybe five hundred thousand dollars into it right uh.

Not only have i lost the opportunity of what i could have done with that i mean i could have thrown it at a tesla stock right uh. I could have um also been renting the property and collected rent on this. There are a lot of things you could do with that money uh. So it's a little bit of a bummer to see this sitting vacant for a year and i'll talk about why in just a moment, but it's worth noting that fortunately - and you can't always predict this - but when i bought this, this was probably finished about a 1.9 Million dollar property.

So obviously i had a very nice wedge about a 550 000 wedge from what i paid 1.337 or whatever i paid to 1.9, really good spread there. I think that makes this a very profitable project. It was a very good deal when i bought it. It was all down to the studs, which meant only a cash buyer could buy it, and i got a private party loan to actually get financing on it, uh and uh.

Then now i've been fortunate. The market hasn't been crashing or plummeting. If anything, it's been appreciating more and more rapidly, so this is probably now sitting at about 2.1, maybe even 2.2, which is kind of like mind-blowing to think about it might even make sense to just sell the property, although usually i don't like selling real estate, because The fees are through the roof, so what took so long to actually get this property to where we are now, where we have officially good news, and we have been fully approved for these. We finally have our permits uh fully approved to where we can complete the renovation, what took so long and what mistakes occurred, that we can avoid in the future.

Well, i'll answer that so number one when you buy a property, that's taken down to the studs and somebody's selling it because it's been taken down to the studs. The odds are they've already exposed the property to the city, so much and they've gotten so frustrated with city building and safety process that they're quitting the renovation project. That's a sign that you're walking into a minefield. It's a sign that you're walking into a headache like somebody else failed, probably because of the city's ridiculousness, and i i didn't initially think that i would have as many problems, because the people who were renovating this property.

They wanted to add about 400 square feet right here. They wanted to add an elevator and a second story here, like they were gon na, do like a level four renovation on this. It was gon na be insane uh. They were really gon na custom spec, this home out.

They ended up deciding to buy just across the channel a a move-in ready home that was like a 2015 renovation, so not like brand brand new, but they didn't have to deal with it anymore because dealing with all this dealing with architects engineers, the city, sending you Violations, because your architects and engineers are taking too long uh, you know them getting mad at you, because you're starting to do some work at the property before you actually have the permit, like all that stuff, is very, very stressful, it's very, very annoying and frustrating. So i think, when you go into any kind of larger renovation, where uh you think you're gon na have to deal with architects and engineers, you better be prepared to be very patient and uh expect the road bumps because working with the city sucks. This is why, generally, i would say in 95 of my rental renovations, we don't deal with the city because we're not having to deal with the city, we're going in we're painting, cabinets, we're doing paint and flooring uh we're doing basic cosmetic work. We don't need to pull permits on that.

I mean city officials have bluntly told me to my face kevin if you're just going in and you're replacing ceiling, fans and you're doing like for like exchanges, just don't bother us like just do it uh and it's because they're overwhelmed too they're overwhelmed they're, understaffed, they're. Laying people off covet's been a disaster for people. These people are so stressed and honestly nobody likes them like. Could you imagine going to work every day and everybody freaking hates your guts, like i kind of feel bad for them, but i also hate their guts, but i know it's not them personally, like i'm sure, they're, nice people.

I know it's just it's. California, government california, bureaucracy, it's a disaster so anyway uh. So first lesson is: if you're going into well try to stay away from renovations. If, as soon as you hear architect engineer you're setting yourself up for a disaster that is no disrespect to architects or engineers, uh, it just is what it is, and they would recognize that as well and i'm sure that they're probably nodding their heads like yeah.

I get it that's different renovation uh like i would rather work with an engineer privately and like hey engineer. You're like this is a non-load-bearing wall right like we don't need to pull permits on this right. We're good like this is good and like yep. This is safe, you're good.

This is an on-bearing wall, you're good here uh and get some sort of certification like that and not have to deal with permitting like. If you move a load very well, you're gon na have to deal with permits, but anyway, so uh lesson number one stay away from renovations. That are massive. If you can lesson number two is if you're gon na get into renovations that require architects, engineer be prepared for a cluster f number lesson.

