November 27, 2019

JF1912: How to Track Your Exterior Renovations | Syndication School with Theo Hicks

We’ve already covered how to track your interior renovations, today Theo will start talking about how to track your exterior renovations. We also have a free spreadsheet for you to open and follow along with while listening to this episode. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!

Best Ever Tweet:

“Some items aren’t as high of a priority”

Free Spreadsheet:

The Best Ever Conference is approaching quickly and you could earn your ticket for free.

Simply visit and sign up to be an affiliate to start earning 15% of every ticket you sell.

Our fourth annual conference will be taking place February 20-22 in Keystone, CO. We’ll be covering the higher level topics that our audience has requested to hear.


Joe Fairless: There needed to be a resource on apartment syndication that not only talked about each aspect of the syndication process, but how to actually do each of the things, and go into it in detail… And we thought “Hey, why not make it free, too?” That’s why we launched Syndication School.

Theo Hicks will go through a particular aspect of apartment syndication on today’s episode, and get into the details of how to do that particular thing. Enjoy this episode, and for more on apartment syndication and how to do things, go to, or to learn more about the Apartment Syndication School, go to, so you can listen to all the previous episodes.


Theo Hicks: Hi, Best Ever listeners, and welcome to another episode of the Syndication School series, a free resource focused on the how-to’s of apartment syndication. As always, I am your host, Theo Hicks.

Each week we air two podcast episodes that are focusing on a specific aspect of the apartment syndication investment strategy. For the majority of these episodes – or sometimes they’re combined into series – we offer a free resource, which we will today. This is an Excel template, PowerPoint template, PDF how-to guide, some sort of resource for you to download for free, that will help you on your apartment syndication journey.

All of these documents and all of the previous syndication school series can be found at In this episode we are going to talk about tracking your exterior renovations. Last week – or if you’re listening to this in the future, I guess it would be six or seven episodes ago – we went over how to track interior renovations, and we gave away a free interior renovation tracker document that allows you to input all of your interior renovation assumptions, and then on an ongoing basis you’ll input the actual costs and timeline of these interior renovations… And it allows you to compare and contrast and make sure you’re on track, on time and on budget.

Similarly, we’re going to do the same thing for the exterior renovations. It’s going to be a little bit different than the interior, obviously, because interior renovations are focused on renovating a number of units, whereas this is going to be all exterior items. But the purpose of tracking it is the same. So the purpose on the overall scale is to input the renovation assumptions, include what you plan on doing, the costs, when you plan on starting, and when you plan on finishing, and that will all be done both while underwriting the deal, and then confirmed or updated during the due diligence process, and then once you actually close on the deal, then you’re going to fill out this  tracker on a daily/weekly/monthly basis, whatever you decide to do… And the goal is to look at the difference between your projected budget and what it actually costs, as well as your projected start date, when you actually started, and then the total number of days to complete the project versus how long you expected it to take.

The free document this week is called the exterior renovation tracker. Ideally, you’ll have this open while we’re talking, so go to or download in the show notes; I believe even if you’re looking at it on your iPhone, you should be able to click on it and see a version of it. You might not be able to edit it, but you’ll be able to see what we’re talking about… Because I’m gonna go over how to fill it out, what everything means; it’ll make a lot more sense if you have it in front of you. I will go under the assumption that you don’t have it in front of you, so I will explain it in as much detail as possible.

Like all of our Excel documents, we’ve got a note at the top that says “All the input data goes into the cells that are in red.” So you only wanna edit the cells that are in red. The cells that are black are things that have formulas in there that are going to calculate the different variances and whatnot, which we’ll go over towards the end of this episode.

So at the top there’s four data tables that you wanna fill out just to get things started. The property name – not as important, but we wanna input the property name in there, so that it labels the data table with your actual property name. And then the next two data tables – one is the category of rehab, and two is the purpose of the rehab.

