One of the most gratifying investments I’ve made is landscaping a fixer I bought in 2014. Great landscaping can really improve the value of your property. Not only does good landscaping make the property look great, it may create more useable space.
Investing in various real estate crowdfunding projects around the country for a potential 8% – 15% return is nice. But there’s something wonderful about coming up with a design and making it come true to improve an asset’s value.
Here are some landscaping I’ve done to the fixer:
- Ripped out the green shag carpet and refinished the original hardwood floors.
- Changed the knob and tube wiring for the latest TR compliant electrical wiring.
- Gutted the kitchen and opened it up to flow into the dining room.
- Replaced the roof.
- Replaced all windows.
- Painted the interior and exterior.
- Built a 175 sqft luxury master bathroom (before and after pics).
- Installed sliding doors from the master bedroom that open out onto a 260 sqft composite deck (before and after pics) with custom boards and railings.
- Built a new retaining wall to hold up my foundation.
Once all of these essential renovations were out of the way, the next step was to landscape!
Landscaping As An Investment For Positive Returns
I don’t have a big house (~1,920 sqft) because I’ve purposefully decided to keep my housing expenses to under 10% of my gross income, but I do have a relatively large lot for San Francisco (5,000 sqft with a front yard, side yard, and backyard). My house sits on roughly 40% of the lot, leaving me with 3,000 sqft to manage. Since I’m on a hill, the back half of my lot slopes downward, making it non-user friendly.
The key to any successful landscaping project is to implement aesthetics with functionality. You want to maximize use of your land while also making it look easy on the eyes. My backyard was a jungle that needed to be cleaned up. At the same time, I wanted to turn the hill into some flat, useable space. Therefore, the ultimate solution was to create large tiers.
With this idea in mind, I solicited some bids from various landscaping companies around the Bay Area. One guy quoted me $75,000. Another guy quoted me $60,000 – $80,000. And another guy who was working on a similar type project across the street for three months said his company originally quoted that client $125,000, but the project ended up costing $160,000! WTH?
I’ve hired fellas for small landscaping jobs before, but I’ve never hired anybody for a project this large. Not wanting to spend close to six figures on a backyard, I decided to sit on the project for a couple months. After all, I’m addicted to investing and felt putting some money into stocks and bonds post presidential election was a good idea.
Then I Had An Epiphany
Why not just go to the neighbor’s house and hire one of their workers directly! Every hardworking person is looking for a side hustle. Even if he said no, at least I could find out more about the landscaping business and get some design ideas.
Luis popped by during his lunch break, surveyed my backyard, and told me he would have no problems creating tiers like he did for my neighbor. He never gave me a quote, but he just said he’d be in touch whenever he had some free time.
Months went by without hearing a word from Luis. Then he texted me on a random Thursday afternoon while I was coaching tennis and said he was ready to work that weekend. He asked me whether I was still interested, and I told him absolutely without even knowing the cost. When there is someone eager and able to do remodeling/landscaping work for you in a tight labor market, you say YES!
Given the neighbor was paying $125,000+ for their landscaping job (including materials), I figured Luis would come back to me with a quote of around $50,000 + materials. After all, the neighbor was paying the general contractor who then paid Luis and his crew. Surely there was fat to cut.
Landscaping Negotiation
After spending roughly 15 minutes climbing up and down my hill, Luis came back with a labor quote of $10,000 for all four levels! Not only would he create all four levels, he’d also de-weed everything, create steps with pebbles, construct a fence around a playground level, roll out black tarp and gopher netting, mulch everything, and create a 4″ thick hot tub platform with rebar that I’d also been meaning to get done!
Even though the price was much less than expected, I negotiated him down to $9,500 and told him I would pay cash if he wanted. He accepted. Luis finished the project over 3.5 weekends with a crew of 5 – 6 people working eight hours a day. It turns out his employer is highly reputable and worked on Softbank billionaire Masayoshi Son’s $120M house for three years recently.
My total cost for this project came out to $17,000 as I ended up paying $7,500 for materials. This is a huge win because I was seriously expecting to spend at least $50,000 after all the quotes I was given.
Now for the before and after pics!
