Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
are you a real estate investor and you're still struggling to get your very first deal because you simply don't have the funding for your real estate deals or are you a wholesaler and you're doing deals and you've collected some assignment fees but there's some deals you want to stay in and you just don't have the funding to stay in the deals or are you a seasoned real estate investor and you've done a ton of deals but you're just sick and tired of paying high interest rates or hard money loans and you just really want to get some funding for your deals with cheap interest rates well if you answered yes to any of those three questions don't go anywhere because i'm getting ready to plug you into the money right now [Music] well hello and welcome to another episode of the private money academy podcast i'm jay connor also known as the private money authority and your host here on the show well if you're brand new to the show you know or if you're brand new you may not know that i always have just amazing guests and experts that join me here on the show today is no exception but before i introduce my guest today i promised you just a moment ago that i was going to plug you into the money well what in the world am i talking about well again if you're a new real estate investor struggling to get funding for your deals or you're a wholesaler and you want to stay in some deals but you just haven't had the funding or you're a seasoned real estate investors and you want to do more deals but you're just sick and tired of high interest rates well i've got the solution for you right here today with a free gift i've just released my brand new book which is titled where to get the money now how and where to get money for your real estate deals without relying on traditional or hard money lenders and this will take you through step by step the five steps of how i was able to get over two million dollars in funding in less than 90 days when i lost my lines of credit all the way back to 2009 so the book is free just cover delivery you can claim your free copy at www.jayconnor j-a-y-c-o-n-n-e-r dot com forward slash book b-o-o-k and i'll get that uh autographed for you and rushed right out the door again that's jay connor j-a-y c-o-n-e-n-e-r dot com forward slash book also your reviews and ratings of the show mean a lot to me and i really need your help on getting this fantastic and amazing information and training out to as many real estate investors as we can so if you would take just a quick second like share subscribe rate and review i love those five stars reviews and uh that would mean a lot to me if you would help me out on getting this information out well my uh guest that i have today is a seasoned real estate investor in fact very very experienced with over 30 years of experience in the business and he has successfully created several businesses actually in the real estate interest industry that covers just a few of the topics that he's done is uh land acquisitions development management construction and big time renovations and rehabbing as you all know uh here in eastern north carolina my wife carol joy and i've been investing full time since 2003 and in our little area we've rehabbed about 450 houses and to have another expert come here on the show to talk about rehabbing and renovations is very exciting to me well my special guest personally owns over 1 000 properties all across north america and of course it won't surprise you that he's uh semi-retired from the day-to-day operations of his business so he's passionate about helping uh homeowners and real estate investors overcome their fears of house renovations and rehabbing i mean stop and think about it if you've never rehabbed a house you probably have got some trepidation and you know scratch your head about well where in the world should i start when it comes to rehabbing and such and my guest also loves to be actively involved in helping people like you reach their goals he's been written up all over the place with articles about his expertise for example he's been written up in the los angeles tribune yahoo finance the ritz herald uh belmont star et cetera et cetera so with that welcome to the show my friend and special guest mr van sturgeon hello van welcome to the show well i thank you very much jay for having me what a great introduction who is that guy that you just named off huh i know it i know it well everybody already wants to know where you're originally from with that such romantic and emotional and a passionate accent right well i i am uh i i'm a born and raised in chicago and then i spent half my life over there and then and then uh and i moved up to uh to toronto canada and i spent time over there as well so i'm a bit of a mutt i'm a mixture of a bunch of things right i got you so you are living now where well i i spent half my time in toronto canada as well as uh half of it down in miami beach florida okay so you're back and forth that is correct i i'm not a i'm not too keen on the on the winter on that snow in the winter all that kind of stuff i saw like those like those birds and you know that they take off those canadian geese i'm one of them that heads down south oh wow well are you ready to jump in i am sir all right well let's jump in well tell us what got you started in real estate well uh my story started i i i'm a product of the 60s and uh i was born and raised in chicago as i mentioned and um my parents uh we lived in a one-bedroom apartment with my little brother and what happened was uh my parents were trying to save up their money to buy their first home their dream home and ultimately what ended up happening was they discovered that the apartment building that that they were renting from uh was actually gone up for sale so instead of buying their dream home they just they put down their down payment borrowed a bunch of money from friends and family and became landlords instead of homeowners and that's how got me