Why Rundown Homes in Great Locations Can Be Smart Real Estate Investments | Jessica Sparks-Schaefer

Jessica Sparks-Schaefer (00:00)

I think there’s a few things to consider. If you’re looking to buy a property to renovate or you own a property to renovate, you live in a property that you want to renovate, you need to consider, are you living there? Do you have tenants living there? It’s tricky to do when it’s occupied, but it’s costly to find other accommodations while you’re doing the job. Be realistic that the budget will never be the budget, that the timeline will never be the timeline, and make sure you get references from whomever you choose to work with and I’d say a minimum of three quotes from contractors and do it right the first time.

Scott Bursey (02:09)

Welcome back to the Real Estate Pros Podcast powered by Investor Fuel. I’m your host, Scott Bursey. Glad you’re with us. And today we have an incredible guest joining us, Jessica Sparks-Schaefer. She carries forward a 60-year multi-generational real estate legacy from Melbourne, Australia, all the way to Los Angeles as a premier advisor at Rodeo Realty in Beverly Hills. With 13 years of direct involvement in private investments and property renovations, she brings a highly strategic wealth-building perspective to the market. Listeners, you can expect to learn how deep market strategy and smart renovation insights create long-term wealth. Jessica, welcome to the show.

Jessica Sparks-Schaefer (02:56)

Thank you, Scott, for having me. It’s a pleasure to connect.

Scott Bursey (03:00)

It most certainly is, Jessica. And to help our listeners get up to speed, please give us the 90-second highlight reel of how your career ignited and where you’re pouring your fuel now.

Jessica Sparks-Schaefer (03:11)

Well, back in the day in Melbourne, Australia, my father and grandfather founded a real estate agency, and so I very much grew up in that domain. And moving to LA, fast forward, working with private investment firms, became a property purchaser, renovator, and then keen to get into the investment side to lease out for short and long-term rental, even double up as a vacation home for my family. I found myself giving so much advice and support, learning so much, loving it, so eventually became a realtor myself with Rodeo and have been servicing California and dealing with investors to residential, every kind of transaction. It’s always a mixed bag.

Scott Bursey (03:54)

Wow, what a journey. Literally what a journey. And what really caught my attention about you, Jessica, was the way you’ve been able to transition a massive multi-generational property background across continents into the Beverly Hills market. And on that note, curious to know: what is working best for you right now when finding properties with real upside?

Jessica Sparks-Schaefer (04:21)

What’s working well for me is moving through every communication with complete transparency. I think early on I was giving a prospect or a client too much information, but as we do, we fine-tune, and now I’m sort of banging out a lot of the terms and the priorities. What are the needs versus the wants, because they’re very different things. So whether it’s a residential purpose, an investment venture, just nutting out the information from the beginning so that we can make sure we’re aligned on the same page and I can be a fit for them to take them all the way home.

Scott Bursey (04:56)

Digging a bit deeper, what is the biggest headache or bottleneck in managing high-end renovations today?

Jessica Sparks-Schaefer (05:03)

I think we’re not dealing with the weather elements in California as much as obviously other states, but reliability and quality of work. What I’m noticing is—I wish everyone well, I don’t diss anyone, they’re all doing their thing—but I have certain clients and a common feedback is on the consistency of style and design, the quality of features and materials used when investors are purchasing properties or independent owners are sort of flipping and looking to sell for a markup and they’re not putting a lot of thought or effort into the upgrades, into the restyle and redesign. So it’s been a challenge finding something they want, the price point they want, the quality or the neutral, timeless style they want. So I think that’s tricky, for sure.

Scott Bursey (05:50)

Jessica, what steps are you taking right now to keep your projects moving smoothly?

