An experienced real estate investor and contractor for over 30 years, in this podcast episode Van Sturgeon walks you through the renovation process from identifying a great deal, to funding options, setting goals and how to find - and work with - the right contractor.
Laurel: Hi everyone, and welcome to The REITE Club podcast. I'm Laurel Simmons, one of the co-founders. Today, my co-host is Francois Lanthier.
Francois: Laurel, welcome to The REITE Club podcast. How did you enjoy the interview? I know this is the beginning, but we have the privilege of asking our questions firsthand. Your takeaway there?
Laurel: Van Sturgeon really knows his stuff when it comes to renovation, especially for real estate investors. You can tell and I was thinking like, I don't to the point where I was like, oh, I don't think I would even look at any major renovation without maybe talking to him first, because it sounds like he will help. Going to his website and seeing what he has to say, because to me the message, the moral of the story was really figure out what you want, figure out what you need versus what you want and stick to it. The more detailed you get the better off you're gonna be.
Francois: This is a business. A lot of investors forget that this is a business you're not renovating your kitchen or your house for fun. You're doing a business transaction. How do businesses conduct renovations? You use the same. I thought it was a great interview. Let's get to it. Everybody listening, please make sure to give us a rating.
I know we're not doing it at the end. We're doing it at the beginning but before, think about evaluating us and giving us a thumbs up and sharing this episode. It might help an investor out there and change their success story or the outcome.
Laurel: Hello, Van and welcome to The REITE Club podcast. It's great, you're here.
Van: Thank you very much for having me. It's been a while. I've been looking forward to this conversation. Thank you very much for having me.
Laurel: We know that you're a coach and that you're a renovation specialist. Tell us a little bit what does that mean? Renovation specialist and how do you work with real estate investors?
Van: It's something that I just fell into. I never planned this out. Several years ago, I had a health scare. I've been at this for over 30 years as a general contractor and as a real estate investor. I've literally done thousands of renovations in my lifetime from single family all the way up to multi-family commercial properties as well. I decided to downshift in my life and as I was doing that, I discovered I was getting bored with myself to the point where I was getting depressed, because I was always going.
I just got out of nowhere, I got a phone call from a family friend of ours who's interested in renovating their house and they're struggling. They know they know about me and you know what I do. They brought me on and I helped them plan and manage a whole renovation.
I enjoyed the experience. A couple of weeks after that, I happened to talk to a real estate investor friend of mine, as well as a coach. I told him of my experiences, how great I've felt. He was like, you'd be surprised at how many people are out there who are struggling for this particular component of real estate investing, as important as it is to find a great deal.
Always important to find out opportunities for an off market deal is just as equally important to be able to do something with it because we're looking to buy ugly duckling diamonds in the rough. We're gonna have to spend some money on the property to be able to raise value, to improve it. That particular component, I don't care how great of a deal you have. If you don't have some systems or processes in place to be able to plan and manage a successful renovation, a value add, you're gonna end up with a great deal being squandered.
That's how God got involved in this several years ago. I've got clients all over North America. I've helped her this whole process and really implemented systems and processes in their lives to be able to not only save money, but get quality work, and also be able to have a project that sounds time and on budget.
Francois: That's a huge thing for investors. As you mentioned, if the project is delayed, then there's carrying costs. If it's a distressed property, you're dealing with private funds or higher interests, and then you want to refinance and now there's seasoning periods and all kinds of things going on: shortage and materials and shortage and labor. What are your systems Van? What do you suggest to keep this all in a good alignment and to stay sane as an investor through this process?
Van: Sure, whether it's on a single-family home side or multi-family, it all really starts with setting a goal, identifying, writing it down, what it is that we're looking to accomplish with this particular renovation, this value us, whatever we're looking to improve on the property. We set that goal for some real estate investors. It could be flipping a property. It could be a buy and hold situation where we're looking to raise rent by $300.
