Original subtitles

[narrator] Last time on Backed By The Bros...

-Hi! -Hi!

[Drew] Heidi has no experience with commercial property,

but she has a lot of value here.

I need to get out of the building.

If we can sell this by a residential rental income...

[Drew] The most valuable thing is getting everything out

so the building can actually sell.

I want to keep this and this.

I don't want to be here, but I don't know how to get out.

I can see that you're overwhelmed.

Yeah. Who do you trust?

[Drew] Nothing is going to cost you more money

than this sitting unsold for another year.

Finally.

[Drew] Everything she has is banking on this property.

I'm trying to figure out

for the North Hollywood project.

So we're doing a slab for the backsplash.

I'll take that all the way up.

And then, I guess we'll probably bookmark.

[cell phone ringing]

-Do we... -It's Heidi.

Hey, how you doing, Heidi?

-[Heidi] Hi! -Hello!

[Heidi speaking on phone]

-Yes! -Yes!

Congratulations.

That's fantastic.

[Drew] As a part of our backing,

we helped Heidi sell her late husband's commercial building.

Now she wants us to help her put that money into a residential property.

And this is gonna be her only source of income.

[Heidi speaking on phone]

You're literally $500 off of your asking price?

-[laughs] -Oh. A $500 bargain.

All right. Well, I guess it worked.

But that means, so you have 45 days

with your 10-31 exchange to identify property.

So we need to get moving.

Here in California,

If you owe capital gains on an investment property that you sell,

you can find a replacement investment property within 45 days,

and then you can defer that tax to the future.

Which means in Heidi's situation,

she would save about $100,000.

And that goes a long way in real estate.

-Yeah, The clock starts now. -Now.

We need to get you in front of some new houses.

And you're looking for something, you know,

2, 3, 4 bedrooms, something like that.

[Heidi] Yeah.

How much cash do you have on top of the million?

Just so I know the total amount you're working with.

[Heidi speaking on phone]

So I'll pull together some houses for us to look at.

-All right. Breathe. -Yeah.

-Breathe. -[exhales deeply]

Remember how worried you were because you'd spent two years

to get that commercial space ready to sell.

-I know. -You can't get caught up on the small details.

You need to look at the big investment.

Yeah.

-All right we'll see you soon. -Take care!

Bye.

Bye.

[Drew] Why are we backing investors? Why continue to back Heidi?

I want to make sure that We're focusing our energy

on helping somebody who one, needs it,

but two, is going to take advantage of it.

And that's Heidi. All of the profit is hers,

but we want to walk away with something, too.

If her investment fails, even with our backing,

that's bad for Heidi, bad for us.

It's bad for our reputation.

[upbeat music playing]

You know, property is expensive, so it's a matter of finding

something that's either move-in-ready investment

or just needs a little bit of a cleanup

or something that might need a bit more work.

I'm good for either way.

So I've lined up a couple of houses for you to see.

But not just a good property that you would want to live in

because this is meant to be an investment property, right?

[Heidi] Yeah, that's pressure!

[Drew] In order to avoid paying capital gains tax,

we need to move quickly and get her into the right investment.

Heidi's putting it all on the line.

The money from the warehouse, plus all her life savings.

So finding the right rental property

is her one shot at setting herself up with a steady income.

So I'm looking for the house in the Burbank area.

The area has all the studios around it.

So the area has the jobs.

Then the people who are able to pay the rent.

A three bedroom single family home,

extra storage and a big backyard

and able to rent out of fast.

-This is the one! -Okay.

[Drew] Burbank's a great choice for investors.

There's high demand and the rents are very healthy.

This House has options because it's got some good size.

Yeah? I'm excited.

-[Drew] The curb appeal is here. -Yeah.

[Drew] Great first impression for prospective tenants.

It's over 1600 square feet and it's sitting on a huge lot.

Has two bedrooms, two bathrooms.

It's listed at 1.19 million,

which is actually really close to Heidi's max budget.

Ah!

[Drew] They've renovated the house. They've put in a luxury vinyl flooring.

-So it's nice and durable for tenants. -Yeah.

-[Drew] They've done baseboards, painting, so... -I like that.

Yeah.

-So one bedroom here. -Okay.

You have the bathroom here now.

-They've kept the original tub. -Yeah.

-There are a lot of elements that are not new. -Yeah.

-The term a little bit is "a lipstick on a pig." -[Heidi laughs]

Because you're not changing a lot,

-but you're making it look prettier, as is. -Yeah.

-Yeah. Yeah. -And that's what they've done here.

For a renter, It's okay.

It's very, very livable for what they have here.

Yeah. I mean, this is what I like.

-A really big living area. -Yeah. I like this one.

-This is a dining area. -Yeah!

No, I like that.

-The kitchen? -Oh!

Yeah! It's all new.

-It's a good sized kitchen. -Not 100% perfect, but I do like it.

I think any tenant that comes into this house

will look at this and say, "This is totally fine."

And the big issue with this only being a two-bedroom...

-Yeah. -...I feel the garage can fix that.

Ooh! You have a solution.

[Drew] This could become some bonus square footage for the house.

