How to Know If a Deal's Renovation Plan Is Worth Your Money | Ep 59

James: Welcome to the Furlo Capital Real Estate Podcast, where we dive into the intricacies of passive real estate investing. And our mission is to equip people to invest wisely in both properties and people or residences so that together we can build wealth while improving housing. I'm James, and this is my wife, Jessi.

Jessi: Hey, I was talking to my mom earlier and she was telling me she listens to all of our podcasts. She was giving me some feedback and all the things she loves. So I have to do a little. Hey mom, thanks for listening.

James: And when you're ready to invest, we're ready to let you,

Jessi: you have to say that.

James: No, yeah, no minimums for you guys.

Famous just then, like, like someone on

Jessi: TV.

James: Yeah, there you go. Hey mom. You should feel famous. We have a few hundred people who watch every single week. So, all right We got a mini fan base going on. Is

Jessi: there any way to tell like are they the same few hundred people or is it like Different people each week?

James: Yeah, I think there's a way to tell. But, it, well, depends on your platform. I think in YouTube it will tell you if they are subscribers or non subscribers.

Jessi: Okay.

James: I don't, or repeat or new, I don't know. Interesting. You know, we're at that phase of the podcast where I don't really pay that close attention to the sta I mean Okay, my producer's gonna have to call me a liar.

No, I, I no, I don't, I, I've, what I'm, what I tell her is, no, you haven't seen me look into stats yet. Cause it's very general high level stuff. But but yeah, I mean, some interesting

Jessi: summer

James: repeats.

Jessi: Well, we at least know at least

James: one mom

Jessi: and dad are listening.

James: That's awesome. Cause what we're trying to do, watch this is we're trying to build a movement, right?

And so what we've done is we put together a plan to construct how people. See investing especially if they're interested in passively investing. Oh, here we go. We can help them construct a plan for them to do it successfully. And one of the foundational pieces one of the foundational pieces to this is.

Doing due diligence before you send over a single penny to a sponsor like myself. So perhaps you got someone like me, who's like, Hey, we got deals. Like last year we did four deals and we had a bunch of people invest with us. And before they do that, there's some things that they should ask and they should figure out before they send us money.

And I try to preemptively send them all the relevant information. So they have it. But I even have a download that you can get on our website. That covers eight different areas for which you can do your, your due diligence. And there's 196 questions. You don't have to ask every single one of them.

We even highlight the ones that are especially important for you. Yep. And but it's just super helpful to kind of wrap your mind around, yeah, what am I looking for? What's important to

Jessi: me? What's that document called?

James: We call it good deals only. Okay. Because the idea is if you actually run through this.

You will only invest in good deals. And so that's the, that's the whole point of it. But fundamentally it helps you do your due diligence side of it. So let's see if I can do this. So there's eight different areas. So first and foremost, probably the most important is the sponsor. Who's the person who you're actually giving the money to?

Who is the property manager that they'll be using, especially if it's a longer term hold. Well, you want to know about the, the market around it. You want to know about the projections and the business plan. You want to know about the construction plan. You want to know about the financing side of things.

You want to know about the legal documents. And then the mystery one that you have to download to figure it out.

Jessi: That's right. You're just keeping them in suspense.

James: There's, I couldn't tell you off the top of my head. That's okay. That's why I have the document so I don't have to have it memorized.

So it's all there. I mean, heck, when I'm looking at a deal, that's what I go through and I use. So super helpful. Yeah. So today I want to focus on number six on that, which is the construction plan.

Jessi: Yes. So the construction plan is a piece of the business plan, kind of what you're going to do with the property.

And there's two crucial questions that kind of drive. The construction plan and how to evaluate it. So, does the construction plan or budget, also called capex, which sounds like a superhero to me. Capital expenditure. Yeah.

James: Which is basically like the big stuff.

Jessi: Yeah. Does the big stuff, does that support the business plan, the big idea and is the right team in place to actually do the work?

