Original subtitles

They've done some investment properties before,

so they should know a little something.

If they don't know a little something,

they're about to learn a little something.

Massive undertaking. Potentially massive profit.

It smells like money.

We just want to help people get into good investments

or to help save them from what's turning into a bad investment.

I don't know what I'm doing.

I've never flipped a house before.

Had you rented it out from the beginning,

you would have made over $400,000.

Ah!

So we want to back you guys.

[women cheering]

$100,000? You're freaking nuts.

What you're looking at doing with this house seems impossible.

We made so many mistakes early on.

I wish we had a mentor who could tell us "No, no, guys, bad idea."

Rookie mistake.

They're already 200 grand in the hole.

Obviously, this needs some work

On paper, Some things can look great.

In person, whole different story.

We got a problem. You gotta tell these guys to stop everything right now.

If they don't get this right, I think they're done.

[woman] This is life changing.

This is gonna turn the page to my career.

Who wants to make some money.

[upbeat music playing]

[Jonathan] One of the things we always look at as investors

is what is the best use for a property.

[Drew] In California, they have passed legislation

that actually allows any property that's a single family home

to have an additional dwelling unit.

[Jonathan] An ADU is essentially another avenue for revenue.

That could be a garage you converted.

That could be a rental space in the basement.

[Drew] This is a great thing because we have a shortage of housing.

And that's a great thing for people looking at getting into investment

because you know there are so many people looking for a home,

looking for a potential ADU.

Renovating and getting these kinds of units onto the market

is something we definitely want to invest our time in.

[Drew] We are meeting up with Denise,

who is a homeowner who wants to be an investor.

She and her husband have this garage sitting in their backyard that could

absolutely bring in some revenue,

but it's been sitting there doing nothing for them.

[Jonathan] So this will be interesting.

-Haven't done a ton in Echo Park. -No.

It's been a while, and also this is a historic area, so...

The demand for this neighborhood

has really grown over the last decade or two.

There's a lot of opportunity.

[Jonathan] Renters want to live here.

It's a very walkable community with lots of local businesses.

[Denise] The overall goal that my husband and I have in mind

is to get some income that will make life a little bit easier.

We have a unique historic property

that we've made a great effort to renovate and restore.

-It's here. -Is it?

[Denise] We want that same kind of care taken with our ADU project.

-Hello! How are you? -Hello!

How are you? Nice to meet you.

Hi. Denise.

-Pleasure to meet you. -Nice to meet you.

What a beautiful home.

You have clearly done some work.

We have. But what we really need help with

-is the garage conversion. -Garage.

-Yeah. -So how long you've had the house?

Twenty-three years.

Oh, wow. How much of that time have you spent renovating?

[Denise chuckles] That's a good question.

About 5-7.

-Okay. -Okay. That's not bad.

[Denise] It's not too bad. But why you're here

-is around the corner in the back. -The garage.

[Drew] Hey, it's like stepping back in time.

[Denise] Yes. My husband and I, we've wanted for 23 years

to convert this into a living space.

But the house took so much time and effort and energy to do,

that we put it on hold.

-And... -I'm pulling out my calculator.

-And if I was to average things out... -Oh! Don't do that.

So that's 23 years at, say, about $1500 a month.

You realize, had you fixed this up

and rented it out from the beginning,

-you would have made over $400,000. -Ah!

Yeah. Out the window...

-[Denise] Okay, so time is of the essence. -Absolutely! Of the essence.

And so, I'm glad you're doing it now.

[Drew exclaims]

Because nobody would be renting this right now.

-No. -Oh, my God!

Did you do any of this on the walls?

[Denise] No, no, no, we did not.

How big is this?

About 380 square feet.

-380. Because it doesn't feel that big. -Oh.

There's definitely a moisture issue up above.

Did you replace the roof?

[Denise] We did when we bought in 2003.

So that is a big no-no.

A skylight in the attic.

It will get so hot up there, that it will cause a lot of humidity issues.

And that can also breed mold.

[Denise] We've had friends say, "Oh, just tear it down," you know,

"And start anew" and we say we can't.

Because we have all these restrictions

being in a historic preservation zone.

A lot of the structure is not going to be saved.

Like, it's in pretty rough shape.

-Right. -I mean, you have to decide what you want it to be.

Do you want it to be a one-bedroom?

Do you want it to be a studio?

Have you looked into the rents in the area at all?

We have, and we're thinking maybe we could rent this for about 2000-2500 a month.

With it being like a studio.

2500, you know, you're starting

to get into one-bedroom territory.

[Jonathan] I'd say 2200, maybe.

The bad news is there's not a lot to keep

because the slab would all have to be repoured.

You can see it's heaved.

It looks like it's actually sunk into the ground a little.

Inside the walls, you can see all the moisture damage

and you've probably got critters living up above.

What kind of a budget have you been looking at?

Roughly about 150,000.

Where did you get 150 from?

[Denise] Uh, just, you know, what we've saved up to this point,

and I haven't really kind of compared it

to, you know, other ADU properties.