It could be like a lounging area or office.

You should always be looking for what you can do to add value.

Are there renovations that you can do

to boost the rental opportunity?

Are there unused or underutilized spaces

that you can turn into moneymakers?

So option number 2, we can make this a legal bedroom.

So now this is a three bedroom, two bathroom home.

-Okay. -Which makes our rental opportunity even better.

-Yeah -If you get a property, we do a little cleanup to it

and we maximize the value and we rent it out within a month.

-I think that's ideal. -Uh.

I do have a little concern.

The house is only two bedrooms,

You know, I'm concerned about that.

If people are thinking, you know,

enough room for them?

Look at this yard.

-Wow! -What's your first impression?

[Heidi] I like it. It's big!

[Drew] That's what renters will think, too.

This is great.

I like that you have a dining area here.

You can have a lounging space over there.

-That's true. -So, say we did close in the garage,

and we added livable square footage but not a bedroom...

-Yeah. -...we could probably get $4000 a month.

-Uh-huh. -But if that was an extra bedroom,

You could probably rent this out for 42-4500, at least.

Yeah, that's nice.

Now, in this area, you're allowed two additional units.

-So down the road... -Yeah.

...you could look at doing two smaller ADUs back here

when you have a bit more money to work with.

And then once those are rented out,

now you have two more additional rentals

-on this property. -I see.

I think most families look at least three bedrooms.

So if we can find a three bedroom already there, that would be great.

We can look at more properties.

But the thing is, we always have to look two.

A lot of the three bedrooms we're seeing are a lot more expensive.

And we only have a very limited amount of time to roll that money

over into another investment without a penalty.

That's true. That's true. Okay.

[Drew] I understand that this is emotional for her

and she needs to move at her pace.

But she took two years to sell her warehouse

and doesn't have that kind of time here.

If she doesn't move fast enough, Heidi will lose $100,000

in capital gains taxes on the million dollars

she got from selling the warehouse.

That is a ton of money that I'm hoping

she can use to buy into a better investment.

[Drew] It's been over two weeks since Heidi sold her commercial property,

which means she only has a month left

until she has to pay taxes on that commercial sale.

Time isn't really on her side right now.

She's insisting on a 3-bedroom home.

So I found one with huge potential.

It needs work, but it is priced to sell.

Heidi is going from a property

that was a commercial investment for her husband,

that was a money pit for her, and she's trying to

turn it into something that will be her livelihood.

This is going to be a long term investment.

We need to make sure the R.O.I is right.

[Heidi] A little older house though, right?

[Drew] Yeah. This was built in 1929, 3-bedroom, 2-bath home.

It's 1900 square feet on a 6700-square-foot lot.

So you have 1.3 million to work with.

-That's true. -This is listed for 1.15.

So that would only leave you 150,000

-if you bought this for a list price -To remodel.

-To remodel. -Yeah.

And with the right rental plan,

this place could be a gold mine.

-Yeah. -As soon you walk in, you can see the character.

[Heidi] Yeah, I like the fireplace.

I love that one.

You got the faux beams up here.

I mean, it's a cute home, but It's tired.

You can see they've been doing a little bit of work.

I see. Definitely the floor.

Paint will go a long way in this house.

New window coverings and floors.

We don't have to use the expensive materials.

-No, you don't. But you want durable, right? -Yeah.

So you want to make sure, like a luxury vinyl or something in here

-that's gonna last. -I see.

But the rental always loves a new kitchen, you know?

-You know, the kitchen is like a centerpiece. -Yeah.

Well, look at this kitchen.

-This is not a centerpiece. -Uh-huh

-This is their dining area. -Okay.

-This is a kitchen, eating area. -Interesting.

And then this is the kitchen.

What would you do with a kitchen in it like this?

You have all the square footage here

for the dining, kitchen in here.

[Heidi] I don't know I think just clean it.

It's a rental. So I'm not living here, so just clean it.

[Drew] Heidi is slowly coming around to the realization that this is a rental.

It's an investment property. It's not her own personal home.

If you're wanting to do a cheap renovation

like keep these countertops, these cabinets,

you're never gonna get a better return.

That'll turn renters off.

-You have to have more quality with your products than this. -Okay.

-So this has to go. -Yeah, in this neighborhood, too,

you want to get a premium rent,

but if you put in super cheap materials,

-you're never gonna get a premium rent. -Yeah.

[Drew] Even with our backing, you're looking at a 4 or 5-month reno.

But if we did it right, this would be a solid investment.

-Let's head to the back. -Yeah.

For the entire back of the house to have this hidden storage--

-Storage, yeah. -...is a dream for renters.

-Yes. -It accesses one of the bedrooms.

-Wow. -You have another one

about the same size over here.

-Yeah. -And then let's head upstairs.

[Heidi] Yeah, interesting.

-Take a look at this. -But I like the ceiling.

-Oh. This is like a stage! Yes! [laughs] -Exactly.

They put the second level on so that you had a really big main bedroom suite.

-Yeah! -They've done a ton of unique work,

like, even the rail. Like this looks like it's out of a medieval castle.

