Kristi moved from Toronto, Canada to Long Beach, California in 2007 to start a full-time rehab/re-sell business.
Since 2008, she has purchased over 250 houses in Southern California, and her specialty is buying “hoarded houses”.
Her current projects include numerous flips, as well as keeping some houses as rentals and building ADU’s for cash flow. Kristi currently lives in Los Angeles, CA. She enjoys outdoor activities, playing her guitar and good food and wine.
Episode Notes:
Narrator This is The Norris Group’s real estate investor radio show the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever -changing real estate market hosted by author, investor and hard money lender, Bruce Norris.
Aaron Norris Everybody it’s Aaron Norris from The Norris Group. And here is part two on our conversation about ADUs, SB 9, SB 10, and more with Kristi Cirtwill. Let’s cover real quick, some tenants of SB 9because I think it might be good because we keep count going in and out. So, let me talk a little bit about the law. So, it basically gets rid of R-1 zoning in urban areas. So, you can have a, currently it says a, you have to be an owner occupant to do this. But this is at the state level, it doesn’t mean that at the your local jurisdiction, that they won’t be more flexible and work with you. It just, this is what the state says. So I’m going to take talk about the state. So, you’re supposed to be living in one of the units, if you do this urban cluster covered that no more than 25% of an exterior wall can be altered, unless one of the following the city approves. You’re not supposed to mess with a property who has, that has been tenant occupied within the last three years. You have to be careful of historic districts or any environmental fire, earthquake, stuff like that. Let me see if there’s anything else that’s really, really important. No short term rentals less than 30 days, that is definitely something to think about. And then it specifically spells out in the state legislation that the city does not have to allow ADUs on these projects. So, I you might have to fight for a little bit. I just would hate for somebody to show up thinking they could automatically do it, please, please, please check with your local jurisdiction, and that they don’t have their ordinances out. It’s just dangerous. You just have to be willing to take that chance. When it comes to a lot split, the state code says a 60/40. So, you know, that could be really weird. Depending on the design and layout a lot have to be careful. The minimum lot size. This made me laugh, and I wanted to get your opinion on this is 1200 square feet. Do you know of any 1200 square feet, lots are 20 2400 square feet is pretty small in LA.
Kristi Cirtwill Yeah, that doesn’t, that wouldn’t even make sense.
Aaron Norris No, I laugh but I know one of the reasons that I put it in there was because during the ADU legislation, a lot of cities were fooling around with the size of lots. So like, oh, yeah, we allow ADUs, you just have to have a 15,000 or greater square foot lot. So, you know, kudos to the people who wrote this. They were thinking of everything that made me laugh, 1200…
Joey Romero They were thinking about, like San Francisco where like your parking lot might sell for like, 800 grand.
Kristi Cirtwill Right.
Joey Romero You know, like one like I’m taking my one spot. Not a lot.
Aaron Norris Right. Oh, my gosh, you can’t, currently state law says you’re not supposed to do it side by side. So if you own two lots side by side, you’re not supposed to do it, or a lot that has previously been subdivided. You’re not supposed to do it. So, something to think about. So, those are like the big things. So, are you, you’re already looking at this. You, I think you met me said last week was somebody about SB 9?
Kristi Cirtwill Well, yeah, just in the whole discussion of what I could build, you know, on properties to come in here, right? Like all the things you’re reading. That’s the case, you have to really have the right property to do it. So, am I going out and seeking those out? Well, maybe, you know, it’s good to be aware of all of that. Because if you can find one that fits, then it gives you another option of how you can build that property out.
Aaron Norris Did it, have you looked at all at SB 10?
Kristi Cirtwill A little bit. I don’t really know all these rules to have memorized, but I do know of them. And, you know, just to be aware of it.
Aaron Norris The only thing that’s interesting about SB 10 is it’s going to be investor friendly, just by the nature of what they’re doing. But the cities are going to designate areas that want, where they want density. So, the city is going to say this is where we want that and you’re going to be able to upzone a lot to include 10 units, two ADUs and two JDUs so up to 14 units on one lot, which is really cool. So, for areas like LA, I just cry the thought of you know, I lived in LA, I’m in LA, all the time for medical stuff and I just I cry at the thought of parking. And I know why they’re doing it. They’re trying to get more people into mass transit. And in markets like LA that might work a little bit more but out here in the Inland Empire we just don’t have a robust mass transit system. So, it, it just doesn’t make as much sense. So, if you design poorly, people are just gonna hate you. They’re not going to, I and I don’t want to get too spoiled because the real estate market has been so good. All my rentals in California and Florida have gone up so much in equity and so much in rent and just a year. I, I don’t think that’s going to be the case this year. And I think design does matter. So, don’t be a cram Lord, do good design. Don’t be the investor that ruins it for everybody. Have you seen any technology that? Well, let me ask this way first, how much has COVID over the last year change inflation on your construction?
