Original subtitles

-[Drew] Last time on Backed by the Bros... -This is why you buy

-a house here, because you want that beautiful view. -Yeah.

It's two lots side by side that we thought

would be perfect for a rental property.

It's literally a full gut.

The JADU should only take about eight weeks.

We helped Christina and Arek finish their junior ADU.

-Oh, look at this. -This looks amazing.

-I like the connectivity. -This is going to be a gorgeous rental.

You're going to get great rent.

But because of a failed foundation inspection.

-Oh, my God. -Holy smokes.

Their garage ADU remains unfinished and delayed.

[Christina] We're in a desperate rush to finish.

We're behind.

[hip-hop instrumental music playing]

-Hello. -Howdy, howdy.

-Well, what's-- -Coming out your way.

I wanted to talk about Christina and Arek.

They said they're only a few days away from

having the ADU garage foundation inspection.

Fingers crossed. If we get that approved, we can move forward.

Exactly.

I'm gonna say all things considered,

I did they did a good job with the junior ADU. It turned out well.

They did. You know, they were acting as their own GCs,

and they did pretty well. Made a couple of...

questionable choices when it came to finishes and materials.

Does that look like it works together to you?

[Christina] It does to me.

This is the complete worst thing to have

for a tenant in here.

Hopefully some learnings came off of that moving into

the next garage ADU.

I do like that they have the bottom line.

It's always top of mind.

So that's good that they have that engraved in it.

Yeah. Well, nobody will ever say that they overspend.

That's for sure.

The big reveal of $100 sink.

Huh?

-That's a nice looking sink. -Right?

We do have a couple of days before we have to get back

over to Christina and Arek.

So I was thinking we should take a few more pitches.

Why don't we talk about the investor in Venice?

We could talk to him. I mean, I love Venice.

I think that would be a great area.

Well, I have a couple of potential investors lined up.

So why don't we meet with them tomorrow?

-Sounds good. -Okay.

-All right. I'll talk to you soon. Bye. -See you later.

Venice Beach is one of those real estate hotspots

right in the ocean and is a magnet for tourists.

We're excited by the whole area

and taking a pitch from part-time investors Mike and Becky.

-All right. -They've done a couple of small projects,

but this is their first property that has potential for two units.

This is the most expensive property we've ever bought.

They're pretty green, so they're looking for our help

to bring them to the next level.

There's so much potential here because their rental rates are high,

vacancy rates are low.

So we're here to kick the tires a little bit

-and figure out who we want to invest in. -Welcome.

Good to see you.

-Mike. -Drew.

-Hi. Becky. -Good to see you.

-Oh, wow. Nice kitchen there. -Yeah.

You've had... This whole area has already been redone?

Yep. We opened up the entire kitchen,

remodeled new cabinets, countertop, floors, backsplash.

The goal here is potentially short-term rentals,

and then eventually we'll move in, and this will be our place.

-Yeah. -We're really using this vacation home right now.

We're gonna try to live on one income.

So we both work, live on one income,

and then use that second income to try to do investments

in real estate and other things.

-You've done properties before, right? -We have.

We've been investing in real estate since we came

-to California about 21 years ago. -Yeah.

We always want to look for a place that has

a little bit of magic and spirit.

We've done seven properties on our own,

and we also put the kids to work.

-Okay. -Amazing.

-How old are the kids? - [Becky] Well, our youngest is 10 now.

Then we have a 14-year-old, a 17-year-old,

-and an 18-year-old. -Oh, wow.

My husband and my son have been the primary contractors.

-It's-- -And we are not strong in that field.

What was the cost of the renovation for this house?

-$125,000 all in. -Okay.

-All in. -This was all us.

All the wiring.

We still have some issues in the house.

You see things like, you know, the receptacle showing.

You can see off the side, there's the hole for the vent there.

Why is that like that, by the way?

I installed the cabinets, and that cabinet

is supposed to be there, and that cabinet is supposed

to be here,

so it offset where the middle was.

Ooh.

We've had always good outcomes.

We've had great returns on our investments,

but it'd be nice in this situation to just

get it right the first time.

If you're trying to save money by doing the work yourself,

in the end, it'll probably affect

how much rent you can get if things don't quite look

-as good as a quality renovation. -Yeah.

I thought they did a really cute job on the main house.

They've cleaned it up to the point where I think

renters will pay a good price for this.

So are you planning to do a new build out back?

-Is that the goal? -It's the plans for the back house.

It's complicated, but it's a remodel.

We're really trying to identify, can we generate

good income using that space? I think Venice has, like,

12 million visitors a year, so there is a strong desire.

Why don't we get back there? Let's get back there and take a look.

Our plan is to make a nice one-bedder,

one-bath living space.

-Have you rented this at all since you had it? -No, no.

I don't know the last time it has been rented.

-Oh, there is a garage. -Very small garage.

-It's really tough to use. -Have you ever considered

taking over this space and making this all living space?

I hadn't thought about that, but I had always thought

that we wanted parking.

-It's very highly desirable to have parking in Venice. -Yeah.

And it'd be nice to be able to pull in the back alley

-and have parking and then build above. -It's so narrow here.

I don't know that you could actually get a vehicle in here.

-Well, that's exactly it. -It's not a parking spot right now.