-[Heidi laughs] -But that bathroom needs a full redo.

There's nothing in the house that can be kept

in the sense that all the appliances,

all the kitchen cabinets, all the bathroom toilets, tub, sink,

everything has to be replaced.

-Yes -That just adds up.

-Oh! -So, your backyard.

The backyard is not as big.

Yeah, it's not huge, but I think for a renter,

this is more than enough space.

I like this property.

-I really do. -I do. I do.

A very unique house.

[Drew] I'm not her agent. Heidi has one,

but as a part of our backing, I am her mentor.

And my role is to advise her on what would make a good investment.

But she has to make the final decision.

So this one.

-1900 square feet. -Uh-huh.

-Yeah. -Three bedrooms, two bathrooms.

So it already has the size that you want.

They're asking 1,150,000

and this renovation is probably gonna cost at least 300 grand.

If we make this a really nice three bedroom, two bathroom house...

-Yeah. -...we'll probably be able to pull in

60,000 to 66,000 a year.

I see.

If you look at that first house that we saw

that had the really big backyard.

-Yeah. -It's a two bedroom,

but it's over 1600 square feet,

so you actually have the opportunity

to convert one of those spaces into a third bedroom.

But as a three bedroom, you can probably get up to 42-4500, at least.

-Okay. -That place is listed for 1,190,000.

-Yeah. -I think we can lock that in at list price.

You'll have the budget to renovate the house, that's there,

but down the road you'll be able to put in two additional ADUs.

So the future potential is even bigger.

Wow. Okay, so that's a lot of it to absorb.

-Yeah. The houses have pros and cons. -Mm-hmm.

Which house do you think is the best one to go for?

This is the biggest investment in my life, ever!

I'm thinking more like an investor now.

Kind of tough decision.

Let me think for a minute.

This is $1.3 million

is the one chance to invest for my future, for my life.

I do have a good feeling towards...

And the house with a big backyard,

-Okay. -The house is already renovated.

You can convert the garage to additional living space,

and we can add a third bedroom.

It has a big backyard, which is also good.

Yeah. I think I want to make off on that one.

Okay. Good luck.

It's sunk in for Heidi.

She's made her decision, and I personally think she's made the right one.

And she's starting to think more about the numbers as an investor.

My suggestion is, if you want to make an offer on that,

let's go in right away at list price

and say we will buy it for list, it's a cash offer,

and I think you could lock that up.

-Let's do this. -[laughs gleefully]

All right, shall we? This is good.

-I'm excited for you. -Yeah?

I think there's a lot working in our favor.

It's a cash offer, and we can move fast.

Fingers crossed, she gets it.

[dramatic string music playing]

Hey, Heidi. How are you?

[Heidi on phone] Good! I have good news!

What is it?

I got the house!

You did?

I got it for 1.199

Oh, right on. Congratulations.

Wait. So it's a firm deal?

Absolutely firm deal?

Absolutely firm deal!

I'm giving you a virtual fist bump.

-Yeah! -Well, done.

[Drew] This is a great value for this neighborhood.

I love that she got this place in less than 45 days

because now, instead of paying $100,000 in tax on her husband's warehouse,

she can put that money into the renovation for this place.

Oh, my Gosh. I'm super excited for you.

Doesn't that give you some relief?

Knowing that you have somewhere to park that investment?

Oh, totally. Thank you so much for helping me.

You know, look for all those houses.

Well, hey, the work isn't done yet.

We still have a lot of work to do.

So I'll meet you over at the house in a couple of days

and we can start talking through some stuff.

-All right? -Yeah. Very excited!

-Awesome. Okay, Bye. -Yeah.

I just want to get over there with Jonathan

and start to figure out the plan.

How can we maximize the space?

Get her the top rent possible.

And get a tenant in here.

-[Jonathan on phone] Hello. -Hey, how you doing?

I got a few things I want to go over with Heidi's property.

-Okay. -She got the property.

Amazing. What did she go with?

That was the one that was listed at 1.19.

So it's got two bedrooms.

It's the one that's a larger home with a good sized yard.

So what does that leave us for renovation?

And what kind of work does it need?

She wants us to keep up to $70,000 for the reno,

including the back yard.

And this is the one where we were thinking,

if we do convert that garage, that's the main point.

And then clean up the backyard to make it a bit more appealing.

[Jonathan] Right. Well, I would say

if we could get Liron over there to start right away it might be good.

Maybe we can get Li on the design side to work with Heidi

because that garage is gonna take some work to really optimize the space.

-Right. -And the backyard needs a ton of work.

So if we want to put Jake on this project, I think that could be great, too,

because he knows how to work on a budget.

Okay. Okay, Okay. All right. Sounds good.

Well, tell her congratulations. That's amazing.

It's going to be a great property if we can stick to our budget.

Exactly.

[classical string music playing]

[Drew] We've got to get the ball rolling on Heidi's new Burbank property.

The inside is in great shape,

but there's a lot of work to be done outside.

So we're bringing in Jake.

-Look at this backyard. -[Heidi] Yeah, look!

