Landscaping As An Investment: Focus On Aesthetics And Functionality

One of the most gratifying investments I've made is landscaping a fixer I bought in 2014. Great landscaping can really improve the value of your property. Not only does good landscaping make the property look great, it may create more useable space.

What's funny though is that when I was in my 20s and 30s, I didn't appreciate the value of landscaping at all. Now that I'm in my mid-40s, I feel landscaping makes an enormous difference to the feel and ultimately the value of a house. I want outdoor space to bask in the sun and for my kids to run around on. I also want houses to feel welcoming with beautiful plants as I enter.

Investing in various real estate crowdfunding projects around the country for a potential 8% – 12% return is nice. But there's something wonderful about coming up with a design and making it come true to improve an asset's value.

Here are some landscaping I've done to the fixer:

  • Ripped out the green shag carpet and refinished the original hardwood floors.
  • Changed the knob and tube wiring for the latest TR compliant electrical wiring.
  • Gutted the kitchen and opened it up to flow into the dining room.
  • Replaced the roof.
  • Replaced all windows.
  • Painted the interior and exterior.
  • Built a 175 sqft luxury master bathroom (before and after pics).
  • Installed sliding doors from the master bedroom that open out onto a 260 sqft composite deck (before and after pics) with custom boards and railings.
  • Built a new retaining wall to hold up my foundation.

Once all of these essential renovations were out of the way, the next step was to landscape! 

Landscaping As An Investment For Positive Returns

My old house wasn't big (~1,920 sqft) because I purposefully decided to keep my housing expenses to under 10% of my gross income. But the house does have a relatively large lot for San Francisco (5,000 sqft with a front yard, side yard, and backyard). My house sits on roughly 40% of the lot, leaving me with 3,000 sqft to manage. Since I'm on a hill, the back half of my lot slopes downward, making it non-user friendly.

The key to any successful landscaping project is to implement aesthetics with functionality. You want to maximize use of your land while also making it look easy on the eyes. My backyard was a jungle that needed to be cleaned up. At the same time, I wanted to turn the hill into some flat, useable space. Therefore, the ultimate solution was to create large tiers.

With this idea in mind, I solicited some bids from various landscaping companies around the Bay Area. One guy quoted me $75,000. Another guy quoted me $60,000 – $80,000. And another guy who was working on a similar type project across the street for three months said his company originally quoted that client $125,000, but the project ended up costing $160,000! WTH?

I've hired fellas for small landscaping jobs before, but I've never hired anybody for a project this large. Not wanting to spend close to six figures on a backyard, I decided to sit on the project for a couple months. After all, I'm addicted to investing and felt putting some money into stocks and bonds post presidential election was a good idea.

Then I Had An Epiphany About Landscaping

Why not just go to the neighbor's house and hire one of their workers directly! Every hardworking person is looking for a side hustle. Even if he said no, at least I could find out more about the landscaping business and get some design ideas.

Luis popped by during his lunch break, surveyed my backyard, and told me he would have no problems creating tiers like he did for my neighbor. He never gave me a quote, but he just said he'd be in touch whenever he had some free time.

Months went by without hearing a word from Luis. Then he texted me on a random Thursday afternoon while I was coaching tennis and said he was ready to work that weekend. He asked me whether I was still interested, and I told him absolutely without even knowing the cost. When there is someone eager and able to do remodeling/landscaping work for you in a tight labor market, you say YES!

Given the neighbor was paying $125,000+ for their landscaping job (including materials), I figured Luis would come back to me with a quote of around $50,000 + materials. After all, the neighbor was paying the general contractor who then paid Luis and his crew. Surely there was fat to cut.

Landscaping Price Negotiation

After spending roughly 15 minutes climbing up and down my hill, Luis came back with a labor quote of $10,000 for all four levels! Not only would he create all four levels, he'd also de-weed everything, create steps with pebbles, construct a fence around a playground level, roll out black tarp and gopher netting, mulch everything, and create a 4″ thick hot tub platform with rebar that I'd also been meaning to get done!