Whatever that is that we're looking to accomplish, we should establish that goal and write it out. Once we have that, we should go out in the marketplace and validate not just peripheral kinds of stuff on the computer and Googling by actually just getting on boots on the ground and actually visiting comparable properties in that marketplace. In the immediate marketplace and really identifying what exactly these other properties have that your property does not, and really having an understanding in validating that goal.
Sometimes you'd be surprised. There are situations where we might have these aspirations of raising rent by $300 in the market to go out in the market. And you realize that comparable properties just are not able to raise a rent at the same kind of rate as other comparable properties, cuz your property's missing.
Something could be square footage, could be a pool. It could be Southern exposure. I don't know, but there's this reason why we gotta go out in the marketplace and validate what it is to accomplish. Once we have that goal then we move on to, we need to know what it is that we have, how many, how much money we have in the budget.
It's often found that a lot of folks, especially new real estate investors will get into renovation, have sort of an idea of what they're looking to spend, but then blow their budget and really what you need to do at that particular stage. Once you've got your goals, you validate them. You need to set aside exactly where that money's coming from and how much money there is.
Whether it's from lines of credit, whether there's cash, that's been stashed away in the kitty. There's also opportunities. Lots of folks pass up on their government assistance. There's a lot of opportunities, whether that's replacing lighting, whether that's storm and sanitary sewers. There's a lot of things that governments will come in that will help support raising the value of your property for whatever reason.
A lot of folks miss out on that opportunity. Budget is really the second step in that folks need to really zero in on and identify exactly how much money they have to be able to move on toward that successful planning and managing renovation.
Francois: I agree with you having that plan and on the boots on the ground as well. Some people sometimes are unrealistic about raising rent, like a thousand dollars. The house or the building is just not set up for it. You're mentioning you also did it commercially so larger multi-family budget becomes even more important than what's always important, but now you're dealing with 12, 24, 36 units. A hundred dollars difference. Multiply that by 24, it adds up and how do you deal with multifamily when budgeting renovations, do you have some insider tips or tricks?
Van: I'm able to rely on the experiences of doing this over 30 years. I'm at an incredible advantage, compared to new real estate investors or syndicates who are putting together their first deals. That is really when I'm bringing in particular new syndicates who put together a consortium of investors to purchase some multi-family assets. They do their pie charts, they do their projections. They've gone to their family and their friends. They put the money together to purchase this asset.
All of a sudden these great plans that folks have it's like that of Mike Tyson. We all have great plans before when we step in the ring until we get punched in the face. Oftentimes, when you've actually acquired that asset is where, when you start to realize that it's a different animal. You're dealing with engineers, you're dealing with specialized contractors and it's a totally different game.
That's where I'm brought in because of my experiences and being able to navigate those treacherous waters and being able to determine what are the items that delivered the highest ROI, because ultimately at the end of the day, we can blow our brains out. Whether it's a single family and multi-family by just what you described a hundred dollars here times 20 units is $2,000 or whatever figure is.
These things can add up quite quickly. And folks don't realize that there's a hundred dollars toilets and then there's thousand dollars toilets. As a multifamily investor and also single family it's really the same, essentially. You really need to have goals, validate them, and then you need to have your budget nailed down to the amount of money. You're gonna use this renovation value. Add. And then ultimately then you move toward the next process, which I call a needs and wants list.
The purpose behind that actual list is that we grab a sheet of paper literally, and we draw a line right down the mill. We write needs and we put wants, and we go around the property from the exterior to the interior. We just write down everything that we seem to find an issue with that property. We write 'em down, but we gotta put 'em in different categories. The two categories are things that need to be done.
There's a pothole in a driveway that needs to be repaired because we don't want that to be a trip hazard. We don't want somebody to hurt themselves. If there's a hole in the roof, that's a need. We would put that down as one of those line items. But then there's situations where we come across a lime green carpet from the 1980s that although it's hideous.