So those are like the big, two big questions. So

James: a quick story for you. I was once looking at a deal. It was in Ohio of all places. It was a larger multifamily. I think there was like, I think there was like. 30, 40 units might've been more, might've even bigger. It was a pretty big project. And what was interesting about it was they were like, we're going to go in, we're going to buy it and we're going to make this thing awesome.

We're going to turn it from the C class that it is to almost an a class, which is like. Practically super nice, like super nice. And that was their, that was a plan and almost all of the fundraising that they were going to be doing was for was for the construction piece. It's been a little while since I looked at it now, but I mean, it was like the construction.

Budget was bigger than the actual like down payment part of the building. Part of it was they had good financing, it was a good deal, but they were going to spend a tremendous amount of money on this project. And they came to me asking if I was interested in investing. And I had two primary concerns with this project.

The first was when I looked at the surrounding area where this property was, it was all workforce. like that kind of thing. Like, you know, like there was a restaurant nearby. I was like Denny's, you know, and it

Jessi: wasn't high end. And

James: there wasn't a lot of other residential stuff around it either. And so my concern, and I'm part of my concern was I just didn't live in the area.

So didn't actually know. But my concern was, I was like, man, if you make the super nice, like there's nothing else from what I can tell via Google maps in the area that is even remotely nice. So what's Like is someone really going to be like, yeah, I'm going to live in this ultra nice apartment complex and, and not like, and not even like a community, right?

Like it's not even like a gated thing. It was just like this nice apartment complex for the surrounding area. Like it just didn't make a lot of sense to me. And then there was even a bigger red flag that I had. This was the guy who was sponsoring it. One of there's actually many, but one of the guys who was sponsoring it, it was him and his buddy had recently started a construction company.

And that construction company was going to be doing all the work.

Jessi: Oh, so they didn't really have a lot of experience.

James: Yeah. Yeah. And they were going to take on a

Jessi: big project.

James: And that was my primary concern, which I communicated back to him. And ultimately I said it was out. I actually followed up with him I don't know, about a month ago.

I was just saying, man, how's that project going? Yeah. It fell through. It didn't end up happening, which I was like, yeah, no, I get it. He's not doing other projects and, and he's being any super successful, so it's okay, but like, but I think that exemplifies like. That construction plan, it didn't match the area and the people doing the work.

I was like, Hey, they might be awesome. Yeah. I don't know. But like before I hand over 50, 000, you want to see a bit of a track

Jessi: record.

James: Yeah. I'd like to know that you can be on that. You are, have been off some in the past.

Jessi: Yeah. And that's this, this first kind of series of questions within this section. Has to do with who's doing the construction work.

And so it's like, has the sponsor worked with them before? How many years have they been in the business? What's their track record? Has the construction company successfully completed a project like this project? And then one that I. Like a lot that kind of speaks for itself is can you see the before and after pictures of previous projects that they worked on?

James: Yeah,

Jessi: you know so that you can actually get a feel for can they accomplish this? Yeah, do I trust that they know what they're doing and I and I feel like these questions in a lot of ways Similar to the questions that you would ask about a sponsor is it's trying to build this relationship of trust when you don't necessarily, when you're not going to be the one checking the work and swinging the hammer and yeah.

And so it's like, okay, if I'm going to trust that you're the one looking at the numbers and executing this plan, I really want to make sure that you know what you're doing and you've got to figure out ways. Yeah.

James: I think if you were to talk to property managers, they would be hard pressed to tell you which one was harder to deal with tenants or contractors.

Jessi: Ooh.

James: Yeah. Cause at least with tenants, you're like, all right, if I screen right and set expectations and just treat them like humans, like it'll, it'll be okay. Contractors. I don't know, man. There's something, they're just notoriously undependable, which is kind of sad, which a bummer. Which honestly, like if you ever wanna start a construction company, like it's super easy, man.

Just like reply back to people within a reasonable amount. It doesn't even have to be within 24 hours. Like, dude, dude, in 48, that's fine. Mm-hmm. And then if you say you're gonna do something, dude, just do it. Yeah. And like, and just commit to less. And honestly, people will be happy with that.

