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The Real Estate Addicts (REA) podcast is a must-listen for anyone interested in real estate development, investment, construction and entrepreneurship. Each episode dives into a wide range of industry topics and features conversations with savvy, successful entrepreneurs who candidly share their career paths, challenges, breakthroughs, and the stories behind the remarkable companies they’ve built. Expect big personalities, thoughtful insights, and conversations that both educate and inspire.
Co-hosted by Ray Hurteau, Dan Rubin (Instagram: @rhinvestgroup), and Marc Savatsky (Instagram: @choose_boston)
Follow the Real Estate Addicts Podcast on YouTube: @RealEstateAddicts
00:10
do the thing. Here we go. kick it off. Wakey wakey, Marc. Welcome to the Real Estate Addicts Podcasts with your host Dan Rubin, RH Investment Group. I love how you guys say podcasts. You both do this. say podcasts. We have multiple podcast episodes. Ray Hurteau RH Investment Group. Marc Savatsky, Choose Boston. Are you mid-berp? Yeah. Are you feeling okay? I had public over lunch today to their lunchbox special. Shout out to Dave and Dave.
00:39
Uh, from Cedar wood. That was fantastic. got this. Dave stopped by. Yeah. Smell. yeah. Damn. Damn. Damn. was a smash burger with French fries and a cookie on a 10, like $11 or something. Can't beat that. Wow. Can't beat that. Thanks for the invite guys. What are we talking about today? ah Uh, we're doing, uh, what are we going to readapt some of our old content and maybe have a discussion. that a joke?
01:08
Are you trying to lead this? Lead in? Oh. Well, I think before we started recording, we were talking about, have, Ray and I are doing a building, a project up in Amesbury, Massachusetts. It's a mixed use building built in 1874. 152 years old today. So today. No, I don't know.
01:34
As of today's the birthday of the building. was born today. It's my parents' anniversary too. Oh, happy anniversary. Happy anniversary, me and Gary. Happy, happy. Love you guys. They watch podcasts? They do, they listen. That's great. Drop a comment. So what we were talking about was, you know, being a building of that age, we did not gut the building to the studs, which we probably should have in hindsight, but anyway. And it's also not a project where you can just
02:03
tear it down and rebuild its It's story in nature. The identity of their downtown. yes. So what do you do with it? So it's like just adaptive reuse in general and how it can become a very slippery slope if you don't, if you're not careful, you know, and where do you draw the line? mean, Mark, you focus a lot on new construction, but have you done a good amount of adaptive reuse? Yeah, we've done churches, we've done. Yeah, it's true. um
02:33
Yes, a lot of brownstone work in the back bay, South End. And how slippery are those slopes? Well, the brownstone stuff, it's a shell, right? You're gunning it to the shell. Yeah. Going into it, you know that. Yeah, we've done some cosmetic. We recently combined two condos into one in a larger building in a great spot in the South End. um So I feel your pain. I've experienced it. I think one of the things that's underrated in terms of its complexity is how off kilter.
03:03
out of plum, out of level the floor system is at. And then also that like, oh, it's great. It's rough, old rough sawn lumber. Like, cool. Yeah. You can't just cut that. Like a TGI is beautiful. You can run plumbing through it. Like you really, if you're using dimensional lumber or rough sawn lumber for your floor system, not, not okay. Generally, maybe wires, but that's sort of it. I was was going say the wires you can go, oh, we've got enough circuits. looks pretty good.
