Episode Transcript
[00:00:00] Speaker A: Steve Seymour here with the Investor Agent podcast. We're in the field today with Zach Cucinata. Zach, why don't you tell us a little bit about this property that we're standing in front of? 1203.
[00:00:10] Speaker B: Yeah, sure. So 1203 Point Court. I actually got here, and it was originally for kind of a listing. So someone called me. I handed out flyers to the area after one of my clients flipped one down the street, and they said, hey, I want to sell my house. And I said, awesome. You know, I can definitely take a look at it. And he said, it's kind of similar to the condition of the original property that we bought. So I said, I can offer you a cash offer or list it, whatever you choose. We met up, and he decided to pick the cash offer.
[00:00:39] Speaker A: All right, let's go on inside. And, Zach, you could tell us a little more about what you're doing and what your plans are with this.
So, Zach, what did you buy it for?
[00:00:49] Speaker B: So I got this property for 245.
[00:00:53] Speaker A: All right, and then approximately how much do you think you'll put into it?
[00:00:56] Speaker B: I think it's gonna be about 50.
[00:00:57] Speaker A: About 50. And what are you thinking for the exit for the resale?
[00:01:01] Speaker B: So there's a direct comp here for 377 with a finished basement, and they're all pretty much the same units. So 377 is pretty accurate for a nicely finished place.
[00:01:10] Speaker A: Can you tell us what happened here?
[00:01:12] Speaker B: This.
This is just a little, you know, sunbathing over here. Nice.
[00:01:18] Speaker A: We think the door melted.
[00:01:20] Speaker B: Yeah, a little over the top of the. The tanning, little magnification.
[00:01:25] Speaker A: All right, so. So big picture, what are. What are the main items we're working on in here today?
[00:01:30] Speaker B: So main items are pretty basic. It's pretty cosmetic renovation. New floors, painting the whole house. So we're going to do some vinyl plank here. We're going to do carpet in the basement and upstairs, new kitchen countertops, handle pulls.
Yeah, let's take a new slider door.
So with the cabinets in this one, I actually decided to keep them because they're in pretty decent shape. I'm just gonna, you know, sand them up and then get them painted nice and fresh. With the new handle pulls, we're gonna get new appliances in here. Nice backsplash, new countertops, probably quartz or some nice stone. And, you know, new light fixtures, new garbage disposal, faucet. Just make it look like a beautiful new kitchen.
[00:02:18] Speaker A: So, Zach, real quick on the. On keeping the cabinets and painting them versus doing new cabinets. What did you price that out or what was your thought process behind keeping the cabinets? Because I see some flippers do it and some, some switch them out depending on, you know, how rough they are. These are in pretty good shape, but.
[00:02:33] Speaker B: Right, right. So I usually switch the cabinets out, you know, and I kind of price it to always flip them out anyway because I want to be safe, you know, because I might take a look. And honestly I originally thought, man, I'm probably going to change these cabinets. But then I got another look at them. I said, you know what, these really aren't that bad because when I look inside them, it's not like rotted and dirty and disgusting. It was actually pretty good.
[00:02:56] Speaker A: So paint them up, put some new hardware on, new countertops and new appliances. It'll look like a brand new kitchen.
[00:03:01] Speaker B: Exactly. Yeah. A couple new pieces of, you know, trim in a certain, certain spots and I think it'll look great.
[00:03:07] Speaker A: And the floors are going to be like a vinyl plank, you said, right?
[00:03:10] Speaker B: Yeah. So I'll get a vinyl plank. It's going to be coming throughout all the first floor.
[00:03:14] Speaker A: Nice. And are you, are you doing anything major with electric or. It's pretty. The electric's in pretty good shape overall.
[00:03:20] Speaker B: Yeah, pretty good shape. The house is, I think built in the 80s, so, you know, just basic electric work. I'll probably have my electrician in here for a couple days more.
[00:03:28] Speaker A: Just swapping out the fixtures and things.
[00:03:30] Speaker B: Yeah, strapping out the fixtures, maybe running a couple wires. Nothing major.