It's a storage unit.

A lot of electrical, plumbing all needs to be redone,

-Absolutely. -some structural.

-The slab here is in bad shape. -Yeah.

We also had a limited budget on what we can afford

near the beach.

If you did a second story and parking down below

and you had a two-story bedroom unit up above,

that could be great because you get the best of both worlds.

-Right. -That also costs a lot more money to get there.

-Yeah. Look inside. -All right.

So you enter through the bedroom?

-Yeah. -We enter through the bedroom.

There's an entrance into the alley as well.

Parking is a premium here. I mean, in Venice, it's tight.

They do have a back lane here, but it's so choppy.

The front hall is wasted space.

This is awful.

I mean, you have the kitchen off the bedroom.

It's barely a kitchen.

There's so much dead space in this house.

What's your plan for the renovation?

Phase one, which is make this bottom unit usable

-and rentable. -What would the rent be here

if this is a one-bedroom remodeled house?

We think between $1,800 or $2,000 a month.

I think you could probably get a bit more than that.

But, I mean, this is Venice, and you're still going to get

a really good rent for it. What are you wanting to spend on this?

We want to spend between $80,000 and $110,000.

The question is, do we do an investment now

that maybe takes us six to seven months

of construction and get it usable,

and then wait two years and do phase two?

-For the second story, right? -Right.

You're not even close to what the cost will be

to renovate this.

Your plumbing lines for the kitchen,

they're surface mounted on the exterior. Terrible idea.

Pipes can freeze, even in Venice Beach.

So that's got to be redone.

-We literally have no insulation of any kind. -No.

You're going to have to bring it up to energy code.

Also, there are some major issues here.

So as soon as this is opened up,

-Oh, yeah. -you know there's something wrong.

This points to a leaky roof.

It pains me the thought of spending that much money on this

before you go to build up, because in reality,

I think you're gonna realize you just need

to get rid of the whole thing and start fresh.

And then you have construction that's gonna take some more time.

And no tenant wants to live underneath

a construction zone.

-No. -That's right.

However, the city really does want more ADUs.

They want more housing.

We do have the capital if we needed to do 350

or 400,000 to do the full project up.

-Do it all at once. We could do that. -Oh, wow.

I mean, it's great that you can do that,

but if this is still just a one bedroom, it's...

-Or two, yeah. -I think you could get away with the two.

I think if you expand it and you do it right,

a good two bedroom back here with the parking underneath,

you could get more money.

It'll take you a little longer to pay off, obviously,

but I think the parking here could also make

the front house more valuable, too.

They have done this before.

They're beyond their comfort zone now.

And so I like the fact that they're reaching out before

they start spending a bunch of money in the wrong place.

Would you be willing to not use the main house

for a couple of years?

Rent out the main house and this just to generate

a whole chunk of cash to help pay down quickly.

And then all of a sudden you're in a spot

where it was worth putting more money in.

I think with the kids at the age that our kids are,

-we wouldn't give up that house. -Okay.

These are the years that we want to be with them.

And use it.

So that front unit is probably where

we're going to spend time when we retire.

Knowing that you eventually want to retire here,

it makes sense that generate some income off of this

so it's paying itself off.

And then by the time you're ready to use it,

that was a great investment.

The property's in a lucrative location,

and they understand the numbers,

but they're stalling on decisions.

It's the personal emotions getting in the way because

they're going to live in the main house.

But they need to take action to start generating income

for their future.

I can appreciate why you haven't been able to figure this out,

because this is a tricky one.

Some of the things that we're struggling with

are the things that you guys are talking about.

You just have a lot more experience

and that's kind of what we're missing on a project like this.

You know, there are a lot of people who say

they're investors where automatically we get red flags.

-Thank you, really nice, thank you for taking the time. -Talk to you soon.

-All right. -I appreciate it.

But I would actually say I got a lot of,

what would be green flags with Mike and Becky.

I like a lot of what they say. With what they think

they can get for rent, they're actually underplaying it.

They're being very conservative, that's smart.

Because this is where we want to be forever,

it's really something that we don't want to screw up.

We definitely need the brothers' help.

We really do look at the numbers.

We want to have all the information.

That's where we make a decision.

But at the other side of it, I also like to like the people

that we're investing in.

If they're listening to us, if they don't have ego,

if they've done their research, that I like.

Why don't we take a look at the other house,

-Yeah. -and then we'll decide after that what we want to do.

-All right. -All right.

We don't have far to go because the second pitch

is from John, a 21-year-old rookie investor

who bought this $1.35 million property

five months ago in coveted Venice Beach.

And he did it in cash.

I love the area.

The lots are much bigger here than Mike and Becky's.

Very fancy.

Rental here, he could do really, really well.

And a short-term rental, even better.

But the house has to look high-end.

Oh, so that's where the construction's at.

-Yeah. -How's it going?

-Nice to meet you, Drew. -Nice to meet you, Drew.

-Jonathan. -Pleasure.

Kudos on your first big investment.

That's pretty cool and a great location.

Thank you. I appreciate it.

What was the reason you decided to get into

-real estate? -Well, I've always loved entrepreneurship

and investing, and I've dabbled in

a lot of different things.

I started off doing kind of simple, silly stuff

like buying and selling Pokemon cards in school.

