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Practice English Speaking&Listening with: Expanding on Profits

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I'm Danny Perkins.

I'm Drew Levin.

I'm a contractor, and he's a real-estate agent.

We own 50 rental properties together,

and each one of them is making us money.

We met in college and quickly became best friends...

You should see this beautiful bay window.

[ Chuckling ]

...and then business partners.

So, we got two good options.

We buy properties in great locations

that are in a little bit crappy shape.

DANNY: Well, this scares me off the bat.

DREW: And we fix them up,

and instead of selling them, we rent them out.

DANNY: I look at it from the contractor's standpoint.

Drew looks at it from the investment

and the tenant's standpoint.

Look at this. Oh, this is so pretty.

Instead of selling a property for a quick profit,

renting it long-term is the way to go.

And that's why we renovate to rent.

-- Captions by VITAC --

Closed Captions provided by Scripps Networks, LLC.

I've got three properties lined up to go take a look at.

All three of them look great

and could be really good additions.

These days are the best.

We get to house hunt,

look at different opportunities, different investments.

Hopefully one of these guys work.

The first property is a four-bedroom, two-bath.

It's listed at $129,000,

but it's a foreclosed property, so...

Which means it's gonna need a lot of work.

Yeah, it's gonna be in rougher condition

but could have a lot of potential value.

Roof is completely shot.

But there could be opportunity.

I know.

First thing I notice is that the place

looks like a total piece of crap.

To me, that's a good thing.

Either we have to replace the windows or paint them.

All the paint is flaking off.

When most people are looking to buy a house,

they're looking for a beautiful home

that they can envision themselves living in.

When Danny and I are looking to buy a house,

we're looking for a place

that we can build a lot of equity into

and make a huge profit off of.

Oh, yeah. The blue paint.

Yeah. Brings back memories.

This is like a college dorm right here.

Yeah.

We got a small kitchen, not a lot of space.

We want to paint the cabinets to match the existing.

New countertops, tile everywhere,

new appliances -- around $7,000.

First bathroom. Whoa.

Yeah, that's a --

This is a total remodel.

Yeah. Ugh.

Well, here's some potential.

DREW: I wonder if there's some bedrooms back here. Yeah.

Egress window.

DANNY: So you got one bedroom down here.

Got a finished living space. We put some flooring down.

Another bedroom.

This basement is exactly

what we're looking for as investors.

There's already a layout for a couple of bedrooms,

and figuring that we can get $500 per month per bedroom,

this place is looking pretty promising.

DREW: This property is a three-bedroom, one-bathroom

listed at $125,000.

But it only has 1,500 square feet.

That's small.

Really small.

But it's on a 6,000-square-foot lot,

so it could have potential.

Nice-looking house. It's got nice curb appeal.

Yeah.

Hopefully it's just as nice inside.

Definitely well-maintained.

Yeah. This isn't bad.

DREW: Let's take a look in the kitchen.

Okay.

Well, this isn't the highlight of the house, either.

No.

[ Both chuckle ]

It's a little bit of a smaller kitchen.

Yeah.

We update it, we put a new countertop,

put a backsplash here.

Uh-oh.

What's that?

What's the "Uh-oh"?

It's got an S-trap drain right here.

So usually that's an indication that it's not vented.

When Danny says, "Uh-oh,"

that usually means it's gonna cost us something

and it's not gonna be cheap.

We're probably gonna have to update all the plumbing.

Really? Speak my language to me. What's that gonna cost?

Probably another $5,000 for plumbing.

Ugh.

[ Sighs ] Small bedroom.

Real tiny.

Is there a closet?

Uh, no, there is not a closet.

Yeah. This makes it illegal.

So it's either gonna be an office,

or we're gonna have to build a closet.

We can't have this be just wasted office space.

This would be wasted space. Right.

The only other place to go is that way.

I mean, if we're okay with having a smaller porch.

Well, how much you think that's gonna cost us?

Probably in, you know, the $7,000 range.

It'll probably get us another $600 a month in rent,

and that pays for itself, essentially, in a year.

Absolutely.

