Ep 14:How to Design Your Product So It Sells Fast (Part 1)

Every good design starts with your end buyer in mind. Today we're going to talk about designing and building a product that people actually want. The tough part it most buyers don't know how to describe what they want, they just know it when they see it. So today we're going to talk about how to do that, because once you can connect with a buyer's emotions you have found a gateway to differentiation, which leads to profits.

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In This Episode (timed with Video)….

4:00 Three ways you can develop a contractor relationship

5:15 The Partner Contract

7:00 How Tim has built a brand with his contractor

11:15 The biggest advantage to a partnership structure

21:55 For Service relationships

25:15 Robert Grand's approach

28:15 How to make sure contractors are accountable

38:30 The biggest question you should be asking yourself

40:14 The importance of starting local

Quotes to Remember

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Full Transcript

Tim Murphy (00:00):

5 4, 3, 2, 1. I'm the Value Investor. And today we are done talking about contractors and we're to talking about what I believe to be the most exciting part about the whole process of flipping a property or doing infill development, which is the design process. So I'm really excited to talk about the design process, because this is definitely something that I love to do. I love to be a part of it. Um, and the topic today is how to design your product to sell fast, because at the end of the day, I think that is the magic sauce. Is that the look and feel of your product will

Tim Murphy (00:47):

Determine number one, your profit,

Tim Murphy (00:49):

But also how fast it will sell, because when you're designing a product and you get the chance to bring that new product

Tim Murphy (00:57):

To the market, because a lot of times you're up against existing product, depending on what price points you're in. Sometimes you're up against other new construction. Um, but ideally if you're in, you know, what, we're price points or you're doing more infill development like myself, you are usually up against older existing products. So you get to be the trendsetter. And I love that. And so today again, my buddy Bob grant, how the hell are you, Bob? I'm back. I'm doing great. Come back another day in Hawaii here, just waiting on it. I love it. So today what we're going to do is, uh, I want to start off with the story because it's really excited because it's literally happening today. Um, and that's what I love about the podcast is that yeah, we might be hearing this later on. You might hear this. I don't even know when you're going to hear this months, maybe after today, uh, when this moment is actually happening, but literally yesterday I got an offer on my $1.4 million, uh, tear down new construction, again, an infill development project that I have that I had a big part in designing.

Tim Murphy (02:02):

And I can tell you, we it's awesome, dude. Yeah. And we're not done with it. So it, and that's the best part. And that's why I want to talk about this project. Um, because we didn't even finish it. It's literally framed up, uh, the inside. We did some sheet rock, wait, wait,

Robert Grand (02:21):

Wait, wait, you pre-sold this like, it's, they they're able to see that gone, dude.

Tim Murphy (02:26):

It's gone. It's not even finished

Robert Grand (02:28):

No way. It's in the framing phase and it's sold

Tim Murphy (02:34):

For a million. so anyways. Okay. So what we're not talking about, all right. So if you want to see my mind, this is what I, I built out. And this is part of the process is that you want to build out great media, because if you build out great media, you can sell the vision. And that's exactly what I sold was the vision. Now, if you want, it was, it was 58 32 Kellogg ab.com. So if you go to the website, 58 32 Kellogg, ab.com, you'll see the house now, all I did, I mean, this isn't rocket science, you guys, but it does. I mean, it's practice and obviously there's some precision here, but I always do a really cool 3d rendering, which you can see at the website. Now we also, I work with the design team. Okay. And this is at $1.4 million house. Okay.

Tim Murphy (03:22):

So if you're doing, and we'll talk about 200,000 or 400,000 later, um, but this is a $1.4 million project. So you have to be a little bit more sophisticated around how you market it and the money you have to spend to kind of set the table. But, um, I have my designers put together all those little pictures. If you go through the website there, you'll see, they have a look and feel for the house. Now are the key to this whole thing is when you're doing a project at $1.4 million cost is not the most important thing. And you're going to be like what? That doesn't even make sense. What if it's true, I'll tell you. And I would've never believed it if I didn't do it. And haven't been doing it, cost is very important. Now we don't want to blow like our budgets to some point that we can't recover, but I'll tell you there's so much margin in these projects that you have to be more focused on the product that you're delivering through the design perspective.

Tim Murphy (04:24):

And you have to be more focused on maybe, you know, how you're presenting this product and this vision. And so it costs money for me to do this and I can be like, oh, you know what? No way. And there's plenty of builders. I know I'm not even going to spend money on this upfront. I'm just going to build the product and the product will sell itself. And that's fine, but I can tell you that it's better to pre-sell because for staging alone, I saved about 15 to $20,000 on just leeching. Cause I have eight to furnish the entire house. So on staging alone, I saved 15 to $20,000. Um, because I pre-sold it. So for me, I'll spend the money to design the websites. I'll spend the money to get the rendering. I'll spend the money to get my designers, to get me the upfront vision boards that we put on that website.

Tim Murphy (05:13):

I'll spend all that upfront money. I will shoot videos. I will put content together. I will spend money to do all that because it's still cheaper than having to stage the property that alone on top of having to carry the property. And so that's, what's exciting is that if you are on the cost of design and that's what we did here is this is a modern Scandinavian house. Now it's not a super traditional modern Scandinavian. Cause if you were to look up modern, Scandinavian on Google, you would see something a little bit different, a little bit more extreme. But what we did is we took a look in Minnesota. Um, and, and we kind of like on the front elevation and we took a look in Minnesota that is very Minnesota friendly, Minnesota. Nice. We'll call it. Um, and, and we would call it maybe more transitional design.

Tim Murphy (06:04):

And then what I did is I put black, we're putting this black, um, vertical board and Batten or not board and Batten, um, vertical shiplap is what we're calling it. And that look alone is gotten the phone to blow up. I mean, and, and who did I sell it to? I sold it to exactly who I'd thought it. I would sell it to you. Someone that's between 35 and 45. And they got money. I believe, I don't know this for fact, but I believe they have been gifted money from family or friends or somebody. And it's right in that wheelhouse. So it's not somebody in their fifties or sixties. It's a younger consumer. That's looking for something that's hip and different. And the fact that I would black, which is not really, you know, black is becoming a trend right now, but it's not the trend.