Jessi: Hmm.

James: I, I, I wonder sometimes, I was actually in this conversation with someone the other day where it was talking about contractors and.

And it was this idea of like, why is it contractors are always under budget or always underestimate how much it'll actually cost, right? They're like, Oh, it's only a 50, 000 job, you know, a hundred thousand dollars later or just whatever. Right. Or timelines actually. No, we were talking specifically about timelines.

That's what it was not about budgets, but it was like, man, they always say it was like like a month to do this and it's like, you know, four months in while we're almost done. And I was wondering, I was like, man, I wonder how much of that is they are just that bad at guessing. And, or is it like, if I told you it was four months, you'd never tell me.

Yes. I don't know.

Jessi: That's kind of like. Sneaky. It's almost like conning you into something. Maybe,

James: not necessarily conning, but just, you know, they, or it's just, they're giving you a perfect timeline. I don't know. I've learned to like, you got to over double it. I think it's more that. Someone told me a month and I gave them six months.

So, you know, it's probably more

Jessi: that it's, it's highly optimistic. And really unrealistic, so it's like, yeah, you just have to gauge it. Anyways so the next question is what is the renovation or improvement plan and what's the budget, including details about estimated repairs and like they need to provide this for you, you know, and the more detail, the better I would think, you know, and you do have to kind of evaluate and know what you're looking at.

But if they can't provide you a plan, that's like, here's what we think it's going to cost. Here's the types of things we want to do. Here's the estimate of what it's going to be worth when we're done and rents we could get for it. You know, if they don't have those basic questions, that is kind of a red flag, right?

James: Oh, yeah.

Jessi: Is there a standard way

James: that most contractors like

Jessi: communicate that information? No, I mean, I, I didn't think there was, but.

James: No, 99 percent of the time when you ask a contractor for a budget, they, they'll go through the property. They'll look at it. They'll then take longer than you want to get back to you to give you a number.

And even then they'll be like, 68,000 and you go based on what? Cool. What's the breakdown of that? And they just, ah, they don't tend to give it to you. Interesting. And yeah, it's it's annoying. Hmm. And I have varying degrees of success. I'll tell you my secret that I do that works really, really well.

So I use an app it's called estimate on, and it's run by Verisk, which is the largest insurance provider in the world, like home insurance provider in the world. So they

Jessi: know how much they cost.

James: Their whole business model is predicated on accurately predicting how much it'll cost to repair something so they can make sure they charge you enough of a premium to cover that cost.

Jessi: Right?

James: And, and they even like they've built software that contractors can use to bid out jobs and to track how much it costs. And that all feeds into their data model in addition to the, I forget how many, they have like 35 data scientists on their team. That like their whole job is to come up with pricing models and they can get you down to accuracy within a zip code and like for all sorts of jobs.

All right. It's, it's really impressive. So

Jessi: why do not, why do more contract? Oh, it's like 10 bucks a month to pay for. I

James: pay happily pay the 10 a month to get an app. And there's some limitations with the app. Like you can't save your stuff. So. That's annoying. So it's kind of like, you like figure out everything you want to know in the session, but what you do is, and it's not, it's, it's okay.

Hmm. It's okay. Cause you got to type in what you're like, search for what you're looking for. And it's not like a normal search engine. Like the more you type, the less results you get. So it's weird. But anyways

Jessi: or

James: you get more, whatever. The point is, but what it does is it gives you a range. And what I will do is I will go through and I'll get like.

The big stuff. All right. I know we're gonna redo the roof. I know we're going to redo the carpet. I know we're going to redo some windows. I know we're going to paint. I know we're going to whatever, do all that stuff. And I will go and I will try to like, and I'll take pictures and videos. And what I'll do is I'll watch, I'll go back and I'll rewatch the video and go, Oh yes, this thing, this thing, this thing.

And I'll make a list of all it is. And then I go to the app. And I look it all up. And part of it's like for the roof stuff, they want to know, well, what's the pitch, what's the size, what's the quality. Like, and I, I look all that stuff up, do the research, get my numbers and I get a pretty good range that I feel good about.