[00:03:33] Speaker A: Alright, what are some of the biggest things you think people that are looking at flipping houses should think about in terms of maximizing the sale price on the exit?
[00:03:42] Speaker B: When I think about maximizing the sale price, I think you just really want like, I mean, to focus on. I'd say if you're looking at big ticket items, like you're looking at the kitchen and the bathrooms, biggest thing to focus on usually like the most expensive areas besides things under the walls like H vac or plumbing or electrical, but you're not really looking at that.
[00:04:03] Speaker A: So I think, yeah, the things that are really going to catch the, the buyer's eye when they come in that are going to look updated and set this house apart from the other ones in the neighborhood. The competition.
[00:04:13] Speaker B: Exactly. Like a beautiful kitchen, beautiful bathrooms. I mean, everything else is just walls and floors. So for the most part you're pretty much just focused right on there to get your value and obviously you want everything else to look nice and clean with, you know, essentially stylish colors that people like. You Know, so I try to keep it basic. I'm not gonna put like a blue wall. Cause I like blue. Or like blue cabinets that are like a pink, pink bedroom. Cause you know, I'm like, this is the girls room. No, it's all one color. Very nice and neutral. Yeah, nice and neutral. Don't go crazy.
[00:04:44] Speaker A: All right, what's the racket downstairs? You want to go check out the basement?
[00:04:47] Speaker B: Yeah, let's take a look. It's loud.
What's up, Garcia? How you doing? We're doing a little filming.
[00:05:04] Speaker A: So this. So this basement was already finished, correct?
[00:05:07] Speaker B: Yes, already kind of finished, but with like the paneling and then drop ceiling, stuff like that. So we're really just doing drywall down here now to get it kind of finished up. And we'll get some new carpet down here. We ripped up the old carpet. That was kind of nasty.
[00:05:21] Speaker A: And I would definitely say, from my experience, you would think a finished basement would add a decent amount of value having the extra square footage.
[00:05:29] Speaker B: Definitely. So when you're going to look at the square footage too, the it's. You're only going to count the above grade square footage, really for like a straight up value when you're looking at comparable properties. And you'll be a little bit misled when you look on Zillow and it says, oh, wow, this is a 2,300 square foot house. You want to make sure they're not counting the below grade square footage. But it still definitely counts for living space. And it's useful when you come to go to the sale. And if you're looking at comps, you want to see. Oh, well, this one sold for like X and this one sold for 50 plus X. Maybe it was that finished basement that did the job. You know what I mean?
[00:06:04] Speaker A: Nice.
Anything else that we should take a look at down here? You want to head upstairs?
[00:06:08] Speaker B: We got some H Vac down back there.
[00:06:11] Speaker A: How water. What's the condition of the H vac?
[00:06:14] Speaker B: So these were actually pretty good.
Thank you. I need a big strong man to help me.
So back here I'll probably end up maybe cleaning a little bit of this up and repainting. Watch the nails behind you.
[00:06:27] Speaker A: Yes.
[00:06:28] Speaker B: But this is a pretty good full forced air system.
[00:06:30] Speaker A: Yeah, the system looks not too old.
[00:06:31] Speaker B: Right. And then this hot water heater. I've actually never seen anything like this one.
[00:06:35] Speaker A: Yeah, that's an interesting hot water heater.
[00:06:37] Speaker B: Right. So that's new too.
[00:06:39] Speaker A: So it's nice when you get a flip. That's kind of very cosmetic. Yes, in and out. Oh, yeah, we definitely walls moving. No major waiting for drawings or township approvals for anything like that.
[00:06:52] Speaker B: No, definitely not. Those can definitely be not fun, as you're well aware, I'm sure.
[00:06:57] Speaker A: So have a little bit of moisture coming through the wall here.
What do you think? It may be a good idea to clean this up and seal it up.
[00:07:04] Speaker B: Right. I think dry lock, that's what I was going to do. Do some dry lock, paint it white. Maybe paint these just a new gray here, clean them up.
[00:07:11] Speaker A: You have the French drain that was built in when it was built with the sump pump. It looks like that's original.