Tim Murphy (06:54):

Because if you look around, especially in my market, white, a white design home with black windows, which I've done several lately, that is still a trend that people are kind of like, if you're, if you're want to be in the trend, that's what you're following. If you want to set the trend like this couple, then you love this black because it's kind of the new thing or the next new thing. And so this modern skin and even design is literally because we were on the cusp of something new. It was why people were pulling out my phone because I'm in a neighborhood where there's probably six or seven, 1.3. Well, at 1.2 to about 1.4, five or 1.4, seven, there's about six or seven other houses in the neighborhood. And I'm the only one that is pre-sold right now. And they could have, they could have bought any of these other houses, but literally the agent goes, congratulations. I said, why? He goes, because they love your design and I've showed them everything. And they keep coming back to your house. Keep coming back to your house, keep coming back to your house. And I'm the only one that's pre-sold. So if you don't think that design matters, if you don't think that paying attention to the details matter, you're wrong, you're a hundred percent wrong and it will cost you a ton. So, Greg, I don't know if you have questions, obviously. I'm pretty stoked about this one, right now

Robert Grand (08:14):

You that house, I pulled up the website where you're talking. Cause I like, I got to see how you sold a vision to somebody and it's actually, um, it's, it's a brilliant idea because you, a lot of times you see builders will put like, uh, you know, their lot with like just a house plan. You know, you see that all the time in MLS and those never sell, right. They just, they just don't sell, but the renderings and, uh, and you know, uh, Shelley our designer, you know, my wife, she does exactly that. She does that vision board. She prints that out for us. So everybody has the vision board. Um, she picks out features, kind of has all this stuff like this, but, uh, we've never done, you know, we've never done a spec like type construction, like you've done. Um, but like this it's really cool. You know, I should actually be doing this with my house. That's actually back to the framing phase, you know, and it's an entry level, you know, home, but it's just a quality difference in materials and stuff. And you know, but I should be doing this. Like, it's actually, it would probably sell the place. Cause I don't even list our homes that are, you know, that we're flipping, we don't even do this. We don't even put them on letting me know it's coming to the market. Um, so I could potentially be pre-selling those. And, and,

Tim Murphy (09:22):

And the other thing is, you know, you and I both are huge believers than you, but you should have your real estate license right. In the labs. I said, I want to focus on being a real estate agent. I don't want to focus on being, because I can tell you that you, this is a product, right? And there's one thing that people say in the real estate businesses, your real estate agent list to last, if you have a product, a product will attract people. If you don't have a product, you have to go out and you have to go find the product or you have to have a buyer. And then you have to you're at the Percy of the product. And you're competing for the product, especially in the market that we're in today, 2021. So the ultimate goal, and this was my strategy for the last eight years is I want to own the product.

Tim Murphy (10:05):

I want to create the product. And if I have the product and it's the product that everybody wants, then it's going to sell fast. And that's huge. That's a huge competitive advantage. But then on top of that, if you have the product that everybody wants, you can create your own buyers. You know? And I got this idea because I watched in, um, when, when all the banks have these foreclosures and all these agents had foreclosure listings, I'm like, yeah, we'll get those guys. They got a hundred listings and they don't even need to do lead generation because all of the people are calling them because they have the product and they want the product. What can I learn from that? I'm like, yeah, I know that one day there won't be the Oreos, but there'll be a shortage in inventory. And if I have the product, I'm going to own the market, as long as I know how to design. So my home sells fast and literally that whole vision, and this is not me being arrogant. I hope nobody takes it that way. But that whole vision that I had for this business plan, call it seven to 10 years ago is literally happening right now in front of you. And it's pretty cool. It's pretty cool to have thought, man, I saw this coming.

Robert Grand (11:14):

That's crazy. I mean, you could do this at almost any level in real estate. Of course, you know that entry-level housing two to 400 market. Um, you're going to do a little bit less. And to me it's like really like inside those homes, it's the quality of the finishes, you know, like the price that you're able to spend on those to be able to keep your budget as you kind of climb up in those areas. And I mean, that's just an example of, uh, being able to take it to an extreme level because you have such a big margin and being really smart, I think, um, and taking that time in the beginning to truly plan it out and to truly have everything there. So you can truly show people the vision that you have for a house. And then you also probably have produced lots of other properties.

Robert Grand (11:52):

So they could probably start, they start digging, you know, they start digging into who is this guy who's built it and they see all your other homes. And then it's, you know, that seven years that you just talked about, so is proof and that's, what's super cool about it. I mean, nothing happens overnight, you know, you know that, but you had, you know, you have the vision, you know, seven, eight years ago to be like, Hey, this is going to change. And one day I can be here and look where you are right now, right here. So it's just another example of people starting out in investing where they think I can't do what these guys are doing. It's like, well, in seven years you can, 10 years I have a 10 year vision, you know? So, but yeah, no, I think that was a high man. The house is awesome. And I'm super pumped for you to be able to pull that off like that. And, and then now they're going to be like, walk us through like, so they've made the purchase, right? Um, or they're they're, they've got it under contract,

Tim Murphy (12:38):

Right? Yeah. Let's go. What I've have is I literally just got the contract. So that was their commitment that, Hey, we want to lock it up. And this is not simple. Again, this is very dynamic as far as the processes and the steps that have to happen. But usually what I'll do is I will lock them on a lot hold or hold agreement. And I'll give them a couple of weeks because what happens is, and this is another topic I wanted to talk about is flexibility. See, I could stay to myself, oh, I don't want to deal with that. And, and my, my builder, sometimes it said, you know, gosh, it's so much more difficult for us to have to deal with. Now they're going to come back and they're going to change things up. But I said, guys, if we're flexible, we're saving so much money on like staging and these other carrying costs and all this other stuff like, yeah, yeah.

Tim Murphy (13:24):

You know what? We have to be willing to play the game and be flexible because it's going to allow us to increase our profits. So what happened is we let them tie up the property. Then we set up a time for them to pick some of their selections or really meet with our designers and get a really good idea of exactly what products are going in. And if they want to make tweaks or, or adjustments, because even right now, we're allowing them to make some adjustment on the cabinets. Cause we haven't even, they haven't started manufacturing the cabinets. Now our cabinet guy needs us for the stuff, but you know what we say, well, you know, you're going to get more business from us. And he's like, yeah, I know you're still a pain in the, but it's just part of it. You know, it's like, it's just part of it.