Wow. Coming into a project,

what I really want to focus on

is the most cost effective way to make this very usable,

very open to where any renter that's gonna come out

is gonna be interested in it.

Jake is a landscape contractor we've used for a very long time.

He's great. And we have a yard like this that's actually pretty big,

you could spend a lot of money planting lot of different things out there

that could just waste your budget.

We don't want that.

One thing to keep in mind, the plan down the road for Heidi

is probably to add some additional units back here.

So we probably don't want to do too much work back there then.

Exactly. We don't want to spend a lot of money.

So if we can find a way just to define the backyard

a little bit, I think, is the main thing.

[Jake] You probably want to stick with plants that produce usable spices.

-[Heidi] Yeah! -Easy to take care of.

-Yeah! -Low maintenance.

-You're talking her language. -[all laughing]

That's right. Look, avacado there.

-Again, remember, it's a rental property. -Yeah

Renters don't always have the same passion for maintaining.

No. As a landlord,

I'm claiming to pick the avacado.

Do you think that your tenants want you showing up every week?

-Yeah. I give them a 24-hour notice. -[laughs]

Every single week?

Uh-huh! I want a fruit tree.

I want which is edible.

I share with them.

-Actually, here's a question. -[Jake] Yeah.

What about for the grass? Because this is a lot of lawn.

-[Heidi] Yeah. -Would you consider doing turf,

or would you want to stick with natural grass?

Okay, what do most of the people do? [laughs]

So for a cost effective purposes,

even including the irrigation,

and maintenance for, I'd say at least 10 years,

you come out ahead with sod...

-Oh. Okay. -...versus turf.

If someone came back here and this was very nicely manicured,

we don't have to spend a lot, but it looks like an appealing destination.

I think that will add more value.

You'll get more rental.

-You could just have a nice zone. -Lounge area.

But, yeah, I think this will be easy.

-Create an outdoor eating area up on the deck. -[Heidi] Yeah.

But I would focus on finding something

that can create an area to draw the eye on either

the back wall, or the side wall.

Because when you walk out these doors,

the first thing you see is this.

-Yeah. -Yeah.

It would be nice to have a border of plants all around the whole yard.

-Yeah. -[Jake] That's exactly what I would suggest.

Some, some bigger trees.

What kind of tree you have in your mind?

So ficus is the most common.

It grows really fast and really full.

-But is it edible? -You cannot eat it.

And do they have flowers?

They do not flower.

Okay. Let's get one thing straight, guys.

We only want two things.

Either get edible or they flower.

I want to just put a warning out here.

You said you're willing to listen to us.

But there are some things we're saying

that I feel it's kind of going in one ear and right at the other.

You keep talking about this as a property you're living in.

My tenants will think the same way I think.

That is one of the biggest mistakes that a landlord will think.

"My tenant's going to take care of this property the way I would."

No. Big mistake.

Why don't we steal you, Heidi, and go inside?

Because we should discuss the garage and our plans...

-Okay. -Thanks.

-See you later. -Thank you. See you.

You keep saying you're looking for the opportunity

to have potentially another bedroom.

-Yes. -Well, It would be pretty costly in the central area

to kind of figure, you know, changing wall locations.

But the garage, you could probably convert that.

-Yeah. -That already has tons of space.

Okay. To have a space that appeals

to the largest group of renters that you want,

I think having an extra bedroom is going to be very valuable.

-Okay. Then let's do that. -Yeah.

This is a blank slate.

-I like this too, because again, limited budget. -Uh-huh.

And if we were trying to move any walls within

or close things off for a third bedroom, there's gonna be beam work,

there's gonna be a lot of hassle.

-Here, there's no beam work or anything. -Oh, I see.

It's just framing in what you want.

If we were converting a garage into a full ADU, that's expensive.

Imagine converting this all of a sudden into a three-bedroom home,

and you didn't pay that expensive price

-of all the three bedroom homes out there. -Yeah!

You've created a space that's actually gonna start putting money in your pocket.

Wow.

If we turn this garage into a third bedroom

and closing the garage door, you've got room for a closet.

-Yeah. -We could even fill in the laundry properly.

-Oh, that's cool. -You'd have a large bed and a desk.

There's even enough space for a recliner.

-Yes! -You don't need the garage because you've got a driveway.

-So you have off-street parking. -Yeah.

I feel like this would be a pretty simple transformation.

Hey, can we do a closet?

And the bed is a pull down?

Uh. We could do a Murphy bed.

-Yeah. -Keep in mind, depending on the type of Murphy bed,

you could be spending $10,000, $20,000.

-Ooh. -You need to take yourself out of "I'm a homeowner.

I know what I like" and put yourself in the business mindset.

You need to make sure you can get the best rent

and offer the most valuable product to people

without spending money on things,

you don't have to spend money on.

I see.

Liron is going to be the one who guides you through this whole process.

-Okay. -I actually think you could have tenants in here

within a month.

So, a month, I can collect the money?

Exactly. Start pulling that money in.

-Well, at least start showing the place. -[laughs gleefully]

When you have the square footage we have in this house,

plus a nice big backyard, plus, we're turning this old dirty garage

into what feels like livable square footage,

I'm excited.

