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TM I N FORM . I NS P I R E . E DUCAT E . EMPOWE R .

Shortages Prompt New Approaches to Building and Design FLEXIBILITY, SOLID RELATIONSHIPS, AND CREATIVITY ARE KEY TO KEEPING PROJECTS MOVING FORWARD IN 2022.

13 Design Trends for 2022 DESIGN

Is Wall Street Buying Up Main Street? INVESTMENT STRATEGY

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PUBLISHER & CEO Eddie Wilson

MANAGING DIRECTOR Linda Hyde

MANAGING EDITOR Carmen Fields

SALES MANAGER Rodney Halford RHalford@ThinkRealty.com

FULFILLMENT COORDINATOR Blair Pierce

DESIGNER David Rodriguez

CONTRIBUTORS John Beacham Lorraine Beato Daren Blomquist Sam Brust Jenifer Calandra Grant Cardone Jamie Cohen Gregg Cohen Kurt Coleman Kori Covrigaru Liz Faircloth Carmen Fields Rob Fuller Suni Goff Andresa Guidelli Kyle Jones

HEY! LET’S BE FRIENDS! GET SOCIAL. STAY CONNECTED.

Jeremy Kloter Robert Knight Zach Lemaster Arianne Lemire Bruce McNeilage Taylor Miller Susan Naftulin Tom Olson Damon Riehl Jeff Roth Glenn Stromberg Garrett Sutton Kirk Taylor Michele Van Der Veen Ingo Winzer

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SUBSCRIPTIONS :: The annual subscription for Think Realty Magazine is $39.99 in the U.S. Order online at www.ThinkRealty.com or call 816-398-4130. Provide your full name, address and telephone number. DISCLAIMER :: Think Realty Magazine , its owners, contractors, distributors and their respective representatives do not provide tax, accounting, investment or legal advice and make no guarantee as to the effectiveness or success of any investment or tax strategies discussed herein. Please consult your own independent adviser as to any questions you have or decision you are contemplating. ABOUT THIS MAGAZINE :: Think Realty Magazine is a publication of Affinity Real Estate Media LLC. Reproduction or use of any editorial or graphic, without permission, is prohibited. We are not responsible for the content of any paid advertisements. For reprint rights; to ob- tain a detailed statement of our privacy policy; and for all single-copy requests, address changes and other subscription inquiries:

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FROM THE EDI TOR

DesignWith Purpose

esign is one of those topics that either

ensure availability of some of the most common SKUs real estate investors need. Read about one of our preferred sup- plier partners, Tarkett, on pages 40-43 to learn more and activate

excites people or causes fear. Steve Jobs once said, “Design is not just what it looks like and feels like. Design is how it works.” Design is more than just following color trends, choosing tile, and selecting counter- tops. Design encompasses making existing space what it needs to be. That is the beauty of it. Design allows you to let your creativity shine through and create a space that has meaning and provides fulfillment. It is taking a thought and making it reality. Recent events have caused shipping issues and product delays, creating headaches for investors when designing properties. Our cover story on page 20 touches on how supply and demand has created its own set of issues for those involved with renovating or updating properties. Think Realty’s Discount program has partnered with suppliers to help mitigate this issue. Our preferred suppliers can save you up to 50% on products and services, and they have created systems and processes to

your savings. Following up on other recent events, we wrapped up our Houston conference March 24-25. More than 250 investors came out to learn how to ”Capitalize on Market Correc- tion” and to network. Next up is Tampa on July 21-22. You can learn more about the Tampa event by visiting www.thinkrealty.com/tampa. Think Realty’s GRC has been hard at it! The committee has been focused on the impact of eviction moratoriums. Recently, they have shifted their efforts to representing investors in the fight against California AB 1771, which will charge an additional capital gains tax on almost every residential property sold within three years of purchase. To learn more and to support this issue, visit aaplonline.com/articles/advocacy/ca-flip-tax/. •

Here’s to your investing!

CARMEN FIELDS, MANAGING EDITOR

thinkrealty . com | 5

CONTENTS

INSIDE THIS ISSUE

COVER FEATURE

Flexibility, solid relationships, and creativity are key to keeping projects moving forward in 2022.

Labor and Materials Shortages Prompt NewApproaches to Building and Design

by Carmen Fields

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DESIGN 8 Inflation-proofing Your Renovation Budget Despite labor shortages and increases in the price of materials, staying open to possibilities and turning up the creative juices can help investors achieve quality renovations that attract buyers. by Suni Goff 12 Investing in Mobile/Manufactured Homes The cost of mobile/manufactured homes are lower than single family, and returns can be proportionately higher—making them a great investment. by Glenn Stromberg

46 Purposeful Design—Container-Based Homes to the Rescue Container-based homes meet our needs for design more than any other sustainable housing choice. by Kirk Taylor 48 What Upgrades Do Millennial Homebuyers Care About Most? Understanding the upgrades that excite