Number three is if you're going to change architects - and you have an architect who, let's say already put together an entire set of plans. If you burn that bridge with that architect - and you have a bad relationship with that architect, because they're just failing and they're not good at responding or they got overwhelmed or their quality of work is starting to go down. You're like you're done you're off this job. They take their paperwork with them, which means you start from scratch and when we're in a building crisis like what we are in now, where it's so difficult to find good engineers and architects, because everybody's spending money like crazy, uh and everybody's building you're, it's gon na, Be a while, before you find another architect, because on this project we fired an architect, took probably about four weeks to interview and find another architect to actually give us.

An appointment gave that architect six weeks to get plans done never got anything done, took five grand from us lied through their teeth, ended up, they were retired and didn't really care to do projects other than just kind of go talk to people at the city and Try to make friends at the city which they never ended up doing. They ended up being hated by the city, and so we had to fire that person as well then start the process of hiring an architect again. So i ended up actually this summer hiring two different architectural firms and i'm like that's it. I've got multiple renovations going on where we need plans for i'm, not just gon na put all my eggs in one architect basket so to speak.

I hired two separate firms to do plans on different projects and fortunately knock on wood. So far, both of them are very good. One of them is way more expensive than the other one, so i probably won't use them, especially if the other one ends up holding through on some of their projects. But it's a nightmare.

It's a disaster, because you not only are you trying to deal with these architects but you're waiting forever for the city, so, on this project we opened this wall. We replaced the doors and windows in terms of actual structural things that we changed. We didn't actually change anything structurally here, but i'll talk about why that's open just a moment we'll go upstairs, so we opened up that wall which didn't affect loads, but it still bothers the city. We uh opened this section of wall right here which there's no weight on this anyway.

From from our understanding, we turn this into a laundry room, because this used to be like this stupid outside closet, like they had a door right here to the outside, and it was just sort of like a storage room where you could throw your surfboards or something Stupid so we turn this into a little laundry room here, we're going to put a nice quartz countertop on top of here uh. So you've got your. You know storage cabinetry here for your linens, but you've also got a ton of extra storage that we've added over here and uh. Actually, i'm gon na see here hold on a sec.

Oh yeah, no, okay, good! Sometimes, when i go through, i look and i'm like wait a minute. Is that not a tamper resistant outlet, because it's black but um? These are the ones that you get at lowe's and they have a little black shutter. So they are tamper. Resistant temper resistant tamper resistant anyway, tr uh, so anyway, we normalized this, but okay, so opened up that non-bearing wall over there put a header in here to put a simple doorway in here to basically take an existing room and just flip where the door is and Then the other thing that we did was up here and quick reminder folks do check out the programs on building your wealth, including the programs on real estate linked below.

If you ever have questions on real estate, you can access me in our private course. Member live streams that we do every day. The market is open and i analyze deals. So if you submit an offer on a property, you get into escrow i'll.

Look at your deal when you submit it in the order that you submit it. There are usually only two or three people ahead at any given time who have written an offer or an escrow, so i'm usually able to get through all the deals that are submitted within a week of them being submitted, which is really awesome. Because i look at your comps, i look at your property. I give some pointers on.

Maybe do this not do that and, of course, you'll learn all my knowledge about. Should you have an llc how to protect yourself? What different levels of renovations are what you should do, what you shouldn't do what's worth it? What's not you'll, probably save thousands, if not tens of thousands of dollars with these programs, you may you might even make hundreds of thousands of dollars. Like many other course, members have - and it's super exciting, so i hope to see you there check out the black friday coupon code link down below it does expire at 11. 59 p.m.

On black friday. Up here was really weird because they originally - i don't know why, but they turned this into a two-bedroom which is not functional and kind of stupid, so we turned it back into a three bedroom, so you've got one bedroom here. You've got a second bedroom here, where we added a closet, and this bedroom had actually been just turned into a massive master space here. So this was all one room.

We added this wall right here. Adding walls is not a bad thing. It's a good thing. Now the city wants to see that you've actually like attached the wall.

So if there's an earthquake, the wall doesn't come falling down, but, like that's amateur like okay, fine, this is not a big deal. So so far, it's like opened a non-load-bearing wall added a wall, not a big deal and uh left the bathrooms. The same added a door jamb here, because there wasn't one not a big deal either uh left this wall exactly the way it was and then over here this actually had a substantially larger opening. The opening came out.

Uh it came out this direction. They had a an eight foot french door here, so the opening was a lot larger and we ended up downsizing this to a six foot opening, and so we put in a nice uh engineered lumber, a piece of lumber here, header framed in the wall, and so, If anything, we've actually reduced the opening and added more support and more beefiness to the property. Well, this is where the city was like. Well, here's the thing kevin you may have reduced the openings, but because the prior owner, without permits, opened the walls from what they previously were.