Kristi Cirtwill I feel like I’m a newbie all over again, trying to figure out what the heck it costs to build stuff. And because, you know, like, since when did a refrigerator take nine months just to to arrive?
Aaron Norris Right!
Kristi Cirtwill You know. So, yeah, there’s just been, you know, and the fluctuation of the material costs, it’s like, I feel like if I get a bid one day, it’s out of date by the next week. So, that’s been a challenge. I don’t know what to say.
Aaron Norris I have to hand it to the builder that we work within Florida, he’s very creative, and has tried so hard to manage this process. So, he thought he was really smart. And he was working specifically with block layers. And they were coming back for, for a wage increase. And he’s like, You know what, I’m going to negotiate with you. And I’m going to pay you a little bit more. But I don’t want to hear from you for another six months, no matter what happens, I don’t want to hear from you. You know what they did, they stopped showing up to the job sites, they were just milking the contract along doing bare minimum taking other jobs that were paying more, but the prices went up twice within a three month period. And so because they weren’t making the right amount of money, we thought we were really smart. And I thought that was a great idea. And then it backfire. So, if you’re not paying market wages, your projects going to take longer, and you only get in the way of potentially more price increases when it comes to supply. So crazy.
Kristi Cirtwill Yeah.
Aaron Norris Joey?
Joey Romero Has there, have been a thought of like, containers or, you know, ready built and just plop them on the property?
Aaron Norris So, that was going to be sort of where I went next. I mean, are you looking at any other kinds of construction like prefab, or, you know Boxabl and these other kinds of opportunities?
Kristi Cirtwill I know of them, but I haven’t pursued them. And I think they’re even having supply chain issues. In fact, a friend of mine sells them. And you know, she was promising clients. You know, a few months, meanwhile, like some of them were backed up 18 months now.
Aaron Norris Oh!
Kristi Cirtwill So. Yeah, I don’t think I want to pursue that.
Aaron Norris Oh, I didn’t know that. And Rancho Mirage is getting their first 3d printed community. And by Mighty builders, I know them, we’ve interviewed them, we almost got a chance to buy one of their first ones out in California didn’t work out. And then Austin is getting ICON to build their first community with lonar. But that’s just the substrate printing, they still have to do the finish. So, even if they can print the exterior in one day doesn’t mean that they’re not going to have to wait 10 months, unless they’re 3d printing refrigerators I don’t know about. So, we’ll see.
Kristi Cirtwill Yeah, and I went to see, actually went to see a homeowner’s module, modular, whatever it was, and, but that’s the thing, they had to crane this thing up a hill seemed like a 45 degree angle, and like, oh, my gosh, I would have had a heart attack just watching that. And then once they got it up there, then they had to have the additional contractors to, you know, tie it all together. So, to me, you know, I’ve had the same general construction crew, you know, for probably 10-11 years or something. So, I just use those guys, not to say you shouldn’t use the the others, but just you can compare it and chalk around, I guess.
Aaron Norris Yeah, it’s good to hear though, too, that I’m 18 months. That’s crazy. But, man, I had to replace a water heater last year late and it just hurt my feelings. So, that I had replaced in a couple years before and it was below half. So, like, oh my gosh, I, It’s definitely been difficult to manage all the price increases.
Kristi Cirtwill It’s like a sheet of plywood. It was $20 one day and almost 100 bucks a couple months later, and now it’s back down again. But it’s like I can’t even keep track anymore.
Aaron Norris Yeah, it’s not like your, your contractors coming back and giving you a discount? Oh, yeah, don’t worry, you know, we budgeted 100, and it’s gone down to $68. It’s not like they’re going back and giving you a refund, right.
Kristi Cirtwill Yeah, yeah.
Joey Romero It’s crypt. It’s crypto would.
Aaron Norris I wish there were some alternatives we knew about. What are some of the things design wise that you’ve learned over the last couple of years, whether it be mailboxes or trash cans, or I don’t know, or there’s things that you get asked a lot things that you’ve learned that maybe you want to pass along?