72 The World Economy Is NOT Your Economy What is really holding you back from growing your RE investments? by Liz Faircloth and Andresa Guidelli 74 Surging Prices and Sales Drive the Market in Southwest Florida How long will it last? by Robert Knight CASE STUDY 78 Private Capital at Work Here’s how one Maine entrepreneur is building affordable housing for his community and changing perceptions one house at a time. by John Beacham

millennial homebuyers and renters will help real estate investors attract this generation as

customers. by Jamie Cohen

52 Property Design with a Purpose

Two factors to consider during the design phase of any building are the physical and psychological features. by Taylor Miller

16 13 Design Trends for 2022

From getting back to nature to more private spaces, the pandemic has influenced what people want in their homes. by Lorraine Beato

LEGISLATION 80 Update from Think Realty Government Relations Committee by Arianne Lemire

FUNDING 54 Designing the Best Rental Loan

24 The 4 Essential Elements of a Successful Real Estate Project “PREP” is the key to getting the job done right. by Tom Olson

An article series on navigating the private lending world by Damon Riehl

MARKET & TRENDS 82 What Does the New Normal Look Like? Despite changing market conditions, we do have some clues about where the real estate market is headed. by Susan Naftulin 84 Will Surges in Home Prices Last? Here’s the forecast for 10 markets where home prices are sharply higher than last year. by Ingo Winzer OPERATIONS 86 Designing Your Entrepreneurial Life Successful entrepreneurs create strategies to ensure long-lasting success. by Kurt Coleman 88 PlanOmatic Increases 3D Virtual Tours for SFR Properties Charlotte ranked as PlanOmatic’s most in-demand mMarket for 3D tours in 2021. by Kori Covrigaru

26 Good Design Can Make or Break Your Business Creating good design that delights customers is good for business. by Jeff Roth

INVESTMENT STRATEGY 56 The Best Way to Achieve Consistent Returns in Rental Properties A diverse portfolio leads to consistent cash flow. by Gregg Cohen 58 The 7 Keys to a Successful Rehab Including these sometimes-overlooked steps to your rehab process can help lead to a successful outcome. by Rob Fuller 60 Design Your Asset Protection Plan With Diligence Your asset protection plan is too critical to be left to unquestioned amateurs. by Garrett Sutton

28 Redesigning Distressed Properties to Appeal to Modern Buyers

Distressed property investors delivered an estimated 140,000 renovated homes to owner-occupant buyers during the pandemic. by Daren Blomquist 31 How Design Can Maximize A Multifamily Investment Fresh design and branding can create value for tenants and owners. by Jeremy Kloter 32 Understanding the Power of Color Color is a tool that can help you create positive emotions in a homebuyer. by Michele Van Der Veen Baby boomers are expected to drive the build-to-rent SFR trend for several years as they retire, move to warmer climates, and demand high-end luxuries. by Bruce McNeilage 40 Reimagining City Living To retain and attract new tenants, residential developers must create inclusive, affordable, and environmentally conscious solutions. 42 Certified Asthma and Allergy Friendly Means Healthier Indoor Air for Everyone The certification program scientifically tests and identifies consumer products that are more suitable for people with asthma and allergies. 36 Design is Crucial to Attracting Discerning Baby Boomers

62 Why Buying Into Access and Noise Can Lead to Poor Investments

Listening to hype in the press and social media isn’t the best way to make investment choices. by Kyle Jones

90 How to Write Compelling

64 Is Wall Street Buying Up Main Street?

Rental Property Descriptions To attract tenants in a competitive market, your

You’ll need to think back to your introductory economics class to discover the real reason housing inventory is low. by Zach Lemaster 66 How to Protect Yourself from the Housing Bubble Here’s how to not only protect yourself but also take advantage of the housing bubble. by Grant Cardone 68 A Lifestyle by Design Ask yourself four questions as you consider the lifestyle you desire as a real estate investor. by Arianne Lemire

words matter. by Jenifer Calandra

92 Insurance for Your Perfectly Designed Investment Property

Follow these general best practices for insuring any investment property that will undergo some form of rehab. by Sam Brust 94 Optimize Your Real Estate Portfolio with PlanOlabs Our data analysis and visualization, cycle optimization, and industry research will help you achieve your REI goals. by Kori Covigaru

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DESIGN

BUDGETING

SPONSORED CONTENT

Inflation-proofing Your Renovation Budget

DESPITE LABOR SHORTAGES AND INCREASES IN THE PRICE OF MATERIALS, STAYING OPEN TO POSSIBILITIES AND TURNING UP THE CREATIVE JUICES CAN HELP INVESTORS ACHIEVE QUALITY RENOVATIONS THAT ATTRACT BUYERS.

by Suni Goff

eal estate investors who renovate and redesign for retail

quality renovations that buyers will love while staying within budget.

However, frustration has started to replace the excitement of home renovation as shortages in materials and labor as well as price increases continue to be a challenge. Many investors find themselves struggling to meet budgets for making neces- sary repairs and marketable updates while maintaining a worthwhile profit. By cranking up the creativity and keeping an open mind, investors can face these new challenges head-on, continuing to provide

are in the business for more than just numbers. Being able to see past lay - ers of chipped paint, rusted hardware, and DIY fails to spot potential brings a satisfaction beyond the paycheck at the close of a deal. The manifestation of a design vision that breathes new life into tired, neglected walls so they become someone’s loved home once more creates a sense of pride that adds another layer of wealth.