They made everything larger. They added this eight foot french door. They made this a two bedroom because they screwed up this entire wall they've screwed up more than like. I don't know what it was: 16 percent of the wall or whatever.

We now want you to bring this entire wall of this house to 2021 standards. So that's very annoying, and this is one of the big reasons that i say: don't buy properties with unpermitted renovations, because at some point in the future, you're gon na have to prove all of the work that people did before you and if they did a crap Job didn't pull permits, didn't do it right, you have to fix all of their crap, and so, even though, what we're doing is adding strength touching on a non-load bearing wall and and flipping a doorway, we're not really doing anything we got caught up in permitting on This project for a year because of basically the people doing janky stuff before us and there's really nothing you can do with that so kind of lame, but is what it is now. We've got to shear this wall, which basically means adding plywood, not that big of a deal hopefully they'll. Let us do it on the inside here and then we'll have to get a little bit creative with how we end up, preferring this.

This extra, like maybe we'll, use like a uh, we'll put our uh half inch plywood up uh unless they want. You know 5 8 uh, which the plans specify i just don't remember exactly what they called for. But then you know that's usually the thickness of our drywall, so we'll probably do like a quarter inch thick sheet of drywall and we'll just have to get creative with the molding over here. How we end up uh furring out uh, the the drywall with the door.

Molding so we'll figure that out, it might mean just kind of putting another quarter-inch layer of drywall around this whole wall. Here won't be a big deal we'll be able to cover it up with moldings when we bring those out so not that big of a deal. Fortunately, the things we're dealing with, like i said, not a big deal. It's sad though, because the cities are so behind and the construction industry is so behind.

Uh things take a whole lot longer and just a pain in the butt, and sometimes it makes you kind of roll your eyes like man. I should just be buying stocks, but remember i invest in real estate as a way to diversify. You don't only want to be all in on crypto all in on stocks all in on real estate. Anyway.

This is just a nice closet here, pretty basic, it's just a maintenance paint. We've got the swiss coffee on the baseboards. I love these baseboards by the way. This sort of molding very craftsman, very simple, very sleek right, our usual black bronzed uh and lately we've been almost trying to go all black on the hardware.

It's just really nice contrast similar with the bathroom we actually tiled the master. This is a this. In my opinion, let's turn the fan off: it's annoying there. We go this in my opinion, tiling a bathroom like this leans a little bit more towards a level three renovation.

So if you want to come in here flip around i'll show you this uh this. This is a subway tile, obviously with the darker grout, i love the metal trim. Uh shout out to nick and mark for throwing the metal trim in here. This, in my opinion, is, is really like a touching a little bit of a level three.

Maybe the one way we kept it two and a half is we didn't actually tile. The pan tiling pans is a disaster, because when you tile pans, you have to water test them. You have to float them in in a pretty expertise way so that you have your slope uh and it takes skill. It's not very easy to do.

It takes skill to do this properly and then waterproofing it and if you screw up, you end up with water leaks and you cause a disaster for yourself, so i personally prefer just taking a fiberglass pan like what this is a fiberglass shower pan. You know this is not going to leak. I mean there would have to be a fluky manufacturing defect or some sort of hole in this, for this delete, so there's very, very small chance of this leaking and then you could just do the beautiful stuff, which is tiling up most people who are renting a Property or buying a property, they won't notice that this is just fiberglass, especially once you put a glass door in here honestly, nobody cares. They look at the tile ooh, nice, okay, and then they move on not that big of a deal.

We did also upgrade the windows on the property, so that's probably leaning a little bit more level three-ish. Usually i don't go through and replace all the windows uh. Some of these, though, were broken, uh damaged, so it just it needed to be done on a property like this uh and again that that that's probably for this place level. Two and a half they're not like super super expensive they're from contractors, warehouse and they're basic.

So, probably reiterating again that two and a half uh, since all the walls were exposed anyway on this project, we, it totally makes sense to replace the vent stacks and your drains uh wallets exposed. I that's one of the things that i hate, though, about when everything's exposed it's kind of like well, while we're at it, we may as well that's dangerous, because that's how costs really really start going up you throw in the new pex plumbing you throw in the New drain lines, but the problem was the prior owner already removed all the plumbing, so we didn't really have a choice like they already sawed off the plumbing that was here before so i always try to stay away from that you may as well. This is a place where we did go with my classic kind of level, two two and a half ish right, maybe a little less than level two. This is just a straight up, fiberglass round it's your guest bath.

