February 29, 2024

The BRRRR method is one of the most celebrated, highly-effective real estate investing strategies the world has ever known. Never heard of it? BRRRR stands for “Buy, Rehab, Rent, Refinance, Repeat” and is a simple framework to allow any real estate investor, no matter their skill level, to get into real estate investing for no money at the end of the deal. This down payment recycling system allows you to use the same amount of cash to build a real estate portfolio that’ll expand to infinity. And for a while, the BRRRR method was yet to be bested—until now.

Janice Stitzer may have cracked the code. As a house-hacking California native, Janice was pushed out of the golden state right before the last crash when housing prices were high, cash flow was low, and traffic was at a standstill. She and her husband decided to boost their quality of life by relocating to Colorado, where they started a construction company and a BRRRR-ing empire. Then in 2008, when lending screeched to a halt, her BRRRRs died down. But some years later, a new idea hatched—the BRRRR 2.0.

Using this simple strategy, Janice got a brand new short-term rental that cash flows like crazy, all while gaining $200K in equity before her first guest checked in. This repeatable system can be used by almost anyone and doesn’t require much experience. With just five properties, this “BRRRR 2.0” investing style could make you a millionaire. But you won’t know how it works if you don’t tune in! So, stick around!

David:
This is the BiggerPockets Podcast Show, 743.

Janice:
I bought the land right. So the land was actually two parcels. It’s being sold together, but no one figured that out, for some weird reason. I ended up selling half of the parcel or half of one of the two parcels. And so all in, I was at 381 and the appraisal came in at 565,000.
That’s very cool because a lot of people… The journey to build this house, very hard, but once you do it one time, it’s like, it’s actually not that hard to build a house, again and again and again, and you built $200,000 of equity or something like that, just doing that.

David:
What’s going on everyone? This is David Greene, host of the BiggerPockets Real Estate Podcast, here with my partner in crime, Rob Abasolo, and our guest, Janice Stitzer, with a fantastic episode that we recorded together in Denver, Colorado. In today’s episode, we get into all kinds of cool stuff, including leaving one market and getting into another market, moving your money from a market that might be crashing, into one that you think will have a run. And a trending topic, new build construction, the new BURRR, B-U-R-R-R build.

Rob:
Nuber, N-U-B-E-R. I just coined it.

David:
Thank you for that.

Rob:
You’re welcome. That’s what I’m here for.

David:
Before we get into today’s fantastic episode, I want to tell you one, listen all the way to the end, if you’ve ever wondered about the origins of the word podcast. We solve that riddle for you today. And two, our quick tip of the day is going to be, newer folks, listen to how we talk in the beginning about how real estate felt way too expensive and we didn’t want to get into buying it, and we had all kinds of fears and we tried to save money on contractors and all these other ways that end up just costing more money. And experience, people. There’s a ton to learn here for somebody who’s wanting to know about permitting, zoning, new home construction, what goes into construction, easy ways you can get ripped off by contractors or rip yourself off by doing things in the foolish way, buttering bread and training dogs, all of that and more in today’s show.
Today’s guest is Janice Stitzer. This LA native started off in the finance world. Janice didn’t find the magic in working at Disney and Fox. It was just a corporate job, and she was built for more than that. Searching for alignment to her interest while house hacking in ADU and LA, Janice landed a job at a discount brokerage in 2005, 2006, where high volume and saving deals became the norm, but she saw the writing on the wall about how the housing market was shaping up. She and her entrepreneurial-focused husband sold the house and moved to Denver in 2006, where they knew no one, for a better cost of living and a chance to start a family. It sounds like the BURRR-fect way to get started. Janice, welcome.

Janice:
Clever. Thank you.

Rob:
Welcome to the show.

Janice:
Thank you.

Rob:
BURRR-fect. That’s good.

David:
Thank you. Thank you. I read it right off of the notes here.

Rob:
I was going to say, did you just come up with that?

David:
All right, so take us back in time, when you first sold that house in LA with the ADU. What did that afford you? What doors did that open?

Janice:
That was our seed money. It was difficult to get into that. It was when we purchased that house, we set out, the ADU was the target. We knew that that was going to be our ticket to affording the house, much like you.

David:
Just living at all.

Janice:
Living at all in the Los Angeles market. And so we found it, it was a stretch, and that was when the mortgage market was giving out money. I mean down payments with a credit card.

David:
Whoa.

Janice:
And yes.

Rob:
Is this our first success story of the 2005 to 2006-

Janice:
Is it?

David:
You didn’t lose everything, right?

Janice:
No.

David:
You actually got out, timed it. Well put the money into better market, right?

Janice:
Yeah. So we bought that house with a credit card down payment because we did not have any money. My husband just started a gym business and I had just recently graduated from college, new into the corporate world, trying to figure that out. And so we did ask around for for family money, but they said no. They were like, “You know what? You guys are adults and we’re not going to do this.” But that was what was going on at that time, was free money.

Rob:
This is relatively significant because I feel like back in this was 2005?

Janice:
That was 2003, 4, when we bought the property.

Rob:
So back then ADUs weren’t really nearly as popular as they are now.

Janice:
No, no. This was a main house, a garage, and then the granny unit on top of that. So it was a needle in a haystack, so to speak.

Rob:
And it was already built?

Janice:
It was already built. It was turnkey. We really didn’t have to do anything. Not that we could have afford to do anything, but we had a network of people, and one of my husband’s clients was like, “This is a good one. If you don’t buy it, I will.” And so that was our sign. We have to do it. We have to jump into this, however we can afford it, we’re going to find a way.

David:
And this was pure necessity. You weren’t intending to be a real estate investor. You didn’t have a great plan. You just knew, I want to live in LA. It’s really expensive. The only way we can make this work is if we buy a house with several units and rent out some of them and live in the other one.

Janice:
Right. There was intent behind it for sure, but even back then, 350, 000 was a significant amount of money.

Rob:
That’s what it cost back then?

Janice:
Yeah.

Rob:
Oh my goodness. That’s crazy.

David:
This is why I’m always saying that housing always feels expensive. When you buy, it doesn’t matter. It always feels like you paid too much. And when you look back 20 years, 30 years, you’re like, can you believe that we were only paying a million dollars for a house because houses are going to be $4 million?

Rob:
It’s true. I was scared when I bought my house in LA. I was scared to talk about it with people. I was scared to talk about it with my family. I didn’t want them to know. I was terrified to tell them how much it costs. And back then it seemed expensive, and now it would be really, really cheap to buy what we paid for it. So you got in “early”?

Janice:
Early and then fast-forward two years, we’re like, “Okay.” My career changed, not that it even had any footing. I was, like I said, you guys know, Fox and Disney, tried the corporate thing out, for my parents, checked that box off. And I was like, “I do not like this. It’s not for me commuting an hour and a half, two hours one way.”

David:
And that’s about a two mile drive in Los Angeles.

Rob:
Exactly, yes.

Janice:
I mean, if you guys are in, know California, Encino to either Burbank or over at Fox Studios across a hill 405, that was a nightmare. That I think, that was really the straw that broke the camel’s back. I’m like, this is-

David:
So, the quality of life sucked?

