BiggerPockets Real Estate Podcast - High-ROI “Value-Add” Renovations for Any Budget ($5K - $50K+)

Starting point is 00:00:00 I want to buy a rental property, but the numbers just don't seem to work. But what if I could actually change the numbers? It's actually possible. You do have options. There are things you can do right now to increase your property's value, generate higher rents, and turn bad investments into good ones. Keep listening to find out how. Hey, everyone, Dave here.

Starting point is 00:00:27 I'm the head of real estate investing at Bigger Pockets, where we teach you how to achieve financial freedom through real estate. Today we're talking about value ads, actions you can take as an investor to make your property more valuable. This can be as quick and easy as adding an accent wall, or you can do some moderate renovations to add an extra bedrooms, or you can scale all the way up to a full gut renovation. Today, to help me talk about what value ads are actually worth it and will deliver an ROI for you, I have Henry Washington with me. Henry's been doing value ad projects basically since,

Starting point is 00:01:03 the start of his investing career. So he's going to tell us which upgrades are actually worth it and how to identify which properties are good candidates for adding value before you actually go and buy them. Henry is also going to tell us one of the conventional much talked about value add ideas that's actually not worth it and one that he's stopped using on his own deals. So make sure to stick around to hear that. Henry, what's up, man? What's up, buddy? This is in my wheelhouse. I'm excited to talk about it. Have you always been a value ad investor? Absolutely. Like your first deal, were you already doing renovations and adding value?

Starting point is 00:01:40 Yeah, my first deal, we added value simply by charging market rents, which is one way you can add. Right. If they're under rented for their current status, you can do that. But yes, and then after that tenant, we did renovate that property. So we've been adding value since day one. Why did you choose this strategy of buying things that aren't necessarily up to their highest and best use and then adding the value yourself rather than buying something that's stabilized and just ready to go? Well, because it's called real estate investing. And investing is the key word, right?

Starting point is 00:02:19 Because if you're investing in anything, what's the basic principle, right? The principle is to buy low, sell high, right? buy the discount and then monetize at the higher value. And when I started researching, how do you buy at a discount in real estate? It's always synonymous with buying some level of distress. So that's how I got into it and then fell in love with it. That makes total sense. It's such a great way to make money. I admit I am a reluctant value ad investor. I always want to buy things that are just ready to go, even if that means there are less returns. I've done plenty of cosmetic rehabs.

Starting point is 00:03:00 I've done burs. I am learning how to flip now. But for a long time, I felt at least when I got started in 2010 and when I was buying properties, you know, last decade, it was kind of easy to just buy something that was not super complicated. And a lot of times the value ad that I would do was just kind of a cherry on top. It wasn't necessary for any of my deals to pencil out. But I am trying to learn more and be a bit more aggressive about value ad. And so I'm hoping to pick your brain a little bit more about

Starting point is 00:03:37 this day. And I think everyone listening will learn a little bit from Henry about where to focus your time, your money, your energy within the really broad spectrum of things that fall into the value ad bucket. Let's do it. All right, cool. So I want to want to start with just like easy stuff. Let's talk about low cost, easy things. If I wanted to, you know, buy something and put five grand into a property, let's call it a rental property, not a flip, because you're not flipping a house for five grand. Where's the bang for my buck going to come? Yeah. When I think about adding value, I think there's a couple of buckets, right? So adding value can be where you're doing something that truly increases the value, like the work that you do will have a direct impact on the value of the property.