03:28
but they're all running all over the place. That may not be the configuration we want in the future. You don't know what's behind the walls. And oh, by the way, we're gonna add more demand. So now everything's gotta move outside and, oh, it's just cheaper to rewire. Yeah, it's very difficult to underwrite and to budget for that type of product. So like the scope of the work that we're doing is, I guess it also, it's mixed use in such that there's a restaurant on the ground floor
03:57
two commercial spaces on the second floor, and then six additional residential units. Residential units um are mainly cosmetic, but we did do some floor changes and things like that. um But when you start peeling the band-aids off, right, you know, and you can clearly tell that, you know, it has just been a Mickey Mouse job after Mickey Mouse job for the past 100 years. And so, you you take a ceiling like
04:27
ceilings have been dropped multiple times. When there's multiple layers of ceilings. It's wild. was wild. Like the original ceiling height on the third story in those two residential units is like 15 feet. Wow. And they dropped the ceiling once, probably to like nine feet. And then they dropped the ceiling a second time to maybe like eight. And so there's three layers of ceiling. And so when you start...
04:52
taking one down, you realize that it's just floating and there's nothing really structurally supporting the ceiling above. So then you start taking out some walls that you want to take out and the ceiling just starts to sag because there's nothing like holding it up. It's just craziness. so it's like where- Hold on, let's dive into that piece real quick. Because there's solution to all of these and we've had some good discussions about it. So on that ceiling note, Like not to get too far in the weeds, but-
05:20
we were able to figure out how to stabilize it and then how to put some headers in there that made it look like the spaces were divided naturally. Because in addition to the drop ceilings, they were all at different elevations in the different rooms. And we want to have a wide open floor plan. So this was a good solution and an easy way to fix it. But you've got to constantly be thinking and adapting. Yes, where do you stop? Like the thing is, where do you stop? I think one truism about adaptive reuse and restoration projects in general is that they're much more demanding on your time.
05:50
So if you're thinking about site supervision, you know, a new construction project's pretty nice because once you get the foundation done, you can kind of hand someone a set of plans and assuming it's where it should be and it's the right length width, et cetera, then they can frame it. You know, they're not like, hey, what do you want to do about this? What do you want to do about that? How are we going to handle this? Like, so... we had to do some structural work to like fix some issues that we just uncovered, right? And it's like, you know, we had to talk through it.
06:18
and I to sit there with the framer and walk through it. And then he had a question or he wanted to make a tweak. So then I had to reach out to the structural engineer to make sure it was okay for him. it's just, it's like a cascading of things that you're always answering questions to. I'll tell you, I'll share a few of the worst surprises I've run across. There we go. like that. ah First was, first place, asbestos.
06:46
waterproofing on the backside of all the brick. Um, the entire building. Yeah. All four sides. Yeah. And then in truth, that wasn't an adaptive reuse is I think about it because we demoed the building and, ah what we did was we disposed of the entire building as asbestos contaminated materials, cause it was cheaper than remediating the brick and disposing it as normal C and D. So that, that sucked. Uh, we had a real issue on one project.
07:13
with um our pulse strength. So we were doing what's called the inter floor. So you've got this old like putting rocks, very putting stone, and then you're, you're basically bolting new, uh, floor systems in between. And the engineer is part of our special testing, uh, requirements, um, required pull tests to determine how strong or not in this case, the bolts are into the mortar, into the brick. And so that was also unpleasant.
07:41
And what are they pulling in that case there? So you have bolts that go through the brick or through the brick. Yeah. Into the brick. Okay. Is, these the ones where like it looks like a little diamond on the outside and I'm thinking, just thinking of Seinfeld every time they have that exterior shot. Oh, no, no, no, no, no. That's different. The diamond thing is more like, uh, when you've had freeze thaw problems within a multi-width brick assembly. And over time that
08:06
water has frozen and pushed it out. So they get those stars on the outside, which are just really nice washers. Yeah. they're pulling it Trying to pull it all back in. like, how far in do you go with the pull test? ah And how many did you, how many did you rip through? remember. mean, we've found a lot of stuff in the ground that's unfortunate, but that's new construction or renovation. We were underpinning uh a basement.
08:36
uh on a triple decker and we were doing it by section, but uh they dug out one section, they were gonna pour it the next day and it rained heavy one night and that whole section wall fell in overnight. Yeah, that A surprising one that wasn't that bad was fire. So we pulled down the drywall, we demoed back to studs and we found that there was a fire in an area of the building and the dimensional lumber was all charred. Oh, we've found that before. Yeah.
