The guys who sell you those jumbo turkey drumsticks also wouldn’t mind being your landlords. And they want you to tune in to HGTV to find out how.
Local “Turkey to Go” founders Drew Levin and Danny Perkins have a new show on the remodeling network called “Renovate to Rent,” which documents their latest adventures in house-flipping in the Twin Cities. The show, which premiered June 11, shows how Levin, a real estate agent, and Perkins, a licensed contractor, buy foreclosed homes and then overhaul them so they can be rented out.
“We’ve been best friends for over 12 years, and to see it all come together was really, really special,” said Levin, who grew up in Edina.
The 30-year-old entrepreneurs manage about 50 rental properties throughout the metro, mostly in Minneapolis’ Uptown neighborhood and around the University of Minnesota. They say the show allows them to showcase the triumphs as well as the frustrations of being landlords in a competitive market.
For instance, on Saturday, the pair visited a single-family Dinkytown house they are converting to a duplex. Buying the property was risky — the lot was technically too small of a space to convert the home for that use and they weren’t sure if the city would approve.
The interior is bright and pleasant, with a large upstairs bathroom boasting new black-and-white tile and a sparkling shower. The kitchen countertops were finished with butcher block for a clean look. Tenants, Perkins explained, often aren’t wooed by expensive materials like granite.
“Tenants want four main things: a big bedroom, a big closet, a dishwasher and a washer/dryer,” Perkins said. He focuses on those elements as well as impressive presentation.
The Dinkytown investment could end up paying off: Levin and Perkins got city approval for the duplex conversion and they plan to rent out the spaces this fall when school starts. The episode will air Tuesday night at 10:30.
The show is the latest in a string of successes for the duo. Levin and Perkins met as freshmen at the University of Florida and immediately hit it off. With the help of private investors, they started their first business, Yfly.com, in 2004. In just a few years, the social entertainment network attracted celebrities like the Jonas Brothers as a platform to interact directly with fans.
The website eventually failed because it couldn’t support the traffic it was getting. But Levin and Perkins, who is from Boca Raton, Fla., continued to work together in the Twin Cities, searching for their place in the business world.“Danny and I are opportunistic,” Levin said. “Wherever there’s opportunity, we’ll go.”
In 2007, the two approached the Minnesota Turkey Growers Association about expanding their Turkey To Go state fair booth into a year-round business serving sandwiches, pitas and salads. That same year, they started their real estate company, D&D Real Estate Holdings Inc.
Since then, they’ve been searching for century-old homes that they can transform into high-grossing rental properties.
A three-part shopping list
Levin said there are several things they look for in a property: location, potential cash flow, low risk and the ability to build equity.
The duo said the Twin Cities is a robust market for real estate because of the number of Fortune 500 companies based here and the workers those businesses bring.
“If those companies didn’t exist here, we wouldn’t be able to have the demand that we do on our properties,” Levin said. “There is a lot of money here, there are a lot of people looking to rent, there are a lot of good, qualified individuals.”
As luxury rental housing springs up around the University of Minnesota, Levin and Perkins face competition. But they don’t mind.
“Does that scare us? No,” Levin said.
While many luxury apartment buildings charge rent that amounts to $2 per square foot, Levin and Perkins try to stay a little above $1 per square foot. Plus, their properties often have a back yard and patio, Levin said.
The idea of buying distressed or foreclosed housing and renting it out gained popularity during the recession, said Mary Bujold, president of Maxfield Research Group, a Minneapolis housing research firm.
“What started that wave is when the recession hit, and there were a lot of foreclosed homes, people started buying up these foreclosed homes and doing what [Levin and Perkins] are doing, which is putting a little bit of money into them and renting them out,” Bujold said.
As people lost their homes and began to rent, the rental market got tighter, she said. But it may become harder to “renovate to rent” as housing prices increase.
“The foreclosure rates are starting to drop now, and the for-sale market is going up ... The ability to pick up homes at a reasonable price is likely going to decrease,” Bujold said.
She said it makes sense that 95 percent of Levin and Perkins’ properties are either in Uptown or near the U.
“Those are markets where people who are looking for rentals are always going to rent anyway,” Bujold said. “Students are not looking for a long-term commitment. If they can price them affordably, definitely, that will work.”
Levin and Perkins said they’ll continue to grow both of their businesses, expanding the menu at Turkey To Go and buying more homes. It’s been a blast watching the show as it airs on HGTV, Levin said.