Starting point is 00:04:31 Right. So that's thinking of things like adding square footage, right? Because now your cost per square foot is higher. That's things like adding bedrooms, bathrooms. Those things have a direct impact on the value of the house. But there are also things that may not have a direct. impact on the value, there may be an indirect impact on the value. And I like to call those upgrades perceived value. You can add perceived value to your property. So for $5,000, things that you want to think about

Starting point is 00:05:02 as a rental property are, what can I do that can make my property stand out from the competition? So you don't want to just go into this blindly and start doing things in your property. You want to look at what are the competing rentals in my market in this neighborhood and what features do they have and not have so that you can add. And so for that $5,000 price point, think about things like can I add nicer countertops? Can I add kitchen backslashes? Can I take a bathroom and take the plastic insert out and do tile to the ceiling? around that. All of these things don't necessarily add direct value, but they add perceived value. They add wow factor. One of the most inexpensive things that we do that helps us get better tenants at

Starting point is 00:06:00 higher rents is doing feature walls. So we like to take a room in the living room and use just a different paint color and some trim to create geometric designs. Yeah. And that feature wall didn't increase the value any. But when people walk in and see it, they go, ooh. Yeah. Right? They go, they go, I want to live here. I might be willing to pay a little more to live here than the place down the street because I don't have any of these features there. And so now I get a higher rent and I get somebody who has some ownership in that property. They're proud of it. They're proud to live there. They want to show their friends, right? And so now they're paying a different amount of rent. And so I would say the best way is for under $5,000 that we add value to rental properties is we do countertops,

Starting point is 00:06:48 back splashes, tile tub surrounds, and feature walls. You can probably do all of those things in a property for under $5,000. So what you're saying is direct value add is changing the functionality of the house, right? Like you're adding something that is measurable, another bathroom, taking it from a half bath to a full bath or finishing out a basement and adding a bathroom. That really changes like who's going to rent that. Right. If you're going from a two bath through three bath, maybe you're attracting more families or bigger families or that sort of thing. The other stuff, like you said, it's perceived value, but it's just it's design. It's desirability. It's not actually functional.

Starting point is 00:07:34 It's just people like it. Now, before we move on, you can sometimes add direct value. for under five grand if your property is set up for you to do so yes an example of this that we did recently this was in a flip but could have been a rental right and so what happened was we had a two-bed one bath house and that one bath house had a laundry room and that laundry room was very big big enough that it could have been a small bedroom this house also had a sunroom now this sunroom was not heated and cooled and was dilapidated. And so what we were able to do was to move the laundry into the sunroom. We finished the sunroom by just putting insulation in the walls and drywalling the ceiling because it was just kind of like an open beam ceiling. We added insulation and drywall in the

Starting point is 00:08:29 ceiling. We painted the concrete floor. We moved the laundry in there. And then we added a mini split air conditioning unit into that sunroom. So by doing that, we were able to, spend probably about five grand. And so we added square footage, even though it was already under roof, that square footage wasn't counted in the heated and cool square footage of the house because there was no air conditioning. So by adding a mini split, we added about 200 square feet to the house. And by moving the laundry into that room, we were able to create a third bedroom. And so that $5,000 allowed us to sell this house for $220,000 instead of $200,000. So I spent five and I sold it for an extra 20. So that's $15,000 worth of additional value for spending $5,000. And not that much work.

Starting point is 00:09:16 Not that much time. So if you have a property, if you're listening to this and you have a property and you're considering doing something like this, do you have a room in that property that is not under roof? Do you have a room in that property that could be a bedroom instead of like a dining room, right? People don't really use formal dining rooms. I like to convert those to bedrooms. I just did that in a property the other day. There was like a front little thing. I just put a door up It costs like $600. I'm getting probably $2.250 more a month in rent because of that. Boom.

Starting point is 00:09:47 Can you convert a garage? A lot of the time single car gar garages people don't use to park in. They use to store stuff. I have a couple of units in Joplin, Missouri, where there's single car garages. And when I bought the properties, every single one of the garages was used with stored stuff. No one was parking in it. Right. So we spend about five grand, convert the garage into a bedroom.

