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Renovations: You Can’t Afford To Get This Wrong

Are you disciplined in your pre-purchase inspection of a home? 

In this article, we feature a conversation from an episode of The Evernest Real Estate Investor Podcast, all about renovating your rental property. In the conversation, co-hosts Matthew, Spencer, and Gray welcome the Evernest Renovations Manager, Craig Bengston, to get an inside look at what every serious investor should be doing during their due diligence period. 

You’ll discover the major issues he’s found over the years that have completely busted deals that initially looked like a home run. If you want to listen to the audio recording, check it out here

Enjoy!

Brief Introduction

Spencer Sutton: Today, we want to talk about renovations, we want to talk about repair, and maintenance, we want to talk about everything that you’re an expert at. Before we dive in there, why don’t you give our listeners a little of your background, what you do at Evernest, your history, how you got in the business, just shed some light on that? 

Craig Bingston: I’ve been in the housing business for quite a few years, mainly on the design side, up until about five years ago when I was invited to start a firm with a good friend of mine. We were an aggregator of single-family homes. A lot of single-family houses in about six different markets. 

We were buying houses in Birmingham, and at the time, it was GK Houses (now Evernest) that managed our property. And then we transitioned that portfolio to a sale, and my first call I made when we transitioned that portfolio was actually to Matthew Whitaker to give him an idea of what was going on with the underlying hope that they had a place for me at Evernest and sure enough, they did. 

Matthew Whitaker: When you called, I was hopeful that the call was you wanting to come work with us. So knowing what you did not know at the time that renovations were a pain and essentially a point that a lot of our owners were getting caught in, which I think is happening across the country right now. A Lot of people are able to buy a lot of homes. Obviously, leasing homes is pretty easy right now just because of the demand, but everything’s hitting caught at the rental phase. When you called, I was pretty pumped that you wanted to work with us, help us, help our clients get more houses, push through faster. 

Craig Bingston: It’s a process of buying a house, renovating it, and making sure it’s renovated to the standard that we want.

Role with Evernest

Spencer Sutton: What exactly do you do on the Evernest team? 

Craig Bingston: I am the Brokerage Manager in charge of renovations. I will work with individual investors up to our institutional investors helping them renovate a house that they’ve purchased through our brokerage team. We are also at this time doing some more detailed maintenance that investors need through the brokerage arm of it as well too, not just turns, but little lower corrective maintenance that wasn’t done when the house was purchased and HVAC work, electrical work, and plumbing work too. So through my contacts and experience, I’m able to delegate and drive some of the maintenance. 

The Renovation Process: Things To Know

Matthew Whitaker: And so would love to dig into our process for renovations, how you help. Our goal is to help investors understand this process a little better, shed some light on what a renovation is actually like, and some things to look out for throughout the value add process. 

Craig Bingston: The best piece of advice I have is to do a thorough pre-purchase inspection once you have the house under contract and that pre-purchase inspection can be a detailed inspection. This could take anywhere from an hour to as many as four hours, sometimes days. There are times that I’ve had to call in my plumber or electrician to dive deeper into an issue that I might have uncovered while inspecting the house. So having those days under contract before the contract goes firm is very important to you. Whether it’s a seven-day, 10 day, or 15 day inspection period, we really need that time to get it scheduled and get it done.

What is the Typical Inspection Window?

Spencer Sutton: What is the typical inspection time? Is it typically around 10 days? 

Craig Bingston: Typically around 10 days. Some cash buyers now because cash is king, they’re diminishing days down to seven days just to be in front of the line for the seller, tends to be the more important thing just getting in and getting out, making sure the numbers matched to what the house was virtually underwritten for. 

Matthew Whitaker: If you think about it from the seller’s perspective though, they had this fear that you’re going to draw up their house, especially since a lot of these are, like you said, virtually underwritten. So the speed with which we can get out to houses or your renovation manager get out of the houses. Really there are two types of inspections, right? There’s what is this house going to cost to fix up? And then there’s also a detailed home inspection. 

Home Inspection vs Pre-Purchase Inspection: What’s the Difference?

Matthew Whitaker: Can you talk about which one is first and how best to handle both of those as we push them through to close? 