Can we make that a legal bedroom?

Get that square footage as a part of the home?

We'd have to find that out pretty quick.

These are all value adds that move the needle

of a two-bedroom closer to a three-bedroom.

Let me just save you some money

and get this place cleared out.

[Heidi exclaims]

-One, two, three. -[Heidi exclaims]

[Heidi] This property is so important to me on many levels.

When my husband passed away, I was thinking, "How I'm going to retire?", right?"

He always, always talk about land, that's so important.

So I get it.

-[chainsaw whirring] -This rental property have a big backyard,

a big land.

Financially, it would be very good for me too

because with the warehouse, I have a zero income.

This one, I think, is going to generate

the income to provide my retirement.

[cell phone ringing]

[grunts softly]

-Hello? Oh. -Hi.

Hold on. I'm on-- I'm atop a ladder.

Remember the project that we have over in Venice?

I'm looking for the light covers. They're--

No, I, I took those home.

I'm using them at my house. [laughs]

Okay. Well, in the meantime, I think we're gonna have a problem.

Wait. Is it about the permit for the garage?

[sighs] We're not going to be able

to turn around proper approval with Burbank in time

to make it a full bedroom conversion.

It'll take months.

What's the minimum?

Are you thinking it's gonna be like two months?

Because that could be doable.

Well, there's no way of knowing.

Like, look how many these projects now that we're doing

that are three months, four months.

So, here's... My question then is if we were just to make that a flex space,

we just have it as a second living space,

I think that would still add a ton of value.

As long as Heidi is aware.

Like, it's not legally a bedroom,

so she can't advertise it as that.

But we'll need her to sign off on this.

The other thing, too, is if we're finishing it that way,

then we still have to legally keep it

as a garage. Like, you could drive a vehicle in there and park.

So we need to sort of rethink the design of it

more than... Uh, why don't we get Liron over there

so that they can get working on the flex space?

-Okay. -The main thing is we just want

to get this done in a month so that we should get a tenant in there right away.

All right, all right. See you later. Ciao.

[upbeat music playing]

[Jonathan] Drew and I have had success in the real estate game,

and we want others to find success, too.

This property is going to be Heidi's only source of income.

So if this investment goes wrong, she'll lose everything

that she and her late husband saved.

Hey, Heidi. How are you?

[Heidi speaking on phone]

I actually wanted to have a little chat about the garage.

I did a little digging, and if we want to do

a legal separate bedroom suite, just for the permits alone,

it's gonna take probably three, even up to six months

if we wanted to do a permitted third bedroom.

Wow.

I guess the whole thing is, if you're thinking resale value,

the resale value of a legal three-bedroom is way better.

So if you ever did end up going to sell,

you'd be in a much better position.

[Jonathan] You could just renovate that as a flex space.

It would cost the same because the reno isn't much different.

Somebody could use it for whatever they want.

No. Unfortunately, you won't make the same amount.

[Heidi] Hmm. I see.

Ultimately, you have to decide.

Do you want to do the full bedroom conversion now,

but have it unrented for several months while we get the permits?

Or do you wanna just do it as a flex space and get it rented right away?

"Flex space." Okay.

All right. Well, decision made.

We'll start working in that direction.

-[Heidi] Okay. -Bye.

[upbeat funk music playing]

[machinery whirring]

[Drew] Just wanted to talk to you about a couple things in the garage.

-[Heidi] Yeah. -Get your input on some of the layout.

Okay. Today, the contractor Liron is coming.

We want to go over the plans for the new flex space.

And I have lots of questions to ask him.

I know after talking to the brothers, we discussed the laundry.

It was two laundry machine here...

And then the closet over, correct?

-[Heidi] Yeah. -Because I also had an idea

to potentially move them to the opposite side.

-Okay. -Over here.

I just like the idea of having them on this side.

Because you have more of a depth here

that will give us a better clearance

-in terms of access over here. -Yes.

-I see. -I know we spoke about

having some built-ins somewhere.

-So with the laundry machines coming over on this side... -Mm-hmm.

-If we kept with the same idea... -Yeah.

-Building out a closet for them... -Yeah.

-Building off of this wall to extend... -Ah.

-You would gain this about 36 inches, 3 feet, right? -Yeah.

To Add maybe a built-in on this side of the wall.

-That's right. That's right. So, like a more if... -More floor to ceiling maybe.

-Yeah, yeah, yeah. That's pretty smart. -Cabinetry.

A good contractor is any property investor's best asset,

and with our backing, we come with all that legwork already done.

Check references. Get quotes.

I mean, a good contractor, on top of doing a good job on the project,

they're also gonna find ways to save you money

and make you more money with the project.

[mellow rock music playing]

[tools whirring]

[Jonathan] I'm doing a surprise check in on Heidi

because I want to see how it's going with Li.

She's one of my best designers, and since we can't market this

as a 3-bedroom rental, this flex space has to grab

the renter's attention and be functional.

The laundry room will be here, right?

-Yeah. -Do we put anything on the top?

Yeah, we could, if you want. We could do open shelves.