Even though the price was much less than expected, I negotiated him down to $9,500 and told him I would pay cash if he wanted. He accepted. Luis finished the project over 3.5 weekends with a crew of 5 – 6 people working eight hours a day. It turns out his employer is highly reputable and worked on Softbank billionaire Masayoshi Son's $120M house for three years recently.

My total cost for this project came out to $17,000 as I ended up paying $7,500 for materials. This is a huge win because I was seriously expecting to spend at least $50,000 after all the quotes I was given.

Now for the before and after pics!

Before And After Landscaping Pics

Here are some before and after landscaping pics that significantly improved the value of my house.

Landscaping As An Investment
Playground before pic.
Landscaping As An Investment
Landscaping As An Investment
Meticulously measured each level
Landscaping As An Investment
Landscaping As An Investment
Dug 10 feet deep and pour cement in each post hole
Landscaping As An Investment
Landscaping As An Investment
Filled the steps with black tarp and pebbles, while each step had two rebar rods screwed six feet deep for stability.
Used the thickest black tarp and gopher netting available to prevent animals and roots from disrupting.
Hot tub platform with rebar before cement pouring
Poured 4 inches worth of concrete over rebar to create a level hot tub platform underneath the 11 foot high deck
Reinforced the redwood fence with brackets so the little ones and adults don't fall out.
A 20 gallon agave plants costs $275+! Gotta take my time planting
Playground for the kids
300 sqft playground for kids
Final Landscaping project outcome

How about them apples! I've now got a clean backyard with roughly 1,000 square feet of flat useable space on the first three tiers and 600 square feet of slightly sloped space on the last two tiers. All for the price of less than my Honda Fit.

Landscaping Created More Space

For functionality, the 300 sqft first tier playground is key. One day there may also be a playground set with slides and swings. The mulch is actually called “playground mulch” because it's splinter free. The ground is also nice and cushiony because Luis and his team piled on three inches of mulch throughout.

Another idea for functionality is making the second flat tier a putting green or a been bag toss field. Can you see it? I definitely can. The top tier right above the playground and below the 11 foot high deck is where the adults will hang around the hot tub. The final functionality is now I have my own private steps to climb when I feel like getting my four-pack back.

Got Mulch?

Landscaping Makes The Yard More Beautiful

For aesthetics, I've planted two agave plants and a cabbage patch succulent on the third tier that's unobstructed by the playground fence. I plan to slowly plant more succulents to fill out the spaces.

I chose cordovan brown staining throughout to contrast the golden colored mulch. Chopped rubber or synthetic grass was a possibility, but after reading there may be potential negative health risks with those materials, I decided to use mulch and stay green for the children playing back there someday.

I realize the backyard is pretty plain at the moment, but that's OK. I believe in low maintenance because my time is better spent doing other things. Further, everybody has their own tastes.

I'm all about getting 90% of the way there with all the heavy lifting, and letting a new buyer put their own finishing touches if they so choose. So many remodels I've seen go 100% of the way there, but they never satisfy 100% of the tastes out there. Here's some advice on how much to spend remodeling and whether you should get a permit or not.

Some of you living in less expensive areas of the world might be shaking your head at the cost. But San Francisco land is expensive. A vacant lot similar in topography to mine, but 20% smaller with NO house sold two years ago for $1,000,000. Add on the fact that every single tier in my backyard has some sort of view of the ocean and spending $100,000, let alone $17,000 to make it useable is quite reasonable.

Single Family Home All Day

The older I get, the more I love owning a single family home over a condo. First, I don't need to get permission from the Homeowners Association Board to do any remodeling. Second, I'm not afraid of disrupting my neighbors as much. Finally, it's a home run to be able to create more functionality and resale value at the same time.

If I was working a full-time job, it would be unlikely that I'd have the time to find Luis and manage a project like this. If I really wanted a landscaped backyard, I would have done what my neighbors did and hire an expensive contractor for $100,000+ to do all the work. So in a way, being an early retiree saved me $50,000 – $80,000. Or an investor could say a $17,000 investment created a 200%+ return.