[00:07:16] Speaker B: Exactly. Yeah. I mean, it's already. All the water control systems are in place. I think it's just, you know, doing a little spruce up down here. And like you said, the dry lock, it looks like I was told by the owner that this window used to actually leak, but that's been fixed and solved. So maybe I will just end up re caulking that or maybe.
[00:07:33] Speaker A: And a lot of times that's from the pit outside with it not having a lid on it.
[00:07:37] Speaker B: Right, Exactly.
[00:07:37] Speaker A: Just putting a lid on that can help, you know, on the. On the pit.
[00:07:40] Speaker B: Right, exactly. 15 bucks upstairs.
[00:07:51] Speaker A: Yeah. So, Zach, what's your total time frame on this? What's your, you know, project time frame?
[00:07:56] Speaker B: Well, Garcia's like lightning fast, so two days.
[00:07:58] Speaker A: Two days?
[00:08:00] Speaker B: No, but Garcia, he does a really good job.
So we'll probably be in this, I'd say, like realistically, three weeks, four weeks, something like that.
[00:08:09] Speaker A: Three to four weeks for the renovation?
[00:08:11] Speaker B: Yeah, I'd say, yeah.
[00:08:12] Speaker A: And how did you finance this?
[00:08:15] Speaker B: So I use something called like a hard money loan. It's like really popular for investors that are looking to flip places. So it's like a pretty much like an interest only payment loan where you bring some money down to the closing table, let's say 20%, and then the lender's gonna finance 80, kind of like a conventional loan or anywhere in between. Some lenders go up to 90, some do up to 100, and then they'll also finance the renovations, your loan, if you want them to. So that's obviously very useful if you don't have that much capital.
[00:08:41] Speaker A: And they're typically higher interest rate loans, but they're bridge loans. Right. So how long is this loan out? How long do you anticipate from closing to finishing the project to selling it and getting the lender paid back?
[00:08:52] Speaker B: So I think I'll have them paid back in about like, probably two. I'd say eight to ten weeks.
[00:08:58] Speaker A: Okay, so less than like even three months.
[00:09:00] Speaker B: Right. Because this thing's. I mean, this is going to lead.
[00:09:03] Speaker A: So you're paying high interest, but it's only for a few months. So you don't really care because it gives you an opportunity to flip the house that otherwise you'd have to put up all the cash for. Right.
[00:09:12] Speaker B: It's kind of just cost of doing business.
[00:09:13] Speaker A: Yeah.
[00:09:13] Speaker B: You know what I mean?
[00:09:14] Speaker A: So I got you. All right. You want to head upstairs and show us the bedroom?
Do you feel like a lot of investors over complicate this?
[00:09:22] Speaker B: I do. I definitely do. I feel like people do sometimes they do too much, and I've been guilty of that myself by over improving. I think that's really common. And kind of waste a lot of money, essentially.
Or putting like your own touch into it too much because of what you.
[00:09:38] Speaker A: Like becoming an artist, right?
[00:09:40] Speaker B: Exactly. Like no one. You know, it's great if you like this, but it's not about what you like. At the end of the day, you know, you're kind of building this for someone else.
[00:09:49] Speaker A: Yeah.
[00:09:49] Speaker B: Trying to be able to the message.
[00:09:51] Speaker A: And this is almost like a perfect starter flip for someone who's not very experienced because it's so much easier than anything that's really complex with any major big. There's no big decisions here.
[00:10:02] Speaker B: Right. Like I did one in Ardmore and I did new H vac, all new electrical, all new plumbing. So I ripped all that out and redid all of it. So that was more of like a big job compared to this. Definitely.
[00:10:12] Speaker A: Can you talk a little bit about the process from which items do you do first and which do you do last? Because that's a big thing that new flippers sometimes do things backwards where they have the brand new carpet and then you got the guy painting the ceiling dripping paint on the new carpet.
[00:10:28] Speaker B: Right. So a nice general rule is work from the ceiling down.