From there, I launched a gazillion different endeavors

over the years with the dream of being able

to buy my first property.

No one has helped me buy this.

All of the money was from the last decade of working.

And that's all kind of sparked by seeing a lot of

financial struggle in my parents growing up.

And my biggest fear is returning to that.

I've been able to, over the years,

scrounge together enough cash to buy this property.

I'm now trying to renovate it and bring it to the market

as a short-term rental.

You have the same vibe that we have.

-We were looking for opportunities. -Yeah.

To be totally honest, I see a little bit of us

back when we were 21 years old in him.

We started our first business at eight years old

selling decorative hangers, tried a million ways to make money,

just like John, and bought our first property at 18.

Why did you choose this area?

Venice is an incredible market for any kind of renovation

or development.

Prices can get upwards of a few thousand dollars a foot,

so you can make a lot of money adding any square footage

or converting anything into living space.

And that's why I bought basically a junkyard

that hadn't been touched in 70 years or so.

And because it wasn't in a habitable condition,

I had to buy it all cash.

Paid $1.35 million for it, which for this area,

there's homes that are $3, $4, $5 million right down the street.

But to get my money back out and refinance it,

I had to put it into a habitable condition.

-Right. -And so we did some work on the phone just to get it

to that bare minimum level of where we were able

to refinance it.

But the backyard and the garage are still

completely untouched.

[Drew] How much did you spend to fix it up?

150 grand, so I'm all in 1.5 million.

Okay, so that's a lot.

Yeah, so 150,000 just to make it inhabitable.

If I'm looking right now, I don't think anybody's going

-to pay you top dollar for the place right now, right? -No, no.

If the goal was just to make it habitable,

well, for me, this is a huge red flag.

How much did you spend to fix it up?

150 grand, so I'm all in 1.5 million.

That's a lot just to make it inhabitable.

Banks only loan money against houses

you can live in, so John had no choice

but to fix it up to get the loan he needs to complete the project.

If the goal was just to make it habitable,

then he way overspent.

Plus, he's still a very long way away

from making this place look high-end enough

to rent for top dollar.

I am concerned that you've already dropped

150 grand on a renovation that I don't see adding value.

When we first started, the big mistake

we made is you overspend.

You spend on things that you're not going to get that return on.

What's your end goal? Why would you even need us?

We want to do a second story to get it to

a three-bed stage.

There's a rooftop patio and everything as well.

The amount of time it would take to do

an entire second story plus the rooftop patio is

a massive, massive undertaking.

If we can spend $400,000 or so...

What are your carrying costs right now?

About $6,500 a month.

You absolutely can do additional stories

and all this extra work.

It's just, do you want to wait that long to get the approvals

and carrying costs for that length of time?

Mm-mm.

If you could get three beds and two or three bathrooms

out of redoing these spaces, you could get approvals

in more like six weeks and start making rent

instead of paying carrying costs.

Are you wanting to flip it and sell it?

Are you wanting to keep it as a rental?

I want to keep it. Short-term rental, three bed.

We think we can gross roughly $15,000 a month off.

-And right now, have you had any rental? -No, I've not.

Want to make sure you're being smart with your money.

But we need to make sure that we're comfortable

with what we would be getting into as well.

John has done a lot of research, but he is so green.

I feel he needs everything from us.

Can you admit when you make a mistake?

I think so, yeah. Yeah, I think I can.

I don't think he needs our warehouse stuff

as much as he needs the trades, the design help

to get him across the finish line.

-Project management, yeah. -I'd say that's the most important part of it.

Can we look in the hallway here

-Yeah. -And see what the rooms look like?

So it's currently a two-bed, one-bath layout on one floor.

I want to know, where did this $150,000 go?

What work has been done, and is any of that something

-that we can salvage? -This is like a belly button shower.

You're tall. What are you, 6'5"?

Why is your toilet four or five inches off the wall?

We can already see that he doesn't know

his whole scope of work.

Yes, he has some designs, he has some ideas,

but he doesn't know logistically what he has to do to get there.

I would do a bump out just to capture a little bit

more square footage.

Is there a chance that you're blinded by this dream

of having a second story?

Potentially, yeah. Potentially.

The garage has to be used as livable square footage.

You've got a garage sitting here,

wasting space in this neighborhood.

You don't need a garage, especially with this being

a hot rental area.

Why would you not go to this as your first choice?

Turn this into livable square footage.

That is so much easier than trying to do the whole hassle,

two years waiting, trying to get a second story.

Mm-hmm.

If you were thinking of just adding bedrooms above the main house,

what were you thinking this should be?

Some kind of, like, media or entertainment room,

you know, throw some couches back here.

Instead of just an entertaining space,

this would be a beautiful-sized bedroom.

I would have a bathroom in here.

That way you can get your three-bedroom goal

without waiting two years to put in a second story.

If you're estimating you want to spend about $400,000

to do a bump-out, complete reconfiguration

of the whole main house and finish the whole yard,

that money will be gone like that.

And if you add a second story, you'll easily double that.

I would walk away from any involvement

in this project immediately if you were gonna GC yourself,

because that's the first step to complete failure.

Yeah.

If we don't come in to help you, what are you gonna do?

Yeah, there's a lot of risk on the line.