Okay. So there's literally no research

or quotes or anything like that.

You just... That's a number you want to work with.

It's kind of like how much we'd like to spend.

Yeah. Why do you think this is a good investment?

[Denise] I think that it's an incredible area

that people would want to live in.

I don't think we would have a hard time finding a renter.

For us, it's going to get us to a point

where we have more financial freedom.

We also have a teenage daughter

who's going to be going to college in three years.

-Those price tags are pretty large, so... -Yeah.

This would help, you know, with that.

Have you dug into any historic restrictions at all?

Uh, I have not.

It's what you can see from the street

-is what they care about. -[Denise] Yes.

We could easily make this look beautiful from the street

and do whatever we want back here.

So this is why we want to work with you.

Because you have all this knowledge

and that would take off so much pressure.

You know, we were able to do the house,

but you know, it was nerve racking.

If we try to tackle this project, it could take like 3-5 years.

There's definitely potential. You have to keep in mind

when you're looking to rent this out,

if you want to get a premium rental,

you need to have a lot of pluses.

-A lot of extras. -Okay.

You don't really have the space for a private yard.

-Mm-hmm. -And you don't have an option for a private access.

So you're not going to give them

that one thing that some people want,

which is a little private space

unless you eat into half your yard.

That's funny. I didn't even think about that.

The biggest question is, is this doable?

[Drew] I mean, it's doable.

It's relatively straightforward.

It's just the building itself.

The structure itself needs a lot of work.

It's a smaller garage than your typical 20X20,

so it's not gonna be quite as expensive.

But there are a lot of other headaches with the slab

and everything else that has to be redone.

In the meantime, we have a lot to talk about, properties to see.

Thank you so much.

So what's at stake with this project is that it may never get done.

It's been 23 years.

I don't want to wait any longer.

[Drew] I guess the first big step is going to be to start putting down

some layouts on paper, understanding the length of time

to push a permit through here.

Plus, the historic commission.

It's a challenge because of the size of it.

It's going to be a little bit tight.

But I mean, it's a studio

Studio could turn around the construction side pretty fast

once you get the concrete poured.

Well, once you have the permits and the concrete poured.

But I would say, you mean this other one sounds like it gets two studios.

So I want to see that before we make any decisions.

-Meet you over the other one. -Yeah.

We're not here to help everyone.

We wish we could, but we have only a certain amount of resources.

We only have a certain amount of time to be able to help out.

So we need to make sure that we make the right choices

-with the right investors, -The people who are willing

to put in the work, the people who are willing to listen,

those are the people we would love to help.

[upbeat music playing]

[Jonathan] We're heading over to the next pitch.

[Drew] Kristie and Tom are in Highland Park,

which is a great area, big rental market.

[Jonathan] Apparently, they have two studio suites.

Which is great.

That's two separate revenue streams.

[Drew] But they want to combine it into one.

I don't quite understand that because the the rental per square footage

would be a little bit more as two individual units.

This is why I like just getting on site.

On paper, some things can look great.

In person, whole different story.

I was looking along as I'm walking just to see.

Not as many conversions for garages as I thought there would be.

Well, it's definitely gonna happen more and more,

especially with the city incentivized to get more housing.

Yeah.

We've saved around $200,000 and it has taken years

saving and saving to afford to change

this back house property to an income generating ADU.

We've been dreaming about renting it out for the past couple of years.

Our ultimate goal is financial freedom.

Hopefully renting out this ADU will allow us to travel.

[Tom] We need that push to help us get it into something

that's really usable and really nice.

How you doing, Tom?

How are you? Drew.

-Nice to see you. -Nice to meet you.

I don't think we could do this project on our own.

[Kristie]It's our first big project.

We're ready to move forward, but it's also really scary

when you're putting this much money on the line.

[Jonathan] Tell us about your property here.

So the front house, it's a 3-bedroom, 2-bath.

In the back, right now, it's two studio units one on top of the other.

[Drew] And you have had them rented, or they are currently rented?

In the past, only to friends, because it's not permitted as an ADU.

It's permitted as two bonus rooms.

Because right now, it's really two separate units.

To go to the top one, you've got to use these stairs on the outside.

[Jonathan] Not getting this permitted so you could rent it out

was a terrible decision.

You've been sitting on a gold mine and just wasting it.

Where are you at right now

as far as getting plans approved and things like that.

We have plans and they're stamped approved.

-Oh, wow. -[Drew] Wow. You're ahead of the game.

You do have some water damage under your stucco.

You'd want to check all that out

to make sure that there's not rot

or problems inside the wall.

Pretty cheap stucco job, which makes you wonder

what else was done quick and cheap.

What are you planning here? What's this?

This is a spiral staircase that goes up into the upper unit.

That's how that would be accessed.

Bathrooms need some revamping too to kind of configure it.

[Kristie] I would love for this downstairs bathroom to have a bathtub.

Would you need the tub down here, though?

Or if the bedrooms are upstairs,

normally you would have the tub where the bedrooms are.

