BiggerPockets Real Estate Podcast Episode: Home Renovation Q&A: Permits, Building a Scope of Work, & Managing Renovations Release Date: April 11, 2025

In this episode of the BiggerPockets Real Estate Podcast, host Dave Meyer teams up with Ashley Kerr to address pressing questions from the BiggerPockets community. Focused on home renovation, permits, deal analysis, and managing renovations—especially in long-distance scenarios—the episode offers invaluable insights for both novice and seasoned real estate investors.

1. Navigating Properties with Unpermitted Work

Key Discussion Points:

• Assessing the Risks: Roman from Upstate New York inquires about purchasing a multifamily home where previous renovations were done without permits. The property is a legal two-unit home offering a monthly cash flow of $900 but requires retroactive permitting for kitchen and bathroom renovations.

• Legal and Liability Concerns: Ashley emphasizes the importance of addressing unpermitted work to mitigate liability risks, especially in states like New York where tenants can sue for issues like electrical malfunctions leading to fires.

• Practical Steps:

  • Engage with Local Code Enforcement: Understand the specific requirements to bring the property up to code.
  • Scope of Work Evaluation: Determine the extent of unpermitted work to estimate costs accurately.
  • Contingency Planning: Incorporate contingencies in purchase agreements to protect against unforeseen permitting costs.

Notable Quotes:

• Ashley Kerr [02:01]: “Talking to the code enforcement person in that area... can give you an idea of what's expected to make this property permitted.”
• Dave Meyer [04:06]: “I couldn’t sleep if I knew there was something even slightly illegal or off kilter in my property.”
• Ashley Kerr [04:59]: “If it's an unpermitted unit... getting permitted as a third unit... requires significant work.”

Conclusion: Retroactively permitting renovations is often a necessary step to ensure legal compliance and protect against future liabilities. Investing time in understanding local regulations and thoroughly assessing the property's existing modifications can help determine whether the investment remains sound despite initial permitting challenges.

2. Mastering Deal Analysis for Duplex House Hacking

Key Discussion Points:

• Overcoming Analysis Paralysis: Tanner from San Antonio seeks advice on confidently analyzing duplex house hack deals within the $250,000 to $350,000 range to avoid getting stuck in indecision.

• Essential Tools and Practices:

  • BiggerPockets Calculators: Utilize built-in worksheets to methodically assess every financial aspect of the deal.
  • Estimating Insurance and Expenses: Obtain insurance estimates through agents or online tools to enhance accuracy.
  • Community Feedback: Share calculator reports on BiggerPockets forums to receive constructive criticism and insights from experienced investors.

• Networking and Continuous Practice:

  • Engage with Local Investors: Networking can provide invaluable local market insights and potentially reduce costs.
  • Build a Buy Box: Define specific investment criteria to streamline deal evaluation and improve decision-making speed.

Notable Quotes:

• Ashley Kerr [15:05]: “Use the BiggerPockets calculators... there’s already a built-in worksheet going line by line.”
• Dave Meyer [16:03]: “Those are things that you can mess around with to try and get your analysis really crisp and sort of to maximize your return.”
• Ashley Kerr [20:11]: “I can eyeball that and I can analyze it like this. I can run those numbers in my head because I’ve done so many.”

Conclusion: Becoming adept at deal analysis requires consistent practice and the utilization of robust tools like the BiggerPockets calculators. Engaging with the community for feedback and networking with local investors can further enhance analytical skills, enabling quick and confident decision-making when lucrative deals arise.

3. Crafting and Managing a Scope of Work for First-Time Rehabs

Key Discussion Points:

• Developing a Comprehensive Scope of Work: Sophia from El Paso, Texas, seeks guidance on writing a scope of work for her first rehab project, determining material purchases, and making design choices.

• Steps to Create an Effective Scope:

  • Property Inspection: Conduct a thorough walk-through or have a representative video the property to identify necessary repairs and desired upgrades.
  • Documentation: Use detailed notes and photographs to outline what needs fixing, removing, or preserving.
  • Collaboration with Contractors: Share the initial scope with contractors to obtain their feedback and adjust based on their expertise and suggestions.

• Managing Renovations Long-Distance:

  • Utilize Local Real Estate Agents: They can act as your boots on the ground, providing regular updates and ensuring that renovations adhere to the agreed scope.
  • Engage Property Managers: Some property management firms offer project management services for an additional fee, overseeing the renovation process.
  • Leverage Networking: Seek motivated individuals within the investment community who can provide reliable oversight and updates.

Notable Quotes:

• Ashley Kerr [26:30]: “I walk room for room and notate what needs to be fixed, what to demo, and what to keep.”
• Dave Meyer [30:22]: “When you are picking out finishes, like you have to not only compare to what other properties are doing but also think of like the labor cost.”
• Ashley Kerr [32:59]: “Start with the real estate agent and property manager, then finding someone that you're paying to be your boots on the ground.”

Conclusion: Creating a detailed scope of work is foundational for successful rehab projects. Collaborating closely with knowledgeable contractors and utilizing local professionals to manage renovations can ensure that projects stay on track, especially when managing them from a distance. Proper planning and clear communication are key to balancing budget constraints with quality improvements.

Additional Resources and Final Thoughts

Key Takeaways:

• Utilize BiggerPockets Resources: Templates for scope of work and renovation cost estimation are available in the BiggerPockets Resource Hub.
• Community Engagement: Leveraging the BiggerPockets forums offers a platform to seek advice, share experiences, and gain diverse perspectives from other investors.
• Continuous Learning: Both hosts emphasize the importance of ongoing practice and education to refine investment strategies and operational skills.

Notable Quotes:

• Ashley Kerr [35:20]: “There are actually templates for rookie investors or really anyone that wants to use them in the BiggerPockets Resource hub.”
• Dave Meyer [35:38]: “They are another great resource for both rookie and advanced investors. You can ask pretty much anything you want.”

Conclusion: The episode underscores the value of thorough preparation, community support, and the strategic use of available resources in navigating the complexities of real estate investing. Whether dealing with unpermitted properties, analyzing potential deals, or managing renovations, the insights shared by Dave Meyer and Ashley Kerr provide a robust framework for investors aiming to build and sustain wealth through real estate.

Final Note: For those seeking to delve deeper into real estate investing or looking for practical tools and community support, visiting BiggerPockets and participating in their forums can be highly beneficial. Subscribe to the BiggerPockets Real Estate Podcast on your preferred platform to stay updated with the latest discussions and expert advice.