Janice:
It sucked. It sucked.

David:
You didn’t want to raise a kid in that area. You were retired of the commute. You were doing well financially, but you weren’t happy, right?

Janice:
No. No.

David:
So you decided to move. Tell us how you made the decision of where you were going to go?

Janice:
We were thinking of moving within the Los Angeles area. Everything that we looked at was a lateral move for double the price. So I said, “You know what? Why wait?” At this point, I still tried to make it work. We put in a couple offers, and at that point, I was working for two real estate agents and things were nutty, completely nutty.

David:
And this was ’05?

Janice:
’05, ’06.

David:
Yeah. This was the peak of the hottest market.

Janice:
Peak, peak.

David:
Even people think the markets we’ve had have been hot. They weren’t as hot as it was in ’05, ’06.

Rob:
Really?

David:
Yeah.

Janice:
I mean, we were juggling 20 transactions at the same time. So I was already thinking, we need to start, we need to sell. Just take some money off the table. If we were going to start somewhere else, we’re going to do it now.

David:
Were you reading any of the writing on the wall? Were you seeing the teachers buying million dollar homes?

Janice:
Yes.

David:
And the no income loans. And at that time, they were just building developments everywhere. I mean, everywhere you look, they were just putting up new homes. Could you just see this is going to end badly?

Janice:
It was just so easy to sell anything. And the brokerage I worked for, they’re no longer around, but they were trying to basically have the commission be a total of 3%. So other brokers, agents didn’t want to play that game. It’s one thing if an agent decides to take a little bit of a discount, but to suggest that the other buying or listing agent or the buyer’s agent take-

David:
So what you’re saying saying is typically real estate transactions or real estate commissions, I should say, the agents are going to split whatever it is. So if it’s 6%, one agent gets three, the other agent gets three. Your brokerage was trying to do 3% total, which meant that the buyer’s side was going to be getting a significantly lower portion, 1, 1.5%. And it’s hard to get a buyer’s agent to show your homes if they’re getting half the commission that they could get on a different house.

Janice:
Right. But at that market, and we were already, the internet was already established. People were starting to get on Zillow and Redfin I think, was starting to be established maybe, back then. So people had access to that stuff.

David:
That was a big change because it used to be, if you tried to give only a percent and a half to the buyer’s side, none of the agents would show your house, so you would lose money. But when Zillow came along, the buyers see the house on Zillow. They tell the agent, “Go show me that house.” And the agent’s like, “What am I going to say? No?”

Rob:
They’ve also leverage in that-

David:
That’s exactly what happens. So that opened the door.

Janice:
It’s not ethical, but of course, they want to earn their standard or suggested standard commission. But things were just selling. I mean, multiple offer situations, much like what we experienced in the past two years. So there’s a lot of mirroring between now and ’08, I feel like.

David:
So knew was time to get out of Dodge. How’d you decide that Denver was the new place you were going to go?

Janice:
My husband. I would’ve never imagined leaving LA because I was born and raised there. I knew nothing else. And he’s from the East Coast, moved to LA for a little while, that’s where we met. But he’s been to Colorado numerous times and basically said, “Let’s move. And the winters aren’t that bad.”

Rob:
Cut to 2023, and it’s five degrees outside.

David:
I just went for a short walk outside and there’s snow everywhere, and my shoes were soaked, and now my socks and my feet are freezing, is recording.

Rob:
I’ll let you borrow some socks.

David:
I appreciate that, man. I would’ve thought the Rocky Mountains were rockier than this.

Rob:
I’ll give you the socks I’m wearing off my feet.

David:
Thanks, man.

Rob:
Some people give you the shirt off their back. I’ll give you the socks off my feet.

David:
The socks off your feet. Did you wear two pairs of socks?

Rob:
Yeah, my feet are getting sweaty. Wait, the first pair, those are the sweaty ones. I’ll give you the dry ones.

David:
Right on. So what’s funny is that you got out of a hot market in Southern California before it crashed, and then you got into the Denver market, which then became one of the hottest markets in the country a couple of years later.

Janice:
That’s because all the Californians are moving here.

David:
That’s a great strategy. See where Californians are going, just get there first. I’ve been saying that for a long time. So when you got here, what did you guys do to start over? You’re no longer working for Disney and Fox. Your corporate career has switched. How did you guys decide to make a living?

Janice:
Well, my husband’s a third generation contractor, so we’ve figured, okay, if anything, that will be our fallback. But we came to Denver with the plan of buying, refinancing, renting and repeating. And at that point, Denver was already seeing REOs on the MLS.

Rob:
But what’s an REO? Just for everybody.

Janice:
Real estate owned. The bank already took it back and put it back on the market, on listing. So that process takes quite a while. And for that to, I mean the MLS was full of REOs, so we were picking up properties, Denver bungalows for 75 to a 100 000. This was at the height of the foreclosure, which is crazy, right? Crazy.

David:
Did your husband think that you were paying too much?

Janice:
No. I mean-

David:
Because you were coming from-

Janice:
We were coming from California.

David:
350, $400,000 houses, right?

Janice:
Yes. Yes.

David:
So these seemed like they were free.

Janice:
Exactly. Because coming from LA, the main house we lived in was a 1000 square feet. And these bungalows were about that.

David:
For a quarter of the price.

Janice:
For a quarter of the price.

David:
And this is where all the people who already live in Denver are like, “Yeah, you Californians keep coming here. Those houses would still be 75 grand if you guys didn’t come here and drive up all the prices.” So there’s a downside to it as well.

Rob:
Yeah, I think people in Denver are like that. Everyone in Texas is like that. Everyone in Tennessee is-

Janice:
Anywhere you go.

Rob:
Anywhere in [inaudible 00:13:12], Florida too. Yes, exactly.

David:
All the places where people make the most money in real estate. We Californians make it unaffordable.

Janice:
But it’s not like California trended down either.

David:
No, that’s true. Inflation, man, everything goes up. So you come here, how many of these houses were you buying? Were you just buying a couple of them or did you go all in?

Janice:
We were buying a couple. So we were doing all of the rehabs ourself.

David:
Okay, so you can only go so fast.

Janice:
We can only go so fast. And for the most part, they were cosmetic. So not even replacing cabinetry, paint, maybe new countertops, new appliances. We throw 15, 20 grand into it. And even at that time, we were able, so we paid cash, we funded the renovations with cash, went back to the bank and refinanced it.

David:
You were doing BURRR before we called it BURRR.

Janice:
Yeah.

David:
Did you guys have a name for it back then?

Janice:
I don’t know. Fix it.

Rob:
Flipping a house?

Janice:
Fix and flip and rit. We weren’t that clever to coin the term BURRR, or else.

Rob:
Or else you would’ve.

Janice:
I’d be in your seat.

Rob:
That’s right. It was all the coining of the term. So I want to know, because you said that this was… All the foreclosures were already starting to pop up and everything like that. Was it really hard to BURRR because were ARVs being affected by this? Because I know a lot of people right now, that are flipping and they’re basing all of their values based off of values from a year ago. And so there’s a little bit of discrepancy there, right now for a lot of flippers. Was that the case back then too?