BUDGET BASICS Investing for retail begins with the challenge of creating (cue: deep, echoing voice-over) “The Renovation Budget.” The profit potential and renovation budget for a project are symbiotic numbers. They slide up and down a scale determined by formulas that include estimated

8 | think realty magazine :: may – june 2022

ARV over acquisition, holding, and marketing costs, so it’s extremely important they are accurate. A trustworthy investing software is a must for this purpose and, really, all aspects of real estate investing. Renovation budgets must be created with several factors in mind: costs individual to the property, its location, and current materials prices. It is best to err on the side of caution and consult a local licensed contractor for project bids versus using a generic formula. A reputable contractor is an essential part of your renovation toolbox and can be a huge help in many ways. They are usually creative and can provide excellent ideas for design challenges; they can keep the project on time; and they can itemize bids for labor and installation materials separate from customer-supplied materials and finishes, making it easier to stay within and on top of your budget. So, where does more creativity and an open mind come in? We’re getting there! For most retail projects, the renovation budget consists of a mix of structural repairs, functional redesign, and cosmetic updating for a property to reach its full ARV potential. Structural repair costs like the foundation, roof, plumbing, and electrical don’t offer any real dollar stretching and belong at the top of a budget priority list. It’s important for a professional home inspector to iden- tify these types of issues before an investor commits to a project. Struc- tural issues should be considered and accounted for when an investor negotiates an acquisition price. Now that the structural issues have been accounted for in the budget, it’s time to address what will make the property appealing to potential buyers.

repackaged, recycled paint in 3- to 5-gallon buckets. Early on, paint types and colors were dumped together and blended into” light” or ”dark” brown options, but the process has been improved over the years to create a wider array of neutral colors. Many don’t separate by finish, so the end product is an eggshell variety, which works great for interior walls. Some facilities even separate and blend specifically for exterior grades. And. It’s. Free. Search the internet for “reblended paint near me” for local facilities. The image of the interior staircase in the accompanying photo shows another great bud- get-stretching design upgrade. When faced with a house full of outdated, cracked tile, investors automatically think the fix is going to be expensive, and it can be. The cost of labor to remove old tile from a con- crete subfloor and to replace it with new tile or even carpet can take a huge bite out of a renovation budget.

DESIGNAND COSMETIC FINISHES

Functional design and cosmetic fin - ishes are the first things potential buy - ers look for after price and location. Exterior curb appeal, interior layout, and finishes are all big-ticket features buyers don’t want to be required to change immediately. Clean, neutral, and functional elements are musts. But what is big-ticket for buyers is also big-ticket for investors, right? Not necessarily, especially when you look at ROI. It’s worth the cost to update responsibly, but the question is how to stretch those dollars and make them go further. Bulk and sale pricing on finish materials like tile and carpet is old news to investors. But materials like windows, shingles, siding, granite, and paint just don’t go on sale often, especially in the quantities needed for large-scale projects. It’s not common knowledge, but many local recycling facilities offer

A rehab project using interior reblended paints. The floor finish is an example of another budget-saving technique involving a sealed concrete overlay.

thinkrealty . com | 9

Before

A savvy budget-stretching option? Sealed concrete overlay. A reputable installer who can lightly sand the floor to rough up the existing tile surface, re-adhere any loose tiles and grout, and add two to three applications of self-leveling concrete overlay and sealer can produce a strong, beautiful modern floor that adds an undeniable “wow” factor for potential buyers—but at roughly a third the cost of traditional replacement options. Using low-grade options for tile, countertops, and appliances is a solution many investors feel they must resort to, but salvage and surplus supply stores can be a treasure trove of high-end materials at deep discounts. They can even be more cost effective than “going cheap.” Discontinued or unclaimed custom orders of everything you need—granite, tile, lighting, appliances, bathroom fixtures, cabinets, flooring, doors, and even windows are available at a fraction of the cost of “cheap” materials. Consider windows for a moment. Many older homes have odd-sized, energy-wasting eyesores with rotting frames that need to be replaced. Ordering custom windows is budget‑crushing in terms of both money and time. Consider replacing them with slightly smaller, new salvage store windows that are easily reset, Sheetrock patched, and trimmed out—without blowing the budget. This solution works excep- tionally well if exterior siding is on the list to be renovated. Even if new exterior siding is not in the plans, a larger exterior window frame or sid- ing transition can complete the repair and even add coveted curb appeal. A good way to stretch the budget for appliances and kitchen cabinets is to browse local marketplaces for sellers remodeling their own

After

A neglected 1970s-era split-level updated to a neo-craftsman cottage using the window hack mentioned in the article. Surplus windows retailing for $220 each were purchased new at $40 each, with an additional 10% discount for purchasing tile, bathroom fixtures, and lighting for the same project. Always, always ask for a discount. The only other answer besides “no” is “yes.”