I can definitely make a lot of missteps.

Every decision I'm making right now is something

that's me spending tens or hundreds of thousands of dollars

on something that is gonna last, you know,

years or decades.

So there's a lot of risk on the table that I do things right.

And what's the deal with the concrete?

-This looks brand new. -That was mistakenly placed there

because we had some rearranging of plans.

We're going to get rid of this.

-When did you do it? -About a week ago or so.

-Oh, my gosh. -What?

This is several thousand dollars of concrete work.

How much was that?

-Probably about $8,000 or so. -Oh, my God.

You don't have unlimited capital.

I like John.

I'm trying to figure out if it's an overconfidence thing

or if it's a fear thing.

I've crunched the numbers super hard

on this market specifically, on short-term rentals,

and I know that there is a massive potential return.

It's just a matter of getting there.

If we can spend roughly $400,000 or so,

that's going to be worth somewhere around $2.7 million.

All in, I'd be $1.9 million, which leaves it

with a profit of roughly $800,000.

But I need someone to help me chart the waters

and steer the ship.

I need the brothers because if this renovation goes wrong,

I stand to lose everything that I have.

Let us chat about it.

We might have a couple other questions to text you.

-Otherwise, great to meet you. We'll be in touch. -Nice meeting you.

-All right. -Nice meeting you.

My hope is you get there to be that Venice land baron.

You're going to get there. We just want you to get there

with more money in your pocket.

I knew that they were gonna give me a little bit of a hard time.

You know, I have to take big swings,

and I have to take big risks to give myself

that stable and secure financial future.

-He's a smart kid. -Yeah, you can see the determination in his eyes.

He's playing it cool, he's playing it confident,

but in reality, he's got all the money that he's made,

which is a lot for a 21-year-old.

It's all on the line.

I feel like Becky and Mike are a little more realistic

about what has to happen.

Even though their numbers, I don't think, make sense.

What are you wanting to spend on this?

We want to spend between 80 and 110.

You're not even close to what the cost will be

to renovate this.

Where John is kind of like trying to put up this confident,

strong front. And I can see he is way over his head.

He's made mistakes.

He's thrown a lot of money out the window.

But there's still opportunity.

But this is the challenge I have.

Is he still focused on adding this extra story?

because with all the extra expense of

the second story and all that work,

I don't think it's enough to really make a huge difference.

-Yeah. -John's project would be an incredible project,

great rental income the way it is.

I agree. But is he gonna listen to us?

So my fear is ego.

-Yeah. -If he's not willing to drop the ego, I don't know.

That's why Becky and Mike, they're just being

a little more realistic and open to our opinion.

We could probably go back and forth

a million different ways.

If we were to narrow everything down,

do they have the budget to do all the stuff they need to do?

Budget, execution, return on investment,

can we get all this?

It all boils down to where our involvement

-would have the most impact. -Yeah.

So, with everything considered,

you want to go with...

So, with everything considered,

the investment itself you want to go with?

-[both] John. -Okay.

Best investment here is John.

For Mike and Becky, they're looking at the best investment

for their situation because they want to keep

the main house for themselves.

Anything they do back there is not going to have

a huge impact until they eventually do

the two-story thing that they want to do.

And again, if they do take our advice,

that would be two years from now.

And if that's the case, maybe we can help them then.

Well, exactly. So they don't really need us right now.

John needs us right now.

This house is a great investment.

Rental rates are amazing here.

Yeah, there might be a little bit of ego,

but we can handle that.

If we could go back, we were John.

Like, we did exactly what he did.

We didn't make any money. We overspent.

He sees this big dream, and he wants to go for it,

and he's willing to put in the work.

-Shall I give him a call? -Yeah.

He'll be excited.

[cell phone ringing]

-Hey. -Hello.

How you doing?

Hey guys, how's it going? I'm doing good.

We want to back you.

Oh my God. Are you guys serious?

Yeah, yeah. We want to back you.

This is like a dream come true.

You remind me a lot of Jonathan when we first started out.

And in saying that, I'm not trying to be mean,

but there's a little ego.

So my question for you is, are you willing to let that go

a little bit to take some of our advice because

we're trying to do what's best for your investment?

Yeah, I'm definitely willing to let you guys

mentor me and try to be a good listener.

-[both laugh] -We're excited to work with you.

You have a good eye. I like that you do a lot of research.

And so if we can come in with our resources

to make this a really viable investment for you, we're here.

Awesome. Thank you guys so much.

-I'm so excited. -We are too.

We're going to finish up another project

with a previous investor in Glass Hill Park,

but we'll reconnect as soon as that's done.

-Can't wait. -We'll see you soon.

-Talk to you soon. -Bye.

All right.

Yeah, I mean, he's excited.

He promised.

He promised he's going to listen.

He's going to absorb.

Yeah, I guess I got to get home to change some diapers.

Christine and Arek have an opportunity here,

but I think they're all over the place.

-I know. -All right, what do you think?

Um, remember that woodgrain porcelain tile

that we said they shouldn't do in the JADU?

Yeah.

They put that in their main suite bathroom.

What?

They're cheapening out the look of the space.

We need this rented yesterday

so that we can start cash flow.

They're in so deep that it's affecting them emotionally.

It's affecting their decision making.