09:05
But interestingly, it's like a percent charred through. Yeah. Yeah. We were fine. It like, generally we brought the structural engineer out and like what does decently well in a fire if it's contained, I guess fairly fast. It's pretty surprising. It's like you look at it you're like, holy shit. Cause it's like, it's like when you have a fire in your fireplace and it's like after it's all charred over, you like touch it and just disintegrates. Yeah. Right. It's like, well, as long as they got to it in time, the old timber wins. Yeah, I guess so.
09:32
I guess. I like that about the older buildings is that you really do have dimensional lumber and that's a nice thing. You know, we're going to shit all over adaptive reuse, but the old lumber is really good. It's pretty sturdy as long as it hasn't been compromised with notches. We've cut open some floors and we're like, huh, the plumber took a little bit of creative direction on this one and took an entire joist out and to put a stack in or something. And those are always interesting. The problem with doing anything partially is especially parent.
10:00
when you're renovating one unit within a multi-unit building. Because you have to think about the load path and how that transfers down the building. you know, can't always go into somebody's unit and be like, excuse me, can I rip open your ceiling and put in a transfer beam? We'd like to impose a dead load over here with a new column to open up our room. that is, there's major constraints in that way.
10:26
You're saying if the building is occupied, like partially occupied already. Yeah. And nothing is worth saying that like the other challenge that we see all the time is like, you'll see as a GC, we get plans that say, you know, us everything bubbled here is to be like removed, salvaged, and re-installed. It's like if you're doing it because you just love it, like, and that's really important to you. God bless your heart. If you're doing it because you think that it's going to be cheaper.
10:54
to remove, salvage, and restore that fireplace mantle, then you're wrong. Yeah, 100 % wrong. Always almost. 100 % wrong. Yeah. I think the other challenge also when you're not doing a gut renovation or ground up is meeting the new and the old, right? So it's like, three quarters of the unit is horsehair plaster and you're trying to meet like new board with the plaster,
11:22
Like it's just, will never look right. It will always look funky. Or you'll have to plan to have the new stuff stick out a little bit more and then go over the old and, just rip it all out. Yeah. It's just, it becomes a nightmare. But I think scope creep to your earlier point is a huge challenge and how do you manage scope creep while also balancing, you know, like you said, you come across two differential textures and finishes and having to have those meet up or.
11:52
I don't know, just, or just meeting new code that's required for your scope of work. So for example, you're adding a bathroom on a second floor with stairs, which doesn't require an elevator or any kind of accessibility, but the bathroom needs to be accessible because maybe in the future, the whole rest of the building will catch up, which seems very unrealistic. That's not a real thing. You're, you're exempt from, yes, you're exempt from M A B if you're doing an adapt. Like how about.
12:21
Check with your local folks because I don't know, maybe we agree to disagree on that or maybe it's specific to the project. I mean, there is a project size where you would need to add an elevator or something, but you can do... No, I'm saying they're making us do the bathroom. No, we don't have to add the elevator. No elevator needed, but the reason you add the bathroom and make it accessible is because in the future another renovation could a brand new bathroom to a commercial condo, a new newly created commercial condo unit. Okay.
12:51
It has to be an accessible bathroom. Like we did a building where there was a set of stairs to get into the front door. And I had a concern that we were going to have to put in some kind of handicap lift. Like a lift. Ramp. And the answer was like, no, it's an adaptive reuse. we don't have to do that. There is a trigger at a certain size project. also think if you're, if you're, if you gutted the building, no, isn't it like a certain percent renovation triggers it or no? No. It's just your grandfather didn't regardless. Yeah.
13:17
on the adapt on the MAB concerns, uh which is accessibility in Massachusetts. um That's good to know. Yeah. I mean, the other, the other one that I've seen, which is a horror story, it's never happened to me, but I've heard of this is like you have an existing to remain staircase that's nonconforming and ah you know, your demo guys get a little bit too um ambitious or aggressive and the staircase comes down.