Craig Bingston: I typically will be there before the home inspector would be there. We want to see if the renovation is going to warrant an extra fee of having a home inspector come in and do the official home inspection report that they’ve been trained for. Not saying that my inspection isn’t thorough. It’s just a double-check on what I saw. It’s worth a few extra dollars even if you don’t buy the house because you might save on the house you bought before and you might have seen something that was hidden and not foreseen in a pre-purchase inspection such as utility plumbing. 

Matthew Whitaker: This is a really a peace of mind inspection. You have the renovation manager that goes out and underwrites the house very similar to basically against the budget that we created virtually. And then you have peace of mind inspection just to make sure that nothing gets missed. 

Estimating Rental Budgets

Matthew Whitaker: How often do we know the rental budget is within a few hundred or a few thousand dollars when we’re underwriting on a computer? 

Craig Bingston: You could be pretty accurate because there’s a lot of media out there available for people and a lot of experience and a lot of spreadsheets that have been built that calculate just about everything. You can make it as easy as a per square foot price, whether it’s $10 or $15 or $20 per square foot over the average of what you’ve renovated a house for, or you could dive deeper, look into pictures that have been provided to you by the seller, what’s on the internet through Zillow or realtor.com. Or just Google walk the neighborhood and walk down the street virtually looking at the houses that are in the neighborhood and the size and the years. And just the experience of seeing what has come up in your life.

Matthew Whitaker: One of the things I would add to that is the reps that a good renovation manager has had, they can look at a house from the outside or even look at pictures on the inside and say, “Well, I see that old carpet. I know I’m going to have to pull that out. There are probably hardwood floors underneath there. I’m going to guesstimate that that’s 1200 square feet of hardwood floors. I know I’m going to have to paint that. That house has a square footage of X.” And so basically you’re just backing into the numbers by using square footage, using what you know, what you’ve seen in that area, getting pictures of the HVAC. You could see the roof from the outside and get a pretty good idea of what you’re going to spend on that house. 

Spencer Sutton: That’s what we used to do. I mean, Matthew, when you and I were wholesaling houses, it was just eyeball. We were just eyeballing everything and saying, “You know what? This is going to be about $20,000 worth of work.” But we were literally looking at these properties and walking them. So it’s different now, especially with a lot of out-of-state people. They need that peace of mind. And obviously, as we’re representing buyers, we definitely want to make sure that we’re giving them accurate numbers. Yeah. Not that you don’t want to get it 100% right. But virtually estimating a property, obviously, you’re not going to get it down to the dollar.

What Blows Your Renovation Budget In Terms Of Expenses?

Matthew Whitaker: I’d be interested in your thoughts on this too, Craig is as long as you get the systems right, in other words, you don’t miss a roof repair or replacement, or you don’t miss an HVAC or major plumbing or major electrical pull. Yeah, as long as you don’t miss the big-ticket items, having general numbers for painting, you might miss it by a hundred bucks, but it doesn’t blow a budget. 

Craig Bingston: What blows a budget is missing an HVAC system or missing that the house had central air, but it never had central cooling, which I’ve missed before in the past it’s a lesson learned that the ductwork for the heating system is a lot smaller than the ductwork for a cooling system. So missing the ductwork that needed to be installed is a pretty big mess that could cost you a couple of thousand extra dollars right there. And that could break the cap rate. I mean, we’re working on very tight cap rates from the investors they’re trying to hit and if you’d miss that on a renovation bit, you’re going to mess up the cap rate unless you get to push the rent up a little bit. 

Suggested Reading: What You Need to Know About Repairs and Maintenance

Property Inspection Process

Matthew Whitaker: Craig, when you’re going and looking at these houses, talk about the process that you go through. You pull up at the house and just walk us through a little bit of the process, get through it and underwrite the budget for the house. 

Observe the neighborhood

Craig Bingston: The first thing I notice in the neighborhood that I come into is I will actually drive around the neighborhood before I even stop at the house. I’ll locate the house, drive by it, see if there are any burnt-out houses, anything that would raise a red flag. If there are too many cars in the driveway on the street means that this is a street where not a lot of people are working during the day. Just observing the culture of the neighborhood. 