It's driving me a little crazy.

This tile with this to me doesn't work.

We're pressing ahead getting John's plans and permits in place

to turn his property into a high-end short-term rental.

But we're still heavily involved with

our previous investors, Christine and Arek.

Between your resources and ours,

I think we could back you.

Oh, my God. I'm so happy.

We backed Christine and Arek because they have one of those

rare properties with potential for two rental units.

Look at this.

They completed the small one-bedroom, one-bath unit

on their own without much hand-holding from us.

You look stunned and shocked.

I am stunned and shocked.

The real work is converting this detached

garage into a two-bed, two-bath.

Uh, we're behind.

They hit a major snag with framing.

-Wait, wait, wait. -This looks off.

Are you trying to make it a three bedroom?

-Um, rookie mistake. -It's almost a complete redo.

Oh, my God.

But it was the additional foundation work that really set us back.

I know it doesn't look like it, but there's a lot of stuff

that has actually been done.

It's just underneath the dirt.

We have poured the new foundation.

We want to have this ready for the rental market

as soon as possible so they can start bringing in some income,

and we can reconnect with John in Venice Beach.

We heard from Adam, and he let us know that

the Garage ADU Foundation has passed inspection

for real this time.

Six inches all around the main.

-Holy smokes. -Hey.

-What's going on? -What's up, man?

Any water or erosion from the mud with all the rains?

We waterproofed the entire foundation

prior to any rain, backfilled the footings.

-That's a lot of work. -Yeah.

-But it looks rock solid. -Yeah, it looks really solid.

Good.

One question I do have, because you guys said

your budget on this was 280 grand.

-Yeah. -Which is a lot.

Is all the work here for the landscaping

and the retaining wall, is that included in the budget?

That was an addition.

-Okay. -Yeah.

-Um... -This is sort of like the afterthought.

-[both laughing] -And I don't think we have a final plan.

There won't be retaining walls like this.

Everything will be landscaping.

But nothing really is going to happen down there.

-Yeah, not yet. -I think we're going to stop it

from the curb appeal.

Yeah, and this will be a work in progress over time.

Are you raising this up, or are you keeping the slope?

To do another retaining wall and have another potential delay,

the cost doesn't make sense for them.

For now, we're just going to grade everything,

and then we're going to run a fence to separate...

The two units.

Okay, so there is a fence and hedges over here.

-Yeah. -Yeah.

We can start to clean up. What's the plan?

What are we doing for decking materials?

It's funny you ask.

Christina, I know, wants real wood.

Why do you want real wood on the surface of your deck?

I like being able to change my mind on the color.

I don't like having to sand down and refinish.

-Yeah. -And real wood does fade pretty fast.

If I could convince you to go with a composite material...

Yeah, actually, it doesn't look that bad in the sun.

-No, not at all. -My concern is longevity.

I would say if you like natural,

go with something in the brown realm,

but a composite material, not natural wood,

-and then you will thank me. -Sold.

-We'll take either one of the brown ones. -Okay.

It's an amateur mindset to think cheap now

being the right solution for down the road.

Spend now on something that you know is going

to make life easier down the road.

-Uh-huh. -Okay, now this is your messy primary bedroom.

-[laughs] That's right. -Won't it be nice to have doors

-and... -Yeah.

-I'm very excited about doors. -I think we're actually close to the doors.

We're about to close up the walls.

-It still looks pretty rough. -Yeah, as soon as

we can get this locked up, the better.

-Yeah. -Yeah.

Okay, let's talk materials.

[Christina] These were some of the items I had already had.

And so we picked this for the flooring.

-Wood. -Okay.

So I did get my wood on the inside.

Personally, myself and the Brothers,

we love luxury vinyl.

It's less expensive. It'll last longer.

It'll be super durable.

I'll keep an open mind.

There's just something about wood that I just like.

Okay.

We decided against the LVP, and we went with

engineered flooring.

I'm okay with that decision.

Because this is a rental, we had proposed luxury vinyl

for the flooring, super durable.

Christina absolutely wants hardwood in here.

I can tell some of these concessions she's making

because this is stuff she personally likes.

I like real hardwood as well. I mean, great.

But, the renters care not as much,

and they are tougher on floors.

So then what are you thinking as far as your backsplash?

I want to say we were going with the white subway

-for the backsplash, partly because of budget. -Okay.

On these that I had already stored away.

Oh, so this is your stuff?

-Yeah. -Yeah.

It will help us save, you know, budget-wise.

The one thing I would recommend,

from room to room, if you have the exact same size,

exact same style, but just different colors,

it can feel kind of boring.

You can always mix it up if you want to do something

a little bit different.

But at the same time, remember Drew's advice

from your junior ADU bathroom.

It is a huge no-no to have a wood up against the wood.

[Jonathan] Our goal is to finish up the garage ADU as soon as

we can so Christina and Arek can start renting it out.

[Christina] This investment is important to us because we need this

rented yesterday so that we can start cash flowing.

Christina is smart, and she has made

some smart decisions, but she's also made some bad decisions,

-getting a deal on everything. -Yeah.

Sometimes when you see, oh, my gosh,

this looks like a real big discount,

but it's not the right product, then it's not a deal.

-Oh, I think they're both fine. -Yeah.