It's still functional. We will put that under the category of a want, meaning if we have the money in our budget, then we'll address it, but we need to first address the items under the need category. A lot of the thought times I find on both sides, single family, and multi-family folks really need to go through this process and really fall back on, goal setting the validation process, make sure that the items that they've identified, they categorize them and also determine whether those are the items that they should be spending your money on or not.
Oftentimes, I find new real estate investors will immediately rush into replacing windows and yes, 34 year old windows can be replaced. They're not very efficient, but if we only have a limited amount of money on the budget and if it's a rental property, or if it's a flip. I'm not sure if that's really gonna be high on my list of items that I'm gonna be spending, cuz it's gonna end up costing $15,000- $20,000.
I might say, you know what? I'm not gonna spend my money there. I'm gonna spend my money on landscaping. Might spend my money on a new laminate floor. There's a whole bunch of things that I would rather spend my money on than windows. In particular, if you're gonna ask me some of the tricks of the trade. I'm a huge proponent of landscaping.
There's something you say when you drive up to a property, whether you're a renter, a tenant, somebody who's gonna purchase a property. The aesthetics, the front aesthetics of a property is really what will differentiate you. What will make the difference on a subconscious level?
There's a real estate agent a long time ago. Beautiful lady said to me, then you can't sell the steak without the sizzle. You need to have this sizzle in order to be able to sell the steak. And it's incredible. I've done this with properties. I have flipped that it's an incredible, landscaped lawn, a couple of shrubs, some flowers, paint the garage doors, front door, and dress up the place. All of a sudden, consciously, subconsciously people are willing to forget those windows you didn't replace, or the kitchen. It's not a new kitchen, but the cabinetry has just been painted.
It's amazing what these types of little things you can do on the multifamily side. I've encouraged people and I've seen. The parking area and re striping it, all of a sudden gives you that illusion, that it's fresh, it's new and it's relatively inexpensive. It compares again, replacing bathrooms and kitchens and windows, which is gonna cost you tens. Perhaps even hundreds of thousands of dollars.
Laurel: You stole my question there, cuz I was going to say, I bet you get people saying I want this and you just went into it. Because I think one of the things that I'm noticing. If you're experienced in real estate, it's still easy to get caught up in the emotion of it. Isn't it like, it really is.
Van: Absolutely, that's the reason why I'm laying out a process. Six steps to this process, that if you hold true to each of these steps, you will find your way to planning and executing a successful renovation. That's the reason why goals validate them. That's the reason why we put a budget together and then we go through a needs and wants list.
We are fine tuning our approach toward this, in the planning and execution stage, because it's really easy, $50 here, $200 there, a thousand dollars there, all of a sudden, whoops. It happens to new real estate investors. The first property it's actually rare for that first property of a new that they actually are not over budget.
Actually, if you think about it, I see that all the time. When you're having somebody who's mentoring you, coaching you, they'll help you navigate and make really good decisions. And you're being educated along the way. I always say that.
Learning how to play a guitar. There's lots of content information out there. You can go out on YouTube, and watch somebody play a guitar and you can learn, you can read books, but ultimately, or you can go higher. A guitar teacher will sit right beside you, watch how you hold that guitar.
And ultimately isn't that a faster, much better way of learning, how to play the guitar versus watching YouTube videos and reading books.
That is when we're talking about real estate and the hundreds of thousands of dollars that are at stake. I would much rather have somebody beside me, who's gone through it and be able to help me because if you make one wrong move, I've seen some real doozies out there.
If you make a mistake, especially on the renovation side, because there's contractors, we see horror stories all the time with TV shows, channels dedicated to this whole industry of bad contractors. Their celebrities have been created because of it. I'm a big proponent of that.
Francois: It's all about compressing time. That's why investors are investing in real estate. They wanna expand their finances, their money, their time, freedom through real estate, and then they could ruin it all by not doing proper planning with renovations and refinances. Van, I'm curious, what are you seeing? Maybe some new trends in renovation.