Janice:
The price discrepancy wasn’t that great because we were able to pull all of our cash out. So for one reason or another, there wasn’t this huge discrepancy where the delta between ARV and renovating was… I just think that there were too many people who were afraid to come back in.

David:
Oh yeah, absolutely. There was some shell shocks, some PTSD, from you’d expose the real estate. You see the value shoot up, everybody runs in there. It’s like a gold rush and then the bottom drops out. So many people were not wanting to buy. That’s actually when I got into the market, I didn’t know any… I mean, I should say I didn’t know any better. I didn’t buy when prices were going up, but I didn’t have that same emotional fear of the bottom dropping out and I stepped in, into the bottom. So what you were doing is you’re buying these properties at 75 to a 100 grand, putting 15 to 20 grand into them. They’re appraising at what? 130, 140 Or so?

Janice:
150. Yeah, was our sweet spot.

David:
And then you’re doing cash out rebuy.

Janice:
Right.

David:
Yep. So you’re getting a 100% of your capital out. You go buy the next one, which is a great efficient method, but it can only scale so fast because you have to do the rehab yourself. You have to wait to get your money out before you go buy the next house.

Rob:
You’re using your own capital to do the stuff.

Janice:
Exactly. At this point, we didn’t know what we know today with all the information that’s out there. Anything that we know we read in books or maybe heard word of mouth.

David:
Word of mouth.

Janice:
Yep. Yep.

David:
Isn’t this crazy? There’s so much information out there. This stuff gets around so quick.

Janice:
It’s different today, it’s way different. And I don’t know if, maybe we were either too dumb to know. We were just like, okay, we’re jumping in, we’re doing this.

David:
Well, who wouldn’t do that? You’re getting a 100% of your money out. You’re getting a rehab house that’s going to cash-

Janice:
You would think. But yeah, there was a lot of hesitancy in this market, in the Denver market that-

Rob:
And what year was this for reference, roughly?

Janice:
2006, 7.

Rob:
Oh, okay. So it was as soon as everything started kind of caving-

Janice:
Yeah, we left a market that was still hot, came to Denver, and it had already happened. And I think the other thing about the Denver market, which was unlike the LA market, was that the valuations weren’t as high. People weren’t able to use their homes like credit cards. And that’s the downfall of what was happening in the ’08 crisis.

David:
All the HELOCs that people were taking out there, buying boats and cars and RVs and vacations and renovations and adding pools.

Janice:
Right. So that was the bigger, that was also the other thing driving California in that market, which wasn’t as apparent here.

David:
So you had something that was working. What made you switch that up and get into something bigger?

Janice:
Well, the mortgage crisis. We did that numerous times and then hit a roadblock. One of our last transactions was, oh yeah, we came to the signing table. They changed our LTV, our loan to value, so we had to leave money in the deal, and that was, the lending just stopped at that point.

David:
So you weren’t able to refinance and get your money out of these deals?

Janice:
We got the final one, which scared us, was the one that they changed the rules of the game.

David:
So you realized you could no longer continue as you had?

Janice:
Yes. Yes.

Rob:
But you didn’t lose money, you just left money in the house.

Janice:
Yep. Yep. That’s right.

Rob:
You’ve done this a few times where you leave… You may not be able to get the full ARV up, or the full LTV.

David:
Yeah, but see, the difference is I knew if that happened, it was like I made a mistake. The ARV wasn’t as high as I thought, the rehab was too big. I think what you’re describing is that the lending pipeline shut off, to where you weren’t going to be able to do cash out refis at 75% loan-

Janice:
Right. Because the LA market came crashing down and the lenders and the whole was that big…

David:
Too big to fail.

Janice:
Too big to fail thing too.

David:
The Big Short, is that what you’re talking about, the movie?

Janice:
Exactly. That whole debacle, just everything came to a halt.

David:
So what happened is everybody started going into default. The banks ran out of money to keep lending, then they got scared that that was going to keep happening. So they were like, nope, don’t lend at all. So even if you do the perfect BURRR, you’re not able to even get the money out of the deal. They’re just not doing home loans anymore, for investment property, at least. They probably still had some primary residence type of thing. So what did you move into?

Janice:
So we moved full on into construction.

David:
Like a business?

Janice:
Yes, establishing a business and going into that as our main, basically our W-2.

Rob:
Were you building for other people specifically?

Janice:
We were not building for other people. We went into roofing specifically.

Rob:
Oh, okay.

Janice:
And because yeah, at that point, builders weren’t building, they weren’t building new inventory. So the captive audience were people who were able to stay in their homes.

Rob:
Yeah, that’s what I was going to say. People always need a roof, right? I mean, maybe there’s flippers that aren’t doing as much renovations.

David:
Do a bathroom remodel maybe.

Rob:
But you still need a roof, just like you always need to get taxes done. There are certain kind of industries that I feel like regardless of what’s going on.

David:
There’s a lot of snow out here too.

Rob:
There’s a lot of snow out here.

David:
Roofs take a beating. It’s not like we’re working in California. You could have a literal hole in your roof in California. It’s only going to matter-

Janice:
For years.

David:
Four times a year.

Janice:
I go back to California and I go, what? People have roofs that look like they’re 50 years old?

Rob:
I’m trying to get you to patch that hole in your ceiling for two years now, man.

David:
You just get a bucket, it so much cheaper.

Rob:
It’s like a 1000 bucks, dude, just spend a $1000 and get some socks.

David:
So you start this construction business and you’re moving out of the investing world into more of a business world. So what role were you playing in the company at that time?

Janice:
At that time, I was the back end. Back office doing what I do, what I know, the financial piece of it, and managing everything else on the back end.

David:
So your husband’s getting leads, giving bids, securing jobs, managing the workforce. They’re going in there swinging the hammers. You’re collecting payments, managing accounts receivable, logistics, organizing.

Janice:
A full fledged construction business.

Rob:
How quickly did it take? Did it take off or how quickly did it take to build that?

Janice:
It took off because here’s why. In Colorado we have hailstorms, and so it’s almost a yearly event. We can’t predict it. But when insurance covers your roof and all you pay is your deductible.

David:
It’s a great point.

Rob:
It’s easy to get people to spend money when it’s insurance money.

Janice:
And you’re improving your house. So-

Rob:
That’s brilliant.

Janice:
We did that for a while until I said, we probably should pivot. We can’t rely on something that’s so niche that is weather dependent, because-

David:
It’s probably exhausting also, right?

Janice:
Oh yeah.

David:
You never get out of that. And you’re always-

Rob:
It’s somewhat seasonal too.

Janice:
It’s very seasonal. It’s very seasonal.

David:
Okay. So you realize, you made some money, I’m assuming, doing this, right?

Janice:
Yes.

David:
So you’ve got some more capital set aside. You’ve got your rental properties that are doing well. How did you decide your next investing venture?