Once You Gain Entrance Into The Property

Craig Bingston: And once I’ve gained entrance, whether it’s tentated or not, or vacant or full of leftover furniture from the last tenant, I actually walk the house first. 

I’ll walk it for two reasons. Number one is to see if there are any major disqualifying factors of the house that would eliminate the house from anybody’s purchase. Something that you can see right off the bat and that’s going to save me three or four hours of time instead of going, “Oh my gosh, I walked through the house and the back of the house is burned out,” which has it to me one time. Number two, I walk the house for safety. There are houses that are vacant that sometimes have people that are staying in them. They’re not supposed to be in there. So I do really do it for two reasons. And it’s the disqualifier end for safety. 

How To Work The House During An Inspection

Craig Bingston: In the inspection process, I’ve gotten down to a little bit of science on how I do it and how I work the houses. 

While outside the house

I’ll work the house from the outside. I always work in a clockwise rotation of the house. Start at the front, go to the left side, go to the back of the house, go to the right side of the house as you’re looking at it from the front. So working around the house in that manner will always help me with the order of pictures that I’ve taken. Things that I’ll notice. I’ll start at the water meter. I’ll go to the gas meter. Then I’ll go to the electrical meter, verify that those are on. You really can’t do a thorough inspection on a house without any of those on. You can guess at it, but guessing is never the best answer for that. So it is imperative that we do have utilities on, and there are some municipalities that’ll turn on utilities for a few days for inspection processes. So you can call ahead and verify that, get them on for a home inspection. But usually, I let the brokerage team make sure that they are on. 

Craig Bingston: Other things to notice outside are in the house on a slab, or is it on a traditional foundation? If it’s on a traditional foundation, can you see any cracks in the foundation and where the house is shifted? 

There are different communities and you could be two blocks away from a house that has a good solid foundation and two blocks away, the ground shifts and it’s a regular occurrence in the neighborhood. And typically you could see that in the houses as you drive by, you’ll see patches paved on the foundations or new windows next to old windows because they’ve shifted in rogue. 

So just be observant of what you see when you first walk up the house. 

Matthew Whitaker: Managing in multiple locations, it’s pretty interesting because some communities have issues with foundations like Birmingham, a lot of Texas-like places have challenges with foundations, but some communities don’t ever have real problems with foundations. So it’s just very specific to the community. 

Craig Bingston: When you have a foundation problem and you identify it and you identify it before you buy the house, you could really budget quite accurately, if you wanted to get somebody in there to adjust the… If it’s on a slab, you could cut holes and put peers in there, and lift the slab up. 

If it’s budgeted right and there’s enough in underwriting, you can do it and you can make a very good house, and that does help in the future that you have warranties in these neighborhoods from a certified foundation specialist. 

It is expensive, but I’ve had good success with the contractors I’ve used when I’ve done foundations. 

Matthew Whitaker: And if you buy it on the front end with the idea that I’m going to fix the foundation and essentially the seller pays for it, then I totally agree. I’ve actually lived in a house where we had to have about, 12, 15 grand of foundation work. 

And I mean, once you did the foundation work that thing’s not moving that thing down to a science. And so I would never say don’t buy a house with foundation issues. I think people that come from areas in the country that don’t have a lot of foundation problems, it freaks them out a little bit, but places like Birmingham, places like Texas, when houses are built on side of hills, that pressure builds up on the hill and the houses will. And at Texas, it has a lot to do with soil and the expansion and contraction of the soil. But again, don’t ever let foundation issues stop you from buying it. Let’s just budget it on the front end. 

Spencer Sutton: You typically can get a pretty good discount on the house with found foundation issues because it will freak out 80% to 90% of the people who are interested in buying. Definitely, the retail market steers away from it. 

Craig Bingston: For sure. And the seller knows they have an issue. They’re just hoping you don’t find it. That’s their whole goal. 

So doing a thorough inspection there. When I’m walking the house, I’m going to be looking to see if there is air conditioning, condensers outside, identifying them, taking a picture of the serial number, doing a serial number lookup on my phone to see how old the condenser is. If it’s older than 2010, it’s most likely an R22 system, which is an obsolete refrigerant. So we’ll definitely budget to replace that. 