You mentioned maybe skipping the windows if it's not the right time or it's not the right fit, but what's happening right now. Is there a trend, something that you're seeing that's different over those 30 years? I'm sure you've seen things come and go and like the carpet and other items.
Van: I'm active in only four markets, but I have clients all over North America and I'm not able to answer your question because every market has their own submarkets and their own flavor. One area might be going toward that white, gray look. Other areas are going more toward those creamy, toppy colors.
Some areas are more accepting of a 12 by 24 porcelain tile or ceramic tile while other areas want the terracotta 6 by 6 by 12. It's really specific to your area. There are trends definitely in every market, submarket. That's really, again, as a new real estate investor, especially if you're going into another market that you're not familiar with, you really need to go out there, roll up your sleeves, get into the weed and do your due diligence, visiting properties, and really understanding the marketplace.
By virtue of you being able to do all of that research and accumulate all that information, you're in a much better position confidently to be able to make the choices in terms of what you're looking to accomplish with that property, particularly, you're gonna be able to identify great deal, cuz it really starts stare at a great deal.
The next thing is what do I do with that great deal? Every great deal for the most part. There's got something wrong with it. We gotta do something with it. We gotta replace the kitchens, the bathrooms, the landscaping, the house is ready to do this or do that. We gotta get in there and we gotta do something about it.
Van: We gotta spend money to raise value. And so we gotta be very careful what items we choose to be able to deliver the highest ROI. And that's why this process is associated with what I preach. Is something that I fine tune over many years and really is a way to be able to be successful in planning and executing a renovation.
One of the things that I stress is that once you put that needs and wants list together, the next piece of business that you should have is a detailed scope of work. And this is one of the, one of the, unfortunately the biggest problems that I see out there, whether it. On a single family home side, and multi-family is a lack of a scope of work where we clearly identify what it is that we're looking to accomplish in the property.
In terms of the types of appliances, what type of paint we're gonna use, how many coats of paint, all that information needs to be included in a body of. Of work in a document so that we know what we're getting when we're looking to renovate. And then when we go out in the marketplace to tender it out to contractors, to bid on it, we're getting quotes back that compare.
We could compare apples to apples. One of the biggest complaints that I hear from clients is I can't find anybody to price my work. What are you doing? I'll ask them. I'm calling this job contractor. I'm calling that contractor and then some of them will just ignore me. And some of them will come by.
I should point at the things that I want. And then I sit back and wait for them to come back to me. And some of them do, most of them don't and whoever does come back with a price it's all over the place. And I'll ask about what it is that you provided them? How do we know that one contractor's price that he provided?
Are they pricing out the same toilet? Are they pricing out the, how many co of paint are they putting on the wall? Are they replacing the cabinet or just gonna paint over that? Are they using porcelain tile, ceramic tile, Lam, and floor, real hardwood floor. We need to get all those questions answered before we even knock on any contractors' doors to start pricing it up, because if they don't, we don't do that beforehand.
Of course, we're gonna have prices all over the place. And let me tell you something else. I'm a really good contractor. I'm very good at what I do. And I've built my business. I've been very successful. What I do. And the reason why I'm successful is that I go in, I do my job. I get paid and move on to the next. I have a turnover.
And I like, and I'm, even though I'm really busy, I'm still out there soliciting phone calls from co people who are interested in getting pricing on work. And if somebody calls me out of the blue and says, Hey, I want you to price out a job after a couple of questions. If they're not prepared, if they don't know what they want, I don't waste my time.
I don't price out anything. I wanna deal with professionals, people that know what they want so that when I step on that job site and I. Spend time putting a quote together. At least I know that I got all the information over there and I'll be competitive, but if you don't know what you want, it's just that it doesn't make sense for me.
That's why good professional contractors, general contractors, electricians, plumbers, whatever they wanna see D they wanna see documentation. They wanna see somebody who knows what they're looking to accomplish, and it provides it to us so that we can then move on and price it out accordingly.