Tim Murphy (14:03):

And so that was, that's also what allowed me to sell this to these this couple, because they want to just a couple of things tweaked. They, they, everybody lives in their house or envisions how they're going to live in their house a little bit differently. And our flexibility allows us to sell into this because we can help them get the vision they want and not just be so rigid about the vision that we have. Because again, it comes down to, if you get emotionally attached to these situations and you lose flexibility, I think you're losing opportunity. And that's really what I think you need to focus on it to sell products and design products and sell them fast. You have to lose emotion and get flexibility and be willing to try and test new things. So what I want to talk about is cause cool.

Tim Murphy (14:47):

There's a lot to talk about here for me. So there's going to be big topics that I want to talk about today. How being a real estate agent gives us a competitive advantage. We kind of touched on that, how different price brackets call for different strategy and then how a designer can maximize your return. On time. I used to back in the day when I was doing these small houses, I couldn't figure out how do I have a budget for a designer or I couldn't find a designer that saw the big picture and was willing to at a price that made sense. But the fact that I brought on my designer and obviously we talked about the contractor, those two pieces have given me a return on time that are, are fantastic. And, and that's one of the reasons why I set up my business the way it is.

Tim Murphy (15:29):

But what I want to start off with is how being a real estate agent gives us a competitive advantage. So when we're a real estate agent, we're licensed, we have the chance to hear feedback and unbiased responses from our clients because when we're walking them through houses, whether it's in the million dollar range or the 600 or 800 or 400, 200 range, we get to see what's important to them. You know, is it the cabinets? Is it the color? Is it the pouring? What products are important to them? Do they feel like it's overpriced? Do they feel like the craftsmanship is not good? And we get to get all this feedback and grant you've been there, right?

Robert Grand (16:03):

Oh, thousand times man thousand

Tim Murphy (16:05):

Times. Is that how invaluable?

Robert Grand (16:07):

The most important thing? I mean, cause it's, that's that intuition, you start to gain, you know, which allowed you probably to jump right into design and start designing places or start designing houses that you're flipping before you could afford to designer. So you're probably walking through and being like, I know they're not gonna like this. This is a trend of the color. This is what people like, they walk in. They don't like beige walls. Now. That's weird. Everybody used to love. Baseball's like five years ago now it's gray walls, agreeable gray. It's like, like it's those, it's those design trends. I think it kind of keeps you up with, and like people like in that, um, in the DIY, people are great at it. Right? So you go, you, you take a buyer into a house that you've seen, somebody did a great job with. It might just be, you know, a DIY person that's been following the trends online that just brought you back into reality of what's the new hottest thing, you know? So things like that, which is kinda cool. Um, when you look at it. Yeah. So then the other thing

Tim Murphy (16:55):

That you and I both know is be also as real estate, licensed real estate agents who are Investors Value Driven Investors. We have the ability to attract trends like market stats, supply and demand is a huge trend that we're always paying, do pricing is pricing. Our pricing is going up exponentially. I mean, it's ridiculous where pricing is going. And then we also get to track neighborhood pockets because if you're an infill developer like myself, or even if you're like, Grando, who's going around and he's rehabbing houses soon to be doing infill development, you're always looking for that next pocket. Where is, and where is the price a little bit lower, especially nowadays when people feel like they're paying way too much for houses, but where's that, where's the price a little bit lower. Where is everybody wants to live instead of where is everybody putting offers in? Where do I think they might want to live? Where's the next phase. Now you can get that. If you're not boots on the ground, if you're not seriously invested in talking to the client, walking him through houses and really paying attention to trends, granddaughter, I mean, tell me how important is it to know the trends of supply and demand pricing and pocket neighborhoods?

Robert Grand (18:01):

Oh my God. I mean, it's, it's the difference between, you know, is, is this area, you know, six blocks that way, you know, 50, $60,000 difference because it doesn't have the name of that community. You know, like, like in our area, you know, it, if, if you're in the university area that demands a different price than just a few other blocks away, which could be the downtown area, which is still high, but then you kind of start heading west from there and then it drops off significantly. So it could be just a few blocks. And then the demand, you know, obviously right now, like you said, prices are growing high and there's no inventory everywhere, but say, take like a neutral market, right? Just something where there's a little bit more inventory. You'll, that's where you really see those pricing swings like per area. Um, and then you can get the highest price of all, you know, that what I call, like, you know, that absolute in price when you have it, you know, a beautiful home inside those areas.

Robert Grand (18:49):

Right? Cause then people are like, it'll the stars align? You know, it's like, it's, it's in the area I want, plus it's updated and it looks beautiful. And you know, and so our area, you know, a lot of people love those core areas. Our city is not nearly as big as yours. So it's got, it's gotta be that walkable, you know, within the first 30 blocks, you know, of the downtown area or in the university area, it's like from out there, the prices start dropping, you know, and it it's dramatic, you know? And if you go way out west,

Tim Murphy (19:17):

You know, like you're, that's the same thing for me is that like literally the, the, I work in the CDN and south Minneapolis, but in south Minneapolis, it is so like, you can go when I first got started in this market, it was like block by block, by block. And then it's evolved like literally it's crowded. I thought that was less expensive and maybe not quite as much demand. And I took a shot because I, I had to get started someplace. So I needed a cheaper house. I bought a house from a bank and I took a shot and it didn't pan out exactly what I wanted. The margin was. I thought it was going to be a lot bigger, but I was setting more of a trend. But then I moved into the more expensive markets as my budgets allowed me to move into the inspection, more expensive markets.

Tim Murphy (19:58):

And literally I can tell you that it, it feels like it's cliche, but location, location, location literally is the most important thing in real estate. Um, so yeah, the fact that you can pay attention to markets and pockets as a real estate agent gives you a huge competitive edge. But then the other thing is we have the ability to distinguish what is needed and what is not needed to hit our price points. You know, what others do, what kind of quality materials do we need? What does the look need to be like? What are the colors need to be like, it's granted, I like to call it the Pinterest house. If you go on Pinterest and you look, or the DIY or, you know, everybody that's watching those DIY shows, they all control certain look and feel white trim, white cabinets. Now do they evolve?

Tim Murphy (20:45):

Yeah. And I can tell you as move up in the price points and you get into more expensive homes, these are people that want to set their own trends. They want to have one of the time. And so when you get into one of a kind, I would say that you're, you're probably pushing on a cusp of a trendsetter, but when you're down, I would say at, for me, it's 75 or less you because of budgets because of cost, because of everything you don't have as much luxury to set trends. And you're more following trends, grand. I mean, what would you say about that as far as the Pinterest house and how consistent it is by market, and then I see what you're doing. I'm like, I'm doing the same thing as you.