Matthew Whitaker: Talk a little bit about that. R22 is basically, they stopped making it, right? 

Craig Bingston: They did. They were really expensive… If you can buy R22, you’re going to pay a premium for it because are some people that are still selling it, but they’re holding onto it. A 10-year-old system’s going to be too old for a rental house anyway. The renters will go in there, they’ll keep the house really cold, they’ll work it, they don’t typically change the filters enough. 

So you get a little bit of wear and tear that way. So you do want to have a newer, more efficient system for a rental house to keep the maintenance down, and identifying that again, at the beginning is pretty darn important. 

What About The Roof?

Matthew Whitaker: So you’ve gone your tour around the outside of the house. What about the roof? Do you take a ladder with you and crawl up and look at the roof or do you do a visual inspection from the ground? And then once you do that, what are you looking for?

Craig Bingston: I have learned from past mistakes that I get on every single of every single house that I will inspect. I actually invested in a pretty good telescoping ladder that’ll hold my immense weight and get me up on the roof. 

And that’s the other key is that walking around on top of the roof, and you can make a visual inspection and say, “That roof looks great. It looks brand new,” until you walk on that roof to find out how firm the wood is underneath those shingles, or getting up there and seeing that they did not replace the old shingles, and they just put new shingles over the top. 

It’s hard to identify without getting up there and peeling back a couple of layers of the shingles to see that. It’s never a good idea to put shingles on top of other shingles per building code. You can do it, but I would never recommend it in an area where you get the amount of rain that we get down here in the south. 

Spencer Sutton: I bought houses that have so many layers of shingles. It’s insane. The older houses are in different parts of Birmingham. 

Craig Bingston: I did a house that had six layers of shingles on it. 

How Does The Weather Affect The Roof Of Your Rental?

Matthew Whitaker: So you can do it and you can do it once or twice on top. But at some point the water, the amount of rain we get, and then also the heat in the south for our southern markets. 

Craig Bingston: Heat and wind and pine needles. Wear and tear. The pine needles will get up there. The wind will blow, the pine needles get wedged underneath the front of the flaps and water will travel in the path of least resistance. So if there’s a way for the water to get into the house, the water’s going to find its way in. 

Matthew Whitaker: And if you think about colder markets, like Detroit and Columbus and Toledo that are up in colder climate weather, I mean, the winter is just as hard on a roof as the summer is. 

Craig Bingston: Certainly. You’ve got snow and ice sitting on top of that house for months on end. It’s going to heat up and melt underneath it and heat up and melt heat up and melt as the day goes on. 

That’s why doing a good attic check is important in the colder climate, as well as the warmer climates. Insulation will definitely help lessen the wear and tear on any electrical plumbing or HVAC system, just to keep the pipes warm, the electrical conduit protected. It’s not as important, but everything helps. So make sure you get up in the attic after you’ve been on the roof too, to see if there’s any hidden damage there. 

Some of the pitfalls I’ve found as I’ve looked up in a roof and I’ve found char marks underneath the roofing, that I didn’t know that there was a fire in that house. So people will cover up some problems. They’ll cover it up with paint. They’ll cover it up with boards that have been cut to fit between the rafters. 

You just have to look, you have to know what to look for and that’s what experience we’ll do for you. 

Matthew Whitaker: And every house is not like that, but you just want to make sure you’re not the one in 20 or the one in 30 that is like that. 

While Inside The House

Spencer Sutton: So let’s walk inside. And so I would imagine you walk in the front door or the back door.

Craig Bingston: I walk in the front door, I start in the living room and I go from the living room to the bedrooms and I work the house in a clockwise manner. Typically you go to the left, there’s going to be a bedroom for some reason, they always tend to be on the left on the entry. It just happens that way. If not, I continue to go on that clockwise motion, whether it’s a family room, a kitchen or a garage, or any of that. 

The inside of the house is really not the hard part. It’s pretty cut and dry. Every homeowner or investor that you work with will have a standard that you’ll know that they’ll want to renovate it to. And that’s usually paint, brush nickel, doorknobs, and half dome lights. It’s really standard in the investment community that you put on their renovate to rental standards of the area. And all the contractors will know that. I do spell it out for them. 