Laurel: It really does sound like you need a, you really need to detail it out. And it, I think you help people do that if I'm understanding correctly, but also as an investor real estate investor, I really have to sit down and literally write it down.
I'm not just going from my memory or from what I think I'd like, because the more you write it down, of course the clearer it gets and the more you can. Even question your own assumptions, because that's what we wanna do. We wanna get rid of those assumptions and all the vague deals and everything else so that you can come in and say, yes, I'm quoting on this and this exactly this, and it makes it a lot easier to compare two or three quotes. If you're all quoting on the same thing.
Van: Real travesty is that a lot of real estate investors will rely on a general contractor to put a detail, put a scope of work together and price it. And it's like allowing the wolves in a henhouse. You don't want a guy like me. Trust me.
Francois: You'll rip out all the bathrooms and the floors I sent that.
Van: All of a sudden the budget of $50,000 will turn into 150,000. I can easily, we can turn it. This is from a Chevrolet into a Cadillac. That's the reason why, again, there's a process in place that will get to the point where we are in control over the whole situation.
If I'm reaching out to contractors from references, from people that we know that have done some work for friends, family, Power, people in our power team. Once we have those people that we've got references and we send out our scope of work, we can feel pretty confident that whatever quotes are coming back, we can compare.
We can then move on to the next phase, which is also just as important too. How often do we find folks putting out 30, 50, 70% down payments to the general contractors and then all of a sudden. Oh, my gosh, the general contractor, he doesn't show up when he is supposed to show up, he comes and he goes, he's not doing what quality work and I'm, and I pose this question to my clients and I said what do you expect to happen?
The only way that we can control our projects is through. And so that's the reason why after we've we've nailed down the person that we wanna do business with. We have to have a payment and a progress schedule set in place before they start work. So we all understand where we're coming from.
We're gonna give you, we, I don't know why we need to give people 30%, 50%, 17%. But yes, there might be situations where there's mobilization costs or maybe some money for ordering material. But 30%, 50%, I've heard some outrageous sums of 70% upfront before a contractor. Does that do anything?
And you go try that with your job, go to your employer and say Mr. Employer or Mrs. Employer, I would like you to pay me two months ahead of time. I promise I'll come into work. But pay me ahead of time. How long do you think that will be? How would that work? Would I actually, do you think that you'll get a nickel outta that?
They laugh at the fact that maybe not kick you in the rear end and all of a sudden you'd be looking for a new job. This is not, this is the reason why we, you need to have control. And it's very clear enough and establishes it right from the get go where we have a payment and progress schedule. So we feel comfortable in the amount of money we're giving and at every juncture.
At every milestone, if that is that contractor's not producing the quality workmanship that we expect, then we gotta make a decision. Whether we continue to want that individual, or we find somebody else, but we're in control over our project. And oftentimes folks lose control because of the amount of money that they put up front.
And then they get stuck in this situation. All of a sudden, a two month project turns into four months and who's gonna pay you. Who's gonna pay for that? You are and why should you?
Laurel: We could talk to you for hours. I think on this you've obviously got so much knowledge and expert experience and expertise and yeah, we could go forever. However, it is now time for the lightning round and maybe Van will have you back for another podcast and we'll just keep the conversation going.
Van: This is my pleasure. I get passionate about this. There's so many times that I run. Folks that are struggling with this particular aspect. I really enjoy as much information that I can dish out to folks so that at least they could take away something and incorporate it into their lives to be successful in real estate investing.
Laurel: Thank you very much. Question number one, what's the best advice you've ever received from another investor or at a networking?
Van: The best advice that I've received is I was struggling in my life a long time ago, where I was successful. I was growing my general contracting business and also dabbling in real estate investing. And I was burning in Canada. Both ends. And I got to the point where I was almost on the verge of having a nervous breakdown and I wasn't, I was growing too quickly and I didn't know how to control it.
It was at a networking event where I ran into a person who was older than me, but it was an individual who had everything that I wanted. And I reached out to him, had a conversation with him and he was able to, I was able to have him as my mentor. I pay them, but it was something that if it wasn't for that, I don't know where I would be.