Starting point is 00:10:10 and now we get an extra $3 to $500 a month of rent out of each one of those units. This is really sort of the best advice because I think it's important for people to realize that this isn't luck. It's not like Henry bought this house and was like, oh, I found this sunroom and I can convert it. Like this is the stuff you need to be looking for when you're actually going to buy properties because anyone can theoretically add a bedroom. But if you're popping a top and taken off a roof and rebuilding that, that's going to be a very expensive proposition.

Starting point is 00:10:42 That's going to take a long time. Or you can find these properties that are set up for it. You know, those are good examples. I did something very similar with my short-term rental. I wanted a four-bedroom house. I needed that to get my revenue. All of them were super expensive. But I found a three-bedroom house that had like a 400-square-foot second-bedroom.

Starting point is 00:11:06 living room. No one was using it. And it's in a walkout, but it already had an egress window built. So I didn't even have to do that. It had a closet. It was basically all I needed to do is put up drywall, another bed, especially if you're new to value. These are the kinds of properties that you can really start to target. The other thing where I invest in a lot of places at basements and finishing them out is kind of a no-brainer. You look for ones that have the right ceiling height, that have a good foundation that have big enough windows for egress, like you don't want to dig out the foundation. But those types of things, like, that's just really easy types of value add that really have a tangible, measurable, proven way of adding value. Can I give people a list of what to look

Starting point is 00:11:55 for when they're shopping for properties like this? You absolutely can and must, but first we need to take a quick break. We'll be right back. I have an uncomfortable question. for you. If your rent collection drop to 80% next month, how long would your cash flow hold up? What about 70% for the next three months? Would your cash reserves cover it? I talk all the time about scenario planning. Smart investors don't just model the upside. They also pressure test the downside. This is even more important in a down market. And that's why I like Stessa's stress test report. It lets you model different rent collection scenarios, adjust expense assumptions, and instantly compare the results to your

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Starting point is 00:14:56 One of the first things you want to look for are look for homes that have bedroom and bathroom counts where the square footage seems too big for that bedroom and bathroom. Yes, yeah, like a 2,400 square foot with two beds. Yes, exactly. That's not right. If you've got over 2,000 square feet, two bedroom house, there is room to convert something to a bedroom. There is room to add some value. If you're looking at a 3-bed, two-bath house and it's got 2,500 to 3,500 square feet,

Starting point is 00:15:26 there's probably room. Look for properties that have sunrooms. Sunrooms typically are not heated and cooled, and you can easily add some drywall and add some flooring and add some insulation and a mini split air conditioning unit and you can get added square footage. No, sorry, I'm just laughing because this is, this is just bringing up my childhood. My dad did this where he like converted a sunroom to my bedroom. I just think he skipped the insulation and adding heat part because it was just freezing my entire life. And it was this was in New York. I was just always cold. There was never heat. I think he might have missed that

Starting point is 00:16:05 critical step. Yes. Yes, sunrooms, we have made a lot of money by converting sunrooms to heated and cooled square footage. And they're easy properties to find. It's typically called out on the MLS listings that they have those features. And so you can literally search for them. A lot of them are not heated and cooled. And yes, you can look for properties with basement units. And Dave is absolutely right. When you're looking at properties with basements, you want to make sure you check that ceiling height and check the egress size of the windows because you want to be able to legally get somebody in and out of that window in the case of an emergency for it to be counted as an actual bedroom. And then you can also look at properties with single car garages because properties with single car garages give you the option. You can convert those single car garages to bedrooms.

Starting point is 00:16:53 But when you're looking for that, you want to make sure you check the competing properties in that neighborhood because you don't want to be the only house with a converted garage. You want to make sure that that is something that is happening within the neighborhood. because if you're the only one, then your desirability goes down. My personal favorite these days that I've been looking for, and I've done this in the past, too, is I love a basement that is the ceiling height that has a separate entry. Oh, yeah, absolutely. Especially now with all the upzoning that's going on in areas, like you can turn places into second units.