Yeah, whatever it's going to be easier.

But what's more important? Whatever is the best investment

or whatever is the easiest.

The best investment.

[Drew] I'm not sold on your idea of combining these for the best investment.

You're going to get more money per square foot

as a studio one-bedroom than you would as a two-bedroom

if you combine the whole thing.

Well, I guess it's not necessarily the best investment.

It's a better setup if we end up moving back here.

Because, you know, as my son gets older,

maybe we want to go take out our 4X4 camper and explore.

And so we all moved back here and rent out the front house at some point.

-Okay. -So to get more rental revenue

-coming off the main house -Yeah, that's right.

I like that you're willing to do it.

You're thinking of the numbers.

Knowing now that they want to eventually

move into this back house and rent the front one,

from a revenue perspective, that's a great idea.

Because the front house would rent for a lot more.

And if you guys are planning on traveling as well, it doesn't need to sit empty.

Yeah.

The success of this rental property is really important to us

because it's really securing our ability

to make choices around what we want to do in our lives.

We're starting to travel with my son.

[Tom] Right now we're even converting an old ambulance

into a 4X4 camper.

So being able to go out long term in that

and then come back to a small base camp, it would be good for us.

What we love to do is have that

become our life and part of his education.

-Can we look upstairs? -Yeah, absolutely.

Yeah.

Were you planning on keeping these stairs?

[Kristie] We're gonna eliminate those stairs.

They wouldn't need the outside access,

and it would allow for a walk-in closet here.

However, you can't get furniture up a spiral staircase.

And that's not gonna work for most renters.

I like a spiral staircase.

Just for easy access.

But It is not functional when it comes to moving in and moving out.

[Drew] And getting rid of those outdoor stairs,

I think that that's gonna be more pain than anything.

It's gonna cost quite a bit to rip that out

and then all the exterior work to patch up and fix it.

[Jonathan] You're making choices that you're totally gonna regret.

You're wasting your time and money.

And I just got to say, you need to rethink your plan.

[dramatic music playing]

[Jonathan] Tell me what your plan is.

-So, spiral staircase, two bedrooms. -[Kristie] Mm-hmm.

[Jonathan] Keep the bathroom where it is.

How much time have you been thinking

about the layout that you've had here?

A few months.

We worked with an architect and this is basically what they said they could do.

It feels choppy.

There are a lot of little galleys of wasted space.

I feel like you would end up creating two [bleep] layouts here.

Like, really, really tight bedrooms that are not functional.

[Drew] You've also got that great deck area outside.

That could be a huge moneymaker.

So you want to prioritize that.

I'm assuming this is your main bedroom over here, right?

This is the big one.

So then all of sudden you have the main bedroom that doesn't have

a walk out to the patio,

but then you have this tiny little bedroom

-that would have a walk out. -[Kristie] Yeah.

[Drew] If you want to increase your potential rent,

you're gonna want easy access to that outside area.

It all comes down to budget as well,

but you were gonna spend a ton of money ripping those stairs out...

-[Kristie] Yeah. -I think you should keep those as your stairs for this unit.

-[Kristie] Okay. -And then not do the spiral.

I hate spiral stairs. They're not functional.

-Okay. -Let's step back downstairs.

I want to talk a little bit more big picture.

So what is it you would need from us?

I think bringing that experienced crew.

This is the biggest investment I will have made

other than buying the house that I knew I was going to live in.

It's different to be making a real estate investment.

That's where I would love to have the stress level come down a little bit.

Right now it's a space that sits unused.

[Tom] Yeah, you gotta maintain it anyways.

Right now, it's a liability.

We want to make it an asset.

This probably could cost $350,000-400,000.

This, we would be paying with our savings.

But we could do a home equity lien if needed.

[Drew] Yeah. Just be ready for any additional costs.

Probably the number one mistake most people make

is out of fear

they don't pull the trigger on a good investment.

I think this is a good investment.

-Yeah. -I think there's a lot of potential there.

Comparable units in the area are getting $40,000 to $50,000 a year in rent,

and that's the kind of money that you're just leaving on the table.

We have a lot to discuss.

If the brothers don't back us, this will put a lot of things on hold for us.

It's our first big project.

It's gonna be incredibly stressful, and it's our savings.

Well, definitely an interesting project.

I kind of love Kristie and Tom's sense of adventure.

Who wouldn't want to rent out their ADU, make some extra cash

and then travel across the country sooner with their families?

[Drew] No, that sounds amazing, but as an investment,

they've already made poor decisions.

They're on the verge of making some very expensive bad mistakes.

And then, on top of that, she's the money person

in this relationship, and you can see that she's in over her head.

We don't cash in on any of the potential profits,

but we do stand to waste our time and our resources

if we back the wrong project.

Denise is a rookie investor sitting on a gold mine.

She's just finished a massive renovation on the main house.

And she has a little construction fatigue.

So she wants us to take the reins

and get this garage conversion done.

Her daughter is headed to college,

so Denise would like extra income to help.

