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I'm Drew Levin.
I'm a contractor, and he's a real-estate agent.
We own 50 rental properties together,
and each one of them is making us money.
We met in college and quickly became best friends...
You should see this beautiful bay window.
[ Chuckling ]
...and then business partners.
So, we got two good options.
We buy properties in great locations
that are in a little bit crappy shape.
DANNY: Well, this scares me off the bat.
DREW: And we fix them up,
and instead of selling them, we rent them out.
DANNY: I look at it from the contractor's standpoint.
Drew looks at it from the investment
and the tenant's standpoint.
Look at this. Oh, this is so pretty.
Instead of selling a property for a quick profit,
renting it long-term is the way to go.
And that's why we renovate to rent.
-- Captions by VITAC --
Closed Captions provided by Scripps Networks, LLC.
Today, I'm showing Danny three very different properties.
I'm hoping that one of them's
gonna make sense as our next investment.
I'm taking you over to a property
that's in a great location with a really great school district,
over in Saint Paul.
It's a four-bedroom, one-bath,
and it's listed at $180,000.
yeah, in that area,
we're definitely need a 4-2 if we want to get top rents.
My great grandma actually grew up in this neighborhood.
DANNY: Whoa!
DREW: Unbelievable.
Are you sure your great grandma didn't live here?
Look at this carpet.
Okay. Decent size kitchen.
Obviously needs some major upgrades.
The kitchen's a mess, but it's good space.
And when we have good space,
I know Danny can figure out a way to make it work.
DANNY: This is a full kitchen remodel.
We're probably looking around 10 grand.
Yeah.
Oh, your favorite -- the claw-foot tub.
There's no shower in here.
This is the only bath, right?
This house is a four-bedroom, one-bath,
but to really make this the right investment opportunity,
we need to make it a four-bedroom, two-bath.
Bedroom here.
Two, three, four bedrooms.
Let's see what's upstairs.
Ooh! All right, all right, all right!
There's a smaller bedroom on the second level
that we can turn into the bathroom.
The plumbing's right back to back.
We could make this the fourth bedroom.
That's a good call.
DREW: It's a great idea from Danny,
and it's exactly what we need to do
to turn this into the right investment
as a four-bedroom, two-bath.
This one's got a lot of potential.
DANNY: Where are you taking me now?
It's a duplex. It is a foreclosure.
It's got two three-bedroom units.
It's only $190,000.
It could be a good cash cow.
You like to pick the ones
that the exterior always needs a lot of work, huh?
Yeah. It's definitely a tiny living room.
See if we can knock down some walls.
This is a real little bedroom.
We might want to knock this thing down, expand it.
I definitely would want to do that, for sure.
There's really no value in this bedroom.
It does bring down the potential rent, though, as a two-bedroom.
Although it'll make it --
More of a premium.
Yeah. And it will rent faster, which is nice.
So, let's go check out the unit upstairs.
Right into the kitchen.
You know, you got the bathroom right off the kitchen,
That's not ideal.
This is not that comfortable.
That I'm going like this for the toilet paper --
it's horrible.
Looks like this is the living room.
Pretty small.
And then we've got a bedroom there and a bedroom there.
This layout's tricky.
DREW: We came over to this property
hoping that there would be three bedrooms
and one bath in each unit.
We left with a plan
where we're only gonna have two bedrooms
and one bathroom in each unit.
But they'd be really nice units.
We are going into the heart of the city
to check out a duplex
that's got a total of five bedrooms and two bathrooms,
and it's listed at $220,000.
This is a big boy.
[ Chuckling ] I guess you break it you buy it?
I guess you own this.
Look at this natural woodwork.
This is a beautiful entry.
You've got to be kidding me.
This is literally a stairway to nowhere.
You walk into a wall.
That is so weird.
So, what is this?
It looks like maybe living room here.
Again, really beautiful woodwork.
Ooh.
Thin.
Kitchen is tiny and ugly.
Oh.
Kind of a small bedroom.
Are they calling this the bedroom?
Yeah. This is no good.
DREW: The lower unit has one tiny bedroom,
a small, little kitchen, and just a ton of living space.
This really doesn't make any sense.
Is there any way that we could knock this out
and expand the kitchen into this area
and then use that dining-room area
and the entryway that we walked in on as the two bedrooms?
It's possible. It's a shame.
What's a shame?
I'm gonna have to take this thing down.
Yeah.
We're gonna enter the second unit in the back.
The anticipation is just riding on me.
What the...?
This is like a maze.
I don't even know which way to go here.
We're entering on a bedroom?
DREW: There is absolutely no way you can rent a unit
where you're entering the unit through a bedroom.