Starting point is 00:17:24 Check the zoning, but the upside of adding a whole other unit is just enormous. And yeah, we've sort of gone on a tangent here. We started with five grand now. we're just talking about the best value. That's 30 grand, 40 grand, you know, something like that. But a whole unit, I mean, that's going to pay for itself in a year or two. That's an incredible return on your investment. So that's something I definitely look for. Same thing as an attic too, you know, similar to a basement. Like if you find an attic that is not going to be swelteringly hot and the roof lines aren't super weird. Yeah, for it to be inexpensive, you have to have access to that attic in a way

Starting point is 00:17:58 that's not weird, meaning you got some normal size stairs to get up to that attic and you don't have to build out a stairwell because that can be expensive, especially if you have to do it to code. And you don't have to dormer out any part of that attic. But I took a tour of a house yesterday that had an attic space that was ripe to just finish off fairly easily. Didn't need any dormers, didn't need to move any electrical or plumbing. It was just wide open space. And it had easy access. So there are opportunities to do it. I'm enjoying this conversation because I feel like it really resonates and sort of speaks to this this rant I've been on for two months now about like trying to find deals that are solid today and adding upside because this is just all upside right if you can find

Starting point is 00:18:42 a deal that's even decent that has any of these characteristics you're going to be able to turn this into a really good deal even if on paper even if you you know just look at zillow it's probably not going to look that great these are things that you're going to have to go identify yourself like go through the checklist that Henry just said, tell your agent that this is what you're looking for. Absolutely. Say, find me a 2,500 square foot place that has two or three bedrooms and I'm going to add more. Like, these are things that they can put into the MLS. This is a buy box that is very feasible, that is very achievable.

Starting point is 00:19:21 You just need to identify which value add projects you were comfortable taking on and then just go pursue them because these deals are out there right now absolutely out there we find them all the time before we move on i thought of one other less expensive value ad that's made me a ton of money particularly in denver is fencing in a yard oh so many people have pets dogs and kids and they want their yard fenced in this is a low cost thing that people will pay money for and they're not going to do it themselves so fencing in a yard is another really good one for driving up rents great but before we're But before we move on, are there any under $5,000, under $10,000 value ads that aren't worth it, that you've done and say, actually, that didn't give me an ROI at all? Things that I have not gotten an ROI on are supplying my own appliances like washers and dryers.

Starting point is 00:20:14 I found that cost me more money than it made me. Really? Even on a rental or is that on a flip? On a rental. Really? Yes. What I've learned is it is best to provide the functionality. but not to provide the actual appliances.

Starting point is 00:20:30 So people buy their own washer dryer? Absolutely. It was my property manager who actually had to pull a report to show me that it was more cost effective to provide the place for them, but to not provide them. I've saved so much money by now no longer supplying the washer and dryers. A lot of the times people would want to bring their own. And so I've spent the money and then I'm having to put these into storage unit somewhere. But most of the time, it's just maintenance and replacing these.

Starting point is 00:20:57 units can so much they're just so expensive i wonder if people also just take better care of them when it's yeah that's probably very very true that's a that's a really interesting one let's move on to some some more expensive ones so let's say if you're willing to buy something that's got a little hair on it maybe you're going to spend i don't know 25 to 50 grand what are some things in addition to adding bedrooms that you would consider doing yeah i mean this is the old tried and true like if you're going to spend 25 to 50 grand you want to make sure that a chunk of that is being spent on kitchens and bathrooms. Like, that is important. So if you're buying a house that only has one bathroom and you've got that kind of a budget, you need to see if

Starting point is 00:21:38 there is a place for you to add a second bathroom. Some of the ways that we have added a bathroom inexpensively, I have at least 10 times now have converted laundry rooms to bathrooms with the laundry in it. Yes, because the plumbing is already there, right? The plumbing is already there. Bonus if it's on a crawl space, because then it's really inexpensive to do because you can access the plumbing very easily. And so two bedroom, three bedroom, one bath with a laundry room, you can typically fairly easily turn that laundry room into a bathroom by adding a toilet and a tub shower and a small vanity. And then what we typically do is take that laundry and make it to where a stackable fits better so that it saves on the space. We have done this several times in flips and rental properties because that additional bathroom adds so much value and it increases the amount of people who want to live in that home because there is more than one bathroom and they could care less that their laundry is in there. What they care about is they've got an extra toilet and an extra shower.

