10 Non-Obvious Ways To Add Value (PART 1)

Feb 26, 2021

Welcome back to the Housing Literacy Podcast with host Matt Guarino! In this episode Matt shares non-obvious tips and tricks to add value to your home. A lot of homeowners choose price over quality, but with 25+ years of experience in the Real Estate Industry, Matt explains why that is NOT the way to go. Stayed tuned for Part 2 of this episode.

As always we provide resources available to you relevant to each episode. Feel free to check them out below and if you have any questions feel free to contact Matt Guarino at 303-885-1644.

Episode Links:

Lighting
www.lightingdirect.com
Reclaimed wood
www.elmwoodreclaimedtimber.com
Home Maintenance
www.acehandymanservices.com

APPS
HOUZZ: home design and remodel
iScape: landscaping
ProjectColor by Home Depot: colors
Wayfair: furnishings and SIZZLE features
IKEA Home planner: space planning plus affordable furniture and accessories

https://www.nolo.com/legal-encyclopedia/can-zoning-be-changed-allow-your-use-vacant-land.html
https://www.bhg.com/home-improvement/advice/home-maintenance-checklist/

Episode Transcript:

Welcome to the housing literacy podcast with host, Matt Guarino, founder of Powerful Homes. Matt's mission is to empower dreams through home ownership. We're here to help. We're going to do this together and now Matt Guarino

Welcome back to the Powerful Homes, Housing Literacy Podcast. If this is your first time here, welcome excited you're here. If you're coming back, welcome back. And what we do here on this podcast is talk about housing literacy. If you Google financial literacy, you'll find millions of hits, tons of books. If you Google housing literacy, I have found you may not find anything.

So what is housing literacy? It's basically how to use your home, that you own or investment properties that you've purchased to create more stability, create more resources and create more happiness in your life. I have found that there's in my experience, nobody's teaching that and middle schools, high schools, colleges. I went to business school, nobody taught it to me. Basically I've been self-taught. I got a paper out as I talk about in a book I wrote called Powerful Homes, which I released last summer, how I just started with the paper out, use that to go to college. After college I just started buying properties.

And what I learned was there was a certain mindset and a set of tactics that I learned to create for myself, that I was able to buy low and sell high and create good opportunities for tenants. And it was just a really great situation. So I wrote the book, summarizing those learnings, basically those best practices. So I'm excited to talk to you about it. And the goal is really just to bring you value, bring you something on this podcast you haven't heard before that you can use right now in your life, whether you're trying to create more resources, if you've had an unexpected expense possibly in your life, maybe a job loss or income loss.

Some of these tactics are very real and you can use them immediately. And I'd love to help you on that journey. I wrote the book, Powerful Homes, creating an online course through a nonprofit we have, the Powerful Homes Foundation. And I'm really just trying to put this information out there so people can use it to improve their lives. And I will leave my phone number at the end of this podcast. Love to answer any texts or calls any feedback you have and I'd love to interact with you on it.

So a couple of quick qualifiers. One is this is kind of a judgment free zone. I have no agenda here. I'm not looking to sell you on anything. I'm not looking to make you believe my way is right. This is just a series of things I've done, all the things I'm going talk about today and everything I talk about, I've done. I've built homes, I've done land development, I've done hundreds of fix and flips all over the country. So this isn't regurgitating information I've read about. I've done this things. But I don't have it all figured out and I don't have all the answers and real estate is not the end all be all. a balanced portfolio should have stock, bonds, investment companies, things like that. This is just my point of view and there's no religious agenda, political agenda. It's not a religious thing, a political thing. It's just a thing that I want to share with you. And I also, won't judge you, wherever you are on your journey. If you're young, old, you own a ton of property or you just wanted to get your first home. Happy to talk to you about that and I'd love to add value to your process.

So let's jump into it. So 10 non-obvious ways to add value in real estate. That's our topic today in part one. So we'll have a second round of this as well. But these are the top 10 ways I have learned and paid dearly to know how to add value to homes. So there's a few key concepts that are woven through all of these things. And the first one is that the market's always the boss. I'm not the boss. You know, I have my own tastes and things that I like. But what I love about real estate is that it's ever changing right? Every day there's a new market, just like the stock market, which sometimes trades on emotion, but usually it gets it right in the long run, real estate's the same way. It trades in emotion from time to time, but typically the highest selling property is a high selling property for a reason. The lowest selling property is the lowest for a reason.

So which leads us to the second thing, that success leads clues. One of the things I love about real estate is the answers are all there if you're willing to dig for it. And then finally quality sells no matter what's going on in the market. If there's a dip or it's going up I always emphasize quality. So if you have a choice to do a lot of work on a home with not high quality materials or doing a little bit with high quality, I would always lean towards doing quality things; in quality, labor, using the best guys and the best key people and also hiring really high quality stuff, it always sells. And it's kind of an insurance policy if the market dips to have a high quality house and product.

