From Chickens to Cheese

[Jorden House-Hay]

After sharing a big fail that was our first flip in this forum, wanted to follow up with a win that was born from it.

Lead Source: Off-Market

Strategy: Flip

Purchase Price: $150,000.00

Rehab Budget: $90,535.00

Project Timeline: 20 weeks

Resale price: $325,000.00

Annualized return: 200%

In terms of scope, 538 Thurman Ave is the largest project we’ve done to date. While the overall annualized return was not our highest, we consider this one the biggest win so far.

The deal was sourced last year through our off-market deal pipeline. The owner responded to a direct mail campaign months before we eventually closed, and the eventual conversion can be credited to persistence: our team followed up no less than twenty times to create a rapport. When the owner was ready to sell, we were the first to walkthrough and, one on-the-spot offer later, we had nabbed what we knew was a project with lots of upside.

Still, the main reason 538 Thurman represented a leap forward for our company was the scope of the project. For one, the comparable properties in this area were beautiful with much higher finish levels that our previous deals. For another, we had only ever done cosmetic updates to this point, and this one was, well, more than just cosmetic.

Take a gander:

My partner and I weighed the pros and cons carefully and eventually decided to take on the challenge. At the least, we figured, we would see how far we had to go.

The result wasn’t half bad:

My partner, who is in charge of our operations, poured hours into reviewing our past mistakes, planning the project, and meticulously implementing quality control to deliver this outcome.

As we continue to scale, his attention will not be able to settle so singularly on individual projects. We were inspired, though, by Paul Graham’s essay , which is a cogent argument for using founder time in the early stages to perfect systems before temporal demands grow such that that focus is no longer an option.

This year we are taking that advice to heart by focusing wholly on what we personally can do to ensure that our prospecting, acquisition, and project execution machinery is firing on all cylinders. 

Improvements

The one area where we could have improved was our project timeline. Twenty weeks is too long for any one project.

The reason this happened was we were doing a number of projects in parallel, including two other large ones that were built in the early 1900s. Here our “do things that don’t scale” approach (i.e. our fastidiousness in project planning and execution) did predictably result in outcomes that aren’t scalable due to the pace of renovation.

The solution was part of the problem in this case. Having put in the time, we can now produce the same results more quickly with less demands on our attention. Additionally, since our marketing brands have continued to grow, we can be more selective about what kind of deals we take on at any given time.