Would you benefit from a 6-foot-five guy

-who can build shelving? -[exclaiming loudly]

Doesn't that look so much better.

-It just opened up, cleaned up a little bit. -Right?

What happened with actually fully converting this over, losing the door

versus having to keep that kind of stuff.

-Where did we land? -We're going to do a custom door.

Is it this style of roll up, or is it going to be one that's contained

so we don't have to have the track coming in?

-[Heidi] Yeah. -One that rolls up and rolls into itself

so we don't have to have these tracks.

[Heidi speaking]

Can we just do those, uh...

-A slider? -Yes, Slider.

Well, in reality, the city doesn't require it to be an automatic door.

It could be a manual door.

-We could actually just almost do like-- -Carriage doors.

Yeah. So it looks a lot more finished.

-Yeah. -Just "open like this" door.

-Yeah. You just have two doors that open out. -[Liron] Right.

We could build two wall panels.

Insulate them, drywall on the inside.

-Oh! -Maybe do like board batten on the outside.

Fakes.

Yeah, they're just-- They're just two wall panels that act like doors.

It would be comfortable, and it would pass the city sniff test

of having garage doors. You just need to be able to open it up.

Anything to avoid having to have the tracks

-because you're not gonna be using this daily... -In favor, right?

-Yeah. -Other than that, what else is going on?

[Liron] Since we are using this sort of as a flex space,

we want to have, like an office, and storage.

So we would do some bookshelves on this side

and then do some sort of, you know, custom desk here.

I'm thinking to do oak.

-I thought it would work well in this space. -[Heidi] Hmm, yeah.

[Liron] Warm tones.

But I also want to add some color on the bookcases to paint the outside of them.

-[Jonathan] Okay. -So not everything is like wood tone.

Okay.

Yeah. I mean, your renters are looking at 20 different places.

What's going to make this stand out?

How about this beautiful, built-in desk and the gorgeous new floors?

That's right. And I have a fantastic door you can open that with.

[Jonathan] This is totally custom and might be a little out of your budget.

-But hopefully. Yeah. -Hopefully!

[dramatic string music]

[Jonathan] Okay.

-Yes! -How do you like it? [chuckles]

-It's a dirt pit. -[laughs]

What a level dirt pit!

-Oh, my God. -[Heidi] Do you like the tree in the middle?

What? Why?

What happened?

-Did you tell them not to take this? -No! No, no, no.

[Jonathan] This should be a big, open area in the middle.

-Yes! -We'll have our canopy of green around the outside.

I will make the call on this.

-We'll get rid of it. Level everything out. -Okay.

The only thing is that you said

that you allow me to go with you to shopping for the trees.

-I already promised. -You promise?

-I will take you with me. -Okay, okay.

My opinion is for a rental property,

you want low maintenance.

Yeah, the tree doesn't need any maintenance.

Like, an apple tree, an orange tree,

you don't need to do anything.

What happens if you have all the apples falling and you don't pick them up?

I do.

You're not understanding! Let's say...

I write in to the contract.

Say they have to allow me to pick up the food once a week.

Okay. I'm sorry.

-You're lovely, your tenants don't want you around. -Okay-

-I trust you. I trust you. -Okay.

Yeah, because I don't trust you.

[both laughing]

[dramatic string music playing]

[tools whirring]

[Drew] I feel like Heidi is putting in

the right amount of money into this property.

She's coming in around 70 grand

for the garage and the house and the yard.

[Jonathan] We're backing Heidi with our experience just to plan the backyard.

Since she's paying for the trees and the plants

and everything's going back there,

I'm gonna take her to the nursery

and just make sure that she doesn't go crazy with the spend.

Because I know if she went to the nursery on her own,

We would have an orchard full of lemon and orange trees back there,

and I am not going to let that happen.

[mellow music playing]

[Heidi] I'm very excited.

We're going shopping for the backyard fruit tree.

Fruit tree. Fruit tree, please.

Maybe lavender.

Some of them you can see

-are already a little bit bigger. -Yeah.

Some of them are smaller,

-but they'll grow quite quickly. -I see.

I'm secretly trying to, like, steer her in the direction of very low maintenance

because if you spend a bunch of money to finish the yard,

but then you're also adding a bunch of money for maintenance,

that's not a good business proposition.

So any of the ones you see that you like,

-just throw a sticker on... -Oh!

Let's see. I think this is lavender. Mm!

-Ooh, the smell. -Smells so...

-French lavender smells nice. -O, my God!

We want more French lavender.

This is kind of nice over here.

What is this?

Which one? Those...

Those are kind of more like succulents.

Then we don't look at it.

I look at the plants that smell good, taste good.

Some succulents, some grasses.

This is all just for ground cover.

That looks nice.

-It's low maintenance. -Are they edible?

You don't have to eat everything in your yard.

[Heidi] This is mine. Don't touch it.1

-Okay. So you want citrus. -[Heidi] Yes, I do.

But look, I need a bigger-- There's only two oranges.

-So, you know. -If you want more than one or two,

-we might have to go... bigger. -What?

Normally, I would insist on no fruit trees in a rental,

but Heidi is not your normal investor,

so I'm willing to give her a little slack

and let her get a couple

-This will be 1000 bucks, installed. -Wow!