Jessica Sparks-Schaefer (06:46)

Sharing timely updates, being well-researched and verifying everything from my end and from their end as well from the outset, and just discussing anything that could arise. I heard Michael Phelps give a speech years ago about winning so many golds, and he referenced he would train envisioning the goggles breaking. He would train envisioning A, B, C, D, E, F, G. So I have a very analytical nature, which is a blessing and a curse, but it does help in business. So having the conversations of the A, B, C, D, E, F, G of what could happen, what could go wrong… as things arise and circumstances change, not all clients are in a position to pivot. And that causes a little turmoil, angst, sensitivities, and worry, and you don’t want people to become overwhelmed. So I think that’s working well for me: to research, verify, open lines of communication, and discuss all the potential outcomes and how we may need to pivot if this doesn’t happen or if this does. So it’s a good process for me at the moment.

Scott Bursey (07:48)

Excellent breakdown. And Jessica, looking ahead, where are you seeing the best expansion opportunities right now?

Jessica Sparks-Schaefer (07:59)

There’s less properties on the market at the moment than there was a year ago. I know interest rates are going up, but there’s a lot of neighborhoods that are in such great proximity to a lot of the go-to areas—whether it’s coastal Santa Monica, Venice, Beverly Hills, West Hollywood. You can’t change a location, but there’s some older, run-down houses there. You’ve got homeowners that have been there for 30-plus years and a time will come where they need to move due to circumstance or health or age, and I think that there’s opportunity to get in. You don’t need the huge land size, you don’t need the big, fancy new, but just to get in, you might be paying the rate now, but maybe refinance later on and do the work slowly over time, but you’ve got the spot, and the spot is where the value is. So I’m seeing a lot of run-down properties in great areas of LA, but there’s so much potential, and I think not everyone is a visionary, so I’d love to help sort of envision and inspire some folks.

Scott Bursey (08:55)

Let’s switch gears here just a little bit. What is the one thing you’re most concerned about in today’s market?

Jessica Sparks-Schaefer (09:04)

I feel like there’s a renting crisis. I have so many successful, smart, capable, hardworking friends who are parents who own businesses and they’re leasing, and there’s no problem with that. I personally feel a level of concern for them and their future generations that the amounts they’re paying towards their rent every month could be going towards a mortgage. And in 10, 20, 30 years, if they were to move, which I’m sure most would, they’re walking away with nothing. And it is a concern. I think people, if they can, need to get over the fear. They say, “date the rate, marry the property.” But listen, you don’t even have to marry the property. If you need to move, if you need to cash out, whatever it might be, if your income circumstances change, lease out the property, have someone else’s rent cover your income, or sell it. You don’t have to marry the house, as much as that’s an old saying.

But I think I’m concerned about how many are renting because when I think of their children, their grandchildren, I think of their retirement. They’re pumping all this money into someone else’s mortgage. If I may, Scott, sorry—the down payment: you don’t need the 20% down payment. I know that’s a big concern for a lot that holds folks back. But there are lenders that do zero to 20%. There’s always a workaround, and if people can adjust a little for 6 to 12 months, they can get it together. You don’t have to have the castle on the hill, but start somewhere and at least you’ve got an asset that’s appreciating and housing security. So renting is my biggest concern.

Scott Bursey (10:41)

And on the personal side, what core habit or skill gives you the biggest competitive advantage?

Jessica Sparks-Schaefer (10:49)

Well, that’s a tricky one. I don’t know if it’s the Australian or the Sagittarian in me, but I’m always up for a good laugh. Maybe a slightly inappropriate sense of humor at times, because we’re all on planet Earth just spinning around together trying to find our way. An advantage would be genuine care, transparency. Someone’s funds, someone’s purpose will absolutely be treated like my own. So I hope anyone that I cross paths with in life and business knows that we have immediate trust. You can give me your trust, and I can only lose it from there. You don’t have to earn it, because I’m not about anything else than just establishing truth from the outset.

Scott Bursey (11:29)

As far as your team at Rodeo goes, how do you make sure that you work together and achieve those standards that you mentioned on not only a daily basis, but as your career continues?