For the category of rehab there’s really two main categories. One is rehabs that begin at closing, and then two are rehabs that are on an ongoing or as-needed basis. When you’re buying an apartment deal, there’s certain renovations that you’re gonna start right away, but then there’s other projects that aren’t as high of a priority. These are things that either don’t need to be done for the property to be operational, or used. They don’t need to be done because they are based on something needing to be done first. A perfect example of that would be if you’re doing a rebrand, then you’re not gonna want to do the landscaping around the current monument sign just to know down the monument sign, and step all over the nice landscaping, put a new monument sign in there and then do landscaping again. That’s one example.

Maybe you are going to add in a dog park, a  soccer field, things like that. Well, you’re probably not gonna want to do landscaping in those areas before you add all that new stuff, because it’s just gonna get trampled on and knocked over anyways.

Maybe the roofs don’t need to be replaced for 2-3 years, so obviously you’re not gonna replace them from day one, but you know going into day one that you’re gonna have to replace the roofs eventually. So there’s two categories. There’s the things that you’re gonna do right away at closing, and then there’s things that you’re gonna do on an as-needed or ongoing basis.

Another example for ongoing – I keep saying landscaping, but landscaping is not something you just do once and then completely ignore. So you’ve got landscaping, and then you’ll have your ongoing operating expense to maintain the landscaping, and maybe every 2-3 years you do a new landscaping overhaul, so that everything looks nice at your property… So you’ll want to make sure you’re accounting for that upfront as well, or accounting for that, some sort of ongoing cap ex budget that’s pulled from your cashflow.

But the reason why you wanna have [unintelligible [00:07:50].29] is because – we’ll get to this in a later section, but you wanna have a projected start date and then a  projected number of days to complete, so you can figure out “Hey, this is when I expect this to be done.” But for things that are ongoing or as needed, like these roof replacements, landscaping, plumbing, electrical, boilers, things that you don’t necessarily need to do right away, but you know you’ll have to do at some point – well, you can’t really predict when you’re gonna start doing that. You don’t know how long it’s gonna take to fix, because you don’t know how many boilers you’re gonna have to replace, how much landscaping, how many roofs you’ll replace… So for those types of things the budget is more important than the actual time to finish, whereas for the things that you’re gonna start right away, both are gonna be pretty important.

So the next table is the purposes. The three purposes that we have on this sample spreadsheet – because we’re not sending you a blank spreadsheet; it’s filled out with a sample deal… The purposes of the rehab – number one, it’s gonna be a lender requirement. So when you’re doing due diligence, you’ll get a property condition assessment done by ideally your contractor, as well as the lender. We’ve done a Syndication School episode on this, about the due diligence report. Something along the lines of “Everything you need to know about doing due diligence.” I believe it’s like an 8-part series, so check that out at

One of those reports is the PCA, the Property Condition Assessment. What the lender will do is they’ll have a contractor of some sort come out, look at all the exteriors and then categorize everything into three categories. One of those categories are things that need to be immediately replaced. These are things that the lender says “You need to replace these right away, at closing”, and that’s something that’s in the loan terms.

So they say “Hey, the siding needs to be replaced and repainted in order for us to give you this loan, so you need to do that from day one.” Typically, it’ll be “Do it within this many days”, things like that. Some of the repairs you’re gonna be doing are gonna be things that are required of you by the lender in order to accept that loan.

The other category you have in there is deferred maintenance. these are things that aren’t’ necessarily going to be required by the lender, but are things that you’ll want to do, that aren’t necessarily going to directly add value to the property. An example would be dumpster enclosures. You’ve got the garbage dumpster sitting out in the open; you’ll wanna enclose those dumpsters and make  it look better, but it’s not like you’re going to market your dumpster enclosures on your rental listing.

Other examples would be replacing roofs, fixing boilers, or retaining walls, or plumbing and electrical… These aren’t things you’re going to sell to potential residents. They don’t care about that stuff. What they care about are the third category, which is value-add. These are things like security camera systems, private patios, patio fences, clubhouse conversions, carports, soccer fields, playgrounds. So things that actually add value to the resident.