-You're thinking at least for our anchor trees. -Lucky you're tall!

-All right, throw a sticker on it. -Okay.

After all, the journey is about her mental wellbeing,

not just her financial.

Finding joy again after the loss of her husband,

I think is an important part of this process.

If that's what you want for that, we would be doing three of them.

Yeah, They have a couple of them, you know?

And because you're overspending, you're walking back.

I'm almost done! Wait!

My whole assignment here with this project was to get Heidi the most rent

while making sure she doesn't overspend

and protecting her future income.

But she is still healing, and this is her property.

So if a citrus tree is gonna bring her joy,

I am happy to give her a citrus tree.

And who knows/ Maybe we'll end up finding a renter

who loves lemons as much as she does.

-You have expensive tastes. -[Heidi laughs]

[Jonathan] I can't believe how fast things are happening over here.

But we've got to wrap it up and move on to our next project.

For this two-bedroom home to compete

with the three bedroom listings out there,

this flex space has to stand out.

It can't feel like a garage at all.

The semi-custom built-in shelving will help elevate the space,

and those doors have to blend in seamlessly.

These doors are 5 inches thick, fully insulated

still had those beautiful windows to let in the natural light.

I think this was the perfect solution

to make sure we still comply with what the city needed,

but give it that comfort of an indoor space

In the back garden, to give Heidi's property

a competitive edge on the rental market,

this yard has to be inviting, clean and low maintenance.

We have less than a week until Heidi needs to start showing this property.

We can't take any delays.

She literally hasn't had any income for two years.

[mellow rock music playing]

[tools whirring]

[Drew] I'm popping over to Heidi's house just to check in on the progress.

I have one of our trusted trades here.

Donnie is like our closer.

We often bring him in to get a project over the finish line.

He's great with special projects like these garage doors,

and he'll make sure it gets done on time.

Hey, the doors do look good.

-[Heidi] Hey! -[Donnie] Hey. Welcome.

[chuckling] How cool is this?

Look at the door.

Yeah. I mean, they are still legit garage doors.

But you have the insulation and they're gonna...

It's just gonna look like a nice wall feature.

Any questions inside here?

Well, we were just talking about this.

And how do we want to trim these out?

One is, do we want to try and make it,

like, real simple as possible and make it look like a wall?

Or do we want to embrace that

it is carriage doors, which would be more like a chunkier, bigger build.

It's already gonna be appealing to a tenant.

Let's not over spend on it.

-Keep it nice and simple. -Okay.

-And I like that we have the luxury vinyl down there. -Yeah.

If somebody still wanted to drive in here and park, they could.

You want to show a tenant the function of a space

and how it's going to work for their family.

-All right. Oh, wow. -[Heidi] Yeah.

-[Drew] Look at this. -[Heidi] Look!

[Drew] Looking good.

I mean, I do love how just big and open this yard is.

Oh, I see the path is going in.

So the path's gonna be a DG pathway, which is decomposed granite.

Everything's gonna be on a timed watering system,

the grass as well. So hands off.

[Drew] That way, you don't need to rely on renters caring for your lawn.

I love this. Keep the pace up.

[Heidi] Bye!

So many people here and out of the house!

I saw people in the garage,

I saw people go to the backyard,

all kinds of people.

But I'm concerned, you know, it's a lot of money

invested in this project, so I can't wait for this house

to be rented out.

Imagining I get my income back.

[Jonathan] We are headed to Heidi's house and this is the home stretch.

We are getting all the finishing touches done,

and it is looking incredible.

This is sort of the cherry on top.

[upbeat music playing]

We're gonna include staging as a part of our backing.

Heidi is still a novice real estate investor,

and her financial thinking is a bit scattered.

She doesn't see the value in staging...

One, two, three...

So we're going to do it for her

and show her the difference it can make attracting renters.

[Jonathan] It's gonna for the highest possible rent,

and it's gonna just give her an extra little boost

over the competition.

[Drew] I like that you have purposeful zones

which we know renters want to see.

[Jonathan] Well, I hope renters agree. We'll find out soon enough.

-[Jonathan] You ready? After you, ma'am. -[Heidi] I'm ready?

What? [laughs gleefully]

-Does it feel like a garage? -No!

-Did you move my bedroom to here? -[brothers laugh]

Having it staged professionally will show renters that

this is actually an extra living space.

This is your flex space.

-[Heidi] Yes! -[laughs]

Oh, my God! I think the renter can see how they can live there.

And if they work from home, they can do it from here.

And for the guys, it's their man cave.

But it also couldn't be the she-she room for the girls, you know?

-Exactly. -Yeah. Yeah.

The wife can use it. The husband can use it.

The kids can use it.

I love-loved the idea.

I think the renter definitely will love the idea too.

When you looked at the garage before,

nobody would look at that space

-and say, "I'm gonna give you more money for this rental." -[Heidi] No.

But now, this is the ultimate flex space.

I would be comfortable snoozing here, watching TV, working here.

It adds so much value and that's what you need.

