Helping Investors, Connecting Contractors, Building Communities
Home Depot’s Culture of Honesty and Problem-solving Is On Your Side.
A little over a decade ago, Home Depot entered a new facet of the real estate industry when it quietly debuted its business-to-business (B2B) service offerings. Called Renovation Services, they target real estate investors, asset managers, banks, mortgage servicers and others involved in larger-scale rehab and renovation efforts.
Of course, being Home Depot, the company was not really “new” to the notion of foreclosure and REO renovations, but the concept of putting the full force and resources of the corporate brand behind the practice was unprecedented at the time. Now, nearly 12 years later, the company is still working behind the scenes to help real estate investors and any large-scale property owner scale their operations, scope projects, and, ultimately, build up the communities around those properties.
“Being part of the community is a big deal to Home Depot, so supporting the community by being part of renovating and rehabbing homes is also a big deal to us,” said Chris Albano, director of Renovation Services. “That’s why we stay in the business and are dedicated to helping investors contribute to a vibrant economy by updating their investment properties. We are part of a recession-resistant industry. That makes it important to us to be active in every way possible in this space at every point in time.”
A Crucial Link the Chain
When the company first started the B2B side of its operations, the move was largely to help contractors, real estate agents and major lenders like Wells Fargo find a way to work together successfully and restore the nation’s battered housing inventory. This had proven difficult, despite high levels of interest and investor activity in the foreclosure space, because both banks and investors were cynical and suspicious of each other after spending the better part of the year being demonized in public forums. There was a desperate need for transparency so the “healing process” of restoring vacant and foreclosed homes to basic marketability could begin.
“There were not a lot of tools out there in 2008 that would enable people to know where they were in the construction process,” Albano said. “The kind of trust and transparency that apps and other software permit today did not exist then. Renovation Services found itself in a position where we could provide some visibility from all sides to help lenders get the repairs they needed and keep contractors and other real estate professionals in business.”
It was a natural extension of what became a series of wildly successful partnerships for Home Depot to begin offering B2B services to real estate investors as well.
“Investors and contractors make up the bulk of what we call our ‘Home Depot Pro’ customers. It only made sense to support them and help them build their businesses up as strong as they can,” Albano said. “Put frankly, a vacant house does not buy anything from Home Depot, does not contribute anything to a real estate investor’s portfolio, does not build up a contractor’s business and does not support the community in which it is located. By bringing all of those individual facets of housing and real estate together, Home Depot served and serves as the crucial link in the chain that gets all those factors working together.”
Everyone’s in the Loop
For Daniel Linenger, national sales manager for Renovation Services, one of the biggest advantages for real estate professionals working with this division of the company is that the brand provides a proven trustworthy track record with a wide range of services across a large geographical area that makes it easier for investors to scale and grow their business.
“Where we are particularly able to add value for real estate investors is when a successful investor decides to replicate their investment strategy in another market,” Linenger said. “So many large-scale investors are very hands-on in their core markets but may lack connections in new regions where they would like to explore opportunities to acquire new properties. We partner with these investors to help them expand into new markets without having to hire a new team or figure out who is a good fit for their business when they are not local to the area. They can trust us to tell them the truth about the market and the things they are attempting to do there.”
Albano agreed. “At the end of the day, we’re Home Depot and that matters to us. People know we are not going to ‘take the money and run,’ so to speak, because we finish projects. We are in it for the parties involved who support our business and buy our products, not to get paid on labor. We are the total package and we never, ever forget that.”
Because Home Depot is a national company, Linenger said sometimes investors feel intimidated by the scale of the company at first and assume they are going to pay a premium for its B2B services. But, Linenger pointed out, Renovation Services is both competitive and affordable, prioritizing the customer relationship over any short-term margin gains.
“Culturally, it is not who we are to lose a long-term relationship to make a bigger margin on a short-term project,” Linenger said. “We are focused on maintaining and growing our partnerships through transparency and adding value wherever we can. We are going to finish the project and finish it right.”
To that end, Home Depot’s Renovation Services now come with a variety of tools and even field teams to help investors and contractors get their jobs done. For example, the company offers a free tool called RenoWalk, which helps investors create a specific product selection that can be duplicated across markets and sourced at Home Depot stores.
“When you use RenoWalk, you can create a budget inclusive of labor that will guide every party working with you to walk around the property in a specific fashion and consider only certain types of products when defining the project,” Albano said. “We support the investor and the contractor by making it possible to easily bring contractors onto a project team and to smoothly guide them in the rehab until the property is brought up to the level required by your investment strategy.”