13:42
The treads or just the whole thing. Or just the building, AHJ, the building inspector deems that like what he sees there is not anything that was original. It was funny because our framer actually brought that up because there are some stairs in an existing staircase that are a little bit wonky. Yeah. Some of the treads. And he was like, oh, do you want me to rip those up and replace them? I go, don't touch them. Yeah. I said, if you start touching them and like...
14:07
Five of the treads are replaced and the inspector comes and looks at this and he's like, oh, now you're gonna bring the whole fucking thing up to code, we're fucked. So don't touch it. did, that funny, the thing did happen to us. The demo guy uh demoed a bunch of existing railings on the back deck that we didn't want demoed because they were below 42 inches in height. um And he removed them and then we had to rebuild them. So stuff like that, bring it up to code.
14:35
Mistakes can happen on the site. Miscommunication. a lot easier when you just say, the building, call it a day, or take the building down and start fresh versus, like, again, going back to having to be there in presence, like, if you have demo guys on site and you only want specific, you can't, like...
14:55
As much as I went around and I put Xs on the walls that I wanted removed and the Xs like on things that I wanted, shit still got missed and shit still got demoed that I didn't want demoed because I just wasn't standing there watching them all day. Should have called Circa Demo and Disposal. Oh, this was pre, this was pre. You guys weren't around here. in for his business yet. But Dan, your defense, you did a great job explaining it. You sent me the videos, I couldn't have been any clearer. So it was just.
15:23
somebody didn't translate the message or transfer the message or whatever you want to say. Yeah, well, do you guys have any asbestos uh issues? We've had a few things like that. I mean, in Lynn, for example, they did some testing as they started doing demo and they had to stop at one point because they thought it looked like it. They got it tested. construction, obviously, if we're taking down a building. Yeah, and that came back okay. And I think we've had some small remediation. We've never had any like major...
15:51
environmental things on that same job, we had some kind of upstream issue like this wasn't our site that had toxicity levels or different levels of shit in the soil. But we had to go through this whole process with the state to go and get like upgrading property status or some kind of shit like that where you got to file it. know, it took forever, but then it was just done and like no one, you know, I should be saying this is like,
16:19
They make you go, if you're raising a building and you're taking a building down, they make you do all this environmental testing. But if you're getting a building to the studs, you can just pull the demo permit and gut the building without any testing. Depends on what municipality. Okay. And I still think you own liability. I think you own liability, but why wouldn't, I mean, I don't want to add more burden, but why wouldn't you have to do that type of testing on that type of demo? I I would, if I were the commissioner of that building department. Yeah.
16:47
And I typically do as a GC. Spot testing. Yeah. mean, especially if I think something's suspect. Like if you're building, if you're demoing something that hasn't been touched since the turn of the century, there's no asbestos. But if they renovated it in the seventies and you see nine by nine floor tiles. Well, exactly. If you see linoleum on the floor, those types of tiles on the floor and it's more than 40 years old.
17:10
more than like where the pipes are wrapped in pipes or like whatever. Yeah. Snowman boiler. Yeah. We had, you know, the other thing we find is the caulking around windows. like, yes, a building may have been done 200 years ago, but they replaced the windows in the seventies and the caulking has asbestos. found some of that on some of the buildings. We took that building itself down. It was right around one of the windows in the front. We about that. We, we got called Circa demo.
17:38
I got called in to take down a acoustical ceiling tiles in a three family in East Boston. And I kind of pulled the guys out. I was, I called the homeowner and gave her a recommendation for who to call it to have tested and all the rest. like they, the vintage of the build looked like, like asbestos era seventies. And I read, just did a quick search. She's like, yes, many acoustical ceiling tile companies used to use asbestos because it was great for sound and it was fire retardant and it was cheap. So.