The only thing that really changes is colors. And the reason why investors change the colors of the walls is that they want them to look different from the other investors. And for me, having a different paint color than normal was just an easy way to check, to see if my contractors are doing their job. If I have a tan wall instead of a gray wall, that’s pretty identifiable that they painted that room. And if the trim isn’t white. It’s kind of a sneaky, dumb check-in balance because contractors are always looking for a way to make money. And we’re here to make sure that they do the scope of work as described. 

Where Can You Save Money On Updates?

Matthew Whitaker: I think two places where you do spend a lot of money though, on the head side are kitchens and bathrooms. 

So talk about if you’re updating to the rental standard, what are you looking for and where can they save money? Where should they spend money just to rent the house fast, make sure it holds up to the wear and tear of a rental home so it stands out in the neighborhood. 

Craig Bingston: I’ve always had the thought that the house is rented by the female of the house. So getting a nice kitchen and a nice master bedroom and bathroom are where I really start and start spending the money because that’s what rents the houses is the decision maker that picks the house. They want to have a nice clean area. They want it to look clean and you want to renovate a house to where the renter thinks that this is the kind of house that they would want to buy if they were buying a house. 

Whether it’s a high-end house or a low-end house, they should be renovated and painted to the same standard. You might not use the same materials, but paint is paint. It’s just colored glue. 

Kitchen 

Matthew Whitaker: Let’s say I walk into a kitchen, are we doing a lot of marble countertops? How often are we replacing the cabinetry? What are you looking for there? 

Craig Bingston: I try and stay away from replacing the cabinetry. It gets expensive and it really digs into your renovation time. I’m going to look underneath the kitchen sink. 

I’m going to see if I have to replace the wood underneath there or if there’s been a lot of leaks underneath there, identifying those issues up front, making sure that there’s no constant leak or a pan underneath the pit trap, or mold-like substance looking underneath there just to see what’s been going on, opening up every cabinet to see if there’s any hidden damage. Most of the cabinets that were built years ago were, are built pretty well. 

They might have 18 coats of paint on, but you scrape them down a little bit. You put a little bit of new paint and some new knobs on them and they look brand new and they’re really good quality. Now the countertops, I would love to be able to put granite in every single house, but cost-prohibitive. 

Sometimes it’s twice what, or even sometimes two times as much as there’s a laminate countertop, you can go to Home Depot or Lowe’s and pick it up. So it’s really a budget constraint. 

If you can make it on the budget, you’re going to get a bump in the red just with granite. Some people have told me anywhere from 45 to $50 a month. 

Spencer Sutton: And it really depends on the area. You got to look at the other houses in the neighborhood, what are they renting for? What kind of countertops do they have? 

Craig Bingston: That’s true. But if you can afford them, put in the better quality, because you’re not going to have to replace them in a turn. You could put a hot pan down on a granite, or quartz countertop and do very little damage to it, whereas if you did that on laminate, you could leave a burn mark on there and you replace the whole cabinet for a four-inch burnt mark. 

Bathrooms

Matthew Whitaker: What about bathrooms? You said, especially focusing on master bathrooms, what are some things that you can do in the master bathroom to create value for the residents? 

Craig Bingston: Well, what we’re going to find is when you’re buying these older houses, some of them do have the pink, the blue, and the peanut butter-colored tile that was popular in the ’50s and ’60s. So it could still look good with those colors in there, but you want to make sure that the tiles aren’t cracked, there are no dangerous edges, or if it’s been epoxied over the top. And epoxy is a tricky product. 

And if the person that’s epoxied over the top just to change the color hasn’t done it right, it’s going to peel off and it’s going to be a mistake you don’t want to make too many times. 

Matthew Whitaker: That’s one super frustrating thing is when it looks good, they’ve just done it, and then a few months later, it starts to peel off. It’s just really frustrating. 

Craig Bingston: And that’s one of those things, you get what you paid for. 

You go to Sherwin Williams, you buy a good epoxy kit instead of going to the big box stores and buying the half-price kit because it is truly a half-price kit. So if you’re going to do it, you need to identify that in the scope of work, you need to make sure that they understand that’s what they’re going to be using when they’re renovating the house. So it will make a difference. 