So those are the three guiding principles, but there are the top five of the 10 non-obvious ways. So I should say there's a lot of websites and a ton of books about quick strike things to add value, like paint the house, you know, upgrade your lighting or really kind of surface level stuff. So these are non-obvious ways to add value to a home. So number one is to keep the most important things, the most important. What do I mean by that? What are the most important things? And we're talking about houses here, residential properties. I would say that the most important thing is the curb appeal, the kitchen and the master. Anybody that's worked with me for any period of time, I've been doing this 25 years. I might say that every single ever seen today. So it's curb, curb appeal the kitchen and the master.

So why are those things the most important and the biggest drivers of value, if it doesn't look good from the outside, people aren't going to want to buy it. They're not going to want to go in it and it just sends off the wrong message, if it's not quality from the curb, it's not going to be quality on the inside. So a big driver is to get the curb appeal right. And there's some big ways to do that with a new roof, you can do paint colors, flatwork, fencing, landscaping. You can also improve the curb appeal in the small ways, with new cool house numbers or lighting, different kinds of lighting. Make a cool mailbox, or you can put a door knock on it. But whatever you do make sure you get the curriculum. So if you're sitting there at home saying, how can I add value? Number one is to increase the curb appeal.

Number two is to get the kitchen right. What's the most important room of a house? It is the kitchen. And so lots of ways you can do that, you can update the flow and the layout. You can add new lighting, you can make it kind of an indoor outdoor space with a door that kind of goes into the wall. That's a really popular thing. But if I was going to focus on one immediate way I was going to increase the value of my home, it'd be the curb appeal and the kitchen. And then finally, it's the master, the second most important room in house.

Some homes don't have a master at all. So if you don't have one it's okay, but if you do have one to make an ensuite, a private bathroom is a really good idea. But upgrading the master because that's again, one of the most important rooms of the house beyond the kitchen. So number two, the number two non-obvious way to increase value of a home and it's that size matters. Make it bigger if you can, but always use a permit, right. So size does matter. What does that mean? That means that houses [inaudible], usually you take the size of the home, it's either above grade or a below grade, below the main floor level, or just above grade, like in Colorado and the Denver Metro it's just above grade.

So if it's a thousand square feet and you can find a way to add 200 feet, then if it's trading on a per foot basis it'll just multiply that perfect basis times the footage. So if you add footage, you add value. So what are some ways to do that? I think you can complete the basement. You can complete the attic and put a stair in. You could even complete the attached garage or the detached garage and build a new garage, if you can. Or add an ADU, an accessory dwelling unit. Something that's behind the house. So adding square footage is really, really good way. And another one is to move the mechanical room in the basement. You can move it either outside or you can move it into the attic. Like I said earlier, I've done all of these things. I used to do a lot of old bungalows in the Denver area, Park Hill, Mayfair, Montclair subdivisions. And what I do is I take the furnace and I'd hang it in the attic, just hang it. It's not the most efficient way to your house, but because the heat rises and that way it have to come down. But getting past that I'd moved that and then I'd moved the water heater. I'd put a tankless water heater somewhere else. So then I pick up a couple hundred feet in the basement.

Another big thing, a practical way, rubber meets the road, non-obvious way to add value is to check your assessors measurements and make sure they're right. So a lot of times, people don't know this, but a lot of times older areas in cities are measured from 1920, from the inside walls. It might seem like very esoteric, but measures from the inside. So, the 20 by 50 home, you'd say, you know, and that's from the inside, you'd say it's a thousand feet. But typically assessors now over the last 50 years have moved to outside walls. Well, you might say, well, who cares? Well, if it's 50 by 20, you'd add a foot because you usually go from the outside wall. So you'd have basically a 140 feet times the square footage. It could be a pickup of $15,000.

Let me give you an example of that. This summer, I was working with a Powerful Home student and she wanted to buy a property in Lakewood, and we immediately looked at it. And when I first walked into the property, I could tell that the square footage was off. And it turns out that there was a porch that wasn't included in the last listing of about 300 feet. I have no idea why, why I have a clue of what, of why it was because I don't think it was heated. So that house was 300 feet bigger than it, than it said on the County records. So what we did is we heated it for minimal cost, called the County, made them add it. And the student picked up a ton of value doing that. So don't assume that the County records are right, and don't assume that the methodology is even understood, non-obvious way to value.