Janice:
Well, along the way, we did have a couple of other investors that we said, “Hey, we’re in the Denver market. There’s still a little bit of room. We can partner up or we can do some of the renovations.” And we learned pretty quickly that if we didn’t have an equity position, we’re just earning a paycheck. So we did a few of those in between. And the other BURRRs that we kept, those were just passive. And that was just running in the background, basically. And going back again to the information, I think that my zest for knowledge was, it just kind of whittled and I just went passive.
And I had this belief that I needed to pay off the loan. And so I started getting aggressive with that. And for a while, that was really the goal until, I think podcasting became a thing, starting to get new information. I’m like, ‘Oh my God, why am I paying off this loan? Why am I doing that?”

Rob:
And that was, you were paying off the loans on all your BURRRs?

Janice:
Yeah. Which-

David:
That makes total sense. So you sort of felt like you’d hit the end of the road. You’re like, “Well, we’ve done everything there is to do. What’s left? Might as well just pay off the loans.” And then you start listening to podcast and all these ideas are coming out and strategies other people are using and opportunities in your mind just starts firing with possibility. And you shake your head, “What am I doing? There’s more to be done.” So what was the next step?

Janice:
So the next step after I snapped out of it, was I need to strip these properties, strip the equity out of these properties so that I could get the velocity of money going and acquire more. So that was my next step, is we’re going to do BURRR version 2.0 out of all of these properties, strip the equity and just grab whatever I can. And once COVID hit, I was like, we need to really change things up. I want to go into development.

Rob:
So this is kind of the concept of return on equity, where you’re starting to realize, I’ve got all this money sitting in my BURRR in all my different properties. It’s not making me any money, but it’s there.

Janice:
Exactly.

Rob:
Adding to your wealth, but you want to actually take the money out of that so that you can reinvest into other things. That’s sort of like one of your big revelations at this time?

Janice:
Yes, exactly. And just understanding the fact that if I strip the equity, grab that equity, and even if I have to leverage, if I get covered debt, that’s really all that matters. Cash flow on top of the covered debt. So because, during COVID, I think we all kind of went through a personal… I don’t know.

Rob:
Revolution.

Janice:
Revolution of whatever that might be. We all wanted to be closer to nature.

Rob:
Oh yeah, for sure.

Janice:
I just went and bought 12 acres of land and I said, “I’m going to build an A-frame.”

Rob:
Just randomly. You were just like, “I’m going to-

Janice:
Well, you know what it was? I was looking through a Dwell magazine, and I don’t know if you guys have heard of Den Outdoors?

Rob:
Of course. Yeah.

Janice:
I think they launched during COVID.

Rob:
Yeah, they’re great. They did. Yeah. So Mike is the founder and he was very fast about it. His designs are really, really, really, really good.

Janice:
They’re awesome. I mean, to the point where that, however, his marketing team is, or whoever does his renderings.

Rob:
Yeah, it’s all in house. Yeah, I’m building a den right now.

Janice:
Really?

Rob:
Or we’re getting it quoted right now, but we want to build it.

Janice:
That’s exciting. Yeah, I saw that article in Den. I’m like, I have to have that. And so that’s basically, one of those things where it was so quick, you hear people say that, right? It’s this gut reaction where it’s like, “I have to do that.” So went in, I had stripped all the equity out, sitting on some cash on the sidelines going, “Okay, well let’s do this.”

Rob:
Was it a problem pulling from your cash flow? Because I’m very much a big fan of the return on equity aspect, but since you’re doing this full-time, you’re a full-time real estate construction investor, and so you’re living off of the cash flow off of a lot of your BURRRs, I imagine. But when you-

Janice:
We weren’t.

Rob:
Oh, you weren’t? Okay.

Janice:
We weren’t. We were, it went to go pay-

Rob:
Okay, you were just [inaudible 00:27:02] straight-

Janice:
Yeah, back into the loan. So yeah, for a while we were just not thinking, really.

Rob:
And I’m curious because starting at 2005 and 2006, what was that interest rate journey? Was it high back then because I know 2020 was really, really low. We’re in the threes. We’re in the fours, obviously not as high in the six and sevens.

Janice:
Well, yeah, on a couple of them I had a refinance 3.0. So that’s what happens when you buy into a market that’s at the very lowest point. Not that I knew, but that’s the opportunity that you have and the advantage. So because the second time the rates were just so low that how can you not?

Rob:
Can’t afford not to.

David:
Were you doing cash-out refis or were they rate and term to get lower payments?

Janice:
The second one was rate and term. The third one was a cash-out refinance.

David:
Okay, so you bought 12 acres, you built an A-frame on it. How did that property end up doing?

Janice:
It’s the same magic. We built it for, 350 was the build cost. That’s like the top number one questions that I get on my DMs. Like, “How much did this cost?” I bought the land right. So the land was actually two parcels. It’s being sold together, but no one figured that out, for some weird reason. I ended up selling half of the parcel or half of one of the two parcels. And so all in, I was at 381 and the appraisal came in at 565,000. So it’s the BURRR…

David:
Build.

Janice:
The build, refinance, rent, or in my case, STR,

Rob:
The Burster. I love it.

David:
So this was a short term rental that you built this A-frame?

Janice:
Yes. I mean there were some personal preferences of like, yeah, I get to enjoy this too.

David:
Oh yeah. But I mean, it was used as a short term rental when you weren’t using it, right?

Janice:
Oh, yes. For sure.

Rob:
And that was the plan when you built it, or were you?

Janice:
That was the plan because again, I’m all about covered debt and if someone else is paying for my mortgage, then I’m all over it.

David:
This was the original idea of the VRBO is you take a-

Janice:
Exactly-

David:
Rental you want to use, and when you’re not using it, you let someone else do it.

Rob:
And yet, back then breaking even was like, you get this house. You break even. You’re like, woo-

David:
Someone else is house pay… I have a free house. It’s crazy that not only do we get a free house, we get cash flow on the free house with $200,000 of equity and then we’re still picky, like, “Well, it used to be better. It used to be easier to do than it’s doing right now.” So were you nervous to get into the hospitality industry when before?

Janice:
Oh yeah.

David:
Yeah. So tell me what that was like?

Janice:
That’s part of the… I mean, that’s actually the main reason why I joined Rob’s host camp because I had no clue. I went for something that was so passive that I I forgot about it, literally. To something that I knew that was going to be so active and I just wasn’t set up for understanding what needed to be done from just operational wise. I didn’t know the ins and outs of what was out there. The different hosting or even Airbnb, was somewhat of a learning curve.

Rob:
I mean, you did just fine though. I know about this property. It seems like it’s doing okay, right?

Janice:
Oh yeah. I mean, we actually only launched it this fall. So it did, this whole thing was built during COVID, and that was the other tricky part about this, is that we basically overpaid for materials. We overpaid for-

Rob:
For lumber.

Janice:
For lumber, for logistics, transportation, everything. And it still worked out.

Rob:
That’s very cool because a lot of people… The journey to build this house, very hard, but once you do it one time, it’s like it’s actually not that hard to build a house again and again and again. And you built $200,000 of equity or something like that, just doing that. And I think the math on this is really crazy, that if you just did that five times, you become a millionaire in real estate.