And the other thing is to turn on every single faucet and every single room that has one, fill up the sink or the bathtub, and then pull the plug and see how fast that water drains. That’s going to be a good indication of how good or bad your system is. If the house is on a slab, it’s not going to be really easy to identify the plumbing material, unless you open up the wall or if the walls open up behind a sink. But the old galvanized and cast iron drains will get clogged a little bit easier than the newer systems, the PVCs that we’re using now. 

So check how long it takes to drain because honestly you don’t know how the house performs until you move tenants in there, and they’ve got two or three kids and two adults living in the house and they’re using the plumbing. And you want to do that two weeks later when they moved in to set up my plumbings. 

Matthew Whitaker: You do make a good point. Well, not just the drains, but also the sewer line going out to the mainline at the street. A lot of the markets that we’re in were built with either clay or galvanized. And at this point now they’re 60, 70, sometimes 100 years old, those are starting to fail. 

Sewer Line

Matthew Whitaker: How do you make sure that you don’t buy a house where you immediately need to replace the sewer line? 

Craig Bingston: Due diligence, looking to see if there’s a cleanout out in front of the house because they didn’t put cleanouts in the houses originally. If you see a cleanout, it’s most likely going to be a PVC cleanout where you can unscrew the cap and you can literally look down in there and see if there’s any water retention in there with a flashlight. 

Or if you can’t, you can hire a plumbing contractor or a specialty company to come out and do a digital scope of the house, and they’ll take a camera. It’s a fiber-optic camera. They’ll put it down the drain, they’ll identify any obstructions or any roots that are growing in there. And again, you could budget per foot and you can see how deep you have to dig that line because the deeper the line, the more money that’s going to cost to get done. 

Craig Bingston: Once you put in a new drain, you should have a completely working plumbing system, unless there’s anything underneath the slab that you didn’t identify on the inspection. 

The other thing, the other material that Matthew didn’t mention about sewer lines is in Jackson, Mississippi, where we’re going, they used to use a product that was basically rolled at Asphalt. It was paper material. That always has to be replaced. You can identify that and you see it. You don’t even have to go two feet into a system. If it has it there, replace it. Just know you’re going to have problems if you don’t.

Matthew Whitaker: Each market is uniquely individual and obviously hiring somebody that is well aware of all the issues that you can run into per market. Like we were just on with Rachel and Columbus, we talked about the rate. So it’s like each market has its own unique flavor that you’ve got to make sure you’re hiring a local professional to knock out these things and look for these things. 

Suggested Reading: 11 Easy and Inexpensive Upgrades to Improve Any Rental Property

Working with Contractors

Matthew Whitaker: Craig, you mentioned one thing, which I think is important is just being very specific with your contractors about specs. In other words, like what products they’re going to use. The last thing you want to do is hire a contractor and have them use really cheap paint or you talked about the epoxy. 

How do you communicate with a contractor and tell them what product you want them to use? 

Craig Bingston: Well, if there is a specific product, whether it’s asphalt shingles and you want to do an architectural or three-tab identifiable product that you put in the scope, you want to put acceptable colors of shingles. 

You don’t always want to limit them to one color on the roofing because right now availability is key. If they have charcoal and you want charcoal, use it. But if they don’t, you want to be able to let them have an option that you let them pick what works for the color of the exterior of the house, because you just want the job done when it comes to that. But you don’t want to have blue roofing on a pink house. 

You just want to make sure that they do something that is within the scope of work. The other specifics that you’re talking about are stainless steel or white or black appliances. 

Appliances: A Few Things to Keep in Mind

Matthew Whitaker: Is anybody doing white appliances anymore? I mean, I just can’t even imagine somebody would walk in and see white appliances and be excited about it. 

Craig Bingston: Right now you buy what you can get. 

Spencer Sutton: Okay. Well, that makes sense. 

Craig Bingston: Supply and demand right now are… Demand is high, supply is low. 

Matthew Whitaker: How do you know when to replace the appliances? 

Craig Bingston: When you can’t clean them or you can’t verify operation on them or you could see visual damage. A lot of people don’t know that they could clean a stove or an oven. 