Kristi Cirtwill Yeah, that’s a good question. Because I would say it’s the details. It’s just the details like you know, and I really learned this over and over again, but even Windows. Window placements and window sizes. Now I know you have to meet egress when it comes to certain windows in ADUs, but you know, you get something that’s too and you can’t fit a bed frame there, or you get something that’s just right in the way of the bed, it could have just been one foot over and just had better functional room. So, just little details like that. Or maybe there’s a window on a wall that doesn’t need to be, you could put a sliding patio door on on one side to give it more light and avoid the window. And then you have a proper wall for a bed frame and pictures and whatnot. So, stuff like that. Yeah, so here’s another thing, I just thought of people have electric cars these days. So, if you’re converting a garage, you might as well put that electric thing right on the inside, so people can pull up and actually plug the car in. So, that’s something new, I’ve thought of still trying to figure out how the cities give out the house numbers. You know, it’s like some so views are like a or b, and then some are half and then suddenly give a whole new number altogether. I had one city didn’t assign any number to the ADU and I’m thinking, how did we get by with that? Because the fire department usually requires a number. Well, anyway, I inquired about it, actually. And the city guys like oh, yeah, well, we didn’t use to issue numbers. But by the way, we’re going to start issuing numbers, and by the way, you have to pay for it. So, it’s like $150, for me to pay to get a number now like ‘Well, okay.’
Aaron Norris Oh my goodness.
Kristi Cirtwill Yeah, that was a couple months ago, I think I wanted to tell you that. Aaron, I forgot to tell you.
Aaron Norris Well, you know, one of the reasons I want to talk about that a little bit is SB 9, is there going to be, SB 9that right now does not have any of the day limitations to where the city only has like, a certain amount of days to get something through? Whether that happens or not? I don’t think most investors are like, ‘Oh, 60 days are up. I’m gonna take this permit run’. Yeah, I don’t think it’s how we should approach it. But at least there’s some expectations at the city perform SB 9 right now that’s out the window. It’s not a priority. But can I go through ADU law since I can build up to 1200 square feet and set it up to where it could convert under SB 9 to a duplex? If I wanted and be able to sell that second unit? What would that take it? Would I have to, because in 80 years, I can tie into the sewer, I can share the electricity would in order for it to be considered? And I don’t know. That’s why I’m asking, what I have to set up with its own utilities and his own sewer line. Do you know?
Kristi Cirtwill Well, that’s interesting. Maybe related to that. I know you can separate electrical because I just had to get a meter spot for a house I’m renovating I need to upgrade the panel. I thought well, I’m I want to meet the guy there from Edison to find out where you, he’s going to put this because I didn’t want it to be in the way in case I built an ADU in a certain place. So, I told him what my tentative plans were. And he’s like, Okay, well just put it here. And then you can put the rest underground. And he says, they’re called gangs, I guess. So, if you have one gang is like one meter. And if you have, if you want like three units, you have three, three gang, that’s what they call it.
Aaron Norris Okay.
Kristi Cirtwill I haven’t heard that before. But anyway, so in other words, right from the get go, you can set up your meters so that your electrical is separate. You can do that with the water meters. Also, it’s usually about six grand, I think to get a second water meter. So, you have to sort of weigh that out. Does it make sense? Over time to have two separate water meters? Are you just ticking on one bill? So yeah, some thought that could go into that. But yeah, back to your point. If you built an ADU 1200 square feet, and you want to make it eventually two 600 square foot units. I mean, maybe you could. If you think you might want to do that, I would just talk to a planner. Right?
Aaron Norris Yeah. Yeah. And get it in writing. Yeah. Just in case they leave the city. And they’re like, I don’t know who said that. But no, that’s not allowed.
Kristi Cirtwill Right. Right.
Aaron Norris Um, any horror stories that you would like to share to make sure people avoid?
Kristi Cirtwill Yeah. Don’t get into real estate. No, just kidding. Get into real estate, real estate’s been great. I mean, here I am in California complaining a lot about this and that but at the end of the day, this is where you have appreciation and you know, nice long term holds and your rent goes up and stable tenants if you’re in the city, usually and if you treat them well, they, they’re, they’re pretty good most of the time. If you manage your properties well, so I really can’t complain because at the end of the day, this is this is my retirement plan. But yeah, gosh, we’d be here for another three hours if I told you all the horror stories.
Aaron Norris Have appraisals gotten any easier?
Kristi Cirtwill Um, let’s see. I did do a couple of refinances.
Aaron Norris With ADU?
Kristi Cirtwill About six months ago. So, the end of 2021. Yes, as matter of fact, I actually met the appraiser on two of them. And he asked me, What did you pay for this ADU? So, I told him the amount? Well, voila, it showed up on the appraisal, and the exact amount in each case that I told him.
Aaron Norris So and he didn’t ask for proof.
Kristi Cirtwill No, no, I said, I said, Well, I said, if you want to see I can show you the construction, you know? He says, No, that’s fine. Three jot it down. And sure enough, when I saw the ADU value, it was what I told him the construction was.