We're gonna have to figure out another entrance into this unit,
or we're not gonna be able to rent it at all.
Wow.
Big living room.
I'll say.
Oh. That's interesting.
That's probably the staircase leading to nowhere.
Perfect. We'll just knock down this wall.
We'll make this the new entrance to the second unit.
I kind of want to just, like, kick a whole in this sheetrock.
Sure.
And this is the bathroom.
What do you think?
This is a total gut.
It keeps adding up.
What is this?
Oh, wow. Gosh. This place is long on living space.
That's true.
Short on bathrooms and kitchens.
We're gonna need to figure out a place to put a bathroom.
This seems like a logical space for it.
Our primary goal when we're looking at these properties
is trying to find cash flow
where we can profit on these properties every single year
because we really don't have the desire
to sell over the short term.
I've run the numbers on the three properties,
and there really isn't a clear-cut winner.
So Danny and I have got to review them
and try to figure out
what's gonna be the best investment for us.
I've got some good news, and I've got some bad news.
Which do you want first?
Give me the bad news first.
The house with that odd layout does not cash flow.
Good. That's actually good news in my mind.
I wasn't loving the fact that we're changing
three bedrooms down to two bedrooms.
I didn't like the whole plan.
Okay. We can rule that one out.
The other good news, then,
is that unfinished attic house
and the duplex, both of those cash flow very nicely.
Good.
The unfinished attic,
that house is gonna cost us about $180,000.
Remodeling it's gonna be another $60,000.
That property will allow us to cash flow
about $15,000 after all expenses.
Yeah.
The duplex is a $220,000 purchase
with about an $80,000 rehab budget.
Little bit more budget, yeah.
We can cash flow that property $20,000 a year.
That's great cash flow, too.
It's a tough decision.
I wish we could buy both of them, but we only can buy one.
So we need to make a decision.
MAN: We got a problem.
The stack runs through this wall.
It's running right through the wall we want to knock down.
Right.
So, we got two good options.
The unfinished attic house and the duplex.
In my opinion,
I'd rather have two units at $300,000
than one house at $240,000.
I think if the rental markets increase,
we're gonna get a better uptick
and it's a little bit stronger location.
I really think we can make a lot of positive changes
to get premium units, have some nice finishes,
and get these things rented very quickly,
and great cash flow.
There we go.
DREW: We were able to purchase the duplex for $220,000.
With an $80,000 renovation budget,
we will be able to cash flow this property, after expenses,
$20,000 a year,
and we only have eight weeks to get it done.
In the lower unit, I'm knocking down this wall
between this narrow kitchen and this tiny bedroom,
making way for an impressive, open-layout kitchen.
And we're also turning a dining room and a living room
into two new bedrooms.
In the second unit,
I'm completely gutting the kitchen,
and on the top floor,
I'm making way for a brand-new bathroom.
CHRIS: We got a problem.
What's that?
The stack runs through this wall.
it's running right through the wall we want to knock down.
The plumbing stack is the plumbing
for all the plumbing in this house,
all the kitchens, all the baths.
This is not good news.
I'm not happy about finding the plumbing stack there.
Do you think you can come over here
in the next couple hours to come take a look?
We called a plumber over to discuss the solution.
Bottom line -- it's possible to open up this wall,
but we're gonna have to reroute some of the plumbing
to a new plumbing stack,
and that's gonna cost more money and delay our project.
How much is this gonna increase the budget?
Probably a matter of between 1,000 and 1,200 bucks.
I'm probably gonna have to eliminate
some of the other wish items that I wanted.
How you doing?
I like this. I see a lot of action here.
I never do demo.
Today I'm coming in to help him out
just because I think I want a little instant gratification
of knocking down that one wall that made absolutely no sense.
DANNY: The second-unit entrance used to be in the back of the house,
but now we're gonna utilize that staircase that led to nowhere,
and that's gonna be the new entrance to the second unit.
Do you think I can get this to stick in the wall
like a Chinese star?
Numbers I'm great with.
Put a hammer in my hand,
I honestly have no idea what to do with it.
[ Glass shatters ]
He's throwing hammers. He's breaking light fixtures.
And that's why you don't come to demo days.
Stupid plumbing stack in the kitchen!
All that noise for just that?
I don't think I'll ever get invited back to demo again.
This will probably be my first and last time.
DREW: Any other walls that need to be broken down?
I think it might be best if you just drop the hammer.
[ Chuckles ]
Heading to the salvage store.
Trying to sell that arch in the living room.
It's a shame we have to let it go,
but we have to make that
a second bedroom to rent this thing.
Hopefully these guys can find a nice home for it.
Can I help you?