Robert Grand (21:22):

Yeah, yeah. I mean, if you look at it, like, you know, my market, so I love that entry level right now. Right. And so I'd take those looks and, and then, uh, you know, Shelly goes and tries to find the materials for the best cost possible. That gives that look, but it allows us to stick with that budget. And, and, and, and we do a little changes here and there, but it's kind of, for the most part, it's kind of the same look and everybody says, you know, I know what I'm wanting to your house has hit MLS or, or something you've staged, hits MLS, you know, it's because you guys produce such a nice quality product and it kind of has that look to it. And I was like, and that's what I want to hear. Cause that look that we're going for is that look that is kind of what's in the market and what people want to see.

Robert Grand (21:59):

Right. So it pulls them right into that. How do you make money? Yeah, yeah, exactly. It's like, boom. Then you get multiple offers on it. And so I think that's kind of cool thing and you know, my market's a lot different than your market like that, uh, you know, million dollar home could still be dated, you know, and that's, you know, in our market. Um, but you're, you can drive the price up and your market's a lot bigger, but that there's only a few of those homes. Right. So like, I would say our sweet spot is kind of like, you know, if, if I were doing that six to 900,000, that would probably be the higher end, you know, area for me or higher end. But I think just like you, like, like with the pockets, you know, around the city, there's certain streets and things like that, that if, if I can get something on those streets, like that's when I know I can push something over to a million because everything at that price point, they're older homes, you know, and there's not a lot of new construction in our city, so, and if

Tim Murphy (22:51):

There is kind of out, so tell me a little bit about like materials. Cause I think as a real estate agent, you know, I think, yeah, if you weren't a real estate agent and I've seen this mistake happen with my builder and my builder, I told him he was making this some street and he didn't want to listen to the beginning. But then when he listened to me and he saw, wow, you might be right, like materials. Like I think builders, when they aren't talking to consumers on a regular basis, they get caught up because they have pride and they want to use certain materials because they know that they have to stand behind the product. So grant, I mean, what are your thoughts like, and I think this can transition us into, you know, how the different price brackets call for different stampede. So I think let's talk materials and let's talk look, but more importantly, materials that like the 200 to $400,000 price point, because cost is the number one thing we have to focus on.

Tim Murphy (23:42):

And so materials kind of, you know, left or neglected in certain instances because we have to focus so much on cost. We have to find lesser grade materials. I mean, how does your real estate license, how does your market knowledge allow you to know, can I go with LVT or do I have to go with real tile? Can I go with, uh, uh, uh, custom cabinet or do I need to go with the box cabinet or whatever? I mean, give me a little insight from your contractor mind on real estate agent, mind on how that, how you define that with your knowledge.

Robert Grand (24:15):

Yeah. I mean, it's just, it's, it's seeing what's out there in the market and what people are doing, like right. The trend of what's going into that, entry-level home, what's going into that, mid-level home, what's going into that, you know, higher end home. And you know, that higher end home obviously has kind of like those custom touches that you're talking about, that entry-level home, you know, like for us, you know, we liked the, like for example, we'll do kind of, we won't be doing tile and like hardwoods, we're doing like luxury vinyl plank, which is kind of like the most common, hottest thing in the entry-level market. We put it in all spaces. Right. You know, cause then that saves us a lot of money. Like we're not doing different floors in each of the rooms, you know, or, or, or doing carpet over here and then tile over there, you know?

Robert Grand (24:52):

So that's a huge money saver for us. And then the cost is always, you know, between two and $3 a square foot. So that's pretty cheap, you know, for like materials, when you look at that. So that's just like an example of like, in that entry-level home, where if I jumped to that mid-level home, um, you know, that's definitely going to have to have like some sort of a hardwood, right? Like, you know, in that four to 800 range, stuff like that. So that it's just kind of, as you jump up, then they upper in-home, it it's completely different, but your agent knowledge, you know, tying that back into that is what are you seeing in those markets and what are you seeing? Because you're seeing all these homes. Right. And that's, I think you're right. Like builders get out of touch. You know, they may still be building like cherry cabinets and cherry hardwood floors and like all that stuff.

Robert Grand (25:31):

And it's like, that's, that was gone five years ago where they don't keep up with that trend because you're seeing it now white cabinets are great or, or, or like a gray cabinet, you know, and, or maybe even a black cabinet with white countertops. But those, and then like, you know, like, is it courts right now? Courts are super hot in our area versus granite. Granite's kind of like not the hottest thing and where it used to be. Granted and builders are still doing granite, you know? And it's like, they could be saving a little bit of money and our area courts is cheaper, you know? So it's, it's like those types of things is an agent that you see. And then when you pair that agent with a designer, you know, who's also in touch then it's like, that's when, like I think the real fireworks happen, you really create an amazing product. Cause they're also helping guide that. And then you're like, oh, I'm seeing what that, and they're bringing that vision to life. You know? So as an agent, you're seeing so many of those homes and that's really where it is. Tell

Tim Murphy (26:14):

Me a little bit about like, let's the 200 to 400, I mean at 200, 400. Cause you would, do you have a project in between two and four right now that you're working on? Yeah, we got one. That'll be,

Robert Grand (26:23):

I mean, right in between that it'll be a 3 25 to three 50 seller. Uh, what are you

Tim Murphy (26:29):

In lightness on? Are you, I know your cost is like probably number one thing you have to pay attention to is cost. Yeah. And then when it comes to the quality of the product or the look and feel, I mean, are, do you feel that if you have use a lesser quality product, you still can achieve the look and feel you need to, to stay at our cost or maybe even make your profit bigger than what you want? I thought it would.

