1. Remodeling for Real Estate Agents
Presented by Nate Moore

2. TEACHER QUALIFICATIONS
Nathan William Moore
20 years of experience working in the construction industry Currently CEO of Moore Construction Group LLC
Managed over 60 Million Dollars of construction projects in MD/VA/DC
Renovated over 100 homes in 2015
Holds an undergraduate degree in Business Administration and a Masters in Systems in Manufacturing with an MBA.

3. PURPOSE
The purpose of this course is to provide the real estate professional with the background needed to properly advise their clients on remodeling work and contractor selection for the properties they are looking to list, or have their clients purchase. Upon completing the course, agents will be able to advise their clients on the risks of purchasing homes with unpermitted work, as well as identify opportunity for their listings to net their clients the highest return.

4. OVERVIEW Contractor basics Permits Estimating construction costs
Types of contractors
Levels of contractors
Contractor qualification
Permits
When are permits required
How to check if work was permitted
What unpermitted work means to your clients
Estimating construction costs
Determining remodeling ROI (return on investment)

5. CONTRACTOR BASICS Trade contractors
Levels of tradesman:
Novice (helper)
Apprentice
Journeyman
Master

6. CONTRACTOR BASICS Trade contractors
Electrical contractors:
An electrician is a tradesman specializing in electrical wiring of buildings, stationary machines and related equipment. Electricians may be employed in the installation of new electrical components or the maintenance and repair of existing electrical infrastructure. Electricians are skilled tradesman who require license to perform most electrical work in the state of Maryland.

7. CONTRACTOR BASICS Trade contractors
Plumbing contractors:
A plumber is a tradesperson who specializes in installing and maintaining systems used for potable (drinking) water, sewage, and drainage in plumbing systems. Plumbers are skilled tradesman who require license to perform most plumbing work in the state of Maryland.

8. CONTRACTOR BASICS Trade contractors
HVAC (Heating, Ventilation, Air Conditioning) contractors:
An HVAC tech is a tradesperson who installs, maintains and repairs heating, ventilating, air conditioning and steam distribution equipment and systems. HVAC techs are skilled tradesman who require license to perform installation and maintenance of heating, ventilating, air conditioning and steam distribution equipment and systems work in the state of Maryland.

9. CONTRACTOR BASICS Trade contractors
Gas fitting:
Gas fitting refers to the installation or maintenance of piping which conveys gas from the gas main to the gas fixtures of a building. In the state of Maryland, a special license must be attained for this type of work. Some plumbers or HVAC techs will hold this license. In the state of Maryland, work performed on gas systems by unlicensed individuals may be considered a misdemeanor.

10. CONTRACTOR BASICS General contractors
In Maryland, home improvement contractors and subcontractors are issued licenses by the Maryland Home Improvement Commission (MHIC). The Commission requires a contractor to hold a Maryland home improvement license before doing any work involving repair or replacement, remodeling, or alteration of any part of a residential building.

11. CONTRACTOR BASICS How to qualify a contractor
Is the contractor properly licensed?
Check license level, specialty and status:
Does the contractor have the appropriate trade licensing for the project?

12. CONTRACTOR BASICS How to qualify a contractor
Is the contractor properly insured?
General Liability Insurance- Insurance policy that covers claims arising from an insured's liability due to damage or injury (caused by negligence or acts of omission) during performance of his or her duties or business.
Workers Compensation Insurance- Policy purchased by a firm to cover workers compensation costs. Its premium rate varies according to the nature of employees' work and is based on the employer's payroll. Also called workmen's compensation insurance.

13. CONTRACTOR BASICS How to qualify a contractor
Is the contractor a quality company?
Personal referrals
Internet ratings
Testimonials
References

14. PERMITS When a permit is required
Construction or demolition of a building or structure.

15. PERMITS When a permit is required
Installations or alterations involving:
The removal or addition of any wall, partition or portion thereof
Any structural component
The repair or replacement of any required component of a fire or smoke rated assembly
The alteration of any required means of egress system
Water supply and distribution system, sanitary drainage system or vent system
Electric wiring
Fire protection system, mechanical systems or fuel supply systems
Any equipment regulated by the Maryland Construction Code

16. PERMITS When a permit is required
For change of occupancy, application for a permit shall be made when a new certificate of occupancy is required. A new certificate of occupancy is required when the change of occupancy requires a greater degree of structural strength, fire protection, means of egress, ventilation or sanitation.

17. PERMITS When a permit is required
Movement of a lot line that increases the hazard to or decreases the level of safety of an existing building or structure in comparison to the building code under which such building or structure was constructed.

18. PERMITS When a permit is required
Removal or disturbing of any asbestos containing materials during the construction or demolition of a building or structure, including additions.

19. PERMITS How to check if work done has been permitted
Call county or city building department and ask if a specific project had been permitted
Visit the county or city building department’s online permitting system
Example: Montgomery County

20. PERMITS Warning signs of unpermitted work
The best way to identify unpermitted work is by checking with the county to verify proper permitting for areas that appear to have been remodeled after the home was built. Some “Red Flags” include:
Partially finished or unfinished remodeling work
Lack of GFCI outlets in kitchens remodeled after 1987
Lack of GFCI outlets on exterior or in bathrooms remodeled after 1975
Poor quality workmanship, or anything that doesn’t look quite right

21. PERMITS Unpermitted work
What happens if your buyers buy a house with unpermitted work?- Properties purchased with unpermitted work transfer the violations to the new owners, making them responsible for remedial work and proper permitting. This may involve partial or complete demolition of un-permitted areas, exploratory work to verify that unpermitted scope is up to code, fines and even condemnation of structures.

22. PERMITS Commercial vs. Residential
Commercial has more strict requirements
Condos and townhomes can be considered commercial properties
Any structure over 4 stories is considered commercial
The potential scope of remodeling projects is limited for commercial properties

23. ESTIMATING REMODELING COSTS
Identify areas which need to be remodeled
Measure and calculate square footage (SQFT) and lineal footage (LNFT)
Apply appropriate costs to SQFT and LNFT to estimate total cost

24. ESTIMATING REMODELING COSTS

25. DETERMINING ROI Maximizing return on remodeling projects
Prepare a CMA to determine “AS- IS” price for subject property
Identify areas that are in worse condition then the target comps at the intended price range
Use “Renovation Cheat Sheet” to determine rough cost to update areas

26. DETERMINING ROI Maximizing return on remodeling projects
Perform another CMA based on the after repair value (ARV) of the subject property
Evaluate the proposed renovations with the following formula:
(ARV) - (AS-IS Price) – (Renovation Cost) = Net ROI
If Net ROI is a positive number, advise clients to get hard estimate for renovations

27. $40,000 11269 Silentwood Ln 11298 Silentwood Ln Sold $225,000
New Kitchen $15,000
Net Sales Price $265,000
Net Increase to Seller
$40,000

28. New Carpet, Paint, Kitchen Floor: $5,500
205 Environs Rd
Sold $375,000
221 Environs Rd
Sold $405,000
New Carpet, Paint, Kitchen Floor: $5,500
Net Sales Price $399,500
Net Increase to Seller
$24,500

29. $44,990 2352 Horseferry Ct 2348 Horseferry Ct Sold $310,000
New Kitchen $15,000
Net Sales Price $354,990
Net Increase to Seller
$44,990

30. SUMMARY Contractor basics Permits Estimating construction costs
Types of contractors
Levels of contractors
Contractor qualification
Permits
When are permits required
How to check if work was permitted
What unpermitted work means to your clients
Estimating construction costs
Determining remodeling ROI (return on investment)