Okay. Bedroom 2.

At least it has a closet this time.

Yeah, this one's got a closet.

You said it has three bedrooms, though, right?

One of the bedrooms probably has to be up on the top floor.

Which means you have to walk through here

to get to the top bedroom.

There's not another entrance back there?

No.

You can't walk through a bedroom to get to another bedroom.

As of now, we have two bedrooms on the lower level --

both not bedrooms.

Ugh.

DREW: It's pretty rare for us to see a listing

that says it's got three bedrooms and one bath,

and then we walk into the first two bedrooms,

and they're not even legal bedrooms.

Whoa! It's pretty big.

DREW: Oh, this is nice, but I don't know

that we're really maximizing the use of this space.

I'd really like to see this

as more of a five-bedroom and add a couple bedrooms.

You did say there was a big lot out there,

so we can take a look to see if there's enough room

to add an addition.

Look at this.

Yes! Finally!

Something positive.

Some space! I like it!

What are we looking at from just an overall budget?

We have a $50,000 addition.

$50,000, plus, you know, with the front part of the addition.

Got to do some plumbing work.

We're probably looking in the $80,000 range.

DANNY: With a budget of $80,000,

we can nearly double the square footage of this house.

But that's a lot of cash and a lot of work.

DREW: This next property we're heading to

is a four-bedroom, two-bathroom,

and it's listed at only $110,000.

Wow. That's low.

Yeah.

It's a foreclosure,

so it's probably gonna need a lot of work.

All right. It doesn't look too bad.

No. For the low price, I'm actually really surprised.

This could be it.

[ Chuckles ]

Yeah, now you can see why this thing

might have been priced at $110,000.

DREW: This place is disgusting. It smells.

What is that?

Uh, there's probably something dead.

I'd say you're gonna have to convince me

if we're gonna go forward with this one.

Let's hold our breath and take a look at it. Let's not rule it out yet.

DANNY: If we walked away from every house because of a smell,

we'd have zero properties.

Look at this. Look at this.

The size actually isn't bad, but I'm fearing

that we're getting close to the source of the smell.

This one needs a lot of work.

Looks like dog poop on the floor.

Let's check out the bedrooms,

see if they're actually decent size,

then we can make a decision.

DREW: Danny's able to see it through a contractor's eyes,

and he's got great renovation vision.

Got a bathroom.

Total bathroom remodel.

So I give him credit for taking me through this entire place.

Small bedroom.

Another tiny bedroom.

And I blame him for wasting my time.

That thing was absolutely a dump.

Not only is it a dump. It'd be a big money pit, too.

So I think we can rule that one out.

Well, we have two properties left --

the property that has good bones and no backyard.

We can buy it for about $125,000

and could easily renovate it for $20,000,

putting us all-in at $145,000.

That one, I'm guessing, would probably cash-flow

several thousand dollars a year.

The property with the big backyard but no bedrooms

is a big project.

We could buy it for $110,000 -- $80,000 renovation budget --

which would cash-flow somewhere around $10,000.

But it's a lot of work.

It's gonna be a lot of work.

I've known you for a very long time.

Mm-hmm.

And I am confident you and I are on the same page here.

I know what you're thinking.

I think I know what you're thinking.

[ Laughs ]

DANNY: I can't waste any time, so I'm gonna start demo right away.

Get the big-boy equipment in.

MAN: Hold on! Hold it!

We've seen a house with great bones and no backyard,

a house with a huge backyard but no bedrooms,

and a house with decent bones but is a total dump.

I think we're reading each other pretty well on this one.

Yeah.

We're gonna go with the house with...

the big backyard.

The big backyard.

DREW: We went with the place that has no legal bedrooms,

but a big lot to expand onto.

Let's do it.

We bought the house for $110,000.

We're renovating it for $80,000.

When completed, we should be able

to get $10,000 a year in profit.

We only have 10 weeks to finish this project

and get it rented out.

If we miss our deadline, we'll start missing out on rent,

and we're gonna have to go out of pocket to make that money up.

DANNY: This 10 weeks is gonna fly by.