Aaron Norris And for those of you who have not done kind of construction, why that’s a big deal is that some appraisers were just averaging across square footage. And the problem with that with ADUs is you’ve got the, when, when they take the primary and the adu and then average you get less of amount in the ADU because it’s the most expensive rooms in a smaller square footage. So, it doesn’t work to your favor. So, that’s a huge upgrade. That’s great.
Kristi Cirtwill Oh, well, when I first had these five refinanced in 2019, when they were completed of Yeah, I mean, I was getting like literally on two of them. I got 20,000 value, like kidding me? That doesn’t even cover soft costs. You know, when I got 50,000 So, that was ridiculous. So, now it seems like you know, they’re, they’re least known, like, I had one appraiser show up one time. He’s like, what’s an ADU? I’m like, well, I’ll just walk around back. I’ll show you. I mean, that’s pretty, pretty scary. You don’t know what an ADU is. And you’re appraising properties.
Aaron Norris Yeah, that’s rough. Joey you have questions?
Joey Romero Yeah. I know you, we haven’t really talked a ton about the hoardhouses but what is the coolest thing that you’ve uncovered in one of these houses?
Aaron Norris That’s appropriate for air?
Kristi Cirtwill Wow. Um, gosh, yeah, there’s, there’s a lot of things I can’t say right now that are X rated. But those are the good stories. And I’ll tell you those another time.
Aaron Norris I haven’t put that on my calendar. Because those are the best stories. Yeah, you definitely find some very interesting things. But let’s because we are sort of winding down and I want to make sure that we, we do focus a little bit on the, the hoarder houses. So, how did you even fall into hoarder houses as a specialty?
Kristi Cirtwill Well, I guess I have a good poker face. You know, I showed up and at the end of the day, it’s the houses I deal with are, you know, it’s a mental illness. Actually. Yeah, we’ve been hoarding like what you and I would consider garbage and rotting food and all kinds of other things. That, that’s a mental illness. It’s been recognized by the Mental Health Association, so, so probably 90% of the houses I get are literally piles of trash, they’re just piles of trash. That’s not salvageable in any way. In fact, when you try to, you know, clean it out, it’s been rotting and stuck to the floor for so long. The floors coming up with it. So, that’s, that’s those types of situations I, I deal with.
Aaron Norris Who are you typically working with family members are the actual owners are the hoarders themselves?
Kristi Cirtwill Both I would say 75% are heirs. So, the family members passed away. And now the heirs are either local, or half the time out of state. They haven’t really been aware of, you know, how bad the situation’s gotten. And, you know, they really just don’t know, you know, even where to start. So, I go in there and, you know, just go I don’t judge, I just, you know, I have a stomach for it, apparently, and I can go in and I’ve smelled you wouldn’t even believe what I smelled. Don’t go in with hungover. I will say that. Just I will say that is dangerous to do that.
Joey Romero When we were sending out, you know, postcards, we would you know, get these pictures. We’d buy these pictures of these wrecked houses. And Aaron was always talking about getting these scratch and sniff stickers to go on his postcards.
Aaron Norris I wanted to send them out to scratch here. Does your house smell like this? We can finance you. Because they have barf stickers. They have poo stickers. I thought it’d be so cute and Craig. He’s like, That’s not professional. I’m all but it’s memorable.
Kristi Cirtwill That’s not professional. But that is that is funny. Yeah, I go in and I’ve dealt with everything. I’ve stepped in all kinds of rat poop and animal carcasses and live ones too. Those are the fun ones when you’re, when you’re doing the to step around. You know, two inch cockroaches and rats running around. So that’s, that’s interesting. But yeah, no, you just go in and you just try to not linger too long and figure out how many bedrooms and bathrooms and the layout and you come back outside and you talk to them about what you can do to help them in their situation, and you know.
Aaron Norris It reminds me a lot of trust yourself, because you’re seeing inside the house, but you’re not seeing inside the house in a hoarder home, there is more risk.
Kristi Cirtwill Yeah, you can’t even get through to some rooms. Like you know, there’s some severe cases where I’ve had to, and it’s even harder getting around on the outside, because the outside is also hoarded, being sort of judge where, where the rooms are because you’re trying to get a figure, an idea of layout, you know, if you have to knock at walls and more of an expense on the construction side of things to you know, make it more of a functional layout, but generally with a hoarding, hoarding situation. You’re doing everything from top to bottom.
Aaron Norris Yeah. So, and these are ones that you know, any iBuyers tackling hoarder homes?