Robert Grand (26:52):

Yeah. I think like, um, there's always a product out there that you can find that is something that you can utilize to create that same look. Right. And so like with that, right, like in this 350,000 3, 25 to three 50 house, um, three bedroom, two bath, 1200 square feet, you know, um, it's a complete back to the studs rebuild, but you know, that we'll get one floor throughout the whole thing. Right. You know, it's just going to get a luxury vinyl plank, you know, throughout the whole thing that saves us a lot of money versus like, okay, now we need carpet here and tile here, you know? So we just do that, you know, the countertops, you know, we pop, you know, for courts in it, you know? And so that's typically like our one thing that we do bigger, we'll still do like, you know, the nice countertops with the tile backsplash. So to really give that kitchen like a really great pop, but the cabinets will be boxed cabinets. They're not custom cabinets, you know, like that you can't spend that money on that. Um, it's just too high of a cost. It'd be double, you know, if

Tim Murphy (27:44):

You did it well, it's also like granted, you know, like there's different thicknesses or they're different, uh, you know, or courts like courts is hot too, but there's so many different levels. There's level one to like level seven or 10. Um, what are you using for like a material standpoint? They're like more of like two or three bonds. It would be more

Robert Grand (28:02):

Like the prefab courts, you know, kind of like how the prefab granite days are out there, where you get that bullnosed edge. This is all flat edge, but they come and blanks, you know, this and that. So our, our same cabinet guy who does kind of that, that semi box cabinet looking kind of custom cabinet, you know, he'll be putting in that exact same countertop. And, and then a lot of people do that four inch backsplash, like they used to do and, you know, in the, in the granite days, but now, you know, we tile the whole backsplash, but we don't, you know, like our tile backsplash, it's always like that white subway tile or kind of one like it where it's like, it's like 59 cents a tile. Right. So it's almost as cheap to put that up, you know, is to put anything else up, you know, if you, you can't do like the mosaic $12 a square

Tim Murphy (28:43):

Because we paid too much for labor. Right? Yeah, exactly.

Robert Grand (28:47):

Yeah. Yeah. So when you look at it, so it's like those little tiles are perfect, you know, it works out great. And it gives people that beautiful look that they really, really like, you know, or they want to see where they feel like their house. You know, this is what I can afford. It's my first home, that entry level person. And it's like setting them up for the next house that they're going to get to, but they love where they live and they're super excited about it, you know? And then like, you know, another example is just like plumbing fixtures, right. You know, we use like, um, Moe and fixtures, but we use the entry-level Moen fixtures versus like, you can buy some amazing plumbing pictures that just look like pieces of art. But that faucet might be a thousand, 1500 bucks where our faucets always that one that is black looks good, pull down nozzle. And it gives it that touch where it's like, oh, this is a good clean looking look. You know? And so that's kind

Tim Murphy (29:32):

Of lighting lighting is a hundred percent the same way. I mean, you can get a light fixture that you're like, oh, that's gotta be a thousand dollars. And it was like 59 bucks. And then vice versa, you can get one that you're like, oh, I swear, I bought that one at home Depot. And it was a designer fixture. It's like super hard to distinguish, what is it, expensive lighting fixture to what is, um, you know, a home Depot lighting fixture, because home Depot is being super competitive about having what they call designer light fixtures. But the thing is, is like grant, I mean, your lighting budget is, is minimal. It's gotta be what like $800 bucks. Yeah, exactly. Like a thousand bucks.

Robert Grand (30:11):

And so like, you know, our designer, Shelley, she's always just shopping for the best deals. Like she'll be looking this and that. And she knows the budget. She has to be finding those materials with that fit within that budget. And so you're exactly right. Like she'll score a great global light, you know, like, uh, you know, maybe on overstock and get that shipped to the office. And it was like, you know, normally 1 99 would get it for 99 huge savings in a small house budget, you know? And it's like, and then we tend to do a few more can lights to kind of brighten it up versus a lot of hanging lights. You know, we're in like a really expensive home. You're going to do a lot of nice, beautiful hanging lights, you know, like in the kitchen pendant lights. And so it'd be rare if we pop for like pendant lights, because we can get cans up in there for, you know, 50, 60 bucks, you know, trim it out, which is it's like those things even like the shower, right?

Robert Grand (30:54):

Like if you go into a home that's like mid-level or higher end, you're going to expect like a nice tile shower, tile floor, where are hers are always the prefab tubs, you know, it's like we can't spend that money, you know, on it. And so that's like just a great example of like those where you have a good clean look, you know, and it's nice. And it's, it's very functional and has just a few pops that make it look really cool, but it's not taking it to that extreme level where you're at, where you can be like, and this is what we're going to do here at $12 a square foot for the backsplashes. Okay know. Yeah.

Tim Murphy (31:24):

And that's a hundred percent. It is that, you know, when you're at the 200 to 400 level, and again, this is market specific. I mean, if you're in California, like 200, 400, that's not even possible. So I'm not getting with range is like something that's in, I think Bob's reality. And my reality is a 200 and 400 range. Um, but then, you know what, you have to be focused on to sum it all up is that you can't get emotional about the products that you use. You have to get disciplined about the look and then you have to find areas where you can make it pop and maybe spend a little, uh, on some product or I'll look in a field, but you always have to be focused on costs where as if we go into the 400 to $800,000 range, yes, you have to be focused on costs because cost is always the number one liar.

Tim Murphy (32:10):

But you also have to focus on when I think is the most important thing between 400 and 800 and Bob can attest to this is that you have to focus on product market fit because it's more of a sophisticated buyer from 400 to 800, they expect a certain product, a certain look and feel they're paying really good money for this house. And they expect you have a house that, you know, their friends are going to walk in and be like, God, this is cool. And so that product market fit I would is probably one of your number one focuses when you move up to the 400 to 800 range. And then your second focus is going to be more along the line of being on point with what buyers expectations are, which is again, product, product, market fit. But then it's also quality of product because as you go to 400, especially I would say to 800, as you get closer and closer to 800, you're definitely starting to have to pay attention to what products am I using because those consumers are, they have an expectation of what product they should see some, and I would say a good example of that is a shower.

Tim Murphy (33:16):

Okay. Bob just told you he has an inserted prefab shower. It's just a big plastic molded shower. He pops it in and there you go. That's your brand new shower. Whereas when you're getting to like a product, I have a new project coming up at 8 75, a little bit over 800, but we would do tile showers because they expect to see tile because it's more, high-end, it's more luxury. It has more design to it. So grand, you had your house, your own personal residence this year that you had bought in a great neighborhood because that neighborhood was the pocket neighborhood that you had to be is you bought it and then you guys did an awesome job. Uh, I hope we can show some pictures on our Facebook of, of that project that you did, but you did an awesome job and tell us, I mean, you're doing a 3 45 projects, but then you had that project and you put it at a great price for you guys. And for you even told me, you go got it. If it sells for this, I'm going to be so happy. But tell me why, what was the feedback and why did that house sell, even though you thought you were at a number that might not stop.