introduced introduced into the into multi-family or into real estate um we we purchased this apartment building and um what happened was in the late 70s things kind of turned kind of changed for the worse as uh you know interest rates rather climbing 18 20 percent the whole iran hostage situation was occurring at the time the economy was in the dumps and this building that we had purchased that was fully occupied all of a sudden uh we were suffering anywhere between 40 60 percent uh vacancy and so as a as a family we had to do everything we could to try to survive survive and hold on to that investment and so we ended up doing everything ourselves whether it's painting plastering cleaning toilets and god knows how many toilets i've cleaned in my life whatever it took to be able to hold on to that building and survive we did as a family and so ultimately we were able to get through that early part of the late 70s early 80s and it was a great investment that my parents made um eventually went off to university graduated and i could have gone off to become a lawyer but i decided that i wanted to get it back into construction renovation that was really my calling i really enjoyed it and so uh i i broke the bad news to my parents because they were hoping that their their you know their boy would have become you know that you know that type of cat with the three-piece suit and alligator shoes um i wasn't a lawyer i i decided i wanted to get into general contractors so that's what i did i opened up my business over there in chicago and as it slowly but surely over a period of time i started to grow my business and uh was being successful i was lucky in that i got in at the right time but i kept jay i kept running into the same cats so same individuals uh these real estate investors who would buy properties renovate them flip them buy properties hold on to them uh create a portfolio and that's when that's when i started transitioning to doing that as well so i had my general contracting business it was growing and prospering but i also started doing uh flips and then moved on to actually holding creating a real estate portfolio so that's that's where i have been i got you so your rehabbing and renovation experience um have you focused over the years more on rehabbing single-family houses or commercial properties such as you know apartments be honest with you i've renovated uh and i still do through my uh through my renovation companies also the restoration company uh i do both i do uh multi-family all the way down to commercial properties to single family homes um so yeah so i have a diverse experience i've done literally i've done thousands of renovations on residential and commercial as well so there isn't really much i haven't done in real estate gotcha so i know you can speak from experience when i ask you this question and i know you can speak from observing uh other people so when it's when someone's a new real estate investor from your own experience and from other people you've observed what would you say the biggest challenges are uh when they're working on their first uh rehab and you know in second part of that question is where do most people mess up based on your experience sure well there's a variety of things that i see new real estate investors uh mistakes that they make in in their first um purchase and look we're when we're buying property we're not buying these beautiful uh emeralds or diamonds we're buying diamonds and rough these are ugly ducklings that we got a great deal hopefully we've got a great deal on and ultimately we need to infuse some type of renovation repair rehab in it in order to raise value um and ironic the ironic part about the whole process is when you take a property you literally got to decrease the value of the property by ripping it apart throwing more money into it to be able to reach the back to the least the very minimum that you purchased it for but then raise the value and so through that whole process there's a lot of fear and there's a lot of apprehension that real new real estate investors have because you're you're talking about literally thousands of dollars tens of thousands of dollars being spent and there's a lot of apprehension through the whole process because you're literally tearing things apart so one of the things that i find that new real estate investors what the biggest mistake that they make is really in trying to they don't sit down and actually write down what their goals are what is it they're looking to accomplish with this particular property you can't go uh willie wally all over the place on it you actually have to sit down and write down what it is you're looking to accomplish if it's a rental property are you going what's the rental rate you want to get you want to get eight to 100 200 a month if you're looking to flip it how much money are you looking to make out of that out of that flip you got to write that goal down and because it is through that goal the whole process of planning and managing that renovation rehab is going to flow through that gold and the actions that we're going to take the steps that we're going to take are going to flow through that goal so once you've established that goal we got to go out there in the marketplace and validate it often i find new these new real estate investors don't go out there to really do their due diligence to find out you know if they're looking to rent that apartment out or a house out for 1200 a month what is it that's in the marketplace that they need to create or need to do to their property in order to be able to get that 1200 or if they're looking to flip it what is it that they need to do and you got to get out there you got to do so you got to get out there and you got to knock on doors you got to look at it and there's some some of you can do off the internet but you also need to go and visit properties to get a sense of what the neighbor is like and what is it the value you need to put in to your property or to get to that