Kristi Cirtwill Mmm hmm. Well, as a matter of fact, I did. I did lose one actually do an ibuyer. And close, I sold that one through and they closed but…
Aaron Norris We have to follow it. Because I mean, I’ve been, people have been sitting the examples of Zillow of how bad they’re, I really didn’t expect that to happen that bad, but they’re sending me examples where they’re overbid or were crazy.
Kristi Cirtwill Yeah, they just pay too much. You know, they pay too much. And then they don’t realize like, sometimes I even paid too much. I’m thinking, Oh, I thought I got a deal. And then you get into it. And, you know, there’s, there’s $20,000 of trash out to do. Like, literally, there’s that much trash. And, and dumpsters aren’t cheap these days. It’s $800. Just for hallway.
Aaron Norris Yeah. And it’s not like guys call somebody, you’re not be able to necessarily save or salvage a lot of stuff from the hoarder. Yeah.
Kristi Cirtwill Oh, no, I mean, the odd time I’ll get one where, you know, there’s some good things to use, it’s more of a situation of they just, you know, collected too much and couldn’t keep up with everything. But generally, it’s, it’s the garbage hoarding ones I get generally, for whatever reason.
Aaron Norris Are they contacting you directly, or you marketing, like driving for dollars for those kinds of opportunities
Kristi Cirtwill Well, I’ve been lucky, because 10 years ago, when I actually worked hard and hustled, I made a lot of good relationships, and those relationships are still paying off. So, people that work in the assisted living industry, people that work in the trash out industry. You know, those types of professions, generally just call me as a resource. So, if that homeowner or heir, can’t afford to hire, you know, my treasure guy, for example, then, you know, he still gets the business for me, but I buy the house first. And then at that point, it’s actually easier for them to clean it out after I own it, because first of all, you know, I’m not attached to anything. Second of all, I pay him right away. So…
Aaron Norris That helps.
Kristi Cirtwill Quicker and easier. So, yeah, relationships like that has really paid off over the years.
Aaron Norris Well, if you had to start over today, where would you start?
Kristi Cirtwill Florida?
Aaron Norris Really?
Kristi Cirtwill Um, no, I don’t have any regrets. I try not to live life with regrets I, I would do the same thing I did, I would hustle and make relationships. I joined networking groups. I didn’t know one person when I came here. So, I had to figure it out. Just started meeting people, networking, and just like actually caring about people and helping their business. And they they sense that and then they want to help your business. So, that’s really what, what’s worked the best over the years. So, I would start start doing that right over again.
Aaron Norris All over again. Well, we are about at the time, what are the best ways people can follow you and your work?
Kristi Cirtwill Well, you want to see the pictures?
Aaron Norris Yes. Oh, you have the best pictures. Where are you posting the most like Instagram?
Kristi Cirtwill I do a little bit on Facebook not so much anymore. Some on LinkedIn and some on Instagram. And I also have a newsletter, actually. So, if you want to email me your email, I send it out twice a month and I put a lot of my, my videos and my pictures some before and after pictures in there.
Aaron Norris Oh I’m on it. I get it.
Kristi Cirtwill Oh, do you? Okay, good. Good. Yeah.
Aaron Norris So what can we post that people won’t maybe overwhelm or desert a specific email address do you want people to contact you at?
Kristi Cirtwill Oh, sure. My email is professionalhomehelp. H E L P @gmail. Best way to reach me.
Aaron Norris Very cool. As always, it’s so nice to talk to you and catch up and ,I I’m going to have to do another interview to find out this LA project. I’m just so upset for you.
Joey Romero Yeah. And can we talk next time about TDUs? Tree ADUs, Aaron talking to me about like, come on, we’ll put some of these in Portland? Sell it to some hipsters and they’d love it right?
Aaron Norris Hey, listen, Arby’s backyard. Those are DMVs Oh, even count is livable unit. So you know, hey, maximize space. Go for it.
Kristi Cirtwill Joey, we’re gonna put you in the first one and then you…
Aaron Norris Let’s do it. Thank you Kristi.
Kristi Cirtwill Bye guys.
Aaron Norris Bye.
Joey Romero Thank you.
Kristi Cirtwill Nice seeing you.
Aaron Norris You too.
Kristi Cirtwill See in real life one of these days hopefully.
Aaron Norris Hey, pretty soon I’m ready. I’m ready to party. Let’s see.
Kristi Cirtwill Yeah. Okay. Ciao.
Narrator For more information on hard money, loans and upcoming events with The Norris Group, check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com.
Aaron Norris The Norris group originates and services loans in California and Florida under California D R. E license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to the Norris group comm and click the hard money tab.