Before And After Landscaping Pics
How about them apples! I’ve now got a clean backyard with roughly 1,000 square feet of flat useable space on the first three tiers and 600 square feet of slightly sloped space on the last two tiers. All for the price of less than my Honda Fit.
Landscaping Created More Space
For functionality, the 300 sqft first tier playground is key. One day there may also be a playground set with slides and swings. The mulch is actually called “playground mulch” because it’s splinter free. The ground is also nice and cushiony because Luis and his team piled on three inches of mulch throughout.
Another idea for functionality is making the second flat tier a putting green or a been bag toss field. Can you see it? I definitely can. The top tier right above the playground and below the 11 foot high deck is where the adults will hang around the hot tub. The final functionality is now I have my own private steps to climb when I feel like getting my four-pack back.
Landscaping Makes The Yard More Beautiful
For aesthetics, I’ve planted two agave plants and a cabbage patch succulent on the third tier that’s unobstructed by the playground fence. I plan to slowly plant more succulents to fill out the spaces.
I chose cordovan brown staining throughout to contrast the golden colored mulch. I was thinking of using chopped rubber or synthetic grass at first, but after reading there may be potential negative health risks with those materials, I decided to use mulch and stay green for the children playing back there someday.
I realize the backyard is pretty plain at the moment, but that’s OK. I believe in low maintenance because my time is better spent doing other things. Further, everybody has their own tastes.
I’m all about getting 90% of the way there with all the heavy lifting, and letting a new buyer put their own finishing touches if they so choose. So many remodels I’ve seen go 100% of the way there, but they never satisfy 100% of the tastes out there. Here’s some advice on how much to spend remodeling and whether you should get a permit or not.
Some of you living in less expensive areas of the world might be shaking your head at the cost. But San Francisco land is expensive. A vacant lot similar in topography to mine, but 20% smaller with NO house sold two years ago for $1,000,000. Add on the fact that every single tier in my backyard has some sort of view of the ocean and spending $100,000, let alone $17,000 to make it useable is quite reasonable.
Single Family Home All Day
The older I get, the more I love owning a single family home over a condo. First, I don’t need to get permission from the Homeowners Association Board to do any remodeling. Second, I’m not afraid of disrupting my neighbors as much. Finally, it’s a home run to be able to create more functionality and resale value at the same time.
If I was working a full-time job, it would be unlikely that I’d have the time to find Luis and manage a project like this. If I really wanted a landscaped backyard, I would have done what my neighbors did and hire an expensive contractor for $100,000+ to do all the work. So in a way, being an early retiree saved me $50,000 – $80,000. Or an investor could say a $17,000 investment created a 200%+ return.
Luis and his team ended up doing such a great job on my backyard that I asked him to do the front part of my house as well. It turned out more beautiful than I imagined. This is where picking the plants, the stain color, the material, and the flooring really counts since curb appeal is key for resale value.
After 2.5 years, I’m now done with all my home remodeling work. All I’ve got to do now is wait for the 6-person hot tub to arrive and then it’s party time!
Investor Mindset Recap
1) Before spending any money on landscaping, always think about value creation in the form of functionality e.g. adding more useable land. Then focus on aesthetics.
2) Not everyone will have the same taste as you no matter how beautiful you think your finished product is. Therefore, don’t finish it. Get 90% of the way there and allow other people to do the final easy work e.g. planting.
3) Everybody likes to focus on the house, but the majority of value is in the land. Don’t neglect good landscaping when it comes to resale or getting top rental income.
4) Cut out the middle man by going directly to the workers actually doing the work. Any good hustler wants to do more work on the side. Just make sure you have a discussion regarding liability. It’s also important to have an umbrella policy in case something were to happen.
5) With good landscaping, not only will you make an economic return when it comes time for resale, you’ll also get a satisfaction return as you look and use the finished product as well.
Real Estate Recommendations
Explore Real Estate Crowdsourcing. If you don’t want to bother with landscaping, consider investing in real estate passively instead. Take a look at Fundrise, one of the largest real estate crowdsourcing companies today. Real estate is a key component of a diversified portfolio with historical returns of between 8% – 12%.
Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. I also really like CrowdStreet because they offer individual investments in 18-hour cities. 18-hour cities tend to have higher growth rates and higher cap rates.