goal um once we've been able to do that the final really thing that i really want to get into with you jay is i find that new real estate investors don't write you know they don't get into writing a scope of work and a scope of work in my field where i you know on a commercial side there isn't a job that i've coded on that doesn't have a scope of work written where it details exactly what it is that needs to be done to that property it specifies the appliances the coloring everything is associated with that renovation or rehab in the resident on the residential side very rarely do i come across people actually going through that so that's one another huge mistake that a lot of new real estate investors make is they don't go into the minutia and actually detailing what it is they're looking for yes so you mentioned a moment ago uh setting a renovation goal in other words what is it you want to accomplish for this property do you recommend setting that renovation goal before you go under contract before you close what through the when what's the timeline through the process that the real estate investor should go through the renovation goal or establish the goal well both actually i think that's in the process of you trying to determine whether a property is a deal you got to have a good sense of what's out there in the marketplace uh and compare that to what market value is but once you've actually acquired a property put it on contract then you really then you really gotta fine-tune that goal and really make sure that it is that if you're going into the proc into the property looking to flip it then you need to actually go out there and validate that what the numbers are and what is it that you need to do this property in order to be able to get to that dollar value so if you're looking to make 40 000 on that flip well you got to get out there figure out what it is that you need to put in this property get to that 40 000 yeah you bring up a really really good point because you know with every property at least as far as single family properties go we always have multiple exit strategies that we can choose from right so for example case in point as to what you're talking about van i personally went and looked at a house last night at 6 30 p.m uh after my wife carol joy and i just flown back in from ketchikan alaska time to go look at houses right so i went and looked well my contractor had already been and looked and if i'm going to flip the house and get top retail it's going to take almost 30 000 well the numbers aren't going to work to do that so my other strategy in looking at the property last night was well wait a minute can i buy it subject to the existing note using the seller's mortgage and sell it on rent to own and not touch the house can i just sell it out on rent to own and not do it and when i went and looked now i can get the numbers to work we just got to negotiate with the seller for them to take our offers so i just wanted to give a little color to what you said part of that renovation goal knowing what your strategy what your exit strategy want to be it's always very helpful in my experience to have backup other exit strategies you can look at instead of just being pigeonholed into one you know like if my only exit strategy is i gotta make this house look absolutely drop dead gorgeous and sell it retail in the multiple listing service if i'm only looking at that exit strategy i'm gonna miss out on some deals would you agree with that uh oh absolutely and uh it goes to show you experience of what you just said uh goes a long way absolutely i never go into any purchase property without having multiple exit strategies uh on that property or whether it's on the renovation side or whether it's an actual acquisition itself and how to structure that like there are situations where i purchased property where for whatever reason i got it i've gotten too far into first for something for some reason and then i've had to transition into actually creating something some other value for example finishing a basement turning that into an in-law suite where i can rent the basement out and have and rent the other the upstairs uh separately adding additional rental income these are the types of things or if there's additional land on that property sovereign selling that that that parcel of land adding uh adding value to the whole transaction those are types of things that you're talking about i totally agree you gotta do that you gotta be you gotta have uh multiple exit strategies excellent now you mentioned the phrase a moment ago and you said you wanted to dive into this and i'm really glad you do because this is something that particularly all new real estate investors that are interested in rehab need to hear and that's the scope of work so first of all van tell the audience what's the definition of scope of work let's not assume that we're all speaking the same language so what is scope of work what does a scope of work look like and then after you define it please tell everyone how do you go about creating the scope of work sure well a scope of work is an actual document that is created uh and it is within that document you'll have pictures drawings diagrams specifications of exactly what it is that you're looking to accomplish in this renovation rehab of this property on the commercial side typically architects interior designers engineers are the ones who create the scope of work and then it goes out to tender and then once contractors or trace people who receive that document there are specific sections within that scope of work that they read they digest and then they submit their quotes and estimates based on that scope of work on the residential side hardly that's ever the case and in fact the scope of works i've really seen are really really checklist from what i've seen out there and they're not really truly scope of work scopes of work that can be and should be used in the process of of of getting contractors and trace people to put