I can't waste any time, so I'm gonna start demo right away.

Do you have any plans for the kitchen?

Yeah.

One thing to keep in mind --

we're keeping the cabinets, but we are adding a farm sink here.

So we're gonna have to modify these cabinets a little bit.

DANNY: In the kitchen, we're getting rid of the old countertops

and we're making way for new ones.

You got it? 1, 2, 3.

We're also knocking down the wall

between the kitchen and the dining room...

Okay, we're through!

...and adding a breakfast bar.

Poked a couple holes through the wall.

Just wanted to see where the electrical ran.

We've got a bent pipe right here we're gonna have to cut off.

So we're gonna have to do a little bit more work

before we get this wall down.

Next step, let's get going on the addition.

All right.

What we should do is pull this lattice work off here,

see what we got underneath.

DANNY: When the house was first built,

they built a porch without footings.

And since we're gonna be adding a closet onto this porch,

we definitely need footings to pass code.

Let's get this guy out of here.

The foundation guys are gonna be happy with us. We've prepped it for them.

Now they can do their thing and put the footings in.

One of the major costs of this project is the plumbing.

Just the kitchen alone is gonna run over $2,000,

and if we don't do this,

we don't meet code, we can't rent it out.

I have some new venting, so we got to rip all this down.

DREW: Kitchens are always a big selling point for tenants,

especially when we're adding bedrooms,

meaning more roommates living in this house.

The kitchen really is gonna need to stand out.

DANNY: I'm spending a little bit more money

on the finishes in the kitchen, so I'm taking Drew tile shopping

so he knows where the money's going.

So, we have three things we got to choose.

We've got the kitchen floor, the backsplash,

and then we got the shower surround.

In the shower, I want something glass.

I like these glass subway tiles.

I'm definitely in on these.

And we can do something with white

and then have some sort of colored stripe.

This is nice, too.

Yeah.

I like these patterns. Right.

You like the expensive stuff.

I like the stuff that's gonna look good.

DREW: Danny's got a good eye.

I've liked everything that he's chosen.

I think he's got a little bit of expensive taste,

which I'm a little concerned about.

I saved a lot of money by reusing the cabinets

and reusing the appliances.

We're making up the difference by doing

a little bit of higher-end finishes.

A big part of staying on budget is staying on schedule.

The new closet off the bedroom is going according to plan.

Wow. Looks good.

This thing went up quick.

The footings are in. The framing is up.

And now the fun part.

I'm gonna take down this exterior wall,

and this is gonna be the new door to the closet.

We're four weeks in, and things are going great on the inside.

Now I'm ready to start the addition on the outside

to build two bedrooms and one bath.

You think they'll be able to dig the hole by today?

I think we should get it all dug today.

Depends on the depth of the frost,

but I think we'll get through it pretty easy.

All right. Good.

There's snow on the ground. The ground's frozen.

It's gonna be a fun afternoon for the guys.

Get the big-boy equipment in.

Any time you're dealing with extreme temperatures

and large equipment, there's always gonna be risk.

Hold on!

I'm nervous.

This is definitely the time where things could go wrong.

It's a tight driveway.

Got to be very careful with the neighbor's house.

There you go.

Before we can start the addition,

we got to rip down that existing porch.

MAN: Hold on! Hold it!

This is not good.

Everybody alive?

I have a concern that we may be pushing the budget.

MAN: Hold on! Hold it!

Pull a little easier trying to come down or something.

We're pulling the back of the house off.

CHRIS: Change the angle of the demo.

Pulling it straight off

is starting to pull the back of the house loose.

So we're gonna come down.

Everybody clear?!

Clear!

DANNY: There we go.

Everybody alive?

DANNY: We're dealing with additions.

We're dealing with risk. Drew gets nervous sometimes.

I'm gonna give him a call, settle him down, tell him everything's all right.

Hey, bud. How you doing?

DREW: What's up, pal?

I wanted to give you an update. We were able to start demo.

We only had a little bit of an issue

when we were ripping down the porch.

What kind of issue?

The wall and the ceiling of the kitchen

was separating a little bit, but everything went well.