Robert Grand (34:20):

Yeah. You know, it's, uh, actually a good point. There's the, I would say that the one negative feedback to start that off at the house is, you know, it was kind of on a hillside lot and it didn't, we didn't ever fence the backyard cause I kind of had another street, but it kind of was kind of an open community like that. Um, and so that was like for the few people, they didn't like it, you know, that was the one thing they didn't like, but the one person that did like it, it like, uh, just hit all those notes of what they wanted in a house, the look, and they wanted to be in that community too. Right. So it's just like the street that you're talking about. I buy every house in that neighborhood if I can get it and almost, you know, like I don't care about the price, like, you know, type of thing now where this one like to buy it.

Robert Grand (34:58):

I was like, I just didn't see it. And you know, and Shelly's like, no, this is going to be an amazing design. It's got a good flow. It's like, it was like that 1990s white tile house, you know, like were, that was everywhere in the house. So it was almost overwhelming and gold and everything like that, green carpet. So, but, but in the end, you know, it's like a lot of people even had commented like, wow, I looked at that house when it was for sale two years ago and I thought, no way, and now I'm seeing it now. And I'm like, I wish I would have bought that house and did that, you know? And, and because the bones were there to it. So it was a good structure, great neighborhood, good structure just needed just cosmetic update all the way around. And some minor things fixed that we identified.

Robert Grand (35:35):

So the people that really liked it, know number one, you know, I popped for an amazing garage door because in homes in that upper end price range, you know, a lot of them don't have it, but the ones that do people love it. Right. You know, it was like $6,000 for a glass garage door. And I noticed a few houses in the neighborhood did have it. And I was like, God, every time I drive by the house, I'm drawn to the front of it. And you know, and there, and a lot of these homes are million dollar homes. Right. But I'm like just off that edge or where that million dollar home could be, you know? And so, and they might have that glass garage door and I was just like, Hmm, that's definitely one. And so Shelly and I were like, yeah, let's get this glass garage door. Let's do it. And let's spend the money.

Tim Murphy (36:12):

Good point. Grando because one of the, as you move up the price point level, I will tell you one of the most important things to focus on is exterior curb appeal. Your elevation will make you or set you apart. You will, it can make or break you. If you are keep on your front elevation, people will be like, oh, well this is like what everybody thinks I'm going to live in. I don't want to live there. You know, that is, that's why, I'm glad you brought up the garage because you spent $6,000 even at a 4,400,000 to $800,000 project level to spend $6,000 on a garage. Like grant. I mean, that's a lot of money to spend the money.

Robert Grand (36:51):

Yeah. And that was like that one big pop that we're like we got to do. And we did like, you know, the one, the other thing that we noticed is, you know, homes that are in the, you know, 800,000, they always have a dedicated, you know, set of steps going up to the front of the house, you know, that's the entry this house had, like you had to pull in the driveway and there was like a path along, you know, I was like, we're looking at, we're like, we just need to do a beautiful set of steps going right to the front door. Cause it was a nice, beautiful front entry. Right. So we're like, yeah. And so we called up the concrete guy. I'm like, I want to cut a set of steps right here, but they need to be big. They need to be nice. You know, it can't be just like a little pathway. It's got to look really amazing. So we dug it out and did an amazing set of steps. And then including another little front porch sitting area, you know, it was Shelly's idea. Like, let's get this. And

Tim Murphy (37:33):

So like chairs, like these swinging hanging. But when I saw that, I'm like, that is setting the house apart right there. Yep. Yeah. Say it because

Robert Grand (37:42):

When you're at a price point at that or wearing in that price point, you know, and you know, it better than I do. You want people to walk in and envision themselves living there and they're like, oh, I would be sitting out in those chairs, you know, just like Shelly and I would do, we'd be sitting out every day during the nice weather we'd be sitting in those chairs, hanging out, having an evening, you know, we're hardworking people just like you are. And that's what we have envisioned that person doing. You know? So the same thing with the back deck, you know, the same thing with the whole living space. They want a beautiful home that they can flow through. And when you can create that environment, especially like during COVID man, that's like a great example. You know, people are spending a lot more time at home. So it's very important to them, you know, especially the work from home generation. That's now going to be kind of the next big thing homes like at that level of they there. And they're the people who make a little bit more money who can actually do that.

Tim Murphy (38:27):

So, and that's part of it is that you nailed it. Uh, because as a real estate agent, when you're talking with the clients days, you're, they're telling you, well, why are you moving? I'm mark moving because I see a different lifestyle. I have to live in my home or work in my home or my kids go to school in my home. And they're seeing this different lifestyle and saying, this is a different way of me living and Bob designed to a lifestyle, those chairs, right? Well, those are just gimmicky chairs. No, they're not. Those chairs were gave you product market fit. Those chairs were wide, his home sold faster because they had a vision on Pinterest or on the internet of mad. How cool would that be to just come home, have a glass of wine with my wife after a long day or not even leave our house, but it's just like, okay, break time, have a last one, go sit out there, decompressed and then come back in and get back on the grind.

Tim Murphy (39:23):

And that's part of the design. That's why when you go to 400 and 800, you have to really, your design needs to match the market. But it also comes down to materials because those chairs weren't cheap. That garage door wasn't cheap. But Bob knew that if I spent money on quality and I gave them the look that they wanted, you know what I was going to get top dollar for my house. So granddaughter, give us a little rundown on, what did you think the house was going to sell for? And then what did it actually sell for because you guys had just left it

Robert Grand (39:52):

Off. I mean, we went to the ultra high end of the price point. I thought it was a S uh, probably like a six and a quarter, maybe 6 49 at a stretch. Um, and, or yeah, yeah. 6, 7, 9, 7, 7, and a quarter. Sorry, I'm thinking about this, the wrong way. Seven and a quarter to, you know, 7 99 at a stretch, you know, or seven a quarter, sorry, seven to seven and a quarter. And it stretched to that. So we put it on, you know, like we're not going to take less than this price, right. We're not going to take mess work. Cause I wanted to live there. You know, honestly like Shelly wanted to sell it every two years. So I, the comps did not show like there's a couple of those million dollar comps. I'm like an appraiser being an agent. I know I go, the appraiser will grab these it's within a mile, but this backs up to a country club like their backyards or the country club golf course.