And then I do, I don't do the top of the range. I do the three quarter mark, the 75 percentile of the range. And so I feel pretty good. And so when a contractor comes to me. Like, for example, I did one where I was like I actually didn't, I did top of the range on this one, but it was, it came out like 86, 000 and the contractor came back and said, yeah, I was looking at it.

I think I can get this done for, it was like 85 and I went, I was like 80, something like that. Yeah. You're like, Oh, all right, you're in the right. And for me, that was enough of a triangulation to be like, okay. And I even, and I eventually, I shared my numbers and I was like, Hey, you're like, are easily all the things.

And so I found that super helpful to do something like that. And sometimes I've run it in a contractors, like they come in like way less. I'm like, Oh, what am I

Jessi: missing here?

James: And but it allows me to have those kinds of conversations. So that's my secret. And it's, it's accurate enough where I, as long as I'm like, as long as I hang out in that upper range, I feel really confident, like, okay, I can go and make an offer and, and there's places where we can make strategic choices to hit my budget number.

And honestly, that's oftentimes a lot of times what I'll do now is I'll walk into the contractor and say, Hey, here's my budget.

It's this number. I would like to do all these things. Let me know what you can't get done.

Jessi: And

James: I'll even prioritize it for them. Like within this, do these things. These ones are nice to haves and that's probably

Jessi: helpful for them too.

Yeah.

James: And so they, cause I'll tell them like, yeah, dude, the budgets, the like, that's the thing that we're managing to, and we can, the quality piece of it, which I get affects my, my ARV on the backend,

Jessi: but

James: you know, again, I'm like. I know what the big items are in terms of affecting the ARV. Yeah. So, and I'm also like, you know, if you can't replace the fixtures, like I'll get that done.

It's okay. Yeah. So that's, so it's super hard cause there are no whatever standard ways of doing it. And yeah, some people are, my observation has been the guys who have really good systems and it's all well laid out. Yeah. Their prices are also two X.

Jessi: Right.

James: What I want to pay. All right. Well, there's that.

Jessi: That kind of makes sense. So leading into something you just said, you also want to make sure that the renovation fits with the property's market and neighborhood. Yeah. And so you were kind of alluding to that as you're running your numbers and you're considering the ARV

James: after repair value,

Jessi: after repair value.

It has to match because if you're going to dump a bunch of money into it, like you were saying with that other property and it's super high end, it's going to be amazing, but the market doesn't support it. That doesn't make any sense. So you, you, your construction plan needs to fit the market and how much it's going to be worth.

And so there were, there's a series of other questions, I think around the market and neighborhood, right? Was that one of the sections? That's one of them. Yeah. And so it's like, just consider like

James: market trends in terms of like population, unemployment. Okay. Which

Jessi: do inform, like, what's the current property class, what is it going to be at the end what percentage of the budget is tied to rents.

So all of those different things kind of play into it. If you know the market, you can kind of evaluate, like, yeah, okay. Or, or you can see if it, if there's an outlier or if it like jumps out as a yellow or red flag, if you're like, wait a second, most of the properties in this neighborhood are around this range.

You're saying the aftermarket value is going to be like 200, 000 more. I'd be like, I don't, I don't know about that. So just paying attention to those and keeping track of it. One thing is you were talking earlier, I was like, okay, if I'm a passive investor, Like, I want to be able to trust my sponsor to run those numbers and do the estimates and that kind of thing.

I don't necessarily want to do all of that, nor do I understand, or am I going to like get that app? So what would you say to a passive investor in evaluating, like, where's the limit, you know, of like how involved I should be or shouldn't be? Is it just a comfort level thing?

James: I, I mean, I, again, I've looked at deals and it's like, if you're talking like ground up construction, that app's not for you, this app is really like repair estimates, right?

That's the not build from scratch estimates. I'm part of me is like, dude, it's 10 bucks. Like you don't have to, like, if you get it on the app store, get it, then unsubscribe. And you get like, I think it's like 10 uses out of it or something. I think you actually get some, like, I think you like three free uses total before they make you pay for it, I think.