If we wanted this to be a permitted ADU,

livable square footage added to the home,

that's a whole different process and a lot more expense.

Heidi didn't need that.

This is like adding 380 square feet to the house.

That is valuable in the tenant's eyes.

And the door is so awesome!

Didn't that turn out amazing?

It's sealed, it's insulated.

You still have the light from the windows.

You don't have to have all that equipment coming inside the space.

That makes it feel like it's still a garage.

If you have the motor and everything.

-[Heidi] Yeah. -Yeah. Check this out!

-[laughing] This laundry, wow! -How beautiful is that?

Oh, my God.

-It's pretty great, hey? -Wow.

You've got that. You've got your storage.

Storage.

Holy moly!

-Oh, the storage space! [laughs gleefully] -This is what tenants want.

Tenants need function. They need more spaces.

They need storage. They need laundry.

I'm so jealous of them. They live better than me.

The rest of the house was already renovated and it looked nice.

This was the one area that just felt like an old rundown garage.

[Heidi] Now this has become my favorite room of the whole house.

This whole process, it was really hard, but also very unique.

I'm always thinking my husband has sent a message

-through the sky to you guys. -Yeah.

[Heidi] After my husband had passed away,

for two years I was not able to move forward

and sell the building.

[Drew] When you were trying to get rid of the commercial space,

you're trying to figure out "How do I prepare to sell it?"

You know, "What do I do with everything?"

-"What's the next chapter in my life going to be?" -Yeah.

You found an amazing home.

And this is going to be a very successful chapter.

I think this was a great investment for you.

I couldn't imagine. So I can't thank you guys enough.

-You're welcome. -Welcome.

My husband would be so proud.

And he is up there helping me all the way.

Just like the brother does.

-Check out this incredible space. -[whoops]

Is this nice?

[Heidi] Oh! So nice!

[mellow music playing]

I mean, imagine somebody coming here

and seeing what the size of table they can fit for entertaining,

seeing a yard like this.

All this grass is amazing for families.

[gasps] Oh! My orange! [laughs excitedly]

Oh, my God!

Smells good, tastes even better.

I'm so happy.

This yard is so usable now. I can see kids playing.

-[Heidi] Yeah. -I can see families getting together.

I love that everything here is edible.

-I know! -Everything could be used in cooking.

We've got a little more height on the two sides of the yard with the fruit trees.

And it smells so good around the garden. [laughs]

The outdoor area, I mean, people are going to be out here...

-Yeah. Yeah. -...Dining.

-Then they're gonna want to come down into the yard. -So good!

-[Heidi whooping] -Then you bring a glass of wine

over here and relax.

Oh, my God. I love this sitting area!

[Drew] Is it nice?

[Heidi] You teach me that don't cost arm and leg

to make a space such a nice space. Yeah, yeah

I like that we didn't have to spend a fortune on this renovation.

We were able to spread the money out to make it make sense,

add value and get top dollar rent.

[Heidi] I want to be the tenant!

Well, let's go over some of the numbers

just to verify, because if you think about it,

you were able to avoid paying any capital gains tax.

That's a big off my shoulder.

-Yeah. -You get this place with pretax dollars.

And then on top of that, we had about $41,000 of costs

that we offset bringing in a designer, project manager of our team,

-some materials, -I know.

-You work day and night, actually, they. -Yeah.

Right there you already have $123,000 already in this property,

-helping you save money. -Yeah.

On top of that, you have the increased value of the property.

-Oh. -Yeah. So, the value of the home

is about $270,000 more than it was before.

Because you added that flex space, you fixed up the yard.

-Oh! -This property is gonna be a great rental.

-Wow! Yeah. -Rent?

Two bedroom, two bathrooms in this area,

a cap on them are usually around 4,300 to 4400.

But you are very unique.

-This house has more square footage. -Mm-hmm.

Plus, you have the big yard.

You have the best house on the block.

In fact, you're pricing more than a lot of three-bedrooms

-in this neighborhood. -Wow!

-Ready for it? -[inhales]

-$5,000 a month, you can easily get for this. -[gasps] Oh, my God!

[laughs gleefully]

[Jonathan] I'm excited for Heidi.

She's getting a three-bedroom rental value out of a two bedroom home.

Before I met you, I was worried.

I don't know what my future financial was like.

I feel so relieved, and excited for a new chapter of my life.

Now I do feel a lot more secure about my future.

I love hearing that.

It's always a little risky to risk our resources,

but I really feel great about backing Heidi,

and in fact, even though this grew from the original scope

of how we thought we were helping her,

into finding another home and fixing it up,

this is what she needed.

Knowing that our help actually got her to where she needs to be,

she's set up for success now.

I just love that she has this great investment

and I think that's a pretty special thing to be a part of.

We've only been gone a couple of weeks,

and Heidi is already making more than Drew and I projected.

She discovered that there is demand

for event space in the area.

So she's renting out that flex space,

including the back yard for $1000 of booking.

In fact, she's already booked it out twice.

And then she found a tenant for the main house

who's okay with that arrangement

and has signed a year's lease at $3000 a month.

So that is amazing. Go, Heidi.