18:08
That can be a thing. I was like, I just don't need you guys in there breaking a bunch of tiles. My own guys breathing it in. they installed it and they're fine, they can de-install it. I'm just kidding. I'm kidding. I know. But installing could, know, stuff's go on. In theory. Another issue with adaptive. How about, this is not, this is new construction, but just because we were on a zero lot line, Dan knows I was.
18:36
absolutely freaking out when we were excavating the old foundation near the sidewalk. And I was like, we got to have some backfill ready to go right when that stuff comes out and kind of do it in phases. Cause they didn't want the sidewalk to fall in. There was, it was tough to kind of like balance that and the shoring side of it. Shoring would have been what? We short though. No, didn't. you want me to tell you what you should have done and what? Should have shorted but that's impossible. It's not impossible. It would have been impossible to short it because you, were right up on the sidewalk.
19:05
So there was no lot line and then you would have had to abandon it. And do know how many utilities we would have cut through in the street or in the public way? There was a 36 inch water main. We weren't going out that far, but God forbid that thing was somewhere near the sidewalk. What are you talking about? The sidewalk and the telephone pole and all that stuff. Yeah. Or the light pole for the. You could like the, could, could you drive, uh, sheet pilings, uh, right on the lot line and then, uh, pour to one sided.
19:34
Foundation wall against it. Yeah, we did a one-sided poor for the vault. Yeah, so like it's doable I'm not telling you that it isn't cost prohibitive. We did a one-sided poor because it was against their own foundation No, it was we did a one-sided poor against the street side street side. Yeah. Well, anyway, I don't know I Cut all this My point was you know, when you're when you're doing demo whether it's adaptive reuse or I get new construction You still have things to worry about like
20:04
the shoring and the, the, the, major concern we've done, we've done a facade ectomy. So we had a historic building where we were redoing the entire, the whole building came down, but for two, like an L shaped portion of the facade. So we had to temporarily shore it. Did you brace it with steel? Um, yeah. So we use the, you know, uh, they're like whalers. Uh, think I remember this project when you were doing it. uh
20:32
That one looks crazy. wild. That was the most expensive wall in city of Boston per square foot. Yikes. That's insane. I know. It's ridiculous. What are some of the benefits? The benefits? Well, you're saving a shit ton of money. Are you? Well, mean, this project wouldn't have penciled if we had to tear it down and rebuild it. um Unless you're adding more density.
20:58
there's no reason to take an existing nine unit building down and rebuild it, right? It just doesn't make any sense. um But I think in most cases, if it's like, if you're replacing a single family or two units with six to nine units, then yes, like that's different. like, if you're, you know, if you're taking an existing multifamily, it's hard to make the numbers work.
21:24
Even, I don't even think the numbers would have worked if we gutted it. Like the price points of these condos that we're gonna be selling are not astronomically high. so we just- No, they're good. They're great. They're excellent. First time home buyer condos. Well, yes, but I'm Price point wise too. I'm saying, I'm saying because they're not, we're not getting a million dollars per unit. No, of course not. So any other like some more practical wisdom, I guess. uh One is cast iron plumbing stacks.
21:52
Cast iron plumbing stacks are good as long as they're in constant use. What often happens is the water's been off through the building for years and that's when they really start to spall and fail. Yeah, we actually, that happened. We had a stack that the guys were trying to tie into and last week when they started, they cut a piece out and the whole stack, the whole like three foot section just cracked off and just fell because of that. It was so old. Yeah, it's tough.
22:19
You know, also another thing that you have to pay attention to, to these old buildings is voids, like random voids and walls, because code requires those voids to be, if you have to sprinkle the building, you have to add heads in those spaces, right? Cause we had a lot of dropped ceilings in this building. So we had like a three foot drop ceiling. So you have all of that space. And if you're either fit, you either have to fill that with insulation.