Matthew Whitaker: And what about a dishwasher? There’s an ongoing debate on whether you put a dishwasher up or not. 

Craig Bingston: If there’s a spot for a dishwasher, I’ll put one in, but I also know putting in a dishwasher, if it stops working, I’ll never send a repairman out there. I’ll always just replace the dishwasher. It’s a $400 item, so that’s a consideration you’ll want to make as a landlord is, do I want dishwashers? 

With a dishwasher, it’s always good to have disposal. So there’s another cost on top of that disposal’s going to cost you $275 total to have it installed, but it does help with the drainage on a dishwasher because people put dishes in the dishwasher that haven’t been scrapped, which is kind of the theory behind a dishwasher. 

But in practicality, that’s not always the best way to operate a house. 

Post Inspection: What Do You Do?

Spencer Sutton: So we’ve talked a lot about this inspection, how you run it, outside, inside, everything. So now you’re coming back to the investor and you’re saying, “Okay, here is the inspection.” Okay, let’s say we went ahead and got another home inspection. So now we’re coming back and we’re saying, does this match up with what we expected when we submitted the offer? 

Craig Bingston: If you can’t get them to negotiate the price down, then we have to start looking at items in the renovation that are cuttable from the scope of work. That isn’t necessary. And I never put down on my renovations necessary or recommended. 

I always put necessary because I look at the houses how I would want to rent them. I’ll let the owner/ investor make their decision. And I will fight with an investor too about things I think are pertinent for the house because you want to have maintenance rehouse for as long as you possibly can. Maintenance digs into your profit. 

Spencer Sutton: Yeah, 100%. 

Craig Bingston: If you could renovate the house in a timely manner, get it on the market and have maintenance rehouse for as long as possible, that’s the goal of every investor, whether you’re you have one house or 5,000 houses. 

Matthew Whitaker: One thing you just mentioned, which I think is really important, is you hire somebody like Craig to be your partner boots on the ground. It’s shocking to me how many people have bought one or two houses if you have Craig that bought 500 houses and Craig will suggest something and then they’ll fight against him to do it a different way. 

At the end of the day, the reason you hire a professional is to trust their judgment. They’ve had a lot of reps at these types of things. Why would you go against something that somebody has been doing for years says because they had the experience? 

Maybe you read something on a Biggerpockets that said to do something different, but there’s always a chance that person on a Biggerpockets has only renovated two houses in their career. Then you have someone like Craig who’s renovated hundreds of hundreds of homes is going to know for sure what needs to be done and home. So it just shocks me how many times people start off and then have their own ideas about what needs to be. 

Craig Bingston: And believe me, everything that we’re talking about here, I’ve made those mistakes. 

Spencer Sutton: That’s where the reps come and play, right? You won’t make the same mistake twice. 

Craig Bingston: You better not make the same mistake twice, but if you do, it’s expensive. 

Matthew Whitaker: It’s also frustrating for us to watch somebody else make the same mistake after you told them they’ll do that, and then they’ll do it. And then you’re like, well, told. 

Craig Bingston: And I hate saying I told do so too. I really do. It’s not a pleasure that I have. I mean, I wanted to get the renovation done. I want to walk away from the house and I don’t want to see it until it’s a turn. 

Matthew Whitaker: Well, and that’s the thing about us too, is the fact that we’re a full-service partner, we help them by, we help a rental, we help manage, we also have to live with these decisions to get paid. So obviously we want the best decisions to be made. 

Spencer Sutton: We absolutely are looking out for the client’s best interest. We only want them to buy great houses and have them renovated well, houses that residents will stay in for a long, long time. 

Craig Bingston: I’ll stand by my word. If it’s a house that I will not renovate, because there is an issue that I saw that the owner didn’t see from New York City, that you didn’t see, feel, smell, touch, I will not renovate the house. I will gladly hand them my scope of work and say, “Find your own contractor, because I don’t see this as being a viable product for you.” You don’t want to have to do that, but if they don’t listen and it is a serious issue, it’s fire beware at that point. I don’t want to say that my word’s final, but it really should be listened to. 

Spencer Sutton: Well, you’re the boots on the ground, right? So that’s the whole point of finding a trusted partner.

Full Episode Below 👇

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