This is a case study by Ian Flannigan on a house flip that netted a $62,000 profit!
Transcript:
This is the case study El Tivoli. I actually documented quite a bit of this property, which some I do and some I don’t. But I actually happened to get a lot of photos and stuff from this one but this is a referral lead. Whenever Lynn reached out to me, her mother was sick. Lynn lived in Florida. Her mother lived in this house that had never been updated. It was built in 1945. The timing was not right for Lynn. And we all know, the fortune is in the follow up. I followed up with her I followed up with her. I followed up with her and about a year and a half later, she reached back out to me and I solve some big challenges for Lynn.
The family did not have a lot of money. We were able to negotiate a month leaseback that we did not charge them for and we paid for their move. You have to think about being in real estate. It’s about providing a service and solving challenges and problems. If you’re not solving people’s problems then you’re really not servicing them. I mean, I know we all want to make money. But at the end of the day, the more that you focus on serving people and helping them then the more that your business can grow.
We closed on this deal. I brought a joint venture money partner, which I’m going to talk about a couple of different ways to structure capital for $82,000. Put that down, if you’re taking notes right now. This is the before pictures of the El Tivoli property. It’s a little bungalow, those of you that are familiar with Dallas, Texas. This is on the west side of Kessler Park about a mile down the street from Bishop Arts which is a very very hot area. We knew we had a little gem. But some of the things I want you to notice, this house had never been updated. It had never been touched.
Those are original hardwood floors. That’s the front door on the left. On the right hand side and standing at the front door looking at the back. And my partners and I we do some pretty extreme properties. Right. We know how to renovate properties. We’ve been doing it for years. But not only that, we actually get a feel for what the market can pay for these properties. I’m going to talk a little bit more about how we sold this here in a moment. But in this kitchen beautiful, built in 1945. This is one of those houses that you just needs a full gut job.
The cool thing about this house is built on a pier and beam foundation. It’s a lot easier to move stuff around because you can run the plumbing underneath the floor. Here’s the numbers on the El Tivoli house. Remember, we bought it for $82,000. We budgeted $75,000. Now, we had to take this property down to studs.
You saw that photo with that contractor. We took this property all the way down to the studs, it was a two bedroom and one bath. But it was a little bungalow in an area where we knew that houses and Kessler and south of this house were selling for $265 a foot. We knew we had some comparables that were within a quarter mile. But this particular neighborhood of El Tivoli had just started to turn.
That only been a couple houses that have been updated, but nothing to the level that we did. Right. Because we know that we can go into these markets and into these houses. We do an incredible remodel and force the appreciation up. And people want that type of product. We knew exactly what we had.
We basically rolled the dice and did it. Houses 1162 square feet, two bedroom, one bath and detached garage built in 1945. And guess what guys? This project went over budget, we took it down to the studs and I literally replaced everything and that yes, they were multiple multiple surprises. This is what the property looked like after we were done.
We listed it for 2799 and it was way over market and we knew that but we have a pulse on the market. We know the demand. And we knew we had a home run on this property. Now, you can’t do this on every property in every neighborhood. You really got to have a pulse for your particular market.
We knew the property was high demand. Bishop arts was right down the street. Kessler Park was right next door. Literally, when I put this property on the market agents were blowing my phone up and that was getting all kinds of crazy transaction. I mean, crazy questions. Here we go. Here are the final numbers.
This is where the rubber hits the road. Right. Everyone loves the HGTV and The Chip and Joanna. They take these little houses and what they do with them is absolutely incredible. It really is. That’s the cool thing about this industry and about this business. And that’s one of the greatest things that I love about it because being a hairdresser, you’re an artist. People would ask me, how do you do what you do? I said, “I don’t know. I’m an artist. I love to create. I love to change things. I love to make things look new.” I transferred that skill set into real estate and guys, I started reading books in the early 2000s.
I was literally on the fence for years and years and years about getting into real estate. I completely retired my past career and I made a pile of money cutting hair. Let’s just it is what it is. But I saw a different vision for myself for later in life. I did not want to stand behind the chair and trade dollars for hours. That’s what I chose to change the trajectory of my future in the real estate. So back to this deal. The final numbers, remember we paid $82,000 for this. I brought in private capital, which we were partners so we did not pay any interest on the capital.
Now, when you have an uncle or somebody that’s very wealthy, you’re not going to pay interest if you can negotiate that deal. Right. We do the deals together so we’re not putting interest on it because he’s going to get a big chunk of the profit. The repair costs ended up costing $90,000. Yes, that is correct $90,000. We went over budget 15 grand. Just like this cedar porch that we put on here. This was not in the original budget. But what type of wow factor did this add to the house? We ended up contracting it for $253,000 and we netted $62,000 at the end of the day.
So look at the after pictures here. Right. We completely, we grinded stumps out, we redid the lighting and we put lighting in the trees. Now, I knew the buyers. I knew the demographic of the buyers. Right. First time homebuyers, mid to late 20s or maybe early 30s that were looking for that custom looking feel and literally that my phone was blowing up. As soon as we put this property on the market. Here’s the interior. Check out this interior. How amazing is this. Look. The original handscraped or the original floors, we hand scraped them, re-stained them and made them look like a multimillion dollar home. You typically only see floors like this is when you walk into $234 million dollar homes and up.
We added that type of feature to this property. We did stack stone over the fireplace. We wired it for our flat screen. We did cathedral ceilings. We just knocked it out of the park. We did upgraded fixtures too. We didn’t just do the Home Depot cheap fixtures. Yes, there’s a time and a place for putting the cheapest materials and finishes in properties. But look if you want to stand out from the crowd, you’ve got to do things differently. This was a really small house. Typically, what we’ll do is we’ll stage the entire house but I didn’t want furniture to swallow this property.
As you can see, we did some light staging. We put some some art on the walls. Added some chairs. We always add towels and wine bottles and all the other typical things that people do when they live in houses. Right. You want people to have a feeling of what it’s going to be like when they’re in that property. As you can see, we swung the range around. I don’t know if you remember this but that window right there was completely all the way down to the floor.
We found some breakout back. We added that window and basically put the sink there. We had a black granite sink. We did a floating island that’s powered. We did a lot of high end upgrades. We upgraded to a tankless hot water heater. Here’s the bathroom. This tub was actually where that toilet is. The bathroom was really tiny. So we went into the closet and swung that tub around.
The cabinet there we ordered from House.com. It’s got a quartz countertop. We did some really unique fixtures there. We don’t do those type of fixtures on every single property but we did it on this and it worked out really well. This property was just stunning. It was so beautiful. It sold so fast. There’s the detached garage in the back right there.
My partner painted it red. It was the very first time we had ever painted a garage floor red. At first, I kind of scratched my head, but I kind of liked it. But here’s the neat thing, If someone objects about that red we can get out there with a bucket of paint and cover it make it gray and black. Whatever the cover they want. We did pavers in the back. We manicured this property from the front curb and all the way through the entire house. All the way to the back fence.
That’s where I see a lot of people in this business really dropped the ball is they don’t manage the property. They want to get the house on the market so fast that they just skip a lot of things and they just want to get it done so quickly. But take your time manicure the property, do it right.