their estimates or quotes together and send them to you ultimately if you don't have a document how is it that you expect contractors and trades people to be able to price out work associated with your project if they don't have if you don't have something in writing like literally i've gone to uh i've i've had conversations with new real estate investors where they've gone through the process of contacting 20 some odd contractors and trace people and only three or four show up and of those three or four that show up only two or three give them quotes or estimates on the work and the reason for that is that good general contractors good trace people really want something in writing to be able to know exactly what it is that this client of theirs or potential client wants to accomplish within their property nobody wants to get into this whole gray area of trying to figure it out along the way because there's no money in it i speaking as a general contractor who's done thousands of renovations will walk away from people if they don't know what they're looking for because i know the name of the game for me to be able to profit the most is to have high turnover quickly go into a project complete it move on to the next one move on to the next one move on to the next one and by virtue of me being bogged down and having to hand hold a person figure out what it is they're looking to accomplish in this renovation rehab is not good business for me so if i if i see somebody who is who's got a document who's got you know a scope of work associate it goes exactly what it is they're looking for in terms of the the renovation rehab of their property then i'm more inclined to be interested in quoting it and being aggressive on that quote because i want to deal with professional people and oftentimes a lot of new real estate investors crash and wonder why is it that these contractors trace people don't call me back or price out or give me quotes well because they're busy and they want to deal with they want to move they want to deal with professionals they want to they don't want to waste time holding you by the hand of trying to figure things out so that's the reason why a lot of people have difficulties especially nowadays with this over with this heated real estate market they can't find trace people or contractors to quote on their work so i strongly encourage people to create a scope of work now jay you asked me about how to create the scope of work um we don't have enough time to really get into detail how to create one but it's it really you got to go through the process of figuring out what it is that you want to accomplish in the property you need to do some due diligence with regards to the types of colors and paints and specifications of appliances you got to put those in also you got to take photographs and maybe do little sketches of what it is that you're looking to accomplish in this renovation rehab and you put it all together in this document and you create subsections in that document for the electrician the plumber or painter whoever it is that you're looking to have to do work on this property so they can clearly go to that section see exactly what it is that they're looking to accomplish or you're looking to accomplish and they quote on it and you'll be amazed at how many people trace people and contractors will quote or bid on it because it all the information is there i'm excited to have as my guest today van sturgeon expert and renovator and rehabber of thousands and thousands of properties and uh if you're curious about what a scope of work really looks like my best guess is when you contact van and his team they will be able to show you what a scope of work looks like you can contact van sturgeon at www dot van sturgeon v as in victor v-a-n-s-t-u-r g-e-o-n dot com again that's v as in victor a-n-s-t-u-r-g-e-o-n dot com bandsturgeon.com now van once the scope of work is put together you're now ready to put it out for bid um i think we got the cart before the horse uh it's been my experience it's always best to have some relationships in place or at least some contacts in place instead of me now having a scope of work and now i'm running around where in the world am i going to submit this to right so at whatever point of the process what is the best way to go find good contractors that you want to submit your scopes of work to well i i i'm pretty sure that you would tell folks the same thing i'm going to tell you that before you get rolling on this you've already created a sort of your power team where you create within the areas that you're concentrating and finding properties do investments you have relationships with real estate brokers motors brokers insurance brokers all those types of people that you need to have on your team and from it's amazing once you have those relationships with those people they should probably provide you and will provide you with references of people that they've done work in the past with also jay you know they're uh we got these beautiful things called rias you know these real estate investment associations uh a lot of great people in them you know if i came across you i'm pretty sure that if i have chatted you up and had a conversation with you you would love to be able to share your wisdom and experience that you've had for over so many years just like how i would and so these are great opportunities for new real estate investors really to educate themselves and really create relationships with people who know something to join these associations you know there's facebook groups there's a lot of places where you know birds of a feather flock together and go to these places and you can touch you can create relationships and also the same time you will learn hey i need electrician do you have anybody oh i'm running into a stagger with a plumber he's telling me i'm do looking to do this what do you think and and those are the areas that's where i would start i would never i hear the i would never go to my