Hey, how you doing? I'm Danny.
Nice to meet you, Danny. Can I help you with something?
We got a really cool property,
really cool arch
that we're trying to get rid of, unfortunately.
That is a beauty.
It's very intricate,
a lot of detail, really good condition.
Trying to get somewhere in the $750-$1,000 range.
If it's under $1,000,
I probably could work with you on that.
All right. Perfect.
KEVIN: Danny!
Hey!
DANNY: Fortunately, the salvage guys
are able to remove the arch today.
That's huge for me.
There are a lot of people that will actually think you're nuts
for taking this out of there.
I'm thinking I'm crazy as well,
but I really need that second bedroom there,
and hopefully you guys can put it in a good home.
Look at this guy.
How are you doing?
I was doing great...
until I see how far along we are here.
DANNY: After weeks of waiting
and getting all the mechanicals inspected and passed,
it's go time.
All right.
Got the mason working on the chimney stack
in the kitchen,
and I framed out the two bedrooms in the lower unit.
In the second unit, the top-floor bathroom
is getting all-new drywall and tile.
Guys, this looks amazing.
We can't use these french doors down in the kitchen,
so we decided to repurpose them.
We're gonna clean them up. We're gonna paint them.
They're gonna go on the top floor in the bathroom.
I love to find something
that already exists in the home and repurpose it.
I want to bring the old charm of this house into this new space.
I found these really cool tiles.
They look like tin, and they're supposed to go on the ceiling,
but we're actually going to be installing them on the wall.
It's gonna give that upscale look
because we're in an upscale neighborhood,
and it's really gonna get the high rents
that we're looking for.
Two down, rest of the kitchen to go.
We are behind schedule,
and I feel like these days are just flying by.
But despite all the stress,
we are making some really good progress in this lower unit.
I'm stopping by the house today
because I have a tenant that wants to see it.
Most tenants are looking to move in on the first of the month.
This project is supposed to finish right before the first.
I haven't seen this house in about six weeks,
and the project timeline is only supposed to be eight weeks,
so we should be pretty close to done on this house.
And I'm ready to show it.
DANNY: How are you doing?
I was doing great...
until I see how far along we are here.
I'm a little bit taken aback by the progress that Danny has --
or I guess I should say hasn't made on this place.
It is really, really critical
for us to get tenants in to look at the place
so we're not sitting on a vacancy for a full month,
which is very expensive for us.
I'm not sure this is gonna show too well to the tenant.
I know I can envision what it's gonna look like,
but I'm not sure they're gonna be able to.
We have some company. This is Irma.
How are you? Danny. very nice to meet you.
Oh, my gosh.
Beautiful.
You're excited, aren't you?
We usually don't do showings like this,
but since we're kind of at the end of our deadline here,
we're trying to get the place done
for the first of the month.
DANNY: It is a little risky
to show prospective tenants in this condition.
Sometimes they can see past the dirt
and the filth and see the finishes,
and sometimes they just can't.
So, obviously not completed yet.
I hope not.
I can tell that she's not feeling at home,
and that's a major issue.
Looking forward to seeing what it will be like at the end.
That will be nice.
Yeah. It's gonna be a beautiful unit.
I'm not feeling all that optimistic
that she's gonna take the place.
DANNY: I'm finally feeling good about the lower unit.
Now I have to concentrate on the upper unit,
and there's a big to-do list.
Coming down!
A really well-done bathroom can be a great deal-maker
when it comes to renting these units out.
Narrow staircase.
DREW: We create our renovation deadlines
to end just before the first of the month.
That gives us an opportunity to get the property rented
for the first
so we don't have to sit with the property vacant
for a whole month.
If we miss our deadline,
we're gonna miss out on a big chunk of cash.
I don't mind spending a little bit of extra money
on the finishes
'cause I know we'll get the money back in rent.
We're repurposing the french doors
that were in the first-level kitchen
and adding them to the top floor in the new bathroom.
Since this was clear glass,
we needed to add some privacy
because these are doors to the bathroom.
We're gonna be putting this window film on here.
It's a cost-effective way
of getting the privacy that we need.
We're $2,000 over budget,
and the only way I can make it up at this point
if we have no vacancy.
I'm working my tail off day and night
to get this project done before the end of the month.
Drew better get his act together,
and he better get this thing rented.
Here it is.
Oh, my gosh.
All the work's been done.
Now it's time to stage the place
so we can get it rented right away.
And a couple dry pastas. This is always the closer.
Tenants like to see where I can possibly put a couch or a bed.
DREW: It allows us to get the units rented faster
and also gives us an opportunity to take pictures of the unit
so we have something to show on all of our advertisements
when we're going to rent this place in the future.