-I do like the cabinet. -Yeah.

The ceiling's taller.

I couldn't have guessed it would have been 10 feet ceilings.

Listen, I liked it.

-Yeah. -And this one's almost done.

Yeah, I like the way that turned out.

Does Drew know about the two colors?

-It was a last minute change. -You think we should call?

-Yeah, we should show her. -All right.

[cell phone ringing]

-Hey. -Hey.

-How's it going? -Good.

I see drywall, but no paint yet.

We're in the primary bedroom.

This isn't done, but we're just about done

with the primary bathroom.

Hang on one second.

I know. All right, what do you think?

Um, is that that wood grain porcelain tile that

I asked you not to put into the JDU floor?

-Yeah, that's the same one. -We already had it.

But you have a hardwood in the main area, right?

The same issue I warned you about in the JDU,

you've now done here.

That's going to be backed up right against the hardwood

in the main area.

But at least there's a doorway in this option.

If you're calling me for advice,

you're really pigeonholed here because you've already got it down and laid out.

That's true. Well, I'll tell you what.

Let me show you the rest.

And then we'll take it from there.

All right, all right.

All right, so now we're in the kitchen.

So you can see our cabinets that are being installed.

Okay, okay.

Oh, they don't go up to the ceiling.

-That's too bad. -Yeah, we just.

You bought these before you planned on using them

-in here, though, right? -That's right.

Okay, I need to get over there and see what else

you've done in person.

So don't move forward with anything until I get there.

All right.

I mean, my big red flag here,

yes, they've done some renovations in the past,

but I don't trust their finished product.

Like, they're talking about products that

just don't go together.

From one location, you can see four different floors.

Like, it's, I don't know, it's driving me a little crazy.

We talk to them, they're stubborn with certain things,

they're willing to change others,

and the next time we talk to them,

they change the things that they weren't going to change,

and they're not changing others.

I'm getting confused thinking about it.

Yeah, it's fine.

It's all right.

-Knock, knock. -Hello.

Let's talk kitchen first.

-Okay. -Yeah.

Oh, yeah. So now that I'm here in person, the gap looks big.

Kelly's first option was a soffit over the entire thing.

The second option was to build the box up.

The bad thing there is that that's custom millwork now.

-Yeah. -So then you would be doing one, two.

-Three. -Three.

I would leave it as is.

-What did you pay for all these cabinets? -$1,000.

You paid a thousand for all of this?

Okay.

That's actually pretty good. That's really good.

Because it's a rental, I don't think it's the end

of the world that it has a space on the top,

but next time don't buy cabinets before you know the space.

-Yeah. -What was your plan with the vent hood?

Um, I'm open.

If you just like drywall box it out

and you go from here all the way out.

You know what? I'll get you one from our warehouse.

It'll hide the fact that is not centered, right?

-Okay, done. -Yeah, save you some money.

I see you left some of your tiles out.

Yeah.

-Which do you prefer? -I think either.

I think either works.

Both of them would look good.

I want to take this to the bathroom, though,

-Okay. -because this is what I was not quite getting.

So the color of that porcelain that looks like hardwood

is going to be right up against the actual natural wood floor.

-Yeah. -And they're nowhere near the same color.

For me, as a design element, it bugs me to see

-that side by side. -Yeah.

The most important thing will be to make sure that

whatever you have as a transition hides under the door,

because when the door is shut, all you should see is this floor,

-Okay. Yeah. -not the transition.

I actually like this tile.

-Yeah. -I don't think this tile is bad at all.

I don't think it goes with the wood.

The style of that wood up against that,

to me, you actually could have just painted this room out

and run this tile the whole way up and around,

and it would have looked amazing.

Yeah.

Maybe that subway could have just looked,

or even just a clean white subway actually could have worked.

-Which I do have. -You do have that?

Why wouldn't that be your choice?

Subway tile is, it's timeless, but it is what it is.

We're gonna have to move forward with it.

The message is simple.

Long-term is better than short-term for design

and quality, but the message is just not sinking in.

Well, sometimes it's okay to save,

but other times it's better to spend.

It's a fine line to walk, and as mentors,

it's really tough to teach that.

Anybody out there, make sure to know what

you're dealing with before you buy your materials,

even if you think you're getting a sale or a deal.

My main thing is the budget.

The budget is driving a lot of decision making.

And if the tenant really wouldn't care,

then it's sort of whatever is the most cost effective.

Hey. What's happening?

Oh, we have to talk all things Christina and Arek.

-Why? -I was just over there looking at the space.

Remember that wood grain porcelain tile

that we said they shouldn't do in the JDU?

Yeah.

They put that in their main suite bathroom.

-What? -They're cheapening out the look of the space,

even in the kitchen.

And I think if they want premium rent,

they're not going to get it with these things that they're doing.

-I haven't picked this. -Well, that's the tough thing.

Maybe we can dress up the space by backing them

a little more with some furniture.

Yeah, I'd love that. For the bathroom, we could probably

give one of our vanities from the warehouse.

Oh, yeah. That would look great.

Like in the kitchen, we can give them countertops.

That'll make the whole kitchen look better.

Okay.

We'll send over a guy and make sure Kelly's there

just so they don't make any more bad choices.

Okay.