But I think it's worth like for something like that, if they're going through and showing you pictures of what it is, like, I don't know, for me, it's super helpful. But I'm a numbers guy, so it's helpful for me to go like, okay, they were showing this, they were showing this, they were showing this. And I've used the app enough now where, you know, in 20 minutes I can work up an entire construction plan.

And for something like that, I'm just trying to see like, are we even in the right neighborhood of possibility? And as long as we're close to the neighborhood, I'm like, all right, I got it. But they're showing a very detailed construction or even like, yeah, construction plan like that, like the one that we invested in, man, they had this massive spreadsheet that showed all of the expenses, how everything laid together.

I mean, it was, you could tell this was like, this was their. These are the materials we're going to buy list and so I felt pretty good about the budget and they actually ended up coming in 100, 000 under budget. So yeah, I'll think about that. And, and so so I think that I think that that's, you know, it kind of depends.

I, I, okay. Let me put it this way. If you're looking at it and you're confused because it's just, it seems to be super messy or it doesn't seem to have enough details or you're like, it's just something in your gut. You're like, ah, this doesn't seem right. I'm like, yeah, run the numbers yourself. There's again, there's apps out there.

Jessi: That makes more sense

James: to me. If you have friends who are a contractor, like, Hey, I know this isn't perfect, but take this video. Take a look at these pictures. If you had to guess how much it was going to be to do a rehab, give me your high Reasonable low and, you know, and then I just see if they're in that ballpark.

That's another thing you can do.

Jessi: That makes sense. That makes sense. You don't have to spend hours and hours, become an expert, but you need to do a gut check.

James: Correct.

Jessi: Yeah. I think it's important. Another great question is how long is the sponsor projecting to complete the capital expenditure? So what's the timeline?

And it doesn't seem reasonable.

James: Yeah, yes and no. We had one project we thought it was going to take, I think we estimated it to be six months and it took a little under, a little over three,

Jessi: it

James: was super fast. We had another project that we said would take six months. And I think we're in the sixth month and it's not done yet, but we're working on it.

We're like, we will finish it this month. So which you know, that's pretty close. Yeah. We've got another project that we did. I thought it was like, we didn't actually need any investor funding for it cause we bought it for a buck. But I thought like. Again, we were told like, Oh, this is pretty light work.

We could do it all in a month. Well, what they meant was 20 days of work that they're going to spread out over three months. Okay. That's cool. I mean, and part of it was like, they were looking for materials and stuff. So so that was one where I was like, Oh gosh, okay. So it's costing me more than I thought.

I think that's one of the things I'm learning as well is like, yeah, when they say it'll take a month, they do mean like. 20 days of work and, but it's not all consecutive.

Jessi: Interesting.

James: And let's see, our, we've started this other project where we're splitting the lots. That one, so it turns out we got buyers already, and so we're not going to do any work on them, other than split the lot.

That's the one thing, and we've talked to the city, and they're like, well, you know, like, can't be done in four months. It can take as long as it takes you to get the paperwork in. Interesting. So, like, so they're like, Oftentimes people take their time to get back. So it's like eight months, but they say one of the, you could do some things in parallel.

So oftentimes what happens is you submit a plan and, and then depending on the complexity of the plan depends on what the next steps are. So like if you're building out a multifamily thing, they got to notify all the neighbors. They got to give them a chance to say something. Maybe they'll have a town hall.

You'll put up your initial plans. They'll go, okay, this looks good. Tentative approval. Now go hire a surveyor. Do all the numbers, do all the stuff, do all the math, and then bring us an actual, like Metric, doubt, plot, map. Mm-hmm . Mm-hmm . And they'll ask for all of that and, and just all that stuff. They're like, yeah, that can take eight to 12 months, but they don't

Jessi: have to go through all those steps for every single no proposal.