Starting point is 00:22:45 I want to talk to you more about kitchens because I've heard some conflicting opinions about renovating kitchens. We do have to take a quick break, though. We'll be right back. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims.

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Starting point is 00:25:12 Curious if you qualify, just head over to hostfinancial.com and find out. Stop letting outdated lending practices hold you back. That's hostfinancial.com where your property's potential meets unlimited financing. Hey, everyone, we're back on the Bigger Pockets podcast talking to value ad. Before we left, I wanted to ask Henry about kitchens. So, Henry, I hear conflicting things here because in my experience, renovating kitchens drives rental value. I don't know about long-term resale value, but renters want a nice kitchen, most people.

Starting point is 00:25:47 I've also heard, though, like if you own a home, your primary residence and you're going to list it for sale, I've heard that you specifically shouldn't renovate kitchens. I've heard that it doesn't actually offer an ROI because people wind up wanting to renovate it themselves and your chances of like renovating it in the way that they like is low. I don't know. I've heard both. So I am curious what your opinion on kitchens is. I think people have grandiose ideas about renovating properties themselves, but they're never really going to do it.

Starting point is 00:26:18 That's probably true, yeah. So, no, I am the opposite. We are going to renovate the kitchen nine times out of 10. Now, the level of renovation will depend on the neighborhood and the comps, but we are almost always going to renovate the kitchen. And they're not as expensive to renovate as people think. I think people really get caught up in doing grandiose kitchen renovations, meaning they want to move it from one side of the house to the other. Or they want to do all new cabinets and build out a butler's pantry. They need a pot filler.

Starting point is 00:26:50 You got to have the pot filler. Oh, gosh. Yes, got to have a pot filler. If you stay within the footprint that's existing, if you can, it can be a very almost inexpensive upgrade that adds value. Because if you stay in the existing footprint, a lot of the times you do not have to replace the cabinets. And that's the most expensive part is coming in and getting a whole new design with all new

Starting point is 00:27:16 cabinets. Now, there are some situations when you need to replace the cabinet. Sometimes you buy a house and you've got the cheap particle board cabinets. it doesn't make sense to paint those. But a lot of the times, if you're buying value ad, you're buying an older home, they've got solid wood cabinets. The cabinets they had back then are better than the cabinets that they build, you know, brand new now.

Starting point is 00:27:34 Totally. Just solid wood cabinets. And so a lot of the times I find that if we just paint or stain the cabinets, put new hardware on them, new modern hardware on them, and you can even get new modern soft clothes hinges and make your old cabinets function like new cabinets. People honestly don't care because they look great. And even if you're hard up on wanting to do something new and you don't like, maybe the doors are old or maybe some of the doors are missing, you can just replace the doors and keep the boxes. I'm doing that right now in a kitchen on a flip.

Starting point is 00:28:08 New cabinets for this house would have run us between $7,000 and $10,000 because it's a big kitchen. I'm replacing all the doors for $2,200 and it's going to look brand new. So if you can save your money on your renovation because you're not changing the layout, then you can remodel a kitchen fairly inexpensively by painting the cabinets, getting a backslash. What's really cool about backsplashes is if you have a smaller kitchen, you can get a really high-end, expensive backslash tile because you've got a small square footage of backslash to put it in. So you can spend more money on a fancy backslash tile and get the ooze and awes because you're not putting it in. in a lot of places. Now, if you've got a ton of backslash, then you're going to have to back off a little bit on that and pay more attention to the design. And then countertops. Between those three upgrades, you can completely overhaul a kitchen and blow your competition out of the water