But this is a historic building, and there's no way to tell

how long we'd be tied up with permitting.

[Denise] It's going to get us to a point

where we have more financial freedom.

[Jonathan] Kristie and Tom are also first time investors

and they are totally overwhelmed.

And they want our help to convert their bonus space

into a rental that will fuel their dreams

of being able to travel with their sons.

They have permits in place, but they've made a huge mistake with the plans.

They need our mentorship as well as our contractor

and design team to get it right.

But they'll also need constant hand holding along the way.

This is the biggest investment I will have made.

I like that these guys have the plans already.

It's just that if we're gonna tweak it, how long that would take?

[Jonathan] I think we can still tweak their plans a bit

without causing a big red flag with the city.

But I guess my bigger concern is

they're making it a little bit of an emotional decision

because they might move back there at some point,

so they want to keep it in a two-bedroom.

Even just with the conversations we were having,

there's so much that they didn't even think about.

Yeah. I honestly think we can pull the trigger.

I think I know what I want to do.

Uh...

I honestly think we can pull the trigger

You want to do... this one?

-Yeah. -Let's do it

With us involved, we can get it done quickly,

and we can get it done for the best price possible.

For Denise's ADU,

she's nowhere near getting started on the renovation.

But we can give her some guidance on how to get things rolling,

so she's one step closer to cashing in on that opportunity.

-Can we just pop back in now and tell them? -Yeah.

-Let's do it. -Or do you want to make them sweat?

-Yeah, we'll just call them tomorrow. -Nah.

Kristie and Tom have a lot of ideas,

but I think one way we can back them that will really help

is the design side of it.

Their plan is not great.

But also on the trade side,

we can get them a GC who will see this project through right to the end.

I don't think she needs to sweat anymore.

-No. -You can tell she looks stressed out.

All right.

[knocks at door]

-Hey, hey! Sorry we took so long. -Back so soon.

You have an amazing property, you really do.

And I can see how stressful this has been.

We want to make sure that you don't make mistakes

pulling the trigger on something that's not optimizing the flow.

We've decided to back you.

[laughing] Thank you!

-Ready, guys? -Yeah. We're looking forward to it.

-Yeah. Thanks so much. -Thank you.

I figured you wanted the good news today, so yeah.

-Thank you. -Thank you.

[upbeat music playing]

They have a lot of their hopes and dreams riding on this property,

especially with the savings they're about to spend.

They're going to need $350,000 to complete this ADU.

They've got 200 grand saved, and they'll take a loan out for the rest.

[Drew] But we also have a lot riding on this, too.

I mean, finishing on time is paramount,

so we bring in the best of the best

to make sure we can get it done.

[Jonathan]Adam is a general contractor who we've worked with

on a million projects.

He's big enough that no matter what we throw at him, he can tackle it.

And I know he's somebody who can get this done immediately.

[Drew] Well, Kelly is a great designer.

When working with small spaces,

you need to have a designer that's a problem solver.

And she is good with puzzles.

[Jonathan] They're both available for 12 weeks,

and I think we can get it done in that time line.

The most important thing for you is organization,

having a team that you can trust,

and we've worked with these guys for a long time.

So you'll see when we walk inside and look at the footprint.

Their idea was to have a spiral staircase

to connect the two so it can be one unit.

I like the design with a spiral staircase.

I also like the fact that you have an entryway

to go upstairs this way

and an entryway to go upstairs in the back as well.

But you want to get rid of the back one.

-Yeah. -But I don't want to get rid of the back one.

-Okay. -Yeah.

I think we'll have to see. [laughs]

[Jonathan] Let's jump inside. So you guys can actually see what we're talking about.

Why in the plans do you have a shower downstairs when there isn't a bedroom?

Because it's already here.

Can we shrink it?

Maybe. Comes down to cost.

Well, keep in mind the cost to redo the tile to put in a new tub.

We just need to do a toilet and a sink.

We could probably gain you a little square footage here

and not have to replace all that expensive fixture.

[Drew] We can work with your existing plans to improve them,

and we'll aim to do that without a big extra cost or a long delay.

-If we had to switch the plans to do a tweak like that. -That's fine.

We just need to do an on site condition change,

and we could get that passed with the inspector sometimes.

This is a pretty easy tweak.

So what do you think on the design side down here.

I think it's pretty straightforward.

It's a small space. We can do a lot with it.

I saw on the plan, you guys have a laundry room.

The kitchen that wraps around, maybe a kitchen table.

Keeping very classic, minimal furniture pieces.

And then, with the spiral staircase, a nice sofa.

[Drew] From a style standpoint, if we can create something

that someone walks in and they're like, "Oh, my gosh.

I don't want to see any other rental. This is the one",

you will have a much bigger pool of potential tenants,

which means you'll have fewer headaches and better rent.

Let's head upstairs.

Okay.

Before we say anything, I want to hear your first impression

as you're physically in the space.

[Kelly] Holy small. This is really tight.

Tight, tight, tight, tight.

Their original plan has those stairs being demoed.