kitchens. Mixed cabinets can be reconfigured and painted, and gently used high-end appliances are budget-maximizing superheroes. These cost-cutting tips may seem time-consuming, but keep in mind that many salvage and surplus stores generally have enough inventory to make it a one-stop-shopping trip as long as you come armed with measurements for the items you’ll need. Most even offer delivery options, or contractors can usually pick up purchased items if agreed upon up front. By far, the most important hack for ensuring that you stay on target and maximize profit for any real estate investing strategy is to start

right with your initial numbers. Use trustworthy real estate investing software, reputable and licensed inspectors, contractors, and service providers. In the long run, you’ll save time and money and avoid expensive pitfalls that can happen when you try to cut corners. Think creatively, be open-minded, and invest smart. •

Suni Goff’s passion for real estate remodeling design and her talent for insightful, well-researched writing are the cornerstones of a prolific, successful

career that spans 20 years in the real estate marketing and rehabbing world. Goff has ghostwritten numerous professional articles, educational programs, and books for 11 best-selling authors.

10 | think realty magazine :: may – june 2022

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DESIGN

MANUFACTURED HOMES

Investing in Mobile/ Manufactured Homes

THE COST OF MOBILE/MANUFACTURED HOMES IS LOWER THAN SINGLE FAMILY, AND RETURNS CAN BE PROPORTIONATELY HIGHER—MAKING THEM A GREAT INVESTMENT.

by Glenn Stromberg

’ve had a front row seat to nearly four decades in the man-

ufactured home industry. I started in the industry in 1982 by answering a newspaper ad to sell mobile homes at a dealership. In July of this year, I will celebrate my 40th anniversary in the industry! That first job was with the biggest mobile home dealership in Texas at the time. It was just like a car dealership. We had 30 or 40 mobile homes at a sales center, people picked one out, we would deliver it, and then we’d set it up on their land. I was promoted to sales manager within the first year. By the end of my second year, the general manager and I decided to partner and start a business ourselves. We opened our first sales center in 1984 and grew it

my franchise in 2006 and started my current business.

We buy an average of 10 prop- erties a month. We keep some for ourselves and turnkey the others to our investors. Currently, we operate in four states: Texas, Georgia, North Carolina, and South Carolina. We are pushing 600 properties under management and have around 150 investors. Why do our investors like our model versus single-family homes? Because the land and home are real estate, they have a deed of trust or a mortgage on them, depending on the state. We get a title commitment on every property we buy. When a manufactured home is built at the plant, it comes with a personal property title just like a car. The owner has the right to keep it this way and keep the home separate

CURRENT BUSINESS MODEL In our current business model, we buy doublewide manufactured homes already set up on land. The homes average 1,400 to 1,800 square feet, and they are typically on a half acre to an acre of land. We acquire the homes and fix them up like new. When I say “new,” I mean new carpet, paint, appliances, air conditioner, septic, hot water heater—even a new roof, if necessary. Next, we put a tenant in the home. We have our own full-time property management company that manages the properties for us and our investors.

to 13 sales centers by 1987. My partner was a great guy,

but we had a difference of opinion about where we wanted to take the business, so I sold out to him in 1988. During that time, we also bought a mobile home park and developed a mobile home subdivision. Later, I had a Clayton homes franchise for 15 years. Warren Buffet bought Clayton Homes in 2003. Did you get that? The supposed best investor in the world wanted to get into the mobile home/affordable housing industry. Clayton Homes was and still is a great company—the gold standard of the industry. I sold

12 | think realty magazine :: may – june 2022

in a manufactured home that you would find in a tract or luxury home.

from the land. If the owner wants to make it real property (combining the land and the home), it’s a simple process that a title company or attorney handles. This makes it real estate with the same classification as a single-family home. Investors like our model because the homes are a third to half the cost, and the rents and returns are proportionately much higher. In addition, maintenance costs are much lower. We don’t have the foundation and plumbing issues single-family homes have. Here in the Dallas/ Fort Worth area, I hear horror stories of foundation repair running $30,000 to $50,000. Manufactured homes are tied into concrete runners. If we must relevel the house, we just take the skirting off, and it costs $1,000 to $1,500. MOBILEVS. MANUFACTURED HOMES Some people wonder about the difference between mobile and manufactured homes. They mean the exact same thing. Back in the 1970s and 1980s, they were called mobile homes. In the early 1990s, the industry started calling them manufactured homes. I guess that term sounds better, but there were also some great changes made to the homes at that time. Before 1990, a lot of the manufacturing plants used particle board floors, which were substandard. When the floors got wet, they would get soft. Over time, they had to be replaced. If they were not replaced, you would run the risk of falling through the floor. Around 1990, almost all manufactured home plants began using plywood and OSB flooring, the same flooring used in tract homes and luxury homes. Today, you can find virtually every amenity