So those are the three categories that we have. When it comes to the category of rehabs and the purposes, these are the main ones. I’m sure you can come up with more… But for the most deals, for the category of rehabs, they’re either gonna start at closing, or not start at closing, and be done on an ongoing or as-needed basis. I guess there’s really no other category of rehab. For these purposes you’re gonna see lender requirements, value-add, and deferred maintenance.

Again, the reason why you want to categorize them based on these three things is because the next thing you wanna input – we’ll talk about why in a second. So those are the top three data tables. The last one – you just insert in the closing date. Again, [unintelligible [00:11:27].20] you know when you’re closing, and you can reference that in the bottom data table, which is the meat of the calculator, which is the exterior capital expenditure budget tracker.

The first thing you wanna input in this tracker are your actual exterior rehab projects. List out every single thing that you plan on doing to the property. You’ll see in this tracker 21 different items that are included in this data table, that are going to be done to the property. You’ve got siding replacement, asphalt repairs, security camera system, dumpster enclosures, convert office into rentable unit etc.

The next two columns – the category and the purpose – these are both gonna be dropdowns that reference the category of rehabs and the purposes that you inputted in the data tables above. So for each of the exterior rehab projects you wanna set the category – do they begin at closing, or are they done on an ongoing or as-needed basis? And then are they things that are required by the lender? Are these things that are deferred maintenance, or are these value-add projects?

The next column is your projected budget. This is where you wanna input how much money you expect to spend on each of these. Usually, when you’re underwriting a deal, right away at the beginning you set a generic exterior renovations number. You’re gonna visit the property and you get a better idea what needs to be done. At that point  you can fill out this tracker with the actual exterior rehab project. And between your experience, conversations with contractors, conversations with the property management company, you should be getting a projected cost for these things. That’s when you can input the actual costs into the projected budget.

So the category and the purpose – these are things that you’ll most likely do during the due diligence, but the exterior rehab project and the projected budgets, those are things you can fill out from the get-go, when you’re underwriting the deal. So you’ll see in here for all of the different exterior rehab projects we’ve got a cost.

Next is going to be the projected start date. Obviously, this is something else that you’re not going to do until due diligence, because you don’t know when you’re gonna close if you don’t have the deal under contract.

Once you’ve got the deal under contract, you’re near the closing date, you’re basically gonna say “Hey, we’re gonna start all of these day one.” Then as you go through the due diligence process, you get your due diligence reports, and you realize “Okay, these things right here are gonna be a lender requirement, so these are definitely gonna be done day one. These right here are deferred maintenance; not necessarily necessary, so let’s push these back and start these maybe once everything else is done. Okay, these are gonna be value-add projects, so we definitely wanna get these done first, or we wanna get these done immediately after getting done for the lender requirements. Okay, this value-add I think is gonna be more important than this value-add, so we’ll start that one first, and we’ll start that one second. Okay, this contractor says they can’t start until this day, so we’ll start this one on that day.” So it’ll be evolving, but you wanna have some sort of specific time when you expect to start each of these projects. Again, it’s gonna change throughout the due diligence process, but you wanna input when you expect to actually start these projects. I’m not saying when you plan on the first nail hitting the first piece of wood, but when you first plan on bidding it out, getting it designed, and then getting it done.

In the next column comes that, which is projected days to complete. So based off of the project, how long do you expect it to take to complete? So how long will it take for siding replacement and property repaint? How long will it take to identify the siding that you need? For all the siding to come in, for you to get all the bids for the labor, for them to actually install the siding, for them to then pick the paint colors, and then get the paint, and then have the people actually paint the property – how long is that entire process gonna take?

Same thing for asphalt repairs – how long does it take for them to come out and identify if it needs to be fixed? Then give you bids; you accept the bids, and they come out to actually do it – how long is that gonna take? Again, this comes from conversations with your contractors, your property management company. This is something that you can have an idea of during underwriting and due diligence, but you’re not gonna know for certain until you actually start having these conversations with contractors. So the projected start date and the projected days to completion – these are things that you can still update, and budget as well. They’re gonna be continuously updated until the actual work starts.