The reason you did that

is because your plans show that being a closet back there.

Looking at this room, we put a wardrobe closet in here.

Maybe we just close this wall off just a little bit.

Then you could put your bed on this wall right here,

and then you could have two night stands.

This bedroom is so tiny that we really can't even fit a dresser into it.

I thought maybe taking the closet and doing something built out.

So you have drawers. We use molding.

We can maybe frame it out so it looks like a built-in

And this is the bathroom that should have the tub.

[Kelly] I agree.

I think the real big question mark is,

is it even an option to enclose those stairs

and then reclaim what you were gonna do for the spiral staircase.

The only two factors would be timing to go back to the city

and resubmit, and cost.

What do you think ballpark would be on both?

[Adam] With foundation, framing, stucco work, 35k at least,

above what else we have here.

All of those permits, all of the structural calculations

have to be redone because of this.

So I would say a minimum like month, month and a half.

What's going through your mind?

It's a big gamble.

To go down that road of additional cost and additional time.

An extra month and a half is a little scary for us, too.

[Kristie] The spiral staircase is really important.

There's not a lot that we're sticklers about,

but this is one of those things that we really want to have.

So we want to figure out a solution.

[Drew] Okay, we're gonna start demo,

but we're gonna need a decision on the stairs in the next couple of days.

-All right. -Thank you. We're so excited.

[upbeat music playing]

[Kristie] This is a pretty big gamble for us.

It is a whole another property for our future.

Like, we're ready to move forward.

But it's also really scary

when you're putting this much money on the line.

If the project goes south for us, it's our savings.

[Kristie on phone]Hey, Jonathan.

Hey, how's it going?

-It's going pretty good. -Yeah, I thought I would check in

and see if you've had a chance to chat with Tom.

What did you guys want to do with the stairs?

We just need a decision on that.

Yeah. We decided that we are going to take your advice

and we'd like to keep the stairs.

Okay. Amazing.

I feel like some renters are gonna hate the spiral stairs.

It looks cool, but it's just not as functional.

What did you think of the idea of enclosing the stairs, though?

Making it an actual proper entry down below?

We considered the idea, but the additional cost

and potential impacts on timeline.

We're not going to close the stairs.

[Jonathan] I get it. No more delays. Let's get this rented.

Yeah. I think that's the... No additional costs.

On timeline is the priority for us right now.

Yeah. And what did you think

of some of the other suggestions we talked about?

So we really liked the suggestion of the powder room downstairs

instead of the tub to give us more space.

I love it. This gets us on our 12-week timeline.

We will not delay. We'll get it done right away.

All right. We'll talk to you soon.

All right. Thank you.

[tools whirring]

[Drew] Plans are a go.

Downstairs, we're converting that bathroom into a powder room.

We're keeping the outside stairs.

And upstairs, to the two bedrooms,

we're rejigging and we're adding a second door to the balcony.

[Jonathan] Yeah, it's gonna be so much more functional for renters.

And the quick approval was a huge plus.

We can now keep this to a 12-week renovation.

Which means we don't have to have it drag on any longer than it has to.

Yeah.

[cell phone ringing]

-Hey. -Hey.

Okay. Look where we're standing.

Oh, my gosh. It's an empty shell.

[Kelly] We do have to talk to you about something.

What we're realizing looking at this

is there's not a lot of surface space down here.

So tell them what we're thinking.

Okay, so here's what we're thinking, Drew.

That space that we were going to utilize

for the washer-dryer downstairs,

we were thinking about taking that space back before the kitchen,

letting that all become outside storage.

We'll close this window off because it makes zero sense,

because now we're just like looking at a staircase.

We'll have access to the storage now from the yard.

-Yeah. -Which is okay with you, right?

-Yeah. -Okay.

Moving the washer-dryer upstairs next to the first bedroom.

That would be the space where we put like a stackable washer-dryer.

Do you think that's possible?

Is that the side of the wall where we were sort of talking about like

like a whole wall of closet?

Yes, where the room ends.

There's kind of a landing space

that we think could fit a washer-dryer.

Right. I think that's a great idea.

Having the laundry up on the bedroom level

makes a ton more sense if we can make it happen

without cramping things, especially if it's a spiral staircase.

Yes, dangerous.

With a laundry basket.

Yeah, exactly.

[Kelly] You learn pretty fast that

Drew and Jonathan know what they're doing,

and they definitely know what they want.

So what I didn't want to happen was

that Drew was gonna walk in and he hated my plan.

I made an executive decision.

We get his a sign of approval, and now we're good to go.

[upbeat music playing]

[Jonathan] Hey, what's going on? What's up?

[Drew] I heard from Adam.

And you know how we thought they'll be a little bit of stucco patchwork

to do at Kristie and Tom's?

Yep.

There's a lot of stucco work to do.

-Like how much?-All of it.

[chuckling] What do you mean?

[Drew] Basically, the water damage was so extensive.

You do have some water damage under your stucco.

It wasn't worth just trying to to save the stucco patch.