But I'm thinking of everything inside the walls first. Like, you're not gonna finish the walls and then do the electrical. So you're trying to focus on H vac, plumbing and electrical first.
[00:10:43] Speaker A: Once that's done, get all the mechanicals out of the way.
[00:10:45] Speaker B: Right. All the mechanicals.
[00:10:46] Speaker A: Then close it in.
[00:10:47] Speaker B: Exactly. Then close it in. And then you can focus on, you know, like the drywall and then spackle. And then painting that, painting the ceilings, getting that all done. Drywall and ceilings if you need to. Then when everything's kind of done, then you're throwing the floors down. You can do your fixtures and all that small stuff. You know, putting the toilets in or whatever.
[00:11:05] Speaker A: You know, carpets should be the last thing you do.
[00:11:07] Speaker B: Carpets are absolutely last. Countertops last too, because you don't want people putting tools on the countertops. Scratches, it breaks. And I learned definitely something you want to save for. Close to end.
[00:11:17] Speaker A: This is a really nice size master you got. It looks like you got a big closet over there.
[00:11:20] Speaker B: There. Yeah, definitely. It's a nice size closet. And then you got the Jack and Jill doors for the bathroom too.
[00:11:25] Speaker A: Do you find it's worth doing any like additional built in shelving or anything to kind of maximize this or you kind of keep it nice and simple and let the owner decide.
[00:11:35] Speaker B: I'm big on letting the owner decide for sure. Because there's nothing wrong with this closet or anything like that. So you kind of just let them handle it. You don't want to do too much like we were talking about. So don't like make a built in shelf here. Don't do this. You're wasting time and money and they might not like it. They might rip it out. So at that point you're just like, why did I do this?
[00:11:56] Speaker A: And then how about with the bathroom here?
Because you have the 4x4 tiles on the floor and on the walls.
[00:12:04] Speaker B: Right.
[00:12:04] Speaker A: What's your plan with this?
[00:12:06] Speaker B: So a nice plan. I like with this when the tile is actually in pretty good shape after you end up getting it cleaned up. And since the tubs in pretty good shape too, after you get it cleaned up, you just reglaze it. So I have a guy that does tile glazing and tubs and things like that he specializes in. So I'm going to get him in here after we get a new vanity, which I just ordered and toilet, which are ordered too, so they get put in new light fixture, nice new mirror, new faucet. And this bathroom is going to look brand new.
[00:12:31] Speaker A: So you get a quick fresh new look without the cost of demoing all the tile, replacing the hardy board and doing all new tile. Right. Which will take not only more money but also more time.
[00:12:43] Speaker B: Right, Exactly. Because if you're going to rip this thing down to such, which is like, if I do, I do do that. If it's like really bad, I'm ripping it down completely. But then that's going to cost me three times as much.
[00:12:52] Speaker A: Yeah. You know, again, getting into that hard money. Loan speed is key to getting in and out of the project. So you're not wasting a ton of time.
[00:12:59] Speaker B: Exactly.
[00:13:00] Speaker A: Anything else that we should take a look up. Look at up here, you think?
[00:13:03] Speaker B: I think we're pretty good up here. Yeah. Yeah.
[00:13:05] Speaker A: Nice.
[00:13:05] Speaker B: I might end up having to run into a roof job though, too.
[00:13:08] Speaker A: Oh, roof. Okay.
[00:13:09] Speaker B: Yeah.
[00:13:10] Speaker A: So you didn't inspect it ahead of time, huh?
[00:13:12] Speaker B: I mean, I did and I was like, I think it could work. I know it's not leaking.
[00:13:16] Speaker A: Yeah.
[00:13:16] Speaker B: But I didn't actually see that there's a little waviness in like this small section.
[00:13:21] Speaker A: Okay.
[00:13:21] Speaker B: So take a look at that. Maybe you get a roof out there, but I don't think it's a tiny roof, you know, so it's not a big deal.
[00:13:27] Speaker A: So all in all, looks like a relatively easy project for you.
[00:13:31] Speaker B: Yes.