Renovation Services has provided a path for thousands of investors to scale upward from one or two people on a team to teams of a dozen or more in multiple markets.
“If you are ready to grow but feeling tenuous, that is definitely something we help with,” Linenger said. “Renovation Services provides a level of support and security through our turnkey services that has helped so many smaller, regional investors get up and running in new markets. We’re your team in the new market until you get there, and sometimes investors just stick with our team permanently.”
Powered by National Prominence and Local Determination
When real estate investors think about Renovation Services, they tend to consider the “big box store” more as a local friend than a national enterprise. As a result, some feel a little “timid,” as Albano described it, about going into a store and asking for help scaling their business. However, the truth is you don’t access Renovation Services through your physical storefront but, instead, through the website and the subsequent personal relationship you build with the Renovation Services team in your area.
“If a potential investor customer goes into the store environment and talks to the local manager, they will not be getting the specialized services through Renovation
Services,” Albano explained. “We operate on a national level to maintain continuity,
but we keep a local presence through our branch field teams.”
The result is an operation that offers all the advantages of “boots on the ground” that real estate investors consider invaluable and all the benefits of working with the national powerhouse behind home improvement in the United States.
“When you see investors working in a new market, they tend to over-improve their properties. At the same time, they may miss the mark in terms of local compliance requirements or local value-add trends,” Linenger said. “Our guys are local and know the area, but our brand is national and relies on us to keep our relationships with every party solid and positive. It’s a perfect position for the real estate professionals involved.”
Sidebar: Major Mistakes New Investors Make
Home Depot’s Renovation Services offerings are designed to help investors scale. But many of those investors are a bit new to the game. Home Depot has plenty of insight in these situations.
Linenger said one of the biggest mistakes he’s seen in recent years is fueled by “reality real estate” shows that feature high-end renovations with fuzzy production budgets. The lure of luxe is very real. But it can sink a new investor, warn the pros. They note that initial “success” with such a strategy often lulls new investors into a sense of false security that ultimately undermines their budgets and their business operations.
“When someone gets into real estate because they watched a reality show and loved the design angle, they tend to spend a lot (too much) time making product lists on their own and wandering the aisles of the local Home Depot store just visualizing what they would love to put in the property,” Albano said. “They might be able to get a house or two done like that, but they will never be able to scale. It absorbs too much time to try to get a personalized fixture that may not add value at the end of the day, not to mention that fixture may not even be available nationally. You think you’re going to save big, but you end up spending big—both because of the custom interior design and because of all the time you spend personally on the project.”
Although the temptation to custom design everything does represent a threat to the success of a new investor, Linenger emphasized Renovation Services is there for investors who are interior designers at heart or who want to sell their investment properties to retail buyers with an eye for local trends and details.
“We use those branch field teams to monitor favorable trends both in terms of market suitability and value-add opportunities,” he said.
For example, in a city like Miami, there will likely be a particular type of tile that is extremely popular for use throughout a home. But elsewhere in the country, that tile might be appropriate only for kitchen and bath areas.
“There are plenty of products that are both on trend and nationally available. It saves you time, helps you hit the mark with your buyers or renters, and saves you money on the entire project,” Linenger said. “If you are going to be a multimarket operation, you have to be sure you can translate your product, meaning your properties and your offerings, nationally. That is something Renovation Services can help you do.”
Sidebar 2: Home Depot in the Community
Home Depot is known for is its philanthropic endeavors. It’s an area where the company’s Renovation Services shine.
“It makes it even better when we get to work with folks we like and that have a distinct philanthropic side to their businesses,” said Albano.
He noted Home Depot has rehabbed more than 600 military donation homes and has pledged to donate $500 million to veterans by 2025.
“We like to work with all sorts of philanthropies and nonprofits, of course, but we are happiest when we are working with someone supporting our veterans,” he said. “It’s particularly gratifying for our contractor network, and we tend to end up with other members of the networkpiling into a project to provide all sorts of wonderful things like landscaping or customization to make a home a perfect fit for someone who served or is still serving in the military.”
Through The Home Depot Foundation, the company has worked with Operation Homefront, the Stephen Siller Tunnel to Towers Foundation, Meals on Wheels, Habitat for Humanity and many more.
“These groups hit a ton of the core values that Home Depot shares with its service provider network and that makes it incredibly rewarding for all of us,” Albano said.