Janice:
Well, at the same time we were building this, we also were doing another BURRRster, but not build, a buy, renovate the traditional sense, but we intended to short term rental that as well. And that didn’t do as well. I mean, not everything can be a home run, but that one was a nail biter because it’s just not the same valuation when an appraiser looks at a property that’s built in the 1960s, that’s when it was built. Versus something that’s brand new construction, they just view it differently.

David:
You say it didn’t do as well, you’re not talking about cash flow, you’re talking about-

Janice:
Not cash flow.

David:
The value of it was worth when you-

Janice:
The ARV-

David:
The renovation.

Janice:
The ARV.

Rob:
Oh, okay.

Janice:
The ARV.

David:
That is a good point. I think appraisers don’t like seeing that you bought a property for 200,000 and the comp show 550, they just don’t giving you that value.

Rob:
I mean, I don’t like paying for it either. When I’m looking at Zillow, I’m like, they just bought that for $500,000 less two months ago. And I’m always like, “No, Rob, if it pencils out, it pencils out.”

David:
That’s true.

Rob:
It’s really hard-

David:
And don’t know how much money they put into it or how much time they put into it, but when you are building something, I do think that appraisers are more likely to, there’s nothing making it hard for them to give the… They’re probably going to give it more than the value of something that already exists because it’s a new construction. So one of the things that I would think, you guys seem like you’re pretty locked in with being able to tell what it’s going to be worth when it’s done. But what about the cash flow? Did you have hesitation about knowing what kind of revenue that property was going to bring in?

Janice:
Again, I’m going to defer back to Rob because he built his tiny house in Joshua Tree and there’s really not… It’s like a Blue Ocean Strategy, if you guys have ever read that book. There’s not really a tangible, there’s no comps out there, you’re making your own comps.

Rob:
If you’re the first one in a market like that, especially for a unique build, it’s really hard, right? There’s a little bit of, it goes back to the art and the science. Right now at this moment, there’s this church that I’m looking at that’s been completely renovated. It’s a six bedroom church. It’s like 7,000 square feet and I want to turn it into an Airbnb, but there is not a single comp that corroborates the success of what this church could be. But I know that if you build it, they will come, for the most part. And so I’m very close to pulling the trigger on that, but I’m just like, it’s hard being the pioneer sometimes, but you just got to lean on your past experiences sometimes to sort of guide your decisions, I think.

Janice:
Yeah, there really isn’t any guide. I will still refer to market comps and use that as my guideline, as well if I have to leave money in the table or equity in the deal, then I’m okay with that. That’s how I went into the A-frame, with that point of view.

David:
Somebody does have to be first. I’ve often thought about this with oysters. Who cracked open a sea rock and looked at that seed booger and was like, “That might be food.”

Rob:
“That’s probably going to taste good. Joe, you eat that first.”

David:
Once you see everyone else eat oysters, you’re like, “Okay, I’ll eat an oyster.” But somebody had do it first.

Janice:
I see people eating oysters and I still don’t eat a oyster.

David:
They’re disgusting. I don’t like them either.

Rob:
Oh, come on. I love a Blue Point.

David:
Some people love oysters.

Rob:
I love oysters.

David:
So be the oyster. But one of the blind spots, I feel like when you’re getting into the short term rental industry is literally, I don’t know what it’s going to rent for. And that is scary. We see this a lot with the medium term rentals that are going out. I get this question all the time, “How do you know what it’s going to go for?” But you don’t. You don’t get that same security that you get with traditional rental properties because you’re getting an upside, because there’s no ceiling. It could go great for you, you don’t ever get to have both.
Building new construction properties is a similar pattern. When you’re buying something that’s already there, there’s only so many things that could go wrong. And most of it can be found on an inspection report. The roof, the plumbing, leaks, electrical. And if you know what you’re doing when you’re looking at a house, these surprises don’t happen. If you have a person look at a foundation, it’s not very often the oops, turns out the foundation’s crumbling and we just didn’t see it.

Rob:
There is no foundation. Oh my gosh, we messed up.

David:
Yeah, exactly right.

Rob:
How did we not notice this? There’s no slab.

David:
Most mistakes that come from rehabs of existing properties were sloppy due diligence. And that’s not to criticize anyone, that’s just what happens. And you learn your lesson, it doesn’t happen. New construction’s different. You have much less control over how things are going to go because there’s so many more moving pieces. So what are some of the other blind spots that people need to look out for if they’re thinking, “You know what? This market’s too expensive. I’m just going to build my own house.”

Janice:
I would say, even given that the fact that we are in construction, we hired a general contractor for the area. There’s a market up there and I mean, this is located in a mountain town, small town, and those people, those contractors, those subs do not market. I mean even in Denver, you have good subs. They do not market on Google. They’re all word of mouth.

David:
Oh, if they were on Google marketing, they wouldn’t be available as a good sub anymore. It’s so hard to find.

Rob:
No one answers the phone in this industry.

Janice:
And we’re two hours away, two and a half hours away. And for us to manage it, it’s not smart, number one. And even though we were probably, we were hands on, we were again, in the middle of COVID, scrambling for materials. We were running some materials up there, but just the fact that he has his own avenger team, right? I mean, Rob talks about that all the time, that they will only work directly with that general contractor. They do not want to work with…

Rob:
They won’t be subbed out with other people.

Janice:
No. They need people to speak their language. They need them to tell them when to show up, when things are actually ready. Not when, “Oh, can you come by and give me a quote?” And you’re still in… You’ve torn everything apart.

David:
People waste contractors’ times all the time without realizing that they’re doing it. It’s just-

Janice:
Exactly.

David:
Out of ignorance, people will do that, “Oh, can you come give me a quote?” And that contractor’s got to take time off a job drive till two to three hours of time that they’re going to spend. Then they got to talk to you. Then they got to go draw up the quote that could be a half a day or a day’s worth of work that’s gone. And then the job never happens.

Rob:
And they never hear from you again.

David:
Yeah, exactly. “Oh, well, he was cheaper. So I went with him.” And they just… We’re not saying you got to hire everyone on the first shot. But people are not aware what they’re asking for when they’re like, “I just want to get a quote.” My family was blue collar workers. My dad was a painter, my uncle, my grandfather, were painters. I saw the work they have to go into just to generate a quote. It’s not a thing. It’s like asking someone to comp a house. You’re not just going to look at it and give an answer. You’re going to go dig in and dive in and spend a lot of time doing that. And so that, you end up finding exactly what you said, the best people stay loyal to the person that butters their bread, protects them, takes care of them, keeps feeding them.
And if you are that good sub and you take too many side jobs and your contractor finds out, he might be looking to replace you with someone that he can count on when he wants to go get the job. And that is something I found when you try to cheat the system and you’re like, “I don’t want to hire a contractor, I’m just going to go find my own person.” You’re often getting someone that couldn’t get full-time work working for a contractor.
I love what you said because we sometimes think we’re saving money doing this. I mean, I am guilty of this just as much as anyone else, where that contractor said 15 k, I can find a guy to do it for 9,500. I’m going to save some money. And then the job takes three times as long. And you make three $5,000 mortgage payments and you’re like, this just turned into a $50,000 remodel. But I only had to pay 9,500 for it. So what’s your experience with that?