Luis and his team ended up doing such a great job on my backyard that I asked him to do the front part of my house as well. It turned out more beautiful than I imagined. This is where picking the plants, the stain color, the material, and the flooring really counts since curb appeal is key for resale value.

After 2.5 years, I'm now done with all my home remodeling work. All I've got to do now is wait for the 6-person hot tub to arrive and then it's party time! Here's a post on the cost to install and maintain a hot tub. Spending $15,000 for the hot tub was one of my best splurges ever.

Investor Mindset Recap For Landscaping

1) Before spending any money on landscaping, always think about value creation in the form of functionality e.g. adding more useable land. Then focus on aesthetics.

2) Not everyone will have the same taste as you no matter how beautiful you think your finished product is. Therefore, don't finish it. Get 90% of the way there and allow other people to do the final easy work e.g. planting.

3) Everybody likes to focus on the house, but the majority of value is in the land. Don't neglect good landscaping when it comes to resale or getting top rental income.

4) Cut out the middle man by going directly to the workers actually doing the work. Any good hustler wants to do more work on the side. Just make sure you have a discussion regarding liability. It's also important to have an umbrella policy in case something were to happen.

5) With good landscaping, not only will you make an economic return when it comes time for resale, you'll also get a satisfaction return as you look and use the finished product as well.

Finally, once you've got the big landscaping stuff done, you can do smaller landscaping jobs with your children. This will help teach them the value of landscaping and hard work. Every year, I plant some trees, get new mulch, and do some landscaping work with my kids and it feels great.

Real Estate Investment Recommendations

If you don't want to bother with landscaping, consider investing in real estate passively instead. Take a look at Fundrise, my favorite private real estate investment platform with over $3.2 billion under management. Real estate is a key component of a diversified portfolio, especially as Fundrise investments in the Sunbelt region where valuations are lower and yields are higher.

Real estate crowdsourcing allows you to be more flexible in your real estate investments by investing beyond just where you live for the best returns possible. I also really like CrowdStreet because they offer individual investments in 18-hour cities. 18-hour cities tend to have higher growth rates and higher cap rates.

I've personally invested $954,000 in real estate crowdfunding so far after selling my SF rental house in 2017. So far so good as I diversify my real estate holdings and earn more income passively. Below is my Fundrise dashboard where I've invested over $300,000 between Real Estate and Venture Capital.

Invest in real estate strategically with Fundrise - Financial Samurai investment amount in Fundrise, $300,000+

Landscaping As An Investment: Focus On Aesthetics And Functionality is a Financial Samurai original post. Everything I write is based off firsthand experience because money is too important to be left up to pontification. I started Financial Samurai in 2009 and it is the top personal finance website today.

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Sonia
Sonia
5 years ago

Hi Sam, I just came across your post as I search for “hilly backyard in San Francisco”. What a smart design and great achievement – getting it down with such a good deal and such a short time!!

Can you connect me to Luis? I live in SF too (near West Portal), and have an almost exactly same backyard – that’s why I was searching that term – Desperately looking for landscapers right now, but haven’t had any luck finding anyone who is even willing to do such a steep yard!

Sonia

Sonia
Sonia
5 years ago

Thanks for the reply! We just got the backyard cleaned up. Now looking for someone to do the retaining walls. I just showed your design to a landscaping company and he quoted over 100,000! Thought you would be interested to know. LOL

ZJ Thorne
ZJ Thorne
7 years ago

This is absolutely gorgeous. I love the idea of having a kids’ level and an adult level. You can actually talk to your friends without children racing through and knocking things, but you are still close enough to monitor for safety. Brilliant and beautiful!

Scott Hess
Scott Hess
7 years ago

Once Upon A Time, we had a contractor rip out the nasty backyard foliage and partly-buried sidewalk at the house we had purchased, and put down reasonable pebble paths and sod and the like. It was much like your description, where the version where you hire someone to help make the decisions was looking like $65k, but by just going “off the shelf” we were at more like $15k.

And we used him and his crew for the front yard, and we later found buried trash along our side yard. So, we got a deal, but we decided we needed to move on from that contractor (we did _not_ negotiate him down from his offer, and we’d have covered the tipping fee had he asked, so that one one corner cut too much).