PRIVATE PROPERTY MANUFACTURED HOMES Private property manufactured homes can be a very good invest- ment in a mobile home park or on land an investor controls. As I said, I did own and operate a mobile home park years ago. This is where “affordable” starts. The typical tenant is usually living paycheck to paycheck and struggles to make ends meet. Its tougher to property manage these, and that’s why I chose not to remain in this area of mobile home investing. There are, however, six or seven big players in this space who really do have it dialed in, and they do a tremendous job. These are usually in a fund, or a syndication—and the returns can be very good! I prefer my manufactured home model because we get a better tenant, because we provide a bigger home and more land, and they are usually located in better school districts. Do manufactured home appreciate or depreciate? The answer is both. Personal property mobile homes usually depreciate just like a car. (In today’s crazy times, things seem to be a little different.) Real property homes, because they have the land included, abso- lutely appreciate. Case in point: For the properties we bought between 2012 to 2014, our typical all-in cost (acquisition plus rehab) was around $60,000. Today, those properties sell for around $200,000. That’s a tremendous amount of appreciation that grows tax deferred—you don’t pay taxes until you sell. That’s why I believe buying and holding real estate is the best wealth-building strategy available. Also, the rents

thinkrealty . com | 13

In addition, as a result of the pan - demic, many people work out of their homes now and need an office in their home. Since we give themmuch more square footage for the dollar, this trend is working in our favor. Mobile/manufactured homes are one of the best, safest investments out there, and they are a great addition to anyone’s investment portfolio. •

on these properties have increased from around $1,000 per month to $1,400—that’s favorable too! What happens in a down market or a market crash? I always say no matter how bad things get, there are two things people will always still need to do: Eat and have a roof over their head. Everything else is negotiable. That’s why I love our business model. It works great in good times, but even better in bad times because we have the most affordable roof with more land. During the 2008 downturn and the COVID-19 pandemic, the demand for our properties was three times normal, because in bad times people downsize and need something more affordable.

Glenn Stromberg began his career in real estate in 1982, quickly rising to the top of the real estate game. He owned and managed a Clayton Home franchise and

owned and operated 13 independently owned manufactured home dealerships. He also ran a successful fix-and-flip business. During his 39 years in the mobile home industry, he developed mobile home subdivisions; owned a mobile home park; owned and operated mobile home sales centers; and bought, sold, and leased single-family homes. In 2006, he formed Stromberg Investment Group with the mission to be one of the best real estate investment companies in the country. The 2008 crisis that took over the American economy led Stromberg to redefine his business model and create the current model SIG uses, allowing investors a safer option to investing and receiving higher returns without the high risk that Wall Street or the “flipping game” yields. With over 500 homes under management in more than four states, SIG deploys over $1 million dollars in investment capital each month and closes an average of 12 properties each month. Stromberg Investments offers investors lucrative passive turnkey options and long-term lending opportunities. To learn more about Stromberg Investment Group, visit www. stromberginvestmentgroup.com.

14 | think realty magazine :: may – june 2022

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DESIGN

2022 TRENDS

13 Design Trends for 2022 FROM GETTING BACK TO NATURE TO MORE PRIVATE SPACES, THE PANDEMIC HAS INFLUENCED WHAT PEOPLE WANT IN THEIR HOMES.

by Lorraine Beato

t’s 2022 and the world has been through quite a lot these past

at the number of new accounts on Instagram and TikTok with plants! As we emerge from this global pandemic, we are becoming more aware of the influence it has had on home design. Here are 13 trends to keep in mind for your projects.

Green in all shades—emerald, forest, sage—and botanical motifs on wallpaper that bring the outside in create a sense of newness and freshness as we reenter the world after a pandemic that kept us all indoors for so long. NO. 2 Wallpaper Wallpaper is back, but it’s not your grandma’s wallpaper! Wallpaper continues to be a dominant element

two years. We’ve seen supply chain issues; labor shortages; and changes in the way we live, work, and play. Home has become the heartbeat of our lives. Many of us had to pivot and work from home, our children had to do virtual learning at home, we started exercising at home, and many of us got back out to nature a bit more and even started growing our own veggies—just take a look

NO. 1 Brown and Green

Warm chocolate browns, cognac, camels, and caramels become a deep neutral for classic timepieces.

16 | think realty magazine :: may – june 2022

in interiors, with strong patterns and more textured, sometimes natural materials being used to create spac- es that envelop and cocoon you as well as add interest and personality.

NO. 3 More Defined Spaces

Open floorplans have been all the rage the past several years; however, when we had to switch to working from home and children were attending school from home, having a more private or quiet space became important. We are seeing a shift to more traditional and designated spaces. NO. 4 MultipleWindowBanks In new construction and many remodels, we are seeing a full wall of windows, especially in kitchens. Rather than more upper cabinets, homeowners and builders are opting for a wall of windows in a kitchen to bring in natural light and connect to the outdoors. NO. 5 Kitchen Islands We all know the heart of a home is the kitchen, and the main hub of a kitchen is the island. It has become a place where children do homework and where Zoom meetings are held. It’s no longer just a place where meals are prepped or eaten. NO. 6 Long, LinearTile Think of a more modern twist on the classic subway tile. Think 4”x12” ceramic tile with a handmade finish, wavy or crackle glaze for texture. It’s a timeless shape, but the newer elongated tiles are a fresh take on the original subway tile. Stack it vertically to bring the eye up, or even consider a more traditional herringbone pattern. Try it in a deep green if you’re looking to make a stunning and bold impact.

view. An iron, lantern‑style light that is large and open can make a big statement without blocking the sightlines.