[00:13:31] Speaker A: In terms of the other flips that you've done, was this one of the more cut and dry, easy, easiest, or. It sounds like some of the other ones are much larger.
[00:13:39] Speaker B: Yeah, I definitely had a lot larger projects in the past.
[00:13:42] Speaker A: Yeah.
[00:13:43] Speaker B: And I've had some easy ones too, but this one's definitely on the easier side for sure.
[00:13:47] Speaker A: And would you recommend that as a yes? I know I kind of already said it, but I'm really trying to stress a point here when baby steps getting into flipping, because sometimes people do, you know, just because it's real estate doesn't mean you can't lose money.
[00:14:00] Speaker B: Exactly. Yeah, exactly. And I see it actually a lot, you know, just because I help a lot of investors. I mean, my transactions are 99% investors. I might work with like some standard buyers like looking to buy their first home or something like that. But I'm usually working with flip clients or people buying multi units or something like that. And I see people lose money or break even all the time. And even if they're not really as much my clients, but I see it all the time.
[00:14:22] Speaker A: So when you've seen people like lose money or just break even, what's the common denominator there?
[00:14:28] Speaker B: I see that people are over improving. They'll do too much work and they'll take too long is what I say. Usually.
[00:14:37] Speaker A: Yeah.
[00:14:37] Speaker B: You know, they spend too much money. They don't. They don't get multiple quotes. They spend too much on something. Like maybe like some contractor quotes you ten grand to paint the house. You just take it. You didn't get three other quotes, right. You didn't ask someone, hey, is this a good price? So a new people. I noticed that.
[00:14:52] Speaker A: Overpaying. Overpaying, you know, overpaying, over improving.
[00:14:55] Speaker B: Yeah.
[00:14:55] Speaker A: Taking too long.
[00:14:56] Speaker B: Taking too long.
[00:14:57] Speaker A: Yeah. So a lot of little Bit of due diligence up front can save you a lot on the back end.
[00:15:02] Speaker B: Right.
[00:15:04] Speaker A: What else? What would you say, like, for you getting started flipping, you know, what was. What was a key point for you to actually take that first step? Because I think the first step is always the hardest thing. I heard at our event last week, fear doesn't like repetitions. Right. So it gets easier as you do it more often when you say, that's true 100%. So then how did you get over that first hump of your first rep?
[00:15:25] Speaker B: So, I mean, your first rep is definitely take it. You know what I mean? So I'd say the. The key factor for me was having a mentor. You know, when I decided that I wanted to do it, and I was kind of like, okay, like, how do I figure this out? I had a mentor, and Rob Lawrence was my mentor who mentored me through my first flip, and he helped me through my first transaction and walked me through it and told me what to do, how much money I would spend, and then I just got in there every day and worked on it.
[00:15:50] Speaker A: So really, having someone that was willing to kind of come into the field with you, help guide you along your first, you know, your first everything, your first hire of the contractor, your first kitchen, your first bathroom.
It's great. What else? Anything else you want to leave the listeners with? You know, trying to make sure that we give you some value of your time watching this episode.
[00:16:11] Speaker B: Yeah, sure. I would say if you're interested in real estate investing, you know, just get started, go out, network with people, talk to people who are doing it and flipping successfully, and it's just, you know, putting it together and, you know, putting the work in. It's not easy. You know, it's. People think it could be easy, like, oh, I'm just gonna get some money and have contractors do the work. But it's not that simple. And, you know, you'll do your first flip, and you'll realize that it's not. So hopefully I'll see your house up for sale.
[00:16:40] Speaker A: So, Zach, you mentioned something about, you know, finding a mentor and then surrounding yourself with some people.
You're at VRA Realty, and are you now accredited investor?
[00:16:50] Speaker B: Yes.
[00:16:51] Speaker A: Yeah, and we'll leave that for you to look up from Google. But it's. That's our vision and our mission is to help people create wealth in real estate and become accredited.
[00:16:59] Speaker B: Yes.
[00:17:00] Speaker A: All right, Zach, thanks.
[00:17:01] Speaker B: Yeah, no problem, man. Thanks for coming over and checking it out.