This whole kit right here is like 750 bucks, which compared to the probably four grand that it costs you to tile the other one. This is a lot juicier now, probably with labor you're, maybe like twelve hundred dollars, but still you could save a good. Almost three thousand dollars doing something like this, and once you put a shower curtain in for a guest bath, nobody's gon na know the difference and honestly, i kind of like it when you get a lot of the little shelves here. You get sort of the bowed out tub.

I like it, it's cool so yeah. I'm excited about that. I added a can light over the shower too so uh yeah, but anyway, because now that whole wall on this side has been uh exposed and uh compromised for the city. We now have to do a few extra things down here, and some of this is total overkill, but sometimes you just in negotiations with the city you're, just like fine, whatever will do it so we're going to be adding some hold downs overkill, but we're going to Be adding some hold downs just to satisfy the city on this wall uh to the right of where that doorway is it's silly, but whatever we'll do it on this side, we, the city, wants us to verify that there's actually a footing here.

So what that means is we're going to have to take a long drill bit and drill under where this wall is to verify that there's, like a 27 inch amount of concrete uh footing, which there should be because this was a load-bearing wall. This still is a load-bearing wall load and load on that on that corner. Here the opening didn't have load anyway, at least that's the way they built this originally. So we are expecting footings to be here, which won't be a problem if there, for some reason, is no footing well, then it turns into a little bit of a nightmare because you basically have to you'll have to dig a hole that you can get in probably Have to be somewhere around what three by three like a nine square foot hole.

You just dig a hole straight down, then you'd kind of start excavating to get under your post over here. You'd set your rebar uh you'd, attach the previous concrete by drilling into the previous concrete. That's there attach rebar into there and then you pour concrete into all of it, uh so yeah. That would obviously be extra work, but you know i've gotten to the point where i look at that, and i go really like.

Is that the worst that you could do on this this project? That's still going to be extremely profitable big deal like we'll deal with it if it comes up, but i mean you always have to remember: it's still that opportunity cost like it could have just taken the money that went into this, even though it sounds profitable. Put it in a tesla stock and would have done way better, but you can't know that, so what do we have over here? Uh, oh yeah, okay, and so here now, because they're like well that whole wall upstairs is compromised. This is total bogus. This is the way the house was built like this header was here when this house was built like this.

Well, they want us to take this header out and put in an engineered header, so this is going to be a little bit of a pain in the butt to take this thing out and and replace it and then throw some probably hold downs down on the Sides, but you know what he's just one foot in front of the other and you just get it done, but this is exactly why i try to stay away from the city when you can uh now. Obviously, if you're doing things that that require structural work, you should do it properly and get involved with the city, but a lot of this is would not be necessary if we were simply replacing the door upstairs and the home was the way it was originally built. All of this extra overkill, that's being done, is solely because the prior owner screwed up the, as they say, integrity of the upstairs wall, and now we have to do all this overkill work uh. You know, i don't want anybody to think when i'm like.

Oh, this is why you don't want to work the city, so you could like skirt around the stuff. No, no i mean if you have to do something and you want to do it right, do it, but our engineer told us like hey: this is overkill. You don't need to do this. The only reason you're doing this is to satisfy the city because they think somebody joined with it in the past.

That's it like. The house is totally structurally fine with this. The way it is right now, if anything, you made it beefier and stronger upstairs so, but again uh, it's not worth fighting the city sometimes, and you just uh, you bite the bullet and deal with it so uh. These are some insights on this property.

My expectation is now that we have permits on this we're finishing up on another project uh which will be done in about a couple weeks and then we're gon na knock this place out, maybe even turning it into an airbnb who knows. But there are a lot of options here. We could sell it, although, if we'd be selling it we'd, be selling it right in january february, maybe not a bad idea. I think we could probably get 2-2 for it, which uh you know.

If i put 300k into it, that's 1-6 minus selling costs off at the 2-2 call it 2-1 uh that'd still be a 500k upside, which is really really good. But again you have to balance that with opportunity costs, which i always say that, but i still diversify into real estate, because you never know you know stock value compressions they could. They could go flat for three years. We've had some insane growth so still like real estate, and it's a good thing to diversify into, but anyway, with that said, make sure to check out the programs linked down below on building your wealth.

Black friday, coupon code expires soon check out the links down below and folks, we'll see you next one thanks. So much.