So once you have a bid in hand that says “The siding replacement and property repaint is gonna be $300,000. We’re gonna start on the 1st of January 2020, and it’s gonna take us 45 days to complete.” Once you have that verbal commitment, that’s when you lock that into your data table… Which brings us to the last part of the data table, which is the actual data.

Once you have that agreement set for the siding and repaint – again, 300k, we’re starting on this date, it’s gonna take us 45 days to complete – then you want to say “Okay, great.” Let’s say this thing is gonna start in two weeks. So you’ve got that filled out, and then when two weeks come, let’s say for some reason they say “We have to push it back a week.” So if they start three weeks after they said they would, or start a week after they said they would, then you’ll put the actual start date as a week later. And then whenever they actually complete it, you wanna input that into the data table as well, and based off of when they started and when they stopped, it will give you the actual time it took for them to finish the project.

The next column would be comparing the actual time it took to complete the project, to how long they said it would take to complete the project. Because this is important, especially for the value-add type of exterior capital expenditures. The whole purpose of you doing that is because you know you’re gonna be able to get more revenue because of that value-add. So if it’s not done when you thought it was going to be done, then you’re gonna get that added revenue later than you expected, which means you’re gonna be behind on your NOI projections… Which is why you wanna get these things done on time.

And then obviously you input the actual cost. Once everything is said and done, you tally up all the costs that it took, for example for placing siding and painting siding. Then it’ll give you a variance there as well.

Depending on the type of loan that you got, you’re either paying for renovations out of pocket, i.e. from your passive investors capital, or your lender is covering those costs. Either way, you wanna track how much you’re actually spending compared to what you actually projected, because no matter which way you’re funding these, you have a set amount of money that you can use to do these renovations.

So if you start off and you’re over-budget by 100k on your first project, well, you’re gonna have to figure out what you’re gonna do to make up that 100k. Is this something you can do? Are you gonna need to do a capital call? Are you going to pull money from somewhere else? What are you gonna do? Whereas if you don’t track any of that, then you’re not gonna know until it’s too late, and then you’re not gonna have money to do something that you thought you were gonna be able to do, and you’re gonna end up in a bad situation.

So as I’ve mentioned, overall, for the projected budget, the projected start date and the projected days to completion, these are things that are set in stone once the agreement has been come to between you and your contractor. So once they tell you “Hey, this is how much it’s gonna cost, here’s how long it’ll take, here’s when we’re gonna start”, those numbers are locked in. After that you’ll wanna update the actual stuff. So if they change their mind the next day, then you still wanna say “Okay, well, they told me it would be this much, now it’s this much. That’s kind of screwing us over.”

So that is really all you need to know about this tracker. If you wanna add in more rows to the exterior capital expenditure budget tracker data table, it shouldn’t be an issue. I believe all you need to do is insert columns and you should be good to go. That’s really the only spot you might need to insert columns and adjust this template. But if you’re doing more than 20 things to the property… But overall, this is a very powerful document that will help you stay on track, both time-wise and budget-wise. And if you do go off-track, you’ll know exactly where that happened, as opposed to just having an overall variance between “Okay, well I projected a million dollars and we spent a million five. Okay, we need to figure out where that 500k came from.” If you look at your tracker and say “Okay, we paid 200k more for this, and 100k more for this, and then 100k more for this, and 100k more for this, which is why our budget is off.” Or “Hey, we expected to be done by this date, but now we’re behind, which throws everything else off…” So it’ll help you see what’s being done on time compared to your projections.

Again, that is gonna be available for you to download for free at or in the show notes of this episode. Until tomorrow, make sure you check out some of our other Syndication School series about the how-to’s of apartment syndications. Again, download this free exterior renovation tracker – all that is available at

Thank you for listening, and I will talk to you tomorrow.

    Get More CRE Investing Tips Right to Your Inbox

    Get exclusive commercial real estate investing tips from industry experts, tailored for you CRE news, the latest videos, and more - right to your inbox weekly.