Robert Grand (40:37):

Right. You know, that's what they're looking at. I'm like, my backyard has a good view, but it's kind of a stretch, you know, but if somebody comes in at that high price, they'll grab those comps and be like, well, obviously this area is, you know, going for it. And that's that agent knowledge that, you know, and so, but me, I was like, man, top end comps, like on this thing, you know, it's like, we can't like, I didn't think we could go that high Shelly, you know, she's way more optimistic than me. Cause I play it by the numbers. So I was like, yes, like seven and a quarter, you know, it's like, could we go that high? You know, it's like, you know, it's was like, but then we put it on this. We're like, we're just going to ask for this, we've done the work we've brought it through.

Robert Grand (41:12):

And you know, the person that did it, they wanted it so bad. Um, that they, they S they were, you know, kind of like a stay-at-home worker, like stock market type person. So they had a bunch of money in their trading account. They ended up using private money to, to get the house and close it down because they were going to have to file their taxes. And they're so afraid of losing the house, you know, and not getting it. They're like, we'll just close it with private money because, and they put a bunch of money down with them and then they're going to refinance it, it out their own leisure.

Tim Murphy (41:39):

So they skip, you're not going to sell for 7 77 a quarter. And you were 11, 9, 9. Yeah. I went there, went for that.

Robert Grand (41:47):

Yeah. I went for that ultra ultra high price, you know, so it was just like, yeah. So we took that $400,000 home and turned it into an $800,000 home. So it's funny that you say like that 400, 800 level, that was the thing in my brain. So I was going through the whole process going, you know, could this house be that house? Like the, the area says it could, you know, can we take it and make it that house? And in the end, the answer was, yes. You know, so the next break over, you know, from that point would have been like, you know, those homes on the golf course, you know, so that are still selling for 900,000 data, you know? So it's like 900,000 that one of them sold for 900,000 days. And the guy probably put two, 300 into it, you know? So they're one, they could be the future 1.3, $1.4 million homes, you know, that you're kind of talking about, you know, that you're doing, uh, you know, where you're at. So it's, it was kind of an interesting process, you know, and it was a huge risk for me, even as a primary residence to go through and do, you know, cause I was like, I'd never stepped up to that level on a home, you know, and, and taking it to that quality of finish, you know? And so yeah,

Tim Murphy (42:47):

Into the 800 plus range. So I mean, if you're going from an $800,000 home plus to like this $1.4 million house that I was telling you guys, I did, I would tell you this there's three major points you want to pay attention to. And, and hopefully you're paying attention to the transition from 200 to 400 to 800. But when you get to 800 plus quality of product, quality of materials matter a lot, the consumer paying a premium and the consumer wants a one of a kind product and the consumer wants quality. It's kind of like that guy that's willing to buy the Hugo boss suit for $2,000. Here's a reason he's willing to pay $3,000 because, and sometimes it's what he believes more than what's reality because maybe that Hugo boss suit has a nice piece of material, but somebody else made that same suit or a suit with the same kind of material for less money.

Tim Murphy (43:41):

But it's the brand, it's the quality, it's the perception. And so when you go to 800,000 plus you are selling a perception, you have to sell one of a kind, you have to sell quality, quality, quality. It's like any high-end brand Mercedes BMW, Lamborghini, Hugo boss, all luxury perfumes, colognes, it's, it's a perception. And you have to understand that the more that you move up, the price point, the more that it becomes a marketing it's marketing game, because these guys take a perfume and they sell it for more money than someone else sells the perfume for it. It's just the liquid. Why is it worth more? Because you've marketed it better and you have a better brand. And so I'll tell you that quality of products and look and feel and design matter. A number one focus is on the design trend that fits, but also as you're moving higher and higher price, I would tell you that you have to be willing to take a chance to go on the cusp of almost setting your own trend.

Tim Murphy (44:44):

Because again, when you're at 1.4 million or in California, if you're selling an $80 million property, they're buying this $80 million property because it's literally a trophy. You know, basles just paid them $5 million for that property because it's a trophy for him. And that's what it is. And that's what people end up buying now everybody buys different trophies, but I will tell you when your, if your market, if your top end is a million, like my market, there's very, very few, $2 million houses. That's on lakes. That's on this lake Minnetonka. It's called very, very few of those products, a million dollars plus to a mill. I would say a million to 2 million is becoming more prevalent. But I wouldn't say it's like dominant, like in California. I mean, it's like, you can't even get a house if it's not at a million dollars in California. So you have to know like, where do I fit as far as the top end of the quote, unquote leads or whatever.

Tim Murphy (45:40):

Um, right. Once you get to that level, that's when they're looking for the point of a kind of trophy property, right? Um, and then cost does matter. But if you're too cheap, if you cheap out, which I literally see around me, I, I see builders go cheap because you don't know the game. And at the end, there's a house that's in the sea on the same street. I'm on Kellogg avenue, he's on Kellogg avenue. He went cheap, quote, unquote cheap. He's at 1.2, 5 million, he's sitting there. I'm at 1.4, I'm going to be sold. There's a difference. Why? Because I understood the game. I understood that quality mattered. I understood that being cutting edge design matter and the understood that don't be cheap because then wealthy people don't want to buy cheap things. And so that's a huge factor in the luxury market. So granted, I don't know if you have any questions around that design or just that market, or if you want to make any point, but I it's important that you guys pay attention to the details. What I'm hearing from

Robert Grand (46:43):

You is like, who is the avatar in that market for that? Right. And the two to 400 kind of, I took from you, which is actually a really good thing to think about. Who's that person, what are they looking for? Entry-level they can have X, Y, and Z mid-level. They want X, Y, and Z 800 plus what's your, what's your 800 plus market. Right. And then, um, what does that person look like? And that, and as you were saying that, I was like, I'm thinking about my market, you know, who's buying the, you know, and ours is like, we have very few homes in the million, right. So like where yours is, like, you have very few homes in the 2 million, mine has very few homes in the million. Right. But there's like, who is that million dollar home buyer? You know, it's like, okay, what did they do? What do they look like? Are they professional? Are they this? So that's kind of what, you know, I got from youth, like listening to that. And, and, and so maybe you can fill us into, you know, you can't say their names and stuff, or what do you know, but who is that person that's buying your home? Is it

Tim Murphy (47:34):

The doctors? Is it, yeah, I would, it would be the doctors. Well, I would split it off this, like what comes to my mind first? I'm not going to put, it's not a hierarchy, but what comes to my mind first? And then it's the entrepreneur. It's, um, the high level salespeople, uh, high level executive people, CEO. I mean, Minnesota, we have, I think, what is it? 15 fortune 500 companies that, you know, we have Medtronic, we have target, uh, I mean, we have Cargill, we have some major corporations. So when you go down the hierarchy from a guy that's, you know, at Cargill making probably a hundred million dollars or something, I have no idea all the way down the hierarchy to like top in management, top end management. So I probably still making 800, 900,000, you know? Um, so you're, you know, high-end salespeople, high-end executives.