Not everybody's a designer, because if they were,

everything would look good.

Yeah. [laughs]

Christine and Arek have an opportunity here,

but I think they're all over the place.

They're in so deep as well that it's affecting them emotionally.

It's affecting their decision making.

They're not thinking things through the way

you and I would if it was

a regular business investment.

They're smart. They seem like smart people.

They just make rash decisions. I hope they learn from this.

Do you know what was in that delivery?

I think that's the other vanity.

It is.

So that's from the bros. Thank you, bros.

-And what else have you got? -The range.

Yeah?

Yeah, I don't see the fridge. Oh!

-There he is. -Hello!

-Hi. -Hello. Hey.

-Yeah. -Place looks great.

-This is Evan. -Okay.

The brothers have decided they're going to give you free countertops.

I'm so excited not to have butcher block countertops.

You can't even imagine.

Some colors to look at.

You're working with some beautiful earth tones in here,

getting that kind of marble look.

-Okay. -So it's made up of a 70% recycled glass.

So environmentally-wise, it's great.

Durability-wise, it's going to perform like a quartz.

But easy to take care of.

Very easy to maintain, which is fantastic.

Do you have a favorite color here?

I'm thinking these.

I like a little bit of brown.

I would go with the Borghini Luxe,

which is great because it incorporates these grayish blues.

And you get the gold.

You get the richness with the wood tones.

-Yeah. -That is stunning.

That would look really cool. I love it.

I have one request. I was wondering

if we can make the countertops go over it?

-Oh, absolutely, a waterfall edge. -Yeah.

-We can do that. -That would look good.

-Okay, good. -Take care.

I can't wait for the countertops to go in.

That will just tie it all together,

it's such an upgrade and it's freaky. [laughs]

There was a lot of money spent before they even knew

what the design was going to be.

That's not a good thing typically.

We don't have a lot of time before this needs to hit

the rental market, and so we're scrambling to try

and put in the finishes that are gonna make this ADU feel custom.

We're giving them the countertops,

but Christina and Arek are providing the tile that they already had.

Well, this is definitely the point where

we're hoping the design components that we're bringing

to the table are gonna jive with their existing materials

when all is said and done.

We are so close to being done.

We're like deciding things that to me are the final step,

like the stucco.

Well, we were thinking about going with a green.

I like that.

I feel like it's still light enough,

-Yeah. -but just like that hint of green, which I think is great.

-Yeah. -I like it.

I can see it now.

[country music playing]

When we first looked at this property,

we're like, two revenues coming in.

-It's like a gold mine. -You're at a complete standstill.

They were lost, completely lost.

This is one of those examples where people see

the opportunity, and then all of a sudden,

every corner they turn, it gets worse and worse and worse.

Then all of a sudden, you have this money pit,

and you have no idea how to get out.

I went back and forth.

Some days, I was thinking they were great investors to back.

Other days, I was thinking, what are we doing with our time?

So by staging the garage ADU for Christine and Arek,

we're building on what they already did with

their junior ADU, getting it market ready

so they can max out their rental income

and direct those earnings towards their main house renovation.

I love them.

Oh my gosh, how cute is that?

That looks great.

It definitely has curb appeal.

And there's still parking.

I mean, you could easily park in here, no problem.

All right.

-The completion of phase two. -Mm-hmm.

I mean, I know you've seen it unstaged,

-Yeah. -but it just makes such a huge difference.

-Afternoon. -Oh, my goodness.

-Oh, my gosh. -Wow.

-Little oasis. -Oh, my goodness.

-I love it. -It feels like a home.

-Oh, my God. It doesn't look like a garage. -Yeah, it's amazing.

Obviously, you've put your blood, sweat, and tears

into this project. You've been here throughout the whole process.

It's amazing.

I adore it.

You would not believe that this was a garage at all.

No, I mean this looks like a home.

You've got pantry storage, you've got space.

In reality, if we were designing this...

-Yeah. -...we would definitely have taken our cabinets

-all the way to the ceiling. -Ceiling.

You had already purchased these

and they actually fit the space pretty darn well.

-Yeah. -I love it.

And, you know, being able to help you guys out

with the beautiful stone counters.

-Yeah. -I love this so much.

The main thing is the place looks finished.

It looks refined, and it looks clean.

That's what tenants want.

It's already bigger than I expected. I don't know.

And you know, to be totally honest,

a tenant might come in here, and they might do a sectional.

They might end up putting a nice big sectional in here, and that still works.

[Christina] Yeah. We could definitely fit a sectional.

Even though it's small, it doesn't feel cramped.

With the original design, it didn't make sense to me

where the kitchen was or the flow to the other areas.

Yeah.

-This is much better. -This is beautiful.

So this bathroom, I know we had some talks about

the color choices, the tile choices in here.

But what I think is great is that it's just clean.

It's presentable.

[Christina] The linear drain, I hadn't seen it before.

Those notes from my house.

And it'll look great for the photos.

This is obviously the bathroom for this bedroom over here.

Really nice size.

Has its own access...

-to the deck. -Yeah, it looks terrific.

And it just shows how much potential is in this place.

And it's amazing we had this much space in a garage.

The way we had planned it, an office didn't seem like

there was room.

But this fits perfectly.

And it is a bedroom. It had a full closet.