NO. 7 Quartz

Durable engineered quartz has become the popular choice over granite. It offers a classic marble look without the care marble needs. It helps keep a space feeling bright and airy and picks up many of the white and gray colors found in today’s kitchens while providing a scratch- and stain- resistant surface. NO. 8 Lantern-Style Light Fixtures One of the more recent trends in design has been oversized lighting to make a bold statement, especially over a kitchen island or dining table. However, when you want an unobstructed view, such as when you’re walking into a kitchen with beautiful cabinetry and vent hood, you don’t want a light fixture with a large drum shade that blocks the

NO. 9 Shiplap

Yes, thanks to Chip and Joanna Gaines, shiplap is still in! We are seeing it more and more—and not just in kitchens and family rooms. It’s also popular in bathrooms and on accent walls in bedrooms. Don’t just think white shiplap; consider warm wood tones and barnwood for a different feel and experience. Shiplap adds character and texture to any room and can emphasize a wall’s height or width visually. NO. 10 Free-standing Bathtubs The long-debated argument of many rehabbers—do we keep the tub or take it out? For those who

thinkrealty . com | 17

What better way to do that than to create various settings such as an outdoor living room, a dining area to entertain guests or have family meals, an area with a firepit to enjoy chilly evenings, a flat grassy area where you can meditate or do yoga, or a garden area where you can grow some veggies and get down in the dirt. Outdoor rooms are limited only by your imagination and budget. NO. 13 Privacy In many new construction developments, we are seeing a compression of lot sizes where you can “reach out and touch someone” due to the proximity of the home next door. Many homeowners are now hiring landscape professionals to install or create more privacy. As they expand their outdoor living spaces, they are looking for screens, pergolas, fences, natural plantings, and other ways to create intimate spaces, provide separation from neighbors, or block a less than pleasing view. •

love the respite of a long soak in a tub, free-standing tubs are the new trend. Lighter than the old cast-iron bathtubs or clawfoot tubs, these new tubs are lighter with more modern curves for today’s at-home spa experience. As long as you have one tub in your renovation for those who love a respite at the end of a long day, you should be good! NO. 11 Aging Gracefully in Style As baby boomers hit retirement, they are embarking on renovations to create their forever home. Incorporating design elements that will assist with ease and accessibility in the future are key as they age in place. Gone are the old hospital-style grab bars. We’re seeing universal design products and features that are as attractive as they are functional. We are finally seeing grab bars

come in more modern and trendy finishes like champagne, bronze, or matte black. They often function as a towel bar to camouflage their true function, doing double duty while still meeting ADA guidelines. Zero entry or curbless showers, nonslip flooring, and shower benches have become alluring and stylish features for homeowners of all ages. NO. 12 The Outdoor Living Room One trending design theme we’ve seen in the last year—and you likely have too—is connecting to the outdoors. From color palettes to more sustainable products to bringing the outside in, people are looking for ways to connect to Mother Nature. People now want their backyards to be a relaxing extension of their interior living spaces.

Lorraine Beato is the CEO of Atlanta’s Residences powered by eXp Realty. She is the author of “Flip the Switch,” a practical guide for real estate agents and

professionals ready to invest in real estate and real estate-related assets in order to build wealth and secure their retirement. Beato has been a full-time, successful real estate agent and investor for more than 25 years. She specializes in thinking outside the box to get clients to the closing table fast. Combined with her personal experience in MBS trading with Merrill Lynch and building her own retirement portfolio using creative strategies to acquire properties and improve their cashflow, Beato’s ability to negotiate and navigate her clients’ way to winning investments has made her a favorite with investors nationwide who trust her to acquire, improve, list, and sell their properties when they are not able to personally manage projects in the Atlanta area.

18 | think realty magazine :: may – june 2022

BUILD WEALTH IN ANY REAL ESTATE CYCLE TAMPA JULY 21 - 22

Experience what Think Realty Conference & Expos have to offer Network with professionals in our packed vendor hall and at the Cocktail Reception. Meet exhibitors specializing in REI tools, products, and services. Attend sessions and specialty workshops on a variety of investment strategies. Access deal-making opportunities with the biggest names in the business.