For us, it's a no-brainer.
Gentlemen!
I think with a family, it's just gonna be tough.
Ton of natural light.
WOMAN: Oh, you guys, look at this bathroom.
It's awesome.
Look at this finished bathroom. I love this thing.
Wow. Wow. Wow. Wow.
DANNY: This space had a lot of potential.
I just needed needed to maximize that space.
I'm honored to be your business partner.
Well, if I --
You did it!
Thanks, pal.
Well, if tenants have the same reaction you did,
we'll get this thing rented.
I love this kitchen.
I love the color scheme.
How about the brick and those mantles over there?
Those shelves.
I mean, it looks incredible.
This place really has come together.
It's got a great feeling.
This place is gonna show awesome.
DREW: We've got several different groups of tenants
coming to see both the lower unit and the upper unit.
DANNY: The first unit's gonna rent out for $1,400,
second unit for $2,500.
We'll let you guys kind of just look around.
We're gonna hang out over here.
If you have any questions, feel free to give us a call.
Give us a call, or we're just right over there.
Either way.
I got your number, Drew.
I'm always nervous when it comes to these showings
because the stakes are really high.
I like the original woodwork.
A lot of the old-school charm, the old woodwork, the old floor.
DREW: When I do these showings,
I really want to spend the most amount of time
in the featured part of the unit.
For the lower unit, that's the kitchen.
So when I invite them in,
I'm gonna talk to them in the kitchen,
and then we're gonna wrap up again in the kitchen
because that's where I want them to spend their time
and kind of really visualize themselves
living in this place
that they're gonna ultimately call their home.
So...?
Looks nice.
We just got to figure out
if we're gonna be able to fit in here or not.
I love the space they created here.
Just if it's gonna work for our needs...
we'll have to keep weighing that.
We'll talk about that, yeah.
DREW: There's a lot of demand to rent in this area.
There's no better thing than having a prospective tenant
cross other prospective tenants' paths
as they're walking into a showing.
It really creates that sense of competition.
Gentlemen! How are you?
I'm Drew.
REID: We're looking for a two-bedroom apartment
with some character, little bit different than all the rest.
I like the brick.
THOMAS: I really like what they've done
with this center island.
It's something unique that I don't think we've seen.
This gives it a little bit of character.
Great for entertaining.
DREW: These renter walkthroughs are going great.
We're getting very positive feedback.
Dan did a great job,
and it's very clear to me and also the prospective tenants.
REID: This is a cool room.
THOMAS: I really like a lot of the light coming in.
Ton of natural light.
All right. So, this is my room.
I like this one. I like this one a lot.
DREW: Gentlemen, what did you think?
Is this a place you think you could see calling your home?
I would definitely rent this place.
I think the price is right,
and with the character,
I think it's unlike anything else we've seen.
That was a great showing.
DANNY: Hey, guys.
Hi.
Hi.
Hi!
It seems like we have interest in the lower unit.
Hopefully we'll be able to do the same thing upstairs.
When we bought this duplex,
the only entrance to the second unit
was through this ridiculous exterior stairwell.
We fixed that problem by creating a new entrance
by opening up a wall in the interior of the property.
I'm hoping that's gonna do the trick
and get this place rented.
Welcome, welcome.
Oh, wow.
It's a nice way to walk in, right?
Big, open living room.
Lots of natural light with all the windows.
WOMAN: Yeah. Beautiful.
DANNY: We sanded these floors. We stained them.
There's a lot of room, which is awesome.
DREW: Ready, cutie?
Straight across.
Ready, cutie? Straight across.
DANNY: Brand-new carpet, freshly painted,
and a nice walk-in closet.
I have a lot of clothes and shoes.
Yep. There is a walk-in closet there.
DREW: Ladies, welcome!
WOMAN #2: Oh, you guys, look at this bathroom.
DANNY: We did a lot of work to this bathroom.
Before, there was an old cabinet here that we knocked down.
Everything was brand-new.
It looks awesome.
I'd recommend, if you guys are interested,
get your applications in immediately.
We might be breaking some traffic laws to get home.
[ Laughter ]
Don't -- Stay safe. Stay safe.
DREW: After the showings we had today,
I am very confident these units are gonna rent immediately.
DREW: We purchased this property for $220,000,
and the remodel was $82,000 -- $2,000 over budget,
putting us all in at $302,000 for this property.
We were able to get renters in both units,
and we got our asking price.
After expenses, our profit will be $22,000 a year,
which is $2,000 more than we expected.
So the fact that we went over budget is really a wash,
and we're gonna be making more money each year going forward.
Overall, this was a great property,
and we're ready to move on to our next deal.