James: Well, so that's the thing, right? Yeah. For, for like ours, like a lot split. Yeah. It's pretty, you're not really gonna change anything. Pretty simple. So they're like, yeah, it should be pretty quick. They still gotta notice all the give notice to all the neighbors. Really? Well, yeah. Why it is the rules, I don't know.

I don't give chance. Like if I got a notice

Jessi: like that where they were like. Oh yeah, the properties behind you like are on one lot and we're going to split it.

James: When they did I've gotten like, we've gotten like three or four of them. I just don't give them to you because I'm like, whatever.

Jessi: Really?

James: Yeah.

Jessi: Dude, if we get another one, let me

James: know. In our very first duplex, they were doing a project over there. And I think I

Jessi: knew that was a

James: massive project. Yeah. And then over at our apartment building, we've got one for the fire station and then we got another one for the old pizza place.

Jessi: Oh, yeah. Okay. Okay. So they're not necessarily, yeah.

Okay. They give notice for anything that you're going to be doing, changing, adjusting, whatever. Yeah.

James: Yeah. Interesting. That may have an impact or not. Yeah. Like

Jessi: this business is closing and there, somebody else might buy it and,

James: well, I'll tell you that it's just that they're structurally changing something.

So so anyways so for this process, because what we're doing is really straightforward and they're like, yep, we totally see what you're doing. Like you get it. Like we can, the second we submit our application, we're going to hire a surveyor. We're not going to wait for them to come back and give us, like, we're just going to save us a month right there.

Cause we're like, dude, whatever.

Jessi: More than likely going to be approved and it's going to be fine.

James: Yeah. And so we're going to let us very quickly follow it up. Yeah. So

Jessi: things like that. All right. Yeah. So timelines, timelines are hard to

James: guess. Oftentimes what I will do is I, I'll try to mile model out the high end of stuff.

So like for this split the lot project I, I, I stress tested it at 12 months and went, all right, this project still makes sense at that. Okay. So I was like, all right, we can move forward.

Jessi: That's a good thing to be aware of as, as an investor. Just realizing there's a range and like, where are the limits of that?

You know, where does it not make sense anymore if I have to wait for a return? So, it's good to evaluate. And then this one, I think, because it's on the construction plan, the question is, how will the sponsor take care of the denants? And because of it, it's part of the construction plan. I'm thinking, like, while construction is happening, like, what's the plan for people who are living there?

James: Yeah, and or before construction starts.

Jessi: Okay. Like if, like, if it's going to change, if you're going to remove people or change leases, if you're

James: going to redo an entire place, like they need to move out. And so the question is, what are you going to do about that? And, and again, I don't like a, you want to make sure they're doing it legally, which is Oregon's a thing.

Yeah. But then just be like, are they actually doing it compassionately? Do they care? I'm like, yeah, we're going to, we're going to help people out. Like when we did our construction thing in our apartment building, right? We didn't just hand out notices. We actually went out and did the research and we helped them.

We gave them the resources to find new places and they all did successfully. And so for me, I'm like, yeah, I just want to know that kind of thing.

Jessi: Yeah. And I think at least they

James: thought it through. Right. Cause like, it's not like for a thing like that. You can't in Oregon, you can't be like, so we're going to break the ground the next day.

No, you're not. There's a 90 day notice that has to happen.

Jessi: You have to wait it out. That's factored into your timeline.

James: Yeah.

Jessi: Yeah. And then similar to that, it's, it's kind of evaluating. Does this construction plan or business plan actually improve, you know, housing or the location? Or does it, does it make people's lives better?

Does it make the community better? Which is a different way to evaluate a construction plan. You know, it's kind of like that can be subjective, I think sometimes, but I

James: mean, for me, the litmus test is, is this the kind of project that you would be okay telling people about? You know, where you go, Hey, like, for example, this lot split, right?

That's one where it's like, man, we took it from one expensive place. That honestly had this really tricky building on here that you're going to have to destroy if you just bought the entire lot yourself to now two more affordable places. And the way that we're structuring it is we're not going in and making it super high end high class.