So the last one is to dig out the basement again, size matters, adding footage. I've done this many times where a basement will be six foot and it really won't count because it's not tall enough. And what people may not know is the footings go six, eight, 10 inches below on the side into the ground. So you could easily just dig that out, literally with 10 people with buckets, re-pour the floor, because it's not a structural thing. And then add an entire basement for a minimal cost. Like I said earlier, I would strongly recommend you talk to an engineer, talking with an architect and all of that great contractors, but those are some serious non-obvious ways to add value.

So another one is zoning myth versus reality. So often, people think they know, or they think because they called somebody at Zoning that what they said is true. But I would make sure that you understand that your zoning, that it says it is for your home, your property, that is what's happening in the market. So a couple things with the zoning, so one is that if you subdivide say you have a duplex, you can make sure the zoning would allow you to subdivide and sell two town homes. Sometimes they'll tell you, you can't and then you really dig into it and you can. So why does that add value? It's kind of like, you know, if you've ever bought a 12 pack of soda or pop, it costs four bucks at Seven 11, but if you sell them separately, they're a dollar each. So the value, just like the value goes up when you sell something separately, again, non-obvious ways to add value, when you sell two townhomes versus the whole thing. It could be worth 15 to 25% more if not more than that. So again, the zoning myth versus reality, understanding.

Another way with the zoning is to assemble lots. You could assemble lots by asking your neighbor if they wanted to sell, or if you wanted to join forces with three of your neighbors and you all go together and sell it together. So now you're assembling some land that could be sold to a builder or someone else for a different use. Again, it's a non-judgment zone, so I'm not promoting or advocating gentrification or anything like that. This is just how can people add value to their home in a non-obvious way.

So finally, you can do the combination of both of those things, zoning versus myth versus reality. I had a property in Washington state in Tacoma where it had a giant piece of land next to an old bungalow or an old house, turn of the century home. And what I did is I subdivided it and sold those two lots to a builder. And then I took my property and turned it into a converted duplex. Basically did both of those things and I had no basis in the house because I sold them the land. And then what happened is the builder built those homes and my home value went up. So, that was just an amazing thing, layer and layer and layer of value creation for my property.

So another one is, I always say, add some sizzle, but at a reasonable price. Because as I've said earlier, that curb appeal, kitchen and your master are the majority of the value of your home, or that's the way the market looks at it. But I also think it's pretty cool to add things like exposed brick, maybe vaulted ceilings in your kitchen, give a lot of volume. If you had a small kitchen, you want to, you know, again, add value to the most important room of the house, you can vault it for a few thousand dollars. It feels dramatically different than it did without a vault. Some other things you could do to sizzle things, as you can add an accent color to one of the laws in the common areas. Or, you know, put a wine rack on the wall in a really cool place with a few bottles of wine and it's just a cool feature.

You can use some reclaimed wood that you see sometimes in commercial areas or downtown, urban centers, really neat. Just get a few thousand dollars of reclaimed wood and put it as an accent or just a well-placed super cool light adds value, but I would do this in moderation, you don't have to go crazy. Remember the market's the boss, the market likes a couple of sizzle things, but you don't have to go crazy with it. These are all practical non-obvious ways you can increase the value of your home. And when you do that, if you're looking for ways to create more resources, say you created and found out that your home was at, you know, three or more feet than you thought at 400 bucks a foot. That could be 120,000, if you increase your home value, go to an appraiser and then go to a lender and say, look, I have 120,000 more value in my home, maybe you can pull out a second mortgage to pay for those unexpected expenses. So these are all housing literacy concepts, but it really starts with value creation for you.

So a final, a fifth of 10 non-obvious ways, part one is today, is to avoid surprises and stay on top of the bones of your house. You know, to service the appliances, to make sure your plumbing and all your electric lines are well maintained. If they're not grounded, I would do that. For sure, there's lots of ways you can call your electrician and make sure that they're grounded in the proper way. Keep things up to code, make sure your windows are in good working condition and that you upgrade your carpet and flooring as it all wears out.

So again, these are the top five ways to the non-obvious ways that you're going to add value. And hopefully you've found some value in that. And again, I've done all of these things many, many, many times in multiple States all over the country. And I would love it if you had any questions or feedback about these techniques and kind of a mindset. You'd always looking at quality, always keeping your eye on the market. The market's your boss, not your personal taste. Love to hear from you. So my cell phone number is (303) 885-1644. And if you're interested in checking out my book, it's powerfulhomes.org. And again, really glad you're here. Look forward to you the next time on Housing Literacy with Powerful Homes.

Thank you for listening to another episode of the Housing Literacy Podcast. Don't forget to like comment and hit that subscribe button and stay connected with Matt Guarino by visiting www.powerfulhomes.org.