Janice:
What’s that say, you’re tripping over pennies to save dollars? So I mean when we broke ground, I was like, we need to finish this in eight months. That was a tall order, I know.

Rob:
I was going to say, that’s ambitious.

Janice:
It’s ambitious. But when you are seeing the rate interest rates going up expeditiously, so from when we broke around to when we got C of O, was 15 months and the interest rates rose 400 BPS.

Rob:
And for everybody at home, that’s certificate of occupancy.

Janice:
Certificate of occupancy.

David:
Which is what the city or county has to issue saying you are allowed to use this as a residential.

Janice:
And even from the lending standpoint, because we were refinancing, they want to see a certificate of occupancy.

David:
They don’t want to lend on something that can’t be used, if they have to foreclose, that no one could live there.

Janice:
It needs to be finished up to a point of being safe to live in. And at that point, we weren’t done, to be honest. We were still waiting on back splash. I don’t know what else we were waiting on. Just cosmetic.

Rob:
You had those cosmetics.

David:
Flooring. What are some of the things that you need to have for it to be a habitable? Flooring part of it?

Rob:
Cabinets have to be in there.

Janice:
Cabinets.

David:
No exposed electrical or plumbing. That all has to be there.

Rob:
Which is fair.

David:
But some of the cosmetic stuff, that is true. The back splash might not be there. Paint might not be finished.

Janice:
Dishwasher.

Rob:
I think it’s past rough electrical where the electrical outlet is all wired up, you don’t need the plate on it necessarily.

David:
And so people can use that information to get deals. Because I’ve looked for properties, not so much recently, but in the past when there was less competition, where they were like 98% of the way to a certificate of occupancy, but they would’ve had the, what’s the word? I’m blanking… The subfloor in with hardy backer, but no tile. And they’re like, “Nope. Can’t live in that house. It just has the hardy backer. Well, I’ll go in and buy it, knowing we just have to lay tile right on there.”
But my competition could not get a loan to buy the property because a lender won’t lent without a CFO. So I can go in and pay cash for this thing because it’s uninhabitable, but it’s not a complete tear down. It’s not a huge project. That used to be a strategy that we could use. Now it’s just something you have to be aware of, like you’re saying, because you can’t refinance until you actually get that. So what are some other blind spots? We’ve mentioned the certificate of occupancy. We’ve mentioned knowing what needs to go into running comps to see what the property’s going to be worth. You mentioned that you got your own contractors instead of trying to work the subs yourself. What about some of the stuff like rough-ins or contractors ghosting you for work not getting done? Have you guys had any issues with that?

Janice:
Well, the punch list. That was, after certificate of occupancy, there’s the punch list and them coming back for it takes a long time.

Rob:
Yeah. Because at that point you’ve basically paid the most of the money.

Janice:
Yeah. Yeah. For the most part, they’re maybe waiting on the 10% of that final punch list.

Rob:
And at that point they’ve started another job where the big money is coming in. They at the foundation 25% milestones hits.

David:
This is one of those things where if an investor could just take one thing to get right, it would be do not pay the contractor all the money to start the job.

Janice:
But it’s weird that they almost don’t even, they’re like, “Okay, 10%. I think I’m good.”

David:
They don’t need the last 10%.

Janice:
They don’t need the last 10%.

David:
Because they’re making the 90% on the other sucker that pays them all the money up front to go start that other job. And then they finish that one halfway through. At least we get ours to 90%. That is, it’s such a crucial thing. You have to give them some money because they’re not going to front their own money to buy materials and pay their labor. But I typically try to keep it around 20 to 30% to start the job. And then I just stay in contact with them. And as they show me that the work has been done, I give them another draw. What you don’t want to do is give them 80% of the money, 100% of the money right off the bat and trust that they’re just going to finish the job.

Rob:
That’s crazy.

David:
Right?

Rob:
For sure.

David:
A 100% of the people that have been ripped off by a contractor that I’ve talked to that come to me, “What do I do? Do I need to take them to court? They’re not returning my calls.” I just asked one question, “Did you already pay them?” There’s that dot, dot, dot.

Rob:
It’s always that.

David:
Yes.

Rob:
No, man. Usually, so a punch list is basically where your house is basically done, but you have all these little things that the follow through wasn’t quite there, or there’s like a drywall crack that needs to be patched up or something that needs to be touched up with paint. And so it’s this list of things that you give your contractor and you say, “Hey, I need these things to be done.”

David:
The dishwasher’s not running. The electrical outlet wasn’t wired correctly and it’s not working. It’s like when you walk a new home, if you ever had a new home that was built, this is where they put the blue tape on the walls, right? Like, come in and have the person fix this last thing. You hung the wrong lighting fixture in the wrong area. The doorbell doesn’t work. Whatever that stuff is. And then none of us know how to fix that. Can you go in?

Rob:
But really though, a handyman has basically done all my punch lists ever.

Janice:
Yes. So we did have to have someone, bring someone up from Denver to finish out some of the punch list items, just to get it to the point where I could shoot pictures. So those are the just, it’s always that 10%.

David:
Yes. The last 10%.

Janice:
That takes the longest.

David:
That’s why you want that big juicy last 25% draw hanging over their head. And it’s funny, have you ever had a dog to try to get to do a trick and they don’t want to do it when your company’s over? But then you put a treat in your hand and all of a sudden they remember how to roll over. That’s exactly how I look at it. It’s amazing how you remembered how to finish that punch list when there’s another 25 to 30% coming. But when you’re holding a piece of broccoli to the dog, that’s like the 10%, I’m not really that hungry. I’m not going to roll over for that.

Rob:
But they would eat the broccoli if it was in a bowl of food.

David:
Yes. They would get it done if it was part of what they needed to do to get paid. That’s a great point there. So I understand you have a shower door story. Can you share that with us?

Janice:
Yes. The shower door story… My contractor, I was like, “I need this shower door. I mean, I guess I could hang a shower curtain, but we want a glass shower door.” And he’s like, “Okay, I’ll call my guy.” I said, “Who’s your guy?” He tells me. I’m like, “I called that guy.” He’s like, “Well, he’s my guy.” That’s the Avenger team.

David:
So that guy will answer the contractor’s calls.

Janice:
The guy, the glass dude said, “I’m too busy.”

Rob:
Except the contractor, as David said, butters his bread.

David:
Yes, he does. That’s right. I mean, if we’re going to go with that dog trick analogy, I’m not trying to compare contractors to dogs. I realize that could have gone in a bad way.

Rob:
All the contractor are like, “How dare you?”

David:
But it’s like when your little sister’s yelling at the dog, it doesn’t do anything. And then dad walks up and boom, sits, right? Because it’s like, I’m not making that guy mad. He’s the one that feeds me. It’s that same idea, as you came along. And they’re not loyal to you. They’re loyal to the person that butters their bread.