We are selling them as fixer uppers so that they are more affordable options. And whoever then goes in and does the work, they get all that sweat equity built into it. And so for me, I'm like, yeah, we're providing. You know, is it affordable housing in the traditional definition of like really cheap housing?

No, but it's a lot more affordable than what it was. And I think that's the project that you can be proud of. You go, cool. Awesome.

Jessi: Well, let's make Ant Board more reasonable for someone to. you know, whereas it's affordable. Yes. But also just time wise and expertise wise, if you've got one place versus like three buildings, that's, that's different.

James: Yeah.

Jessi: So,

James: yeah, no, totally. Yeah. So I think that's the kind of question that you, that you want to ask, you know? And I, in general, the answer is going to be yes. Yeah. It's pretty rare that you're going to be like, well, actually, I'm going to make my life worse. But you know, that's just kind of,

Jessi: I don't know why, why, why you would.

James: I mean, you could get it every once in a while where it's like, yeah, we're going to.

And so we didn't go in and I mean, I did some repairs and some upgrades, but for the most part, I was like, we're just going to like get people on our plans and rents were super low. So I'm going to raise them the market rates done. And you know, was that a cool project to be proud of? I don't know. I, you know,

Jessi: it did improve the property.

Yeah, no, it

James: did. And it gave people a place where they're like, okay, cool. I actually know my stuff is secure and being looked after now because it's being managed. Well, of course that was maybe previously. So but yeah, ultimately the question is just simply, is this a project you'd be proud of that you would tell other people about, or is it, is it more than just getting money?

Jessi: Yeah. That's

James: what I care about.

Jessi: Well, in both. I mean, this, the question is in here and maybe, maybe rephrase it a little bit, but is this a project you're proud to put your money in? You know, which is like, are you proud to tell people about it? Is it worth your time and money and effort to support?

James: Just

Jessi: it's good evaluation tool.

So there you have it. Boom.

James: The construction plan. I love it. Yeah. It's super good. It's important. Yeah. You know, and it's something that causes a lot of consternation for people. So I think it's good to ask those questions. And, and I think it's especially if you're doing flips like that, that's the ball game, right?

You know, you gotta get that right. Yeah. And so in

Jessi: a lot of ways, you're threading that needle of like. You know, you don't want to overspend and have, have it take forever and then, you know, not have the aftermarket value actually work. And so you're, you're. Finding that right balance of making it all work out.

And

James: the way that we've structured it with our investors is we give them a guaranteed return. And so we take out a lot of the risk from this plan. As a matter of fact, a lot of them would be like, man, you can take as long as you want. And so now they don't get to share in the economics of the upside, but they don't have the risk.

Of the economics on the downside, you know, so, cause if a project takes, you know, I don't know, man, if it takes twice as long, right? Like, yeah, I lost money on the deal and I'm going to have to find money out of pocket as opposed to going to my investors and saying, so sorry, not only did I not given your money back, but I'm giving you even less back than when we started like that, you know, you don't feel good.

And so yeah, so there's that. But but again, because I'm giving them that fixed it takes a lot of the risk of the construction plan out from their hands. I mean, the biggest risk is just me not paying, which, and part of what I'll point out to them is like, well, I've got a massive portfolio behind me. I'm massive. I have a portfolio behind you have a portfolio behind me that worst case scenario, I can make you whole if I need to it will hurt.

I don't want to do that, obviously, but you

Jessi: Which actually puts you in a good place for motivation. Like, you have genuine motivation to adhere to timelines

James: and evaluate

Jessi: and do your math right. Calculate all of your, you know, costs and construction plans and all of that. So that you can give them your return and you don't have to scramble for it.

Exactly. Yeah, exactly.

James: So there you go. That's the construction plan. Hopefully that was helpful. And again, if you like that, believe me, you're going to love the other seven of them. They're all super helpful. You can check, you can find that on our website, furlo.com. And it's got that along with a whole bunch of other information about what it looks like to invest with us.

So definitely check that out. So if you love this podcast, we'd love it if you left a rating, wherever it is that you listen, even if you're family. And so with that, thanks for listening. Have a great day.