local home improvement center and stand out their hand and try to you know write down fellow numbers or find people that way that's just the wrong way to go that's the only way for you to be able to do that is if you're a seasoned a veteran if you're an expert you know exactly what you're doing like you're surely i could pick out people like that and and and immediately i can put them on a job site and determine whether they know what they're doing or not know what they're doing but if you're not at that stage yet you cannot go down that route you really should focus your efforts on finding bona fide individuals that will handle the work and you will you'll have less you know problems going that direction absolutely back to the scope of work for a second there van uh when you get a bid from a contractor um do you require the general contractor to line item their bid or are you satisfied with the bottom line well if i have a detailed scope of work i'm i'm fine with them just giving me a line item ultimately i what i tell people is that i would love to have a general contractor trace people include all of their material and in their price and just give me the bottom line i don't want to get into going running out to buy a pail of paint for people or or a box of tile that they run short it's amazing when they look after the material when they bring it on site how how they're you know how efficient they are and you don't see things sprawled all over a place uh loosey-goosey when they're paying for it so i when starting out that's what i recommend once you become experienced and seasoned then you can turn things around and maybe you might supply material for your contractors trace people but in the early stages when you're starting off i strongly suggest you just get the bottom line you have a detailed scope of work which is included as part of the quote and contract that exists with your contractor trace person and then you and you get a bottom line number and that's you don't that's all move on when you're brand new as a real estate investor what percentage deposit up front should they expect to hear from qualified general contractors say for their first deal or two well i my my i get this question asked often and my what i suggest to people is try to minimize that dollar amount as least amount as possible and then as far as if their that money is going towards the purchase of materials i would even go to the extent of purchasing the materials and having that under my name some somehow structured in that way legally you want to do that because then you retain ownership of the materials instead of in the owner's ownership of that general contractor trace person but i try to minimize the amount of money put down and i understand that uh there's been a growing trend especially now because of this real estate market how heat it is and and everybody's running running running that uh more and more people are looking for deposits especially these trades people and contractors but i try to minimize that of dollar amount in fact not give any like it's it none of these guys like when you walk into mcdonald's yes you're going to give your ten dollars over to to to purchase that hamburger and you step aside and wait for it to be made but none of these guys are are mcdonald's so this whole notion that me paying upfront uh for for these contracts or trace people to reserve them or for them to go to my job is something that uh i try to avoid as least as that's and i've i encourage people to avoid as best they can they don't need to get uh 50 i've heard some outrageous sums of money 50 80 percent uh up front and that's no way to do business because guess what um you've lost control jay you've lost control when you've overpaid your contract or trace person you've lost control because then they can jerk you around they can go now you know they started your job and they got another job that they got to run off to they're going to go run off to do that one and they'll tell you they'll be there they'll be back at your place in a couple of days it turns into being a couple of weeks and who's paying for that but you've already paid them so you've got they got you by they got you in the headlock and you got no wiggle room if you if you got them if you've got them coming to you every week or two weeks with an invoice to pay them trust me i got control they're gonna show up on my job site they're gonna finish their work and then they're gonna they're gonna go take advantage of somebody else's good graces but they're not gonna do that with me so that's part of the seasoning and experience that you and i have that fortunately you know you can't buy that in a book you can't you know download it a youtube video and watch it these are types of things that i can tell you thousands of stories that i come across the situations where you know it's just experience so absolutely well you know when uh when you talk about maintaining control one way that i learned the hard way years ago is i never write that final check to the general contractor that final draw until my realtor who's going to be selling that house does a walk through and does their punch list then we get the final punch list and then we pay that final check so speaking of these contractors van um what is it that a real estate investor should do to make sure that the contractors that they're working with are qualified and what are the qualities that you want to look for in a contractor well obviously when a contract when you come across a contractor or a tradesperson um hopefully you've got them from references that you've received from from people that you trust but even in those situations you still need to go out there and you need to do your due diligence you need to go visit uh their job sites of a current job site that they're working on get find out what their condition is and also hopefully you can get a hold of that principle uh of the person who you know that they were doing work for to find out how this trades