But I really like the way they did the staging.

It's just going to make it so more people are like,

yes, I want it.

Give it to me. Take it. Take my money.

-[both] Yeah. -And by the way, if you do decide to furnish it

to get a higher rent, I mean, in reality,

you're going to pay yourself back for all the pieces

-that you purchase very quickly. -Yeah.

If it's that much of a difference,

we might want to do it furnished.

Yeah, yeah.

These floors turned out great, hey?

Yeah.

These are the hardwood floors. I know we talked about doing,

what were we saying, a composite?

-Luxury vinyl. -Luxury vinyl, there we go.

Initially, you know, Christina wanted to do hardwood.

We've had hardwood in a rental before,

and we think it looks better, and it's held up.

You're picturing luxury vinyl as a really cheap,

cheap-looking material.

You literally can get luxury vinyl

that looks identical to this.

You can't tell without touching it that

it's not hardwood.

You can still get that beautiful look.

It's just gonna be durable.

If your laundry machine overflows or whatever happens,

-it's not gonna wreck it. -Yeah.

This is gonna be a very comfortable rental

for somebody.

-Okay. -Oh, my God.

This is my favorite room.

High ceilings, so much natural light, access to the deck.

I love it.

Walk-in closet and its own main suite bath.

-Yep. -Now, the material choices,

-the barn board, porcelain with the... -And the marble.

Yeah, with the marble.

They clash in the future.

Don't just put in materials because that's what you have.

-Yeah. -Find bargains after you've done your design.

But it's beautiful, it's bright.

This is really an incredible room.

The addition made so much sense.

We were able to optimize this space.

-This is a really, really good ADU. -Yeah.

I think the layout is literally perfect.

I don't think there's anything that would make it better.

Yeah, there's no wasted space.

It was so worth it, because now this is really

going to be a dream for somebody to live in.

So the rentals are all done.

To have the extra income coming in, that's spectacular.

All right, let's go over some numbers,

because to me that's the exciting thing.

-I know you always dig in. -Yeah, I like the numbers.

$315,000 is what you're out of pocket.

-Yeah. -$35,000 is what we contributed.

$10,000 of that was actual hard material.

-Yeah. -The thing is, you had so much material already,

we didn't have to contribute a lot.

Even more valuable than that was getting you a GC

who can get in here and get it done.

-That's exactly right. -You have our designer, and then we paid to stage

-the space to get some really good photos. -Yeah.

If we look at this whole project between

both of these rental units, it costs you $87,000

for the junior ADU and $315,000

for the garage ADU.

You're $402,000 out of pocket.

Might I just point out in the beginning,

we told you that your unrealistic budget

of $150,000 to $200,000 was probably more like $400,000.

-Yeah. -You're $402,000.

-Yeah. -So we kind of came in close to that.

You could easily, easily rent this for $3,500 a month.

You think about that, that's $42,000 a year.

And together with the $26,000 a year

for the JADU rental, that means annually

you have $68,000 of revenue that can start pouring in

-on these properties, which is pretty amazing. -That's right.

It's gone from being a money pit to

an income-producing investment.

-Absolutely. -I love it.

I love it.

But I do think you should keep in the back of your mind,

as a furnished rental, you could creep up to $5,000 a month.

You'll pay yourself back for the furniture pretty fast.

-Yeah. -Yeah.

And we can finish our house.

-That's phase three. -That's right.

I'm glad we were able to get you through phase one and two.

[Christina] Yeah, two out of three, hey.

[Jonathan] Well, the good thing, too, is we wanted to get you guys

in a better spot financially, and the only way

that was going to happen was to have these done.

-Yeah. -What a relief.

We do feel that you have grown,

you've learned, and now here you are with

an amazing investment.

So we're really happy to be back to you.

Thank you guys so much.

Honestly, we would have been another year.

Oh, at least.

We really appreciate having someone help us,

you know, figure out which way to go and what to do.

Less ornate for rentals.

-We just don't need the fancy. -I like fancy.

Simple and durable.

And we're going to get through this.

All right, you guys. Celebrate.

Christina and Arek have been getting a lot of interest

in their rental units, but I recently heard

they love the garage ADU so much,

they've actually been considering moving into that,

which will save them paying rent to that temporary house

they're renting, and they're going to be on site

while they finish the main house.

So it's kind of a win-win.

I love the creative thinking, and no matter how you slice it,

they have a winning property here.

Next time on Backed by the Bros...

What would we need to do to add a second store?

Is that something you've run by the brothers?

It's something I want to do, so I'm going to go for it.

Oh, no, no. You didn't.

It adds a tremendous amount of value.

This probably added, like, three weeks.

He's spending a lot of money.

We want to put, like, a waterfall behind it.

What are you talking about? A waterfall?

I want to make it zen.

-Oh, my God. -Give me a whole new--

Reel it in.

I like this guy, but I want to strangle this guy.

How many changes have there been?

13 right now, and we're not done.

Oh, my God.

My goal with this is to make the best stay in Venice.

The end goal is to build a business.

It's Zen in Venice. We're building Zenice.

I hope you're right. I don't know if we can make it.

There's not a lot of time left in this project.

Welcome to the Zenice Beach House.

Wait, wait, wait, wait. What?

That's it?