John
John
7 years ago

Great pics Sam.
1) You mentioned liability so besides the regular Umbrella policy as a homeowner did you get anything special?
2) Also with all the remodel I am curious if the county assessor asked you for revised costs and updated your property taxes?
3) I’m in east bay so was actually thinking about hiring Luis as well haha

John
John
7 years ago

Hi Sam,

My understanding was that if you use a GC then the GC holds insurance and worker’s comp. Since you are directly hiring the workers is there anything additional you needed to do?
Also for my permit; I received a notice from county assessor with assessed cost higher than stated on the permit form. Not sure what would you do in such a situation.

Also please email me Luis contact info :-)

Master Duke
7 years ago

Nothing like coming in under budget on a DIY project. Sounds like Luis was someone you could definitely continue doing future landscaping with if you need it!

Awesome pictures it looks great !!

The Foxy Dad
7 years ago

That looks fantastic! On my strolls through San Francisco this spring, I couldn’t believe how many homeowners neglected their landscaping due to the challenging topography. As you showed, creating a usable lot is possible on a modest budget.

Your First Million
Your First Million
7 years ago

Some of the best investments I have EVER made were in landscaping on my rental properties. I was paying an arm and a leg for lawn care, trimming, etc… which was eating up precious cash flow each month. Now on I do not allow grass at my properties. Rocks and/or artificial turf. The returns on the investment on these upgrades are astounding (based on the money saved from lawn care etc).

Vancouver Brit
Vancouver Brit
7 years ago

So based on the limited information you gave, each contractor earned around $34 per hour.

3.5 weekends = 7 days @ 8 hours a day = 56 hours x 5 people = 280 labour hours. $9,500 / 280 = $33.92.

Pretty damn cheap if you ask me! I won’t lie I’d be a bit uncomfortable haggling him down to $9,500 when you know it’s already such a steal. I almost felt sorry for Luis reading this post until you said you’re hiring him again to do the front haha.

Vancouver Brit
Vancouver Brit
7 years ago

Haha didn’t realize he was such a young guy. Pretty skilled for a 22 year old! I guess most of the work is simple manual labour so I suppose $34 an hour ain’t bad. That seems a low minimum wage for San Francisco though, I imagine most industries pay above the minimum?

Vancouver Brit
Vancouver Brit
7 years ago

Yeah the minimum wage here sounds similar, around $11. I envisage SF to be a more expensive place to live though, but perhaps I’m mistaken. It seemed quite pricey when I was there as a tourist, but admittedly that’s a whole different kettle of fish than living there. What is typical rent for a one bedroom (600 sq/ft) in an “average” neighborhood in downtown? Here it’s perhaps around $1,700 CAD. Based on the astonishingly expensive AirBNB opportunities I saw in SF (most over $300 per night, way more than hotels, and they were utter dumps that were being offered) I can only assume rent there in downtown is very high.

And I agree, at that age I would kill to earn that kind of money, that’s a whole load of cash. However, is it Luis’ side hustle or it his only hustle? Don’t forget that this is contractor work and has to cover many other expenses like tools, pension and any other costs any employer would typically cover.

Personally, in my situation at least, education is more worthwhile to me than side hustle at the moment. Right now I’m studying for the CPA, which is very time consuming. Once I’m done with that (1.5 years) I’ll either find other designations/certificates that can boost my income potential or if there is nothing, perhaps look at side hustle opportunities. I’m pretty sure I won’t be shoveling dirt all weekend to earn more money though, I value my free time more than that, even if the pay is decent.

Chris
Chris
7 years ago
Reply to  Vancouver Brit

I always do the same hourly contractor math and probably wouldn’t have bothered negotiating down under $10K with that much built-in savings. Instead, it would have been something like 10% bonus for meeting the budget and getting the project down on-time. Both of those are worth far more to me than saving $500 up front on a $10K project.