They had to tear it all off and we had to start over.

Oh, my gosh. How expensive is that going to be?

I mean, this is tens of thousands.

That's not really the news that they are gonna want to hear.

They're tapped out. They're gonna have to talk to the bank.

But if they keep anything that's not done properly,

then in one year they're gonna start

having leaks again and more damage.

So no, it's better to get it all done.

I was thinking, I'm gonna hop over there when I get a chance just to see

where else in the budget we can save money.

-Okay.-Keep you posted.

[blows raspberry]

Do you want to see the sheer wall that we got out here?

So we had a little run in with the inspector.

-Okay. -For the joist that we're behind here,

he wanted us to double up.

-We got that done for him -[Drew groans]

That's another hit to the budget.

And, yeah, we got the full sign off, that was it.

You know what? To be honest, I wasn't even thinking

that we had to strip all of the stucco and then work from there.

I was thinking, it's just gonna be a bit of the patch.

But obviously, we've got to do what the engineer needs.

It is a shell.

We're down to the studs.

This building is literally falling apart.

Every time we find something new, they need to find more money.

And I think that is stressing them out big time.

I might just have a little peek upstairs and see what Kelly is up to.

The new wave coming up.

Why bother putting in, you know, a bulky spiral staircase

when you could just put a ladder, right?

It's saving money.

So Adam told me about the extra cost that came up

How are you feeling? Before we even talk about anything.

Uh, scared of things like that.

The termite damage.

Yeah, yet another unexpected fix.

You can see signs that things

were not fully done, right, That bugs me a little bit.

That's gonna be a lot of extra cost.

The one thing I still want to ask you about is that little backyard space.

-Okay. -Out here. All righty.

You're thinking this section here

-will be for the suite, right? -Mm-hmm.

[Drew] It needs to feel private, but with a defined function.

So it feels like added square footage for your tenants.

With all the overages, we want to keep costs down.

And are you still gonna have enough

to clean this up and make this look presentable?

Truthfully, I'm not gonna have a lot of money.

What's the dream?

I think the dream for me would be to have pavers or flagstone

or something on the ground here,

where you can have a nice table

or even like a little fire pit.

We have the outside space on the deck,

but this would just be an additional space.

[Drew] I mean, we could, if we're really trying to be cost conscious,

we could find a really good price on some pavers,

or do some sort of brick lay and then great.

We don't really have much budget for it.

[upbeat music playing]

I do have a bunch of updates to give you.

Let's start with the bottom floor.

We got all roughs in. All rough inspections passed.

Please chime in if you want to add any more recess lights.

We have four in the main area, and then we just have

another 3, 2 in the kitchen, one light above the sink.

Because there's limited windows down here,

-definitely more light. -Definitely more light.

So some updates.

Pocket frames are in.

We're ready for drywall.

We got your plywood on.

-[Kristie] Yes. Thank you. -[Adam] Thank you for approving that.

Because it feels a lot better in here.

A lot better.

[Kristie] It's a really old house.

So I guess there's always gonna be unexpected costs.

[Tom] There's a little pressure to get all this right

Finding any more surprises in there is something I worry about.

Yeah.

[Jonathan]Like a lot of first time investors, Kristie and Tom

are using their life savings for this ADU.

So they are overwhelmed by the uncertainty of it all, and they should be.

There are so many failures in real estate for every one winner.

When it comes to people who don't really know what they're doing.

But that's the challenge. You get a lot of investors who will come in

and this is 10 years of their life savings

that they're putting into a project.

You can't screw that up.

[pensive music playing]

-Hello? -[Kelly] Hey, Jonathan, it's Kelly.

Hey, what's happening?

So here's the deal. I'm actually heading over to Kristie and Tom's.

I'm gonna have them make some design decisions.

But honestly, I'm a little bit concerned

that they're making choices kind of based on if they were

living there versus renters because they have discussed before

about how they were thinking of moving in.

They need to make this as appealing as possible to all renters,

so it's not about what they want.

A decade down the road when they may move into this ADU.

They need to think about right now what renters would want.

So I would definitely make sure your voice is heard

because you'll steer them in the right direction.

Okay. So the other thing that I'm also concerned about

is the storage upstairs, the bedroom.

Kristie and Tom are like almost completely out of money

with all these extra costs.

Why don't you do this?

If you talk with them, figure out what you think

the best storage solution would be.

And then Drew and I will cover the bill.

We'll add that to our backing.

Perfect. I'll talk them through all the options and we'll keep moving.

-Sounds good. -Have fun.

-Talk to you soon. Bye.-Okay. See ya.

Right now, we're at the time where we have drywall up.

We're starting to paint.

Kristie and Tom need to pick out their tile choices,

their colors, wallpaper choices.

I just need to get everybody to give me their little check marks,

and then I can just plow through it.

What were you guys talking about?

Color choice.

Oh! I love additional colors.

I know you do.

Can we keep it red?

Based on everything else that I'm thinking?

I think that black would be your best choice.