Starting point is 00:29:03 and really does add value because people want nice kitchens and nice bathrooms. Bedrooms are bedrooms. It's floors and paint and a window. But kitchens and bathrooms, that's where you wow people. That's where you make your money. Totally. I mean, when I go into a house, I look at the kitchen first. I don't know about you. Like, that's what, for living too, because I like to cook. You like to entertain. Like, this is where people spend time with their family. So you hang out. Yeah, you know, it matters. And so every time I think I've renovated a kitchen, it's, it's been beneficial and it's paid off for sure. All right, let's, before we get out of here, I want to just talk about the big, big stuff. Because this, all this stuff is super practical stuff that you can do. I am. I'm not a fancy value-ad guy. I don't do super hairy types of stuff. I've done all of this. It continue to do all this. It's really very practical for people, even if you're just getting started, especially if you're just doing a kitchen. If you're just doing a bathroom, you're working

Starting point is 00:30:04 with one or two trades. I think that's a really nice way to get started where you're not having to coordinate these massive projects. You're just working with a couple of people on a tighter timeline. And for me, that makes these projects feel a little bit less risky and a little bit more manageable. But let's talk about the big ones. You know, if you were going to buy something that really just it needs a gut rehab, like, first of all, should new people do this in the first place? Or is this something more for advanced, more experienced investors? Because I get this question pretty much every day. If you're going to do gut rehabs, you need some experience.

Starting point is 00:30:44 You need a partner with experience or you need to be working with a trusted contractor who is very experienced and can tell you where you're making mistakes. Because when you have a big budget and a big project, we can spend a lot of money doing things that aren't going to bring back the value. Yeah, it feels like the stuff that we've been talking about prior to the big stuff is all incremental. You're just looking for some upside. With gut rehab or buying something that's truly distressed, it can be sort of all or nothing. Sometimes you could really lose money. And so the risk-reward profile is totally different. That doesn't mean it's wrong.

Starting point is 00:31:23 But if you are just looking for some upside, if you're just trying to improve your existing portfolio, might not be worth it. I'll talk about some major things that you can do. There is a whole market for pop-tops, right? And that's where you go find a ranch-style home, single-level ranch-style home. And you literally cut the roof off and you throw a second story on it. And that way, you're adding bedrooms and bathrooms to the second story. And it's a cool niche because you're able to pay retail value for something and still

Starting point is 00:31:55 renovate that property and sell it for a much higher price point because you're literally doubling the square footage. But again, this is not something that you as a beginner want to do because the permitting and engineering process is going to be a challenge with this and you want to make sure that you're doing it the right way and that you're doing it safely and it can be very time consuming and expensive. Another way to add value you had talked about before and that is can you take a single family home and make it a multifamily home? This is my favorite. Multifamily homes right now in my market they sell for so much more than single family homes. If I were to go buy a single family home for let's call it 2,000 square feet, I'm probably going to pay between 250 and 350 for that property.

Starting point is 00:32:43 If that same property is a duplex, it's probably valued at 350 to 450. Yeah, the secret is out on house hacking. People will pay up for these things. They will pay up for it. You notice now in the descriptions of multifamilies, it's like house hacking dream or owner occupied, investor, you know, because it's true. You can pay more for a property. if it has a second unit. Absolutely. And that stinks when you're trying to buy a duplex, but when you're trying to sell a duplex, it's pretty great. But you can make yourself a duplex,

Starting point is 00:33:14 and that's by adding the value. And one of the ways you can do that is by taking a single family and making it a multifamily. Now, first and foremost, you need to check with the city and the zoning rules to make sure that your property is either zoned for you to do it or the city will allow you to change the zoning of the property for you to do it. But there's air quotes easy ways. to do it right now i say air quotes easy because they're not really easy but it's not like building a