22:48
or you have to have fire suppression. So you gotta make sure that you account for that because if there's all these random voids that you have to make sure that you have fire separation or fire protection within, then that's something that you might not. And then you gotta make sure they're not prone to freezing. Correct. they're on an exterior wall. Yeah, and that insulation needs to be fire retardant. Yeah. You know, naturally this is for buildings over a certain size.
23:14
I think it's 12,000 square feet. the other thing is like if you want to add windows on a zero lot line, you need to make sure that. Well, that's a good practical one too, is make sure you capture every single penetration and opening. So if you're going to renovate a place, first order of business is obviously to measure the existing, but make sure that anything that's a penetration in that wall is captured clearly on those existing drawings.
23:42
Yeah, so they don't confuse it for a new one, yeah. Well, not so you don't confuse, yeah. So you get credit for it. Right, right. Well, also if it's zero lot line, then that window has to be a fire rated window, right? If it's a zero lot line building, you're adding- it's existing to remain? Yeah, our architect told us that if we wanted to cut openings in a zero lot, yeah, not existing to remain. If we wanted to add a new window on a zero lot line, the window itself would have been fire rated.
24:11
It depends what you're budding, like a public way or a neighboring building or a neighboring lot. A neighboring lot. Yeah. Yeah. You have a good point. Yeah. The public way is different. It's cool. Yeah, I guess it depends. It's a tough thing. What? Gotta keep up with those roofs. Chimneys, when to take it down, when to leave it. You know, the other one was seismic systems and like...
24:38
Particularly parapet walls, that's You've installed a seismic system? Yeah. In what application? Seismic clips is a big thing. So you've got this unsupported- Such a time with those balanced things. Vineyard masonry wall, and you're renovating the building. You're converting it from office to resi, whatever. You need seismic clips on that wall, every facet at a regular interval, and you're probably talking hundreds of thousands of dollars. So that's an example of a seismic system.
25:06
But you could have to end up upgrading the lateral system in a building. um Specifically parapet walls, which are embraced. You you see all of these like, think of the movie Batman, where they have these big ornamental things hanging in the corner. It's like, how do you think that's going to do in an event of a hurricane? Like that was fine 150 years ago, but now if you touch it, you know, if you go above a certain amount of restoration. So consult with your building code consultant, your design professionals.
25:36
but give that consideration because those are costs. bat that's hanging on the side, corner of the building. Yeah, sometimes you're fortunate enough that like, if you don't touch it, you're good. But other times it's like, no, you've renovated this much of the building. So now you do have to put kickers and tie The rule of thumb in most municipalities is ah more than, I think, 50 % of the assessed value.
26:03
Right? Of the building is that how they, at least I know Boston, that's kind of how they deem it, right? Yeah. And the other one you'll fall into is like adding fire protection. If you didn't have sprinklers, at what point is your minor cosmetic renovation a meaningful enough renovation that you now have to add sprinkles? That's typically tied to the assessed value. And the other thing that they'll do is they'll provide a look back period. you can't be cute about, you know, doing Triple multiple permits one unit at a time. Yeah.
26:32
Yeah, we were nervous when we did those three in Dorchester, because that was just a short form, know, cosmetic renovation. We were very nervous that... I wasn't. What? You were nervous? I wasn't. I was a little nervous about having the inspector come in and saying, you need to sprinkle the building. But we... Because we, I mean, we didn't gut it, but we removed... We removed some walls and added a couple of partitions. I mean, no structural work, but still, you know, you never know. Like, they're crazy about that stuff.
27:02
Well, hey guys, I think one of the takeaways for me is like, when you're doing a sensitivity analysis or you're doing your underwriting, I just want to be really conservative with an adaptive reuse because you can start peeling back the onion and uh you know, there's a lot more than meets the eye. I would add a much higher contingency bucket for adaptive reuse. Yeah, that's a great point. Yeah. Well, thanks everyone here. Listening, rating, subscribing and reviewing and watching. We'll see you on the next one. Cheers. Later.