person contractor how are they are they are they are they showing up on time are they happy with the service that they're being provided and that's where you really need to start to figure out whether this is an individual that you want to do business with or you don't um ultimately you gotta it is a process where once you've been able to find those uh contractors and traceable that you want to do business with then ultimately the process of trying to manage them is is easy because if you have a scope of work in place and you know the details associated with everybody's supposed to do then you can then create a flowchart and create you know when it is if they're supposed to arrive and not arrive and it flows beautifully i don't know if i've answered your question sure so do you recommend that real estate investors manage their own renovation and if so how do they go about doing that if they've got a general contractor hired well i i'm going to i'm going to suggest that people don't hire a general contractor and in fact i suggest that they plan and manage their own renovation uh without a general contractor and they could save anywhere between 30 to 50 on the whole total renovation rehab budget like i i don't if you uh go follow the step-by-step process that i've just sort of touched on right now with you you don't need a general contractor you can handle this all on your own uh it's just a matter of figuring knowing how to plan and manage it and there's thousands of dollars that tens of thousands of dollars that you can save and i think it's you know you starting off as a real estate investor i think you need to go down that road and do it yourself because not physically do the work jay i'm not suggesting that at all but hiring the right you know the plumber the electrician the painter directly you eliminate the general contract tracking as a middleman and you're dealing directly with these folks and you're ulta and and and uh you get the most you get the best bang for your buck and listen at the end of the day jay you gotta you gotta have that skill set just as as important it is to find a great deal uh it's also really great to be able to have plan and manage your own renovation and minimize the rental budget as least amount as possible because that's more money in your pocket and if you don't have that skill set it's a problem because guess what tomorrow you're going to get a phone call and it says hey i got there's a great deal on this property you walk well you you get over there and it's a you know these properties we're looking at are ugly ducklings and and if you don't have a semblance or an understanding what it is what kind of work you need to do in that property how are you going to be in a position to be able to snap that deal up you're going to call up your contractor friend you're going to call up your your the property inspector to come over there by time they show up that property is long gone so you need to have that skill set if you're going to be a successful real estate investor be able to walk in determine what exactly what it is you need to do what the value is what the how long it's going to take and bang that and then make a decision whether you want to buy that property or not yeah uh when i started out back in 2003 uh that year we only rehab three houses our first year into it from 2003 up until just a few years ago um i've just been working with two different crew leaders managing my own innovations through my project managers uh but then a few years ago here in north carolina and i'm sure this varies from state to state here in north carolina if a rehab is going to cost 30 000 or more and it's not your primary residence they will lock you up if you don't have a general contract or ask me how i know but anyway uh so i do both uh adhering to the law here in north carolina uh and again i know it varies from state to state 30 000 or more you've got to have a general contractor involved overseeing all that work under 30 000 you know you can use your own crews but what i love about your advice van is whether you're using general contractors or not you need to know what those line item costs are buy the tradesmen if you're getting plumbing done what's that if you're getting interior paint done what's that exterior paint what's that uh lvp flooring whatsapp otherwise you're gonna be taken to the cleaners van wow it's been exciting to have you here on the show parting comments to the audience well i really appreciate the time that you've given me and hopefully there's folks that will learn something about what i've uh what i've been preaching um if they want to learn more about myself and the process of planning and uh managing a successful renovation rehab i encourage them to go over to my website advancedurgeon.com i've got a bunch of information there from articles i've written podcasts i've been on and also i've got a free training video that that's on my website that people can watch to be able to give them a good understanding what it is that they need to do to plan and manage a successful renovation rehab whether they use a general contractor or not it really is a good uh process to get really to understand be able to really uh navigate the trouble the difficult uh waters that everybody goes through uh when they purchase their first or second property and they gotta do a substantial renovation rehab to it that's awesome van thank you so much for joining me thank you very much for having me jay you betcha there you have it folks uh connect with van sturgeon at vansturgeon.com so glad you enjoyed uh or joining me here on the episode i'm jay connor the private money authority wishing you all the best here's to taking you to the next level and we'll see you right here on the next private money podcast show [Music] you
Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority
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Secrets To A Successful Home Renovation With Van Sturgeon & Jay Conner, The Private Money Authority