Janice:
Exactly. So you really do. It’s again, that time that, because I would’ve been high and dry trying to find, call Home Depot everywhere and then transport this thing myself and have my handyman go and install it.Where this guy goes in and cuts this piece of glass and comes back with it. Perfect. I mean, it’s custom, pretty much. So it was just the timeframe of launching on Airbnb and that helped to just really, he did come back. I mean he’s a good contractor, but yeah, like you said, he’s onto the next job because he needs to get his timelines going. He has milestones to make on all of his other jobs.

David:
Or the next three jobs sometimes,

Janice:
Right, yeah. They’re juggling multiple.

Rob:
Starting them at the same time.

David:
And so we only look at our situation, our house, the contractor’s like this middleman, who’s trying to deal with the clients that want things done. They’re usually not math geniuses or business gurus. It sounds like you and your husband were pretty good at this, but I don’t think everyone has a Janice working their books on the backend. They’re struggling, they don’t even know how to bid a job. Then they get the job and now they have to manage a herd of cats, getting their employees to show up and work every day. That industry is notorious for having people that do not want to show up and work from nine to five, or nine to nine. They’ve got issues, they’ve got drama. They’re fighting with their girlfriends, they’re stealing your tools. A lot of them get into drugs and they’re unreliable. It’s always a challenge as they’re like, “How do I get my labor on all these different jobs?” And then they got to pull someone off this job to come.

Janice:
Well, when there’s delays for anything and during the timeline we were building, there was just delay after delay. And it wasn’t really the contractor’s fault. It’s-

David:
Materials.

Janice:
It’s materials. And there’s just normal delays in construction, period.

David:
If you have to go through the permit process.

Rob:
But I think the most frustrating thing though, is whenever you do have all the pieces and all the materials and you drive by your house and nobody’s there. And you know that the contractor’s just had another job, doing a different job and you’re like, “Man, I literally can’t advance.”

David:
And you’re bragging about only paying 9,500. That other person was willing to pay 15 grand and their job’s getting done.

Rob:
Their job is done.

David:
And yours is not.

Rob:
I always, I do say that. I mean, I think-

David:
Sometimes when you win you really lose.

Rob:
Especially in short term rentals. I think it’s very important because you’ll sometimes might have to pay three or $4,000 to get done a month or two earlier.

David:
But what revenue would you have made?

Rob:
Exactly. You could be making like five to $10,000 more.

Janice:
You’re talking about interest rates too. I mean.

David:
Yeah, you have a story about that, don’t you? In one of the cases, the time from breaking ground to receiving your certificate of occupancy, the rates rose by 400 basis points.

Janice:
Yes. So we ended up having to pay down the rate. And now looking back at that rate, we are at 8.8. We were quoted 8.75 and we paid two points down.

David:
But you were originally around in the mid-fours?

Janice:
In the mid-fours when-

David:
When you started the project.

Janice:
When we got quoted getting,

David:
Yeah. That caught me on several of them, actually. It just happened to be when I bought a bunch of houses, right after that…. There’s nothing you can do. You can’t-

Janice:
No, no.

David:
That’s a great point. Time is often more expensive than the money that it would take to get the job done faster.

Janice:
Right. Because if you… That amortization over 30 years or versus-

Rob:
Hundreds of thousands of dollars.

Janice:
It’s hundreds of thousands of dollars. And so the other point of hiring a general contractor for that area is that they know the permitting department. They know the inspectors.

David:
That’s nice too.

Janice:
It’s not like I’m calling, “Can you come and do a rough in inspection of my electrical?” “That’ll be two weeks.” Versus my contractor calling. “Okay, we’ll be there tomorrow at 9:00 AM.”

Rob:
A good contractor, yes, can get anybody on the phone because they’re just trusted. So, all right. So you kind of worked it out with your contractor. You get this house done. Can you tell us a little bit about how it actually went? Did it perform well? Were you crushing it out the gate? How did it actually go when you launched on Airbnb?

Janice:
So the other timing factor is that we missed the summer season.

Rob:
And that’s a busy season for you?

Janice:
And that’s a busy season. But we launched in the fall, we have leaf peeping season, so out of the gate, I mean it was a success. We have been operating for five months now. So on average we’re doing gross, 7,200 a month.

Rob:
A month?

Janice:
A month.

Rob:
That’s good.

Janice:
Yeah. Yeah. I mean we have our shoulder seasons here, but that’s pretty good. Considering our net is anywhere from 4,000 to 4,500, which is solid.

Rob:
That is good.

Janice:
Especially when I pulled out all the money that I initially invested. I have-

Rob:
Infinite return.

Janice:
Infinite returns.

Rob:
So you put all your money in, you get it back. This is what I call getting a free house. Everyone on YouTube gets mad though because they’re like, “It’s not a free house if you still have to pay a mortgage.” It’s a free house in my mind.

Janice:
It’s a free house because someone else is paying my mortgage.

Rob:
And then you basically make 48 to $50,000 a year in profit.

Janice:
Yes.

Rob:
And if you did that twice, you make six figures.

David:
Not only is it a free house, it’s a free 50 grand.

Janice:
Yes.

David:
Everybody else is giving you these things, which is how investing works when it’s done well over time. All right. So you figured out how to get a free house and you figured out how to get free revenue. Obviously you’re going to want to do more of this. So what project are you working on now?

Janice:
For sure. So we’re going in on scale. We want to do eight units, which that’s our next project. Eight micro cabins in Salida, Colorado. And it’s the exact same model.

Rob:
That’s a great location too.

Janice:
It is.

Rob:
For short-term rentals.

Janice:
There’s fourteeners, if you guys know what they are. People love to come and hike them. A lot of river activities. So it’s a great market and I’m basically doubling down on what I did with the A-frame, but doing it on one, basically outdoor hospitality is what-

Rob:
You’re octupling down.

David:
Yeah. You’re doing eight units.

Janice:
Yes. Yes. Good catch.

Rob:
Octupling down. Definitely a word.

Janice:
Yes. And then what? 10 xing on my other project that I have in Buena Vista, which is close by and that is on 39 acres. So that is a different play because it’s located in an opportunity zone and there’s a bigger learning curve there. But I’m building my Avenger team.

Rob:
Dang that cool. So really you went from sprinting on a new construction, which is really what it feels like on your first build, to now you’re entered the marathon phase, you’re in it to win it.

Janice:
Oh yeah. Oh yeah. I’m making up for lost time, is what I’m doing here. So with those properties I get a lot of people asking me, “How can I do this? How can I buy land?” And I just, land is probably the most crucial piece. And with these particular properties, I worked backwards. I worked from looking at what the zoning maps are and going, I’m not going for conditional use or special use. I’m going straight for use by right. And so with the eight unit micro cabin resort that is zoned for campground, which is hard to find, given it’s only one acre, but the fact that I could go straight to permitting, gives me that speed again, that’s going straight to construction.

Rob:
So when you say, use by right, that just means it’s zoned for that, plus you don’t have to go through crazy conditional use permit or special use permit application?

Janice:
No planning and zoning.

Rob:
Wow, cool.

David:
So when you’re talking about buying land, you mentioned that people ask that question. We’ve also mentioned that buying land can be the difference between a deal that works and a deal that doesn’t. What are some things people need to be aware of when buying land?