If you're doing a rental, you don't want to make it too specific with color,

because ultimately your renters may not like it.

Okay. We have some wallpaper.

-Mm-hmm. -It's the one place and the only place

that we'll bring in color.

Because I want everything else in the main spaces to seem semi neutral.

So I love the colors.

Are we doing it for this whole space?

[Kelly] Almost every wall.

If we're thinking of doing this entire space in it,

I feel a little bit claustrophobic.

[Kelly] Okay, another option. That's fair.

So what about doing the wallpaper on the top half then?

And then we can take this green and put tongue and groove

on the bottom half.

[Kristie] I really like that.

[Kelly] This space here is where we're gonna have the closet.

-[Kristie] Okay. -We originally talked about this space.

We were talking about giving you guys like

a big box store closet system.

That maybe we could try and frame out

to make it look like it was a built-in.

I had a change of heart yesterday,

and I decided that I would prefer

to build you a custom closet.

It could be completely built-in,

and also because we had to put our split unit here,

our air conditioner, now we can even if we wanted to build something

that was almost like a dresser lower on this side.

There's not a lot of space to store things

and making sure that it feels like there is

I think what increases the value to whoever's renting it.

[Kelly] The price, $6500 for custom.

But I've already talked to the brothers.

They've already agreed to pay for it.

Would you guys be open to that?

Absolutely. [laughs]

Okay. All right.

[Jonathan] One of our landscape experts, Jake is available,

and he's actually over at Kristie and Tom's right now

with his crew.

This is a little bit more backing than we had initially planned.

We were hoping that Kristie and Tom

might have been able to take on

some of the yard work themselves.

That didn't pan out.

But if you really want to be able to attract great tenants

and keep them there, a backyard is important.

-Hey, hey! -Hey!

Tell me what's happening out here.

What we have is kind of an outer area

for grass, trees, play area, whatever you want to do.

And then right here in the middle,

we have it boxed out for a seating area.

The big thing for us is, ideally wanted an outdoor dining area.

Because of the size of the space,

it doesn't allow you to have a dining room inside.

That dedicated outside space gives you that outdoor dining.

[Jonathan] What's the path going to be?

It's a DG base with pavers placed in the middle of it,

so you have a hard surface to walk on.

-Okay. -You know, if it's a little rainy,

you know, you can stay on the concrete.

You have to worry about getting muddy.

It'll lead you from the front yard

and bring you all the way back to the seating area.

And what do you guys see this the ground cover being?

I was thinking decomposed granite.

We could possibly put garden boxes back in.

My opinion, and I would just do this all as grass.

Because DG costs about 2 bucks a square foot more than grass to do,

and grass would look nicer than a a giant DG area.

[Kristie] I kind of like the idea of the grass.

I think I'm on board.

I am noticing you've got standing water.

Yeah, because the problem is this whole lot it slopes

where you don't want it to slope.

It slopes toward the structure here

and toward the house at the back.

[Tom] Yeah. This has been an issue with rains before.

[Jonathan] Well, Jake will take care of it now,

but it was a mistake to have left it.

You should have fixed it yourselves

the the first time you saw it.

Do you mind if we take a peek inside?

I'd love to snoop around there.

We'll take the advice on the grass

because your advice on keeping the stairs

was absolutely the right move.

Boom! Put it right there.

Why was that the right move?

[Kristie] For multiple reasons.

One, once we see the spiral staircase,

we're like, "You could never get anything big upstairs."

[coughs] I told you so.

Ahem. Excuse me. Something in my throat.

-I'm good. All right. -The second reason is,

this kitchen is significantly bigger

than it would have been had we lost that space

and lost the stairs to where we were originally gonna

put the washer and dryer.

Yeah. This is a great looking kitchen.

It's really well laid out.

-Yeah. -Anybody would be really excited to rent this space.

[upbeat music playing]

[Drew] We can't risk having any delays with Kristie and Tom's ADU.

They need to start getting some income rolling in.

And Jonathan and I can't afford any more time.

We are stretched really thin.

[country music playing]

[Jonathan] Every week we keep our trades here,

it's gonna be like another 6 grand out of our pockets.

And the thing is, with Tom and Kristie's property,

it's going to be a success in the end.

It's a great location.

They're gonna rent it. They're gonna do very well.

For them it's a win.

I feel like for us as mentors, maybe not so much.

They're sweet. They're kind. They're team players.

The only thing missing from this project

is they're not gonna be lifelong real estate investors.

For me, backing people, I'd love to see.

our knowledge and our expertise

going to somebody who's going to take that

and then just run with it and do so many properties.

That is more satisfying for me as a mentor.

[upbeat music playing]

If we're gonna get them the best possible rent,

then we need to show these spaces the best possible way.

And that's what's staging.

But we're putting this place on the market tomorrow,

which is when our crew is moving on to the next project.

Time has run out

[upbeat music playing]

It's one thing when a renovation project is done.

It's a whole other thing when it's staged.

-Yeah. -Take a deep breath. See your new space.

This is it.

-Oh, my God! -Whoa!