Hopefully we won't have any more issues going forward.

At least the whole house is still together.

Otherwise, that would have been a very painful day.

DANNY: During the winter, you have to give yourself

a little bit of a buffer time

due to the frozen ground in building a foundation.

But we had some decent weather.

We were able to do it within a couple days.

I'm really pleased about that.

The walls are up. The ceiling's in.

We're matching the existing siding to complete the addition.

I'm really pleased with the addition.

Look how -- This thing went up so quickly.

The bottom floor has a new bedroom and a new bathroom.

We built a new hallway so we can access the existing staircase.

We got the stairs figured out so that you didn't have to

walk through this bedroom to get up to the stairs.

On the second floor, we added a brand-new bedroom.

Now that the framing's up,

it's on to mechanicals, insulation, drywall,

and then to the fun stuff.

I can start tiling the bathroom.

We're installing a glass subway tile.

I want to make a big impact so renters absolutely love this.

So, basically, we're gonna have this subway tile

surrounding the entire section

except for that we're gonna be putting a brick pattern

of this bronze going all the way up.

In the kitchen, I'm laying down

a travertine floor, which is very durable.

I've got a couple hours of this.

The tile will be down,

and we can start setting the cabinets.

If we plan on having five people living in this house,

we need more cabinets and countertop space.

We're adding upper cabinets and a breakfast bar.

Today, Drew was stopping by and checking on the progress.

We're a little bit further along than he's used to.

So I hope he's pleasantly surprised.

What's up, pal?

DANNY: Hey.

Place is really coming together.

What do you have your hand on over there?

You don't like this beautiful sink?

That's beautiful. It's really nice.

[ Laughs ]

Is it too nice?

You know, I actually got a really good deal on it.

We were able to keep the original cabinets,

so we added some new just 'cause we knocked down that wall.

Gosh.

But we got a really good deal on this.

The theme of this kitchen is stone.

We got the travertine, sealed floors,

you know, nice stone, exposed sink.

And then the backsplash has some stone and glass to it, as well.

This looks incredible.

I want to show you the bathroom and the bedroom over here.

The next thing that a tenant's gonna want to know is...

closet space.

Not scared for you to see this.

Oh, wow! Full walk-in.

Yeah. I'm gonna show you the bathroom.

You'll be impressed.

I love the tile design.

Isn't it cool?

It's very nice.

Yeah.

I have a concern that we may be pushing the budget

with a lot of the finishes that I saw in there

that are quite nice.

We'll be close.

If you pull this one off on budget

and you've done all these great high-end finishes,

it's gonna be a huge win.

Yeah.

I've got a good feeling.

All right. My man.

Now get out of here so I can get back to work.

Yes, sir.

We'll take a look inside.

[ Whistles ]

Oh!

The hard work is done... for Danny.

[ Both chuckle ]

And now it's time to get this place staged and rented.

We went from three illegal bedrooms to five legal bedrooms

with a beautiful remodeled kitchen.

Added a bath.

Walk-in closet.

Yep.

On budget.

We have one more problem to figure out.

Need to get it rented.

Need to get it rented so we can pay for this place.

I haven't heard any oohs or ahhs.

I'm very anxious.

So am I.

Can you picture yourself living here?

Today is the day that we find out

if all of our hard work is gonna pay off.

I'm feeling great about this property.

I think we've got ourselves a really nice place.

We were walking through here.

There were zero legal bedrooms.

Yeah.

Now we've got five.

There was one horrible bathroom.

Now we've got two really nice ones.

The bathroom that we added off the back

looks like a hotel bathroom.

Got a gorgeous kitchen.

I didn't think this kitchen was gonna be workable.

It was just so small.

But knocking down this wall, having this little peninsula,

adding the bar stools over there --

The total transformation -- exactly what we wanted.

It's perfect.

I'm glad we did the upgrading with some of the finishes,

with the glass backsplash and some of the travertine floor

and this beautiful sink.

I'm glad we did that and didn't go over budget.

It was a good gamble.

Yeah.

So, hopefully it'll pay off.