COVER STORY

DEALING WITH SHORTAGES

Labor and Materials Shortages Prompt NewApproaches to Building and Design FLEXIBILITY, SOLID RELATIONSHIPS, AND CREATIVITY ARE KEY TO KEEPING PROJECTS MOVING FORWARD IN 2022.

by Carmen Fields

ix-and-flippers, new home builders, and build-to-rent contractors must feel like they’re

Mischa Fischer, chief economist at Angi, said, “With so much uncertainty around manufacturing slowdowns, supply chain disruptions, scarce product availability, and volatile prices, building in flexibility and advance planning to your project is more important than ever.” To protect against protracted timelines and cost over- runs, consider these questions as you plan your project: • How can you ensure you have a solid team in place for each phase of the project, bringing together the right people at the right time, despite the current labor shortage and competition for talent? • How can you incorporate materials available locally into your project design? • What proactive steps can you take to guard your budget against increases in materials once the project begins? • Where can you build flexibility into the timeline to avoid building delays—and the subsequent cost increases and customer frustration? • Which relationships can you leverage? Each project is different, and market conditions likely will continue to change. So, as you move from one project to the next, you may need to adjust your planning process to accommodate the new realities. DESIGNAMATERIALS STRATEGY Although multiple factors have contributed to supply chain disruptions, they are primarily a result of the unexpected remodeling and building boom that occurred just as manu- facturers and shippers—both foreign and domestic—slowed or closed operations during the pandemic. Now after more than two years, many basic materials continue to be in short

caught in an endless loop of Groundhog Day. Although many builders and rehabbers had hoped 2022 would bring some relief from materials shortages, labor bot- tlenecks, and soaring construction prices, challenges in these areas have continued unabated across the country. As the construction industry continues to grapple with these challenges, consumer demand remains strong. According to a report from the Joint Center for Housing Studies at Harvard University, Americans in 2020 spent approximately $420 billion for home improvements, and those numbers are expected to remain elevated in 2022. In terms of new construction, the pressure is just as intense: An estimated 5.24 million new homes are needed to satisfy homebuyer demand. But, real estate brokerage Redfin predicts homebuyers will face a record housing shortage in 2022, driven in part by an expected rush of home purchases before interest rates rise further. And, a November 2021 Department of Commerce report revealed the number of houses authorized for construction but not yet started had reached a 15-year high. In the face of escalating shortages, delays, and pric - es, how can building and design professionals satisfy demand and still turn a reasonable profit on projects? Flexibility, solid relationships, and design creativity are critical to keeping projects moving forward in 2022. DESIGNYOUR OVERALL PROJECT: PLANNING Design encompasses all aspects of a project, not just use of space, selection of materials, and color palette. With that in mind, what planning adjustments can you make to design your project for success?

20 | think realty magazine :: may – june 2022

hit Texas in early 2021. Some homebuilders resorted to immediately ordering whatever bathtubs they could find and paying for them upfront. Other contractors are buying cabinets, windows, doors, and other items at the beginning of a project to avoid the long wait times (up to 18 months) and the project delays that accompany some backordered materials. ORDER FIRST, DESIGN LATER // Materials are typically selected to fit a project’s design. But some contractors are flipping the process. They are acquiring materials that are currently available and designing around them.

supply—if they are available at all. The National Association of Home Builders (NAHB) claims that in 2021, more than 90% of builders reported delays and materials shortages. Astute contractors and designers are embracing strat- egies to navigate supply chain disruptions and advance their projects. ORDER EARLY // Some builders and remodelers are ordering materials early and then storing them to ensure they are available when needed during their projects. Bathtubs, typically considered a commodity, were in short supply following the devastating winter storm that

thinkrealty . com | 21

MANAGE EXPECTATIONS // Open and frequent communication with homeowners to manage

expectations is vital. A customer may think a simple change in window styles, for example, will have only a minimal impact on a project. Obtaining those windows could delay a project several months, however. BE FLEXIBLE // Remain open to new ways of combining materials in your design. Given the selection of appliances, lighting fixtures, cabinets, and other items available to you, consider how you can change color schemes and/or mix design styles to accommodate them. Now is a time for you to be creative. Perhaps you’ll even start a new design trend! It’s anybody’s guess as to when currently backordered materials may be more accessible—or which materi- als may be delayed next. Designing a plan for procuring your project’s materials in advance, remaining flexible, and adopting a creative mindset will help you maneuver through supply chain issues. DESIGNASTRATEGYTO KEEP COSTS IN LINE Supply chain issues combined with increased consumer demand is a sure recipe for high prices. In his Monthly Economic Dashboard released on Jan. 28, 2022, David Berson, senior vice president and chief economist at Nationwide Insurance, stated: “As supply chains heal, inflation should decelerate, but is likely to remain above-trend into 2023 as prior expansionary mon- etary policy continues to push services prices upward. Fed tightening will eventually slow growth, but not until next year and beyond.” In a February 2022 release, NAHB Chief Economist Robert Dietz said: “Building material costs are up 21% compared to a year ago. Their price and availability, along with persistent supply chain bottlenecks, remains the most urgent challenge for builders as they seek to boost production to meet rising demand.” Still, savvy builders and designers are putting their cre- ativity to work to stay on budget and keep their projects moving forward. TAKE ADVANTAGE OF RELATIONSHIPS // Don’t overlook your local and national industry relationships. Sometimes someone you know may be able to secure hard-to-find materials or negotiate discounts for you. For example, the Think Realty Supplier Program is one of the many perks Think Realty members benefit from. The program saves investors, developers, builders, and rehabbers time and money. By partnering with companies that have a