I’ve personally invested $810,000 in real estate crowdfunding so far after selling my SF rental house in 2017. So far so good as I diversify my real estate holdings and earn more income passively.
With the housing market so strong, rents and property prices are going up. Further, high inflation and low mortgage rates means borrowing is extremely cheap. As a result, real estate should continue to do very well post-pandemic.
Refinance your mortgage: Check out Credible, my favorite mortgage marketplace where prequalified lenders compete for your business. You can get competitive, real quotes in under three minutes for free. Refinance your mortgage before rates go up.
Hi Sam, I just came across your post as I search for “hilly backyard in San Francisco”. What a smart design and great achievement – getting it down with such a good deal and such a short time!!
Can you connect me to Luis? I live in SF too (near West Portal), and have an almost exactly same backyard – that’s why I was searching that term – Desperately looking for landscapers right now, but haven’t had any luck finding anyone who is even willing to do such a steep yard!
Sonia
Funny search term! Glad I rank for it LOL!
Unfortunately, Luis retired! He decided to be a trucker instead as the landscaping work was too grueling. I’m bummed! B/c I have another project for him to do and he turned it down. Noooo.
Just copy my design! It just takes a lot of manual labor.
Good for structural support too.
Thanks for the reply! We just got the backyard cleaned up. Now looking for someone to do the retaining walls. I just showed your design to a landscaping company and he quoted over 100,000! Thought you would be interested to know. LOL
Wow! That is big bucks. I really wish my guy didn’t retire. Good luck with your landscaping!
This is absolutely gorgeous. I love the idea of having a kids’ level and an adult level. You can actually talk to your friends without children racing through and knocking things, but you are still close enough to monitor for safety. Brilliant and beautiful!
Thank you! I hope my vision comes true :-) Hot tub is coming in a couple weeks on the adult level. Can’t wait!
Once Upon A Time, we had a contractor rip out the nasty backyard foliage and partly-buried sidewalk at the house we had purchased, and put down reasonable pebble paths and sod and the like. It was much like your description, where the version where you hire someone to help make the decisions was looking like $65k, but by just going “off the shelf” we were at more like $15k.
And we used him and his crew for the front yard, and we later found buried trash along our side yard. So, we got a deal, but we decided we needed to move on from that contractor (we did _not_ negotiate him down from his offer, and we’d have covered the tipping fee had he asked, so that one one corner cut too much).
Great pics Sam.
1) You mentioned liability so besides the regular Umbrella policy as a homeowner did you get anything special?
2) Also with all the remodel I am curious if the county assessor asked you for revised costs and updated your property taxes?
3) I’m in east bay so was actually thinking about hiring Luis as well haha
Hi John,
Not sure what type of special umbrella policy there is. Just amount. Thankfully, no county assessor has come by to reassess to tax my property more. If you get a permit, then you will get reassessed higher by the cost you state on the application. You don’t need a permit to landscape, which makes it a relative good value from a tax perspective.
If you need Luis contact info, let me know. He’s happy to hustle for more work!
Sam
Hi Sam,
My understanding was that if you use a GC then the GC holds insurance and worker’s comp. Since you are directly hiring the workers is there anything additional you needed to do?
Also for my permit; I received a notice from county assessor with assessed cost higher than stated on the permit form. Not sure what would you do in such a situation.
Also please email me Luis contact info :-)
Nothing like coming in under budget on a DIY project. Sounds like Luis was someone you could definitely continue doing future landscaping with if you need it!
Awesome pictures it looks great !!
That looks fantastic! On my strolls through San Francisco this spring, I couldn’t believe how many homeowners neglected their landscaping due to the challenging topography. As you showed, creating a usable lot is possible on a modest budget.
It is funny b/c property is so expensive here. That said, it’s one of those things were properties will sell at a minimum expensive level regardless, especially if your street looks similar.
I just really like having a well-maintained house that looks good. It just makes me happy to come home to a sweet home.
Some of the best investments I have EVER made were in landscaping on my rental properties. I was paying an arm and a leg for lawn care, trimming, etc… which was eating up precious cash flow each month. Now on I do not allow grass at my properties. Rocks and/or artificial turf. The returns on the investment on these upgrades are astounding (based on the money saved from lawn care etc).
So based on the limited information you gave, each contractor earned around $34 per hour.