Starting point is 00:33:39 duplex let's say you take a single family home three bed two bath 2,000 square foot house what you're looking for is a split wing house where the primary bedroom is on one side of the house and the other two bedrooms and bathroom are on the other side of the house well that could allow you to take that primary bedroom and section off that primary bedroom where you're putting maybe a kitchenette on one wall and you can have a one bedroom studio with a kitchenette. It's got its own bathroom. It's got its own entry. Or you pop in an entry on a side door there and now you've got a one bed, one bath unit or a studio unit. And you've already got two bedrooms in a kitchen and a living room on the other side. So it's really set up for you to make it a multifamily. You can

Starting point is 00:34:31 Again, you need to check on the zoning and you need to check on the neighborhood and make sure that you're not the only multifamily in that neighborhood. People are doing this all across the country, especially right now as ADU laws change. All right, Henry, this has been super helpful. I think we've addressed most levels of sophistication and challenge when it comes to value add. We've done easy, medium. Give us a pro level one, though, before we go. For people who are experienced and are willing to, you know, accept risk and work. Okay. Pro level. This is not for the fan of heart because you can lose a lot of money, but there are pro level value ads. And when you think about pro level value ads, I think about things like renovating single family homes and then selling them as commercial. Wow. Think about the busy streets in your area that have single family homes on them, but also some of those single family homes are dentist office or law firms. Right.

Starting point is 00:35:31 At one point, that was a neighborhood that then transitioned to commercial. And so you can look for where the city wants to build more commercial, where there's current residential and there's potential for you to buy a single family home. Change the zoning because the city will allow you to do it because they want commercial in that area in the future and then sell that house as a commercial property. There's an example of this in my local market. I actually had this house under contract. So I had a house under contract that I was going to live in.

Starting point is 00:36:03 We were going to buy it and then renovate it and then move into it because it was close to where my in-laws were. And the reason we decided not to do it is because one of the people on the planning commission is a friend of mine. And when I told her we had this house under contract, she said, well, we're actually going to expand that road. And so the city's actually going to come and they're going to take a good chunk of that front yard. And so your front yard won't be as big because we're expanding that road. and they'll probably do some commercial there in the future. So we said, you know what, we're not going to buy that house. Well, another investor in the local market went, bought the house, renovated the house beautifully, and then sold the house as a commercial property. So I had that house under contract for about $175,000. They bought that house, I think, for ended up being like $225,000. They spent maybe $100,000 or so on the renovation and sold the property as a commercial. property for a million bucks. Wow. Oh my God. That is pro level, but that is pretty awesome.

Starting point is 00:37:07 That is value ad, my friend. But it's pro level. You're going to have to have a lot of understanding of what's coming. You're going to have to do a lot of research. And there's some risk because he couldn't turn around and sell that home. After putting a hundred grand into it, I don't think that he could have sold it for a profit. No. As a single family home, especially knowing that the yard, they're going to lose some of that yard frontage. there's a bit, there's a lot of risk there. So you have to make sure that you truly understand and can sell that thing. And there's demand to sell that thing as a commercial property. But that's a great way to add value. Awesome. Well, thank you for your pro level advice here, Henry,

Starting point is 00:37:43 and all of your advice. This has been super helpful just for me and my own investing. And I would imagine for everyone out there who's looking for ways to make deals make sense right now, these are the types of things that you can do. You know, you can find deals where these opportunities are abundant. It just takes that little bit of extra work working with your agent to identify these things and gaining a level of comfort that allows you to take on these types of projects. But I promise you, I'm not handy. I'm not even good at this stuff. And I can make these things work. And so if I can do it, you can absolutely do it. Henry, man, thanks for being here. Thank you for having me, man. And thank you all so much for listening. We'll see you next time for

Starting point is 00:38:22 another episode of the Bigger Pockets podcast. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

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BiggerPockets Real Estate Podcast - High-ROI “Value-Add” Renovations for Any Budget ($5K - $50K+)

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