national footprint and offer quality products or services, Think Realty passes savings on to its members. To take advantage of the Think Realty Supplier Program, sign up for a free membership at thinkrealty.com and then click on Discounts. ASSEMBLE YOUR TEAM DESIGN TEAM EARLY // The sooner architects, designers, and contractors can meet to plan a project, the sooner everyone involved will understand goals, expectations, budget, and timelines. Such collaboration minimizes mid-project redesigns, cost overruns, and delays. And, when everyone is looped in from the get-go, there is more time to consider design ideas that keep the cost of the project manageable. REUSE AND REFRESH // Before designing a remodel, consider what you may be able to reuse. For example, in the past, brand-new cabinets may have been on the shopping list for a kitchen or bathroom project. But cabinets often are still in good shape and can be transformed with some new paint or hardware. Even if you don’t think existing cabinets would fit well with the new design, you may still be able to use them in another part of the home (e.g., garage, laundry room, basement). Some appliances and light fixtures may also be good

22 | think realty magazine :: may – june 2022

candidates for salvaging. Existing wood flooring can be sanded, stained, and varnished to restore the finish. CONSIDER ALTERNATIVE MATERIALS // Being open to using new or alternative construction materials could take the stress off your budget, and you might find they are easier to obtain. For example, Tarkett Home offers a new waterproof flooring option called Triton Tuff that is strong, affordable, and aesthetically pleasing. Available in 18 designs that include traditional tiles and woods, modern herringbones and unique ceramic tiles, Triton Tuff is also certified allergy- and asthma-friendly. Its durable textile backing makes it 75% stronger than traditional luxury sheet flooring. Additionally, the company offers QuickShip and Express programs designed to streamline and expedite design and delivery. MANAGE CONTRACTS WISELY // If you’re a builder or rehabber, price volatility can cause you to be locked into contracts with cost estimates that become outdated as your project progresses. Some builders are revising their cost escalation clauses. If you’re a developer, be sure you understand the cost escalation clauses in any contract you sign. DESIGNASTRATEGY FOR LABOR It’s easy to blame the pandemic for the current short - age of trade laborers. Although COVID-19 has certainly exacerbated the situation, the U.S. has seen a steady decline among available tradespeople for several years due to fewer entrants and more retirements. Data from the U.S. Census Bureau shows the number of tradespeople working in construction labor, plumbing, pipefitting and steamfitting, carpet installation, dry - wall and ceiling tile installation, carpentry, construction trades, painting, and construction maintenance dropped between 2018 and 2020. Further, the census bureau reports that in 2021, there were 347,000 hires in the con- struction industry—70,000 fewer than what was needed to make up for separations due to layoffs and retirements. According to just one trade association—the National Electrical Contractors Association—7,000 electricians enter the field annually, but 10,000 retire. What’s behind the attrition? Some studies point to the emphasis on college education versus trade school edu- cation as the reason for fewer new people entering these professions. On the other end, baby boomers are retiring in increasing numbers. Most experts agree that as long as there are more posi- tions available in the trade industries versus workers to

fill them, homebuilders and remodelers will see higher prices and slower project completion times. It’s not just a shortage of skilled construction workers fueling building delays. Workers across a wide spectrum of industries that interact with the building and remod- eling industries are contributing to the backlog. From manufacturing workers who produce materials to truck drivers who move goods to retail associates who stock and sell construction materials to local government employees who process permit applications, the general labor shortage is causing delayed completion times for new construction and home remodeling projects. Although there’s no quick solution to enticing new entrants to the trades or slowing the stream of retire- ments, there are some general measures you can consid- er to design a plan for navigating the labor shortage. Don’t overcommit. Although demand is high, if you take on more work than your existing staff can handle, efficiency and quality may suffer, potentially damag - ing your reputation. Worse, you may be forced to default on a contract. Enlist the help of HR professionals. Trained profes - sionals can offer resources you may not be aware of for competing in the labor market. Pay fair, competitive wages. Provide proper training. The labor shortage also means more untrained workers and more workers overall who may be pushing their limits, resulting in accidents, dam- aged equipment, and substandard workmanship and quality—all of which are costly. Remember, design isn’t just about color, fabrics, and lighting styles. To achieve success with your projects in the current challenging environment, be sure to “design” them in the broadest sense. Sketch out a project plan that tack- les materials shortages, labor bottlenecks, and soaring construction prices—so you can tackle them head on. • Carmen Fields is the director of strategic partnerships for Think Realty and managing editor for Think Realty Magazine. She is known for her ability to establish and develop relationships. Through partnership collaboration, she aims to elevate the real estate industry by aligning with like-minded visionaries through strategy development. She intuitively sees the threads of opportunity that wind through an organization, brings them together into a coherent whole, helps others extend their thinking, and drives material business advantage. Fields is known for her passion around creating legislative initiatives in the real estate investing space. Her past career with Nordstrom has allowed her to develop systems and processes catered toward the client experience. Respected as a credible voice in the industry, finding strategic partners, and establishing relationships, Fields earns a seat at the table wherever she serves.

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