Tim Murphy (48:25):

Um, you also have, there's, there's a lot of old money, um, especially in Dyna, uh, any Dyna, Minnesota and Southwest Minneapolis, it's old money. Um, we have two lakes, we have this lake bade Mecosta, and then we have this lake Harriet, uh, the homes that have been on that lake, where these were very wealthy families. So there's also a good amount of money that's passed down. And so I've been lately actually selling these to kids who have inherited money and they want their trophy property. And they're saying to themselves, I want to be in the diamond south Minneapolis, because if you've lived in lifestyle yeah. If you've lived in Minnesota, you know, you dine in south Minneapolis, like they're probably not going to go down in valley because it's just that much demand. And that's just where people want to be. That's like the best place to be. Um, and so these young kids are going okay, if I'm going to get this money and I'm going to put it into a good investment, it'll be my home. Plus I get to enjoy it. Well, I want to be in a great location. So I'm actually seeing young people get good gifts, you know, and they're spending the money on houses. And so, you know, that's some of the demographic of people that I'm dealing with. Right.

Robert Grand (49:36):

And you just prove my point perfectly, like when you're an agent, you've you understand the market, you understand the people, you understand this where a builder might be tied into just building his product. He might be missing that window, or you've got the whole thing. You're identifying areas, this and that. And that's exactly, you know, like that's one of the reasons tying it back to thing, like, you know, being a real estate agent super helpful, you know, when you're doing that, because it allows you to walk through that process, you identified at a spot where you could fit in the market and, and go huge with it. And so you could not do maybe volume, like I would have to do. You could do, you know, just the right projects that really kind of inspire you to kind of do something cool, which is what they want. Right. So they want that 10 Murphy inspiration. Well,

Tim Murphy (50:20):

In grand old, that's one of the reasons why it's been, I keep pushing myself because like you said, I can be one project instead of doing maybe seven projects or five projects, depending on what you're doing. You know, I know you did 10 projects, um, but I can do one project, but then more importantly, you know, I think you and I are on the same page and I know Shelly's on the same page, but, uh, it's also like, it's just, it's so cool. Like I get to design something and then I get to drive by and be like, that's the house that I designed. And it's one of a kind like, it's just cool to do that on top of also being, you know, profitable. Um, so today, Hey man, you know what? This was off the podcast. I did, I can talk about stuff like this for seriously hours because we're hitting 51 minutes. Again, we promise.

Robert Grand (51:11):

I think so. But you, you know, you know, it's, you know, it, you would think it's gotta be, I mean, if I could get in the brain of somebody that's spent 15, 20 years doing it and just have that information, just that processed out, just like, you know, we've done here today. I think it's super valuable and you know, it's should be worth the wait.

Tim Murphy (51:32):

It's like, you never know people. So yeah. Yeah. Excited for you guys to keep listening to our podcast, you know, grant and I are having a fantastic time doing this and, and we want your feedback. So if you guys have feedback about any one of our podcasts episodes, or if there's an episode that you want us to throw in and talk about, you know, what, that's, what this is all about is we want to deliver Value for you guys. We want to see more people doing what we're doing because grant, I mean, how fun is it when you sold your own personal residence that you got to design out and you sold it for 7 99 instead of seven 20?

Robert Grand (52:04):

Oh my God. Amazing. Right. Yeah. I mean, and it was like one of those things it's to me in my real estate world, it's defying the odds, right? It's like, it's defining what the home Value should be and that's, but that's even on a, entry-level flip, it's the same thing. Like you're getting a higher price because you're cleaning the place up versus just putting it on the market onstage, a vacant home. How, who wants to walk into a vacant, sad home. That's what I'm always like saying it's like that vacant sat home versus the beautiful home. Right. Nobody wants to see those homes, but they'll buy them if they have to, you know, but you're not getting a high price. So,

Tim Murphy (52:36):

You know, as a Value Driven Investor, it's not, again, granted, I look at this and we say, it's not always just about the money. Like think of what Bob's doing for that neighborhood. He's helping that guy out a million dollars because he can see the opportunity of, oh man. If he came in and bought this 400 plus house and then turned it for almost 800, what can I do with my $900,000 house? That's on the golf course where the location is absolutely amazing. Can I upgrade to, so it's not just about, oh my gosh, how much money we made or, oh my gosh, let's talk about us. It's also, we're changing and transforming neighborhoods for what we think is, is the better. Now if somebody lived there for a long time, sometimes they don't always agree with that. But in the end, like that's, it's called evolution. And I think that that's also a great thing that we're doing and it's super exciting. So should be great things for sure. Yeah. A hundred percent meaning we didn't get to, uh, we didn't get to the, um, how designers can maximize your rot. So I'm going to save that for the next episode and we'll get back to me. What's that buddy? That's

Robert Grand (53:39):

Going to be a good one because that actually is a perfect segue because that actually is going to

Tim Murphy (53:42):

Be another 15 minutes. That's going to be 50 minutes when

Robert Grand (53:46):

You talk about that. Like, so yeah. So

Tim Murphy (53:49):

Anyways, you guys visit us at Value-Driven Investor.com. Sign up, join us on our private Facebook group, because we are going to have a whole lot more content on the private Facebook group on how to design houses. We're going to have products. Uh, eventually I do want to have a, one of my designers come on and talk on the podcast, but then I also want to provide awesome resources in our private Facebook group around design, around selections, around websites, where you can find materials and discounts because Shelley is absolutely amazing at finding awesome products for at discounts. So again, thanks for visiting us on the podcast. Thanks for listening on how to design your

Tim Murphy (54:29):

Product to sell fast. We are thanks for listening to the Value Driven Investor podcast, where we lead by giving for more information about our community and what's new visit Value Driven Investor.com. The Value-Driven Investor podcast was produced by digital legend media in Minneapolis. Build the or legend digital legend media.com.