It was and it was, it's the start of a lot of mentorship and weekend retreats and books, and a lot of information. I've made the investment in myself before I made investment elsewhere. And I've seen the, and I've seen the benefit of.
Francois: Great advice, which leads me to the second question. What is your favorite resource for real estate? Investing could be a book training, a person, an event you've answered it, but maybe you have a new favorite
Van: I think that there's a wealth of information out there for folks to just be able to really have a good understanding. But ultimately, as I mentioned before, I think folks really need, if you really wanna get serious on your business, you should find someone, an individual that can. You feel comfortable with it, I'd be able to take you through the process and instill confidence. We're all cut up in our little comfort zones.
If we wanna be able to grow and expand, we need to get out of it. And a good mentor. Coach is somebody that should be able to do that, to be able to drive you out of that and be able to put you on a road of success.
Laurel: I agree with you either pulling up kicking and screaming, doesn't matter. You just bring on that person and you go, because we can't coach yourselves. You just can't. It's impossible.
Van: All the information for the most part resides in us like we've watched the YouTube videos. We've read all the books. It's a coach of somebody over there that holds you accountable. Pushes you and pulls the good, best out of you. He's there or she's there as a sounding board and it's somebody there that really pushes you to progress. I've experienced it in my life and the reason why I've been able to accomplish and achieve what I've been able to achieve in my life is because of that. And it just makes a lot of sense that I'm a huge proponent of.
Laurel: Question number three. What's the one attribute you think has made you successful? If you pick one.
Van: I believe, my positivity. I think that a positive mindset that nothing is everything is accomplishable. If you put your heart and mind and focus, and if you're passionate about it, I think that positivity is a huge bonus in my life and has propelled me to where I've been, but I rather I've been able to be positive.
Francois: I love it. It's so true. Being positive will take you much further. We do talk quite a bit about mindset on The REITE Club podcast and how it can help you persevere. Which leads me to the next question. What do you typically do on a Sunday morning?
Van: I have been trying to break this habit, being in construction and all that kind of stuff, like I wake up early, no matter what. I'm up at 4:30, 5 o'clock in the morning and on a Sunday usually I'll just be going. Sunday is different from the rest of the days. I will just double up with a cup of coffee and the dog, and I'll read.
Laurel: There you go. That sounds like a great thing to do. If we need time to refresh, reenergize, replenish and all the rest of it. That's great. Thank you Van. Before we go, how can people reach you? What's the best place for people to reach you?
Van: I have a website vansturgeon.com that people are more well welcome to go there. It's a source of information, resources got a bunch of due dads and calculators, stuff like that, that people can download. I'm on social media, Instagram and Facebook. There's lots of videos and information that I post on those forums. If people wanna reach out to me, they're more welcome.
I love helping people and I wanna give back. My goal is to create 1 million millionaires by 2030. I'm more than willing to help as many people as I can to get to.
Laurel: That's great. Thank you. We'll make sure that all your contact information is in the show notes. People will be able to reach out for you or out to you. Thank you again very much. I think we're gonna have to have you back and talk more about how you can be a super duper renovation specialist with Van Sturgeon as your mentor and coach.
Van: Thank you very much for having me.
Laurel: Francois, I guess we know that, you gotta figure it out and write it down and get those details down before you actually start doing the renovation. On that note we will close out this episode of our podcast and everyone. Thanks for listening. We want you to customize your life. Get out there, have success with real estate investing and come back and listen to our next podcast.
DJ: Thanks for listening to The REITE Club podcast, where the focus is on helping all levels of real estate investors advance to the next level and help you customize your life. Be sure to tune in next week at thereiteclub.com/podcast or wherever you listen to podcasts. And if you get a few seconds, please rate the podcast. Wherever you're listening, it helps the show get noticed by others. And we truly appreciate it and don't forget to subscribe.
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