Copyright 2008 Profitable Partnerships USA, LLC
Level of Finish – The Different Tiers
In our experience we have “bucketed” the types of properties that we do into three specific categories: Tier 1, Tier 2, and Tier 3.
Each of these Tiers is specific to a particular value or level of property and thus, a specific type of finish that needs to be incorporated into the property. By setting up your renovation systems with three different tiers of properties, it allows you differentiation from house to house, while also keeping things standardized and systematized for your crews.
Tier 1 houses are those that typically have a price point on the lower end of the scale. The houses aren’t necessarily in a “war zone” neighborhood, but they are in the lower price points for your market.
In our home market, a Tier 1 house generally runs the $100,000 – $250,000 price range. In this level of home, our contractors are instructed to use more builder-grade materials. This involves lower cost finishes in the house. This is because the types of materials in the property that the buyers of these houses expect are cheaper. Please refer to the Tier Specification Worksheet in the appendix to see specific materials we place in each of our properties in the Tier 1 category.
Tier 2 houses are those that are typically in the “middle” of the price scale. These properties are going to be more for your middle class buyer and will have nicer material finishes than your Tier 1 house. These properties in our home market generally run the price scale of $250,000 – $450,000. Some of the materials in this tier class overlap with Tier 1 properties since the price points are so close. It makes sense to make the level of finish as nice as possible in this type of house while still keeping it priced relative to the market and market value.
Tier 3 houses are those that we consider the “high-end renovation”. These are houses whose price points are $500,000 and above in our area and would be considered the upper tier homes in your local market.
These properties are those that the upper middle class buyer can afford and have the more generally high-end materials used.
Within this category you can break down your renovations even further. In some properties you renovate, you will want to include very high end materials for the finishes. For the context of this manual, we will consider the lower price points of the “upper tier” homes; those that a majority of the upper middle class buyers can afford. When you get into mansions and multi-million dollar properties, you are going to be looking at more selective and distinguished grades of materials that we do not cover in this manual because it is beyond our scope.
The Tier 3 houses boast the nicest finishes and most “custom” features for the homeowner. Please refer to the Tier Specification Worksheet in the appendix to see the specific finishing materials for this and the other two tiers.
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Tom Zeeb and Will Lansing are active real estate investors, national speakers and mentors who coach students how to make BIG profits so they can live the lives of their dreams. They are the authors of the highly acclaimed home-study course the “Profitable Partnerships Success Library”. For information on having Tom & Will speak to your real estate group or for home study course and other Profitable Partnerships product information, please visit www.profitable-partnerships.com email mentor@profitable-partnerships.com or call 877-COACH-50.
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