After doing many, many rehabs with different contractors, my biggest irritation is still low-priced bids who don’t deliver followed by crews that don’t clean up afterwards. A few crews didn’t even bother showing up on Day 1 at the scheduled time (which instantly leads to contractor #2 being hired).

I’d rather pay slightly more for someone reliable and give them an incentive to remain reliable. You always run the risk of the bigger project with fatter profits pushing your just started project into the background. It happens much more frequently with side hustle guys trying to do bigger projects, but established contractors with multiple crews aren’t immune either.

Dave
Dave
7 years ago

Thanks for sharing the photos and details from this project. It was a great investment and truly looks amazing. learning about the sf real estate market on your blog is fascinating.

Joe
Joe
7 years ago

Wow, that’s really nice. The tiered backyard gives you a lot more usable space especially when you have kid. Great deal. Looks like this will help with land movement as well.

High Income Parents
High Income Parents
7 years ago

That looks awesome. I’m sure you had to have added more than $20k to your resell value.
You could use one of those tiers as a petanque court in you golden years. :)

Tom @ HIP

Dr. Remoulack
Dr. Remoulack
7 years ago

Beautiful job, Sam. But please tell me you tipped Luis and his crew the $500 you negotiated him down for a job well done :)

Dr. Remoulak
Dr. Remoulak
7 years ago

Would love to – if you ever hear him mention that he’s taking a trip out to the Jersey shore area and is looking for some work, let me know :)

Great advice on starting his own shop. Someone is making a fortune off his talent and hard work. Maybe on your next project you can barter by giving him a crash course in web marketing :)

AB
AB
7 years ago

I can’t really imagine a job costing anywhere between $60k to $80k on a such a small garden (you can build a 1500 sq ft house with such amount of money), even though I am well aware of jaw dropping real estate prices in San Francisco, but $17 000 sounds very reasonable indeed, that is a huge discount thanks to ditching the middle man out. You’ve done very well. It’s good to have usable terrace garden instead of a slope lot and it looks great. I just wonder why did not you use concrete slabs instead of wooden planks, wood can always rot when in contact with wet ground or dry up and brake up eventually. Cost of materials is about the same, but the longevity of concrete slabs should be at least ten times more. If I would do the same in my garden (I live in Czech Republic), wood would rot and break up in about two years thanks to weather. Cost of similar project in Czech Republic, including work and materials (if made from concrete slabs) would be anywhere between $3000 to $5000 (without ditching the the middle man out). On top of that, if you encrust the concrete slabs with stone, the garden wall looks fantastic (pic related) https://tinyurl.com/l49o72s

Dood, el Farbe
Dood, el Farbe
7 years ago

OMG, wow, thanks for sharing this.

I’ve tried to get my wife to look at various articles on your `site.

I can only hope to God she doesn’t see this one. We’re also on a fairly steep property and I don’t want to spend ~ $XXXXX K to make it more like yours! She’s always bugging me on how we can make it more liveable.

You’ve just shown great “how to” examples… but I don’t want to let go of the dollars.

Dood, el Farbe
Dood, el Farbe
7 years ago

That must have been her.

(But I thought husbands were SUPPOSED to snore?)

Save Splurge Deny Debt - Cameron
Save Splurge Deny Debt - Cameron
7 years ago

Wow job well done and if I could get my yard done for 17k I would hire it out as well.

We bought a foreclosure that needed and still needs work three years ago. No one offered on the house because of a hole in siding around the chimney flue. My dad and I can handle pretty much any home repair so we fixed it in the first weekend.

Our other projects have included yard work, new floors, new paint, and new doors/windows. I would imagine we have saved tens of thousands of dollars of work by completing the projects ourselves.

Having some knowledge and doing research also helps when hiring it out. We can basically subcontract out plumbers/electricians instead of having to call a contractor. Much like you did with the yard guys.

It looks absolutely fantastic by the way! I like the agave plants a lot and think the kids will enjoy playing in the playground area. Nice job!

David
David
7 years ago

Man, will Luis and the fellas travel? ;) I’m about 100 miles from you. Haha! I need to landscape about a 1/3 of an acre.

