In this episode of the High Return Real Estate Show, Jeff Schechter interviews Antonio Hornbeak.
Questions Asked:
- How do you get your checklist so dialed in?
- How do the choices in quality of materials and items used change with property class?
- How do you know when and where to use luxury items in a B class home?
- What are your thoughts about the extra bedroom?
- When it comes to wear and tear of materials, is it sometimes worth spending the extra money for longevity?
- Have you run into situations where you have over/underspent?
- How do you determine when to replace and when to repair?
- Are there any tips you can give the listeners based on your experience when it comes to whether you will buy a property or not?
- How do you evaluate a fire damaged property?
- How do you make sure you’re keeping up with current code?
Key Lessons Learned:
Buying
- Antonio utilizes a 7 point checklist of the major areas of repair to gauge if a property is worth buying or will be highly costly.
- The 2 most important areas to look out for when purchasing a property to rehab are the roof and the foundation, followed closely by electrical.
- When checking the foundation he looks for cracks and bowing.
- When looking at the roof he checks to make sure it's intact including the membrane to determine if any moisture is getting in, and tries to determine the age of the roof to see how much life it has left in it.
- When buying a property for rehab he ultimately considers how much time and money will be tied up in the project, and how quickly he can recuperate those funds.
Rehabbing
- Antonio recommends sticking to functionality for C class properties and saving luxury items for A class properties. B class properties are a balance between the two.
- When adding a bedroom, he suggests using pre-existing structures like a dining room that already has 4 walls and an entry. This makes the room fit better into the pre-existing layout of the house, and will cost you less time and money to convert.
- Some places like Indiana don’t classify a room as a bedroom unless it has a closet.
- Even when purchasing lower expense materials Antonio recommends buying quality. It will last longer and save you money in the long term.
- Antonio shares his experience that spending the funds to install a garbage disposal, even in C class neighborhoods, can save money by not having to snake the drains due to clogs from tenants putting things down the sink.
- The most important part of any rehab is focusing on areas like the foundation, roof, electrical, mechanical and plumbing. If these things are in good condition you will always have a solid property.
- When it comes to keeping up with code, cities are required to update any changes on their website so anyone can view it and keep current.
- The decisions you make about the property you’re rehabbing should be based on the numbers, not your emotions.
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