Hello. How you doing? Drew.

Hey, guys.

I'm Danny.

Maria.

DREW: We have four different groups of tenants coming in.

Nice group we have here. Okay.

Hopefully somebody's gonna end up taking this place.

It's a five-bedroom, two-bath house.

We just recently remodeled it.

Brand-new kitchen...

brand-new bathroom...

...and we actually built an addition on

and added two new bedrooms.

It's $2,550 a month.

Well, take a look. Take a tour.

We'll be in the other room. Let us know if you have questions.

Today's gonna be very, very, very telling

for the future of this property.

We need to get it done today.

This is cute.

WOMAN: Wow!

MAN: This is a big closet.

That closet is really big.

That's cool.

Oh, the bathroom looks lovely.

MAN: Wow.

I like the color scheme.

Look at the tile.

I like the spaciousness of this kitchen.

Yeah, the kitchen's really big.

MAN: Oh, wow.

That's the best part of the kitchen.

I know.

Danny and I like to be hiding out in the corner...

Ooh, nice sink!

...spying on them to see what all their reactions are.

I'm very anxious.

So am I.

I just want to get this place rented.

Yeah, me too.

I'm not so sure about the cupboard color.

WOMAN: I love the color!

Really?

Yeah.

MAN: Yeah, okay.

WOMAN: Yeah.

Let's move on.

Here's the bathroom.

All right.

Ohh, I like it. I love the color in here.

MAN: Kind of narrow stairs, though.

Here's the other bedroom. Tiny.

This one's a little smaller than the last one.

WOMAN: Yeah, I'm not so sure about this one.

It's a little small.

I haven't heard any oohs or ahhs up there.

It doesn't work.

MAN: Yeah, it doesn't work.

I'm not getting a good feeling.

No.

DREW: I don't know if it's just the wrong groups

that are looking at it, but I can tell you right now

things aren't going well.

So? What'd we think?

Ohh. It's kind of big for all of us.

Yeah, it's a little big for only three of us.

How'd the property look?

MAN: It was okay, but, I mean, doesn't really fit our desires

of what we're looking for.

Can you picture yourself living here?

The living room's a little small for us.

This is gonna maybe be a little bit harder

than I thought it would have been to rent.

Getting anxious. Getting anxious.

I think I need my energy up for this next showing.

Oh, one bite?

I'm feeling like the day just can't get any worse

and we're not gonna get this rented.

[ Knock on door ]

Oh, here they are.

And then...

Hello!

...a nice group of girls come in, all smiles and giggles.

How's it going? I'm Drew.

Rachel.

Hi, Rachel. I'm Danny. Very nice to meet you.

Zoey. Becky. Stephanie. Jodi.

So, I'm not gonna remember anybody's names.

Oh, this room is nice!

Wow!

I like the colors a lot.

The blue is really nice. The color's coming through.

Whoa.

There's so much light in this room.

I really, really like that.

Yeah.

This is going really well.

This is nice.

Wow!

This is a nice room.

This is so big.

Oh, my goodness.

A lot of good comments.

Good comments.

You guys like it?

Yes!

That's great to hear.

High five.

[ Laughter ]

[ Sighs ]

Big relief.

If it is something you guys are interested in,

the next step would be to fill out a rental application.

Then if all is good, we just sign the lease.

Great!

Ooh, I'm so excited!

[ Laughter ]

At the end of the day, we were able to pull it off,

and we got a group to rent the place

at our asking price and for the 1st of the month.

[ Whistles ]

Whistles and thumbs. Whistles and thumbs.

[ Whistles ]

Wow! Wow!

That was as good as it can get.

$2,550.

My man!

DREW: We bought this property for $110,000.

We remodeled it for another $80,000,

putting us all-in at $190,000.

After expenses, this property will profit $10,000 a year.

Plus, I think we've put a little equity into this place,

and I think we'd be able to sell it for at least $50,000 profit.

But that's not our game.

We're here to hold on to it and rent it out.

Projected, on time, on budget.

Projected, expected, and delivered.

We did it.

The Description of Expanding on Profits