[Jonathan] Take a deep breath.

-See your new space. -[Drew] This is it.

-Oh, my God! -Whoa!

-[Kristie] Wow. It's beautiful. -[Tom] Yeah.

[Kristie] I cannot believe how much fits in here.

Yeah, I know, right?

[Kristie] I would never have envisioned

that we could have a room like this

-or a kitchen this size. -Yeah.

This sink is fantastic.

Like, so many sinks have, like, that cutoff thing in the center.

It's not even functional.

[Jonathan] I'm a fan of a single basin. A nice, big, nice, deep sink.

And I think a lot of renters will feel the same way.

[Drew] When somebody has an ADU,

just because it's a smaller home,

you don't want it to feel like it's non-functioning.

This is extremely functional.

We decided to move that laundry upstairs.

This is so much better for your kitchen now.

Your fridge isn't over here.

It's tucked over here.

Most ADUs don't have this level of functionality.

Renters are gonna jump at this place.

The spiral staircase,

not only is it functional to get upstairs, but it also looks really cool.

[Kristie] It looks architectural.

It's art as part of the room.

And I really appreciate how much color

you all brought in here because that was one of my things,

I really love color.

And not just color in here.

Did you peek in your bathroom?

-Oh, no. -Yeah. Look at the color in here.

Oh, this is fantastic!

-[Tom] Oh, yeah. -This is another thing that feels bigger

than I would have thought.

Because we removed the shower and I thought this was gonna

feel like a tiny half bath, but it doesn't feel squished.

It feels like a good amount of space.

This is not just a tiny ADU living space.

This is an actual real home living space.

The way it's configured, the way it's laid out,

it's so comfortable.

[Kristie] The staging really shows off the space fall.

When I look at the rentals in the area,

it looks better than the other ones that are staged.

I know you're not doing furnished rental.

People will bring their own furnishings.

But all this is meant to do is paint the picture

for what people could have in their space.

It looks stunning, and I think that we're going

to be able to get top dollar for it.

Once we get runners in, I think we're going to enjoy that for a little while.

And then eventually move back here

and rent out the front house. when we're traveling more.

Wow. This feels like a lot of space.

A lot of space and a lot of storage.

Yes. Look at these drawers.

We decided at the end of the day,

nothing was going to fit better

than custom, so we just donated a little gift to you guys.

[Kristie] Thank you so much!

It looks like it's always been here.

I mean, I think it's a key element to really helping us get

the top dollar for this rental.

[Jonathan] And even moving your laundry upstairs.

How great is this having laundry so easily located to the bedrooms?

[Kristie] I mean, it makes so much more sense

that it almost feels embarrassing that we didn't consider it.

[all laughing]

You've got the large stairs that you ended up keeping off the back here.

So if you ever do have to move furniture

in or out or who knows, access is just in the backyard.

It's nice to have that direct staircase,

But also it's nice to have a staircase

directly to that beautiful outdoor area.

You've got the table, you've got a great setup.

If somebody wants to have a meal outside

and the fact that it's fully connected

to all the grass area.

I'm glad we changed it to more grass all around.

-Yeah. -With a backyard like this,

you can charge hundreds more in rent.

You'll keep your tenants longer and attract families.

Oh, wow, this is stunning!

[Jonathan] The best place in the whole property.

This is incredible.

If you have a tenant and you're trying to paint the picture

of how they have this private oasis.

It's comfortable, it's functional for the family.

Oh, man. Renters will pay a lot to have this.

[Jonathan] That deck adds value to the whole listing.

[Drew] You know, there's so many ways to be able to back you

to keep you on budget.

Bringing a designer in to work with you.

Oh. Kelly was amazing.

-[Tom] She was. -Couldn't be more grateful for getting to work with her.

[Jonathan]Your starting budget was $350,000,

and you were hit with change orders

for all the surprises inside the walls.

The value of our backing is just shy of $80,000.

So all in, the value of this renovation is close to 500 grand.

[Drew] You could easily rent this for 4250 a month.

Which means you could pull in 51,000 a year.

That's a heck of a good return for a rental.

That is far, honestly, far better than I was expecting.

To get 51,000 a year.

-That's huge. -Yeah, it's really good.

[Jonathan] You could literally rent this right away.

It shows nicer than anything else in the area.

-[Drew] Yeah. -And you guys are gonna reap all the benefits.

-Thank you so much. -[Tom] Yeah.

Taking the plunge, doing this, I know it's scary.

It's so much stress, a lot to take on.

But you are setting yourself up

to be in so much better position.

We're gonna be able to go on more trips.

Outdoor adventures like... Yeah, that's going to really help us.

You want to travel, you want to do all the things you love.

And now this gives you the financial freedom to actually do that.

Absolutely.

[upbeat music playing]

Even though I don't think Kristie and Tom

are gonna be lifelong investors,

they have had so much interest in their ADU,

and they've added over 600 grand to the value of their property.

And then down the road, when they do move into the ADU

and rent out the main house, that picture just gets a whole lot better.