Dynx
Dynx
7 years ago

Absolute steal. I’m thinking about completely updating a Bay Area rental and need to find a way to get around the middle man which is hard when you don’t live locally any more.
I have noticed an interesting fact and taken advantage here where we live though. If I speak with someone I get the standard rate quotes that the neighbors pay. My wife is Puerto Rican and if they happen to be Spanish speaking the price drops immediatly.
In terms of your backyard…
Outdoor bar and custom spa on the top level.
Second level putting green and ring toss/general adult enjoyable games then the kids on the bottom. Last thing you want is some kid from school taking a tumble down a level from the playground.
Again nice job on the price. I think it’s a bit like travel when you’re retired….
If you’re not in a hurry or particular about days you can save a lot of money. Leave Monday at noon? Sure why not. What’s that flight cost? Those workers had a gap in schedule. Option: make no money or bang out your job and get paid. We usually follow this approach. “When do you want this done?” Whenever you have time.

Debbie
Debbie
7 years ago

No picture of the front?

SMM
SMM
7 years ago

Before and after are nice. It looked like a straight up jungle before. Can you please put up pics of the playground and how you plan to accessorize the other tiers (for functionality purposes). I have a hilly backyard so I may steal…..sorry gently borrow some ideas :-).

DadsDollarsDebts
7 years ago

I love landscaping, though I still have a HOA to deal with. Since moving in I have put in 14 fruit trees, ripped out some ferns to make more green space/grass for my son, and have been modifying the drip system. It is fun and the most enjoyable part of owning my home currently.

Nice tier work. I have a slope I am also thinking about doing something similar to.

Done by Forty
Done by Forty
7 years ago

It looks great, Sam. Way to turn an unusable hill to a pretty sharp back yard.

Chris
Chris
7 years ago

Looks great. We just spent $200k on our backyard and if I could post pictures I think you would agree it was money well spent. A huge cedar pavillion with natural gas fireplace, 1,500 sq ft of stone patios around the free form pool, $18,000 hot tub, $12,000 in furniture, $9,000 in led lighting, new trees and about 100 new plants. With young kids and lots of family time we think its a great investment in family fun (and it raises the value of our property significantly). No mortgage and paid cash for this project without impacting our financial security.

Chris
Chris
7 years ago

$1.5 or so, maybe $1.7. Bought it 11 years ago for $580k. Have put quite a bit of money into it over the years. Mortgage was paid off on it 6 years ago. Will email you some pics on the weekend, pouring rain today! We had three designs done and went with the most expensive but most interesting design. A great use of space, good flow and the pavilion is awesome. Carpenter and his team spent weeks building it. Post and beam style, cedar shake roof, tongue and groove cedar ceiling.

Jack Catchem
Jack Catchem
7 years ago

Great job, Sam!

I always force myself to get at least three quotes for any project. You never know when you will stumble on a gem like Luis!

I also deeply appreciate your approach of keeping the maintenance low. I used to have a backyard full of weeds and slab concrete. Now it has a few fruit bearing trees, good looking artificial turf, and hardscaping. We replaced a hot tub with a fire pit and an 8 foot stream. The project did not cost too much and saves me a lot of maintenance time and utility money. Also I love hanging out there with my family.

As usual: good move, Sam. Thanks for letting us be a part of the project.

Albert Jeans
Albert Jeans
7 years ago

Great job! So much of landscaping is just plain sweat and hard work. There are lots of resources in books and on the web, so why not learn and do it yourself while saving money? For some reason landscaping services have huge price variations as you found. I found factors of 2 or more in the quotes to take out some redwood trees which I had planted and had gotten too big (be careful what you wish for!). Now my garden is mature and the challenge is to keep it from getting too overgrown.

Mr Crazy Kicks
7 years ago

Nice score, sometimes it pays to wait for a good deal to come along. Another nice aspect of investing in landscaping is in the plants themselves. The smaller the plant the cheaper it is. Once in the ground, these plants double in value each year. I just planted some $40 trees, by next year they should be as big as the $100 trees :)

nirav desai
nirav desai
7 years ago

Make sure it’s roots don’t destroy your sewer line!