Jessica Sparks-Schaefer (11:43)

I’ve noticed as much as everyone within Rodeo—there are a couple of teams, but the independent agents, too—there is a camaraderie. If they have an off-market opportunity, whether it’s remodeled or a fixer, of any price point available to any demographic, they’ll share it with the Rodeo agents first. If they need an open house host cover, they’ll ask the Rodeo agents. They’ll champion each other’s success, lean into each other for advice. It’s one of the largest boutique agencies in America, which was quite the appeal. I know there’s some fantastic brokerages out there that have hundreds or thousands of locations and agents, but for me, I’m all about the old-school traditional boutique where you can be really hands-on, high-touch, personable.

Scott Bursey (12:29)

Thank you so much for expanding on that, Jessica. And for an investor starting in property renovations, what is the exact first move they should make today to secure a profitable deal?

Jessica Sparks-Schaefer (12:44)

I think there’s a few things to consider. If you’re looking to buy a property to renovate or you own a property to renovate, you live in a property that you want to renovate, you need to consider: are you living there? Do you have tenants living there? It’s tricky to do when it’s occupied, but it’s costly to find other accommodations while you’re doing the job. Be realistic that the budget will never be the budget, that the timeline will never be the timeline, and make sure you get references from whomever you choose to work with, and I’d say a minimum of three quotes from contractors, and do it right the first time. For example, a lot of people in LA are looking to put in an ADU—an additional dwelling unit, I refer to as a guest house, much nicer ring to it—but they save money on not putting in a bathroom or a laundry because the most costly sort of part of that venture is the plumbing and the sewage. You might have to dig up a driveway to get to the street lines, and you’re looking at $20,000 just to relay the concrete after they’ve laid the sewer and water line. So if you’re going to do it, do it properly, because you’re going to affect your resale value 100% if you don’t put it in initially, and it’s much harder to do it and more costly to do it later on and you’ll be kicking yourself. So things like that to consider. The references, the three quotes, do it properly, spend the extra, put in the laundry, put in the bathroom, and factor in more than what the budget or the quotes are, and factor in more than what the timeline is quoted as well. And try not to live there, because that makes it very difficult.

Scott Bursey (14:26)

Thank you for dropping that advice, Jessica. And really you have dropped a lot of great wisdom bombs here today, but is there any additional golden nugget or two that you’d like to leave with our listeners?

Jessica Sparks-Schaefer (14:39)

I would say that we need to move through deals and transactions by being an advocate for your client, by being a ruthless negotiator, but by being empathetic. I think that I’ve experienced, I’ve witnessed, I’ve heard stories that have changed me in the way that I move through deals. People are selling or moving because of not always the upgrade and the exciting new chapter and the new start, but because of hardship, because of crisis, ailing health, aging parents, children move to college, you need to downsize, change of job circumstance, and I think that’s forgotten. There’s a lot of focus on the terms, the amount, the contingencies, getting a good price, the comps, all of the legalities, the tax implications, and the administration, and there’s not as much consideration to the rest of it. It can be a stressful time, a sensitive and emotional time, and I think people can be quick to say “they’re irrational,” “they’re unrealistic,” “they’re too demanding,” “they have no idea.” But just give grace, give empathy, and give some to yourself as well.

Scott Bursey (15:53)

Excellent advice. Thank you for that, Jessica. And for those of our listeners that want to keep this conversation going, what’s the best way for them to reach out to you?

Jessica Sparks-Schaefer (16:45)

Well, it’s a strange time because I could list 10 things we have, but the email, the phone, the text, the WhatsApp, the Instagram, the website—there’s so many platforms. However it is, I look forward to connecting. Absolutely will do my best to respond and give you my all, whatever the query or request might be.

Scott Bursey (17:06)

Jessica, thank you for joining us today on the Real Estate Pros podcast.

Jessica Sparks-Schaefer (17:10)

My pleasure. I wish you the very best. Anyone listening, I wish you the best, sincerely.

Scott Bursey (17:16)

Thank you for that. And to our listeners, we appreciate you. If you received value from today’s episode, please subscribe. We’ll be fueling your tanks with a lineup of elite guests, just like Jessica, who are accelerating and really setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you in the next episode, everyone.