Janice:
So my top red flags whenever I look at a piece of land is number one, flood zone. Deal breaker for me, maybe not for some people, but if it’s located in a flood zone, I will not do it. Insurability issues. Potentially, building issues. Along with that goes with, if something’s in a wetland, those two go hand in hand, you more than likely can’t build. Utilities is a big one. Water, sewer, electricity, all of the things that we take for granted. If those things are not on site or reasonably close by, it’s going to be very expensive.

Rob:
I mean, even if it’s reasonably close by-

Janice:
Oh yes.

Rob:
Electrical can cost tens of thousands of dollars if it’s a 100 yards away. It’s crazy.

Janice:
Right, right. Yeah. I had someone call me go, “I think it’s a half a mile away.” I’m like, oh.

Rob:
Yeah. Because if you ever go on Zillow or Redfin and you see these beautiful pieces of land, they’re 100 acres and they got views of the mountains and there’s a spring and then in the photo, there’s this little baby deer and you’re like, “Oh my gosh, it’s only $27,000.” And it’s like-

Janice:
There’s a reason why it’s that cheap.

Rob:
There’s no utilities anywhere for miles.

Janice:
Exactly. Exactly. And then, what goes along with that is accessibility. If there’s no road or if you have to build a road or if it’s landlocked by other neighboring adjacent properties, that’s going to make it somewhat difficult.

David:
Meaning you can’t get into this property.

Janice:
Correct.

David:
Because you have to go to through somebody else’s property to get there.

Janice:
Whenever I do my due diligence, it has to have public access. What’s another red flag? Site grade’s a very big one. Anything above 15, I won’t do.

Rob:
What does that mean?

Janice:
15% grade. That will just make it expensive for your dirt work. Then you have other foundation things that you will have to do. And it’s, I go for either anything 10% and below. So water is a pretty big one. That is a big variable. If, like Rob said, we all want this beautiful piece of land, but there’s no public water going to these parcels and the variable is digging a well. You don’t know how far you you’re going to have to dig. And on my project, anything that’s going into the eight to 10 dwellings or units, they’re deeming those commercial.
So if we’re doing a commercial, well that’s a whole different animal and water is public. It’s not something that you could just go and apply, “I want a commercial well permit.” Certain counties will have you go in front of a water court and you have to get a water engineer to basically state your case on why. There’s just so many intricate things that we all don’t, have any of that expertise. So it just gets expensive to do that.

David:
This is so, people always say, “Hey, I just want to build because it’s too expensive to buy. What do you think about that?” There’s so much to it. I couldn’t even warn you of all the things you have to know about, because how many people would’ve thought of any of these things on their own? If there’s like-

Rob:
[inaudible 00:57:00] the hard Way.

David:
That’s exactly right. So let’s sum up, was it five things that we went over there?

Janice:
Five things, yes.

David:
So we had water access and-

Janice:
The utilities in general. Yep.

David:
Utilities.

Janice:
Sewer.

David:
Okay. The site grade.

Janice:
The site grade.

Rob:
Floodplain.

David:
Floodplain. And was there-

Janice:
Wetlands with that. The other one was zoning.

David:
And zoning. Yes.

Janice:
Zoning’s a big one because if you can’t build what you envision, then you’re stuck with a piece of land that you can’t do anything on.

David:
Other than try to sell it to someone else who hopefully doesn’t know how the process works too.

Rob:
That’s what happens all the time too. You see these beautiful pieces of land and they’re like, “We’ve already got the plans drawn up and everything.”

Janice:
Exactly.

Rob:
“Oh my gosh. They’ve done all the hard work.” And then you ask the realtor a question, they’re like, “Oh, I don’t know. I don’t know. Why would you ask that? I don’t know. Got to figure it out.”

David:
It comes with plans. You’re like, “You just didn’t tell me $3 million to run the electrical into where these plans were drawn up for.” Okay. Well this has been fantastic. I think you’re the first person we’ve talked about that’s given us this much detail into building properties and how easy it is to mess that up. So I appreciate you sharing this with all of our audience, who may have had these hair-brained ideas that they’re going to run into this thing without knowing what they’re doing.
My personal opinion, you should leave development to the experts and I don’t recommend people get into it, unless they know an expert. And I think you seconded that by just talking about having the right construction people, having the right contractor, having your Avengers that know how this works, can make the difference between losing a lot of money and having a successful project. Is there any last words you’d like to leave the audience with?

Janice:
Well, I mean if you do want to build something and it’s along the lines of a single family home or even a cabin, that’s probably going to be your easiest point of entry. If you’re thinking, “Oh, I’m going to do a multi-family development.” If you go into any county or municipality and you go, “I want to build a house.” They’re going to say yes. Again, it’s the permitting. So that’s going to be the path of lease resistance.

David:
So do you have any advice for people that want to learn more about this? What would you tell your niece if she wanted to get into development?

Janice:
Well, I’m actually doing a little bit of consulting and putting out some information on Uncommon Developer, if you want to check that out. I just started that because I get the same questions over and over again.

Rob:
Is that your website or your-

Janice:
It’s my website.

Rob:
Uncommondeveloper.com.

Janice:
Yes. My Instagram for the A-frame is Backcountry A-Frame and I share a little bit about that process in the highlight reels. So I’m very transparent about the process and the cost there.

David:
Okay. Rob, where can people find out more about you?

Rob:
You can find me on the YouTubes over at Robuilt, R-O-B-U-I-L-T. And on Instagram, at Robuilt as well. What about you?

David:
You can find me at Big 5 Sporting Goods, looking for some new socks because my feet are freezing from walking in this snow. And after that, you could find me at DavidGreene24, all over social media and my new website, Davidgreene24.com. I’m one of the only old people left who is still making websites. Although I guess, Uncommon Developer. Right? That’s a website. It’s like we’re coming back.

Rob:
I just made a website yesterday.

David:
No way.

Rob:
I just named my direct booking website. I’m really excited.

David:
What is it?

Rob:
It’s called Neekleeps.com.

David:
Nique?

Rob:
Yeah, like unique.

David:
N-I-Q-U-E?

Rob:
N-E-E-K sleeps.com.

David:
Spelling it cool. This like when you try to put an X in something because that makes it cool, like Spanx?

Rob:
Well, I was going to do Neekly, but I know that you don’t like when people just add the LY at the end.

David:
I so don’t like that. Living in the Silicon Valley area for too long, they just started to add LY to the end of any word and call it a tech company, Shirtly.

Rob:
I-Unique.com.

David:
Couchly, Computerly, Podcastly. Yeah, it’s everywhere.

Rob:
Hey, you ever wonder where the word, the term podcast comes from?

David:
That’s a great question, Rob, do you want to get into that?

Rob:
Oh, off air jokes. Okay.

David:
All right. Well thank you very much, Janice. We appreciate you sharing your story. It’s been fantastic, as well as some of the struggles that you had and the doubt that you had before you jumped into what you’re doing right now. So thanks for coming here. We’ll make sure that we check in on with you and see how that project goes. And I’m glad that Rob brought you in.

Janice:
Thanks for having me.

David:
This is David Greene for Rob “Neek” Abasolo, signing off.

 

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