Winning Mistakes : A Real Estate Investor’s Case Study
August 1, 2020
Welcome to this Turris Group case study on winning with mistakes as Real Estate Investors. This house just came through on my Zillow Feed. 6716 Northridge Blvd is a residential rehab we completed a little over a year ago. This house was a major undertaking. We replaced everything in this house. Roof, windows, HVAC (The new one that was in the house was stolen) and a major structural change as we ran into some permitting issues with the city on opening up the kitchen/living area and the stairs. These mistakes put us $18k over budget and taking on about 3 months more of closing costs than we had anticipated. Many times this can be detrimental to the Real Estate Investor.
Let’s take a look at the drawbacks of this house and what we did to get top dollar. The house came with a large hill in the backyard that we were planning to terrace out and place a covered sitting area at the top of the hill. (Beautiful view of downtown Omaha from up there.) Unfortunately because of the overages we had inside we had to scrap that idea. To overcome what could potentially be a major negative (the hill) we made some minor cost efficient upgrades in the house. The fireplace being the biggest, moving the laundry to the main level and the use of staging (which we had not done on any of our rehabs to that point).
As a Real Estate Investor I like to find uniqueness in a property. We found that in the ceilings with this property. As you look at the before and after pictures, take particular notice of how the ceilings are rounded off where the ceiling and the wall meet and are separated by what I found in my research to be picture rail. In the 1950’s when this house was built it was pretty common to have picture rail from which you would hang (yeah you guessed it) pictures. We were able to accentuate this built in design element simply by contrasting the colors where the transition takes place.
As I mentioned it was a very challenging project, but an experienced Real Estate Investor knows that buying a property right can certainly overcome some mistakes. We purchased this house at an auction. Here are the rough numbers
PP $ 71,400
Rehab & Holding Costs. $ 94,000
Selling/Closing Costs $ 20,000
Total Invested. $185,400
Sale Price. $225,000
Total Profit. $ 40,000
We were told by many Real Estate Investors and a couple of Real Estate Agents that there is no way that you get $225,000 out of that house in that neighborhood. We were confident that we could if we did the rehab right and didn’t take any shortcuts. Thanks to the agent who stepped up and said she could Megan Owens and thanks to Kim @ Jill of All Trades for her ideas. The Florence Neighborhood is making a comeback. Part of the reason for that is this house was just outside an economic opportunity zone. Now when you go there you see a lot of rehabbing going on.
The best part of this whole deal is what we were able to learn and how we were able to create tremendous opportunity for our team of investors (our private money investors made a total of $13,000 in 9 months), tradesmen and women, the neighborhood around it and the buyers. I just checked comps on this house because I did not believe the Zillow Estimate of $242,000. Turns out it was right. The buyer has just gained almost 10% in equity in just over a year.
Now that’s a win, win, win, win, win, win opportunity. I think ole Zig Ziglar would be proud. If you would like to learn how to invest passively with Turris Group please don’t hesitate to reach out to [email protected] or [email protected] for a detailed overview on how we help passive investors capitalize on this hot real estate market. If you are already an investor or thinking of becoming one and want to get the details on the mistakes we made and how we have adjusted our processes, let’s have coffee.
Enjoy these before and after pictures.
https://www.turrisgroupllc.com/property/9520961-6716-northridge-dr/