3.5 weekends = 7 days @ 8 hours a day = 56 hours x 5 people = 280 labour hours. $9,500 / 280 = $33.92.
Pretty damn cheap if you ask me! I won’t lie I’d be a bit uncomfortable haggling him down to $9,500 when you know it’s already such a steal. I almost felt sorry for Luis reading this post until you said you’re hiring him again to do the front haha.
$34/hour is triple the minimum wage. Not bad for a 22 yo who also hired his younger brother to do work. Making $2,400 a weekend for 4 weekends in a row is pretty darn good money for a young fella who also has a full time job.
I can only hope most readers are side hustling as much as Luis!
Haha didn’t realize he was such a young guy. Pretty skilled for a 22 year old! I guess most of the work is simple manual labour so I suppose $34 an hour ain’t bad. That seems a low minimum wage for San Francisco though, I imagine most industries pay above the minimum?
I don’t set the minimum wages rules. What is it in Vancouver? Louie started working in the industry when he was 18.
But I do think your feedback and other feedback about feeling sorry for Luis is indicative of what upside potential there is in America at least. And also how truly rich we all are.
When I was 17 to 22 years old, I would kill to earn triple the minimum-wage every weekend for now nine weekends.
I really still believe despite all my wealth accumulation, I would still be pumped to earn $2000 plus in cash on weekends as extra side hustle money. Even until this day at almost 40 old. But maybe it’s because I didn’t come from a wealthy family, and I really enjoy working hard for my money. I was in the backyard shoveling dirt with them for two hours each day as well.
What do you think are the reasons why the $2000+ Side hustle dollars isn’t that big of a deal for you? I’m beginning to think a lot about hustle, and wealth generation is part of one’s DNA.
Yeah the minimum wage here sounds similar, around $11. I envisage SF to be a more expensive place to live though, but perhaps I’m mistaken. It seemed quite pricey when I was there as a tourist, but admittedly that’s a whole different kettle of fish than living there. What is typical rent for a one bedroom (600 sq/ft) in an “average” neighborhood in downtown? Here it’s perhaps around $1,700 CAD. Based on the astonishingly expensive AirBNB opportunities I saw in SF (most over $300 per night, way more than hotels, and they were utter dumps that were being offered) I can only assume rent there in downtown is very high.
And I agree, at that age I would kill to earn that kind of money, that’s a whole load of cash. However, is it Luis’ side hustle or it his only hustle? Don’t forget that this is contractor work and has to cover many other expenses like tools, pension and any other costs any employer would typically cover.
Personally, in my situation at least, education is more worthwhile to me than side hustle at the moment. Right now I’m studying for the CPA, which is very time consuming. Once I’m done with that (1.5 years) I’ll either find other designations/certificates that can boost my income potential or if there is nothing, perhaps look at side hustle opportunities. I’m pretty sure I won’t be shoveling dirt all weekend to earn more money though, I value my free time more than that, even if the pay is decent.
It’s his side hustle money. He has a day job working for a landscaping company.
Vancouver is median home price is more expensive than San Francisco’s. Yet, one of the thousand dollar your jobs are a dime a dozen for 20 something-year-old’s due to all the big tech companies here.
Good luck with the CPA designation.
I always do the same hourly contractor math and probably wouldn’t have bothered negotiating down under $10K with that much built-in savings. Instead, it would have been something like 10% bonus for meeting the budget and getting the project down on-time. Both of those are worth far more to me than saving $500 up front on a $10K project.
After doing many, many rehabs with different contractors, my biggest irritation is still low-priced bids who don’t deliver followed by crews that don’t clean up afterwards. A few crews didn’t even bother showing up on Day 1 at the scheduled time (which instantly leads to contractor #2 being hired).
I’d rather pay slightly more for someone reliable and give them an incentive to remain reliable. You always run the risk of the bigger project with fatter profits pushing your just started project into the background. It happens much more frequently with side hustle guys trying to do bigger projects, but established contractors with multiple crews aren’t immune either.
My embedded bonus was to introduce him to many, many more projects of my own and in my network. That’s exactly what I’ve done and he is meeting for the second time with one of my friends who is going to spend at least $30,000 on their backyard.
With his bonus, he’s been great. On time, great cleanup, within budget.