speaker-0: When I walk into a property, I'm looking at mul a multitude of things. And I'm not just looking at the finish finishes. Finishes do help me determine quality and the investment that was already made. So like the appliance package, the material finishes, how much architectural detail. Those are things that are immediate evaluation points for me. And it helps me to hone in on kind of the level of what we're looking at in terms of craftsmanship. And quality. Welcome to Return on Design, the podcast where beauty meets strategy and interiors become assets that perform. I'm your host, Rachel Niederhofer, designer, investor, and builder of high-impact spaces that deliver real results. Alongside my husband, I run both a design firm and a real estate investment company, where I live at the intersection of creativity and ROI every day. Each week, I'll be unpacking what most people overlook, how strategic design decisions can grow your investment, elevate your lifestyle, and unlock the full potential of your property. You'll get real tools, proven strategies, and unfiltered conversations with industry experts who are doing it right. So if you're ready to invest with purpose and leverage design as a powerful tool, this podcast is for you. Welcome back to the show. Today we are going to be sharing something a little more personal, something that's really happening in our life. And that is that we are moving. And if you've been following us for any time, you might be wondering, well, why would you do that? Because the house we live in has been fully designed by me, completely customized to suit our family, built it from the ground up, been raising our children here for years. And yeah, here we are. We're packing boxes, we're looking at new properties, and we are stepping into a season.

speaker-1: Yeah, and people looking from the outside might think, ⁓ you're just looking for maybe a a bigger home or a nicer home or just a more upgraded version of what you have.

speaker-0: Interestingly enough, that is not what we are doing at all. In fact, this entire process is only reinforcing what we really believe about return on design. And that is essentially that you cannot evaluate a purchase as an isolated event. But really buying real estate is a larger strategy. And that's exactly what we want to focus on today. So we're going to be pulling back the curtain and ⁓ sharing with all of you. what we're going through and how we are evaluating the situation and making strategic decisions moving forward. So let's just go ahead and dive in with the most obvious question that people keep asking. Well, are you excited? Or is it hard? And it's like, of course, people are just assuming like, you know, you must be excited about the move. Or if you're excited, there's not some emotional attachment or feeling associated with leaving and leaving the house that we've put so much into. And that's just really not true.

speaker-1: Yeah, no, it's it's definitely emotional. I mean, like you said, we designed this house. You curated this house and did it to suit the needs of our growing family. We have raised our kids here, we've built memories here, we've we've built a life and celebrated milestone.

speaker-0: That's really why this conversation matters because return on design is not just about real estate and it's not just about design. It's about really designing and building assets that actually add value to life and shape ⁓ families. And, you know, this home has done exactly that. It served our family beautifully. And we really know that it's gonna serve the next beautifully as well. Sometimes ⁓ you know, it's just time to step into the new, step into the next. And we just want to share with you ⁓ exactly what that looks like for us. You know, as we're first of all, there's a big misconception, right? Because you think, ⁓ like we said, you've customized this home, you built it, why would you leave? Very valid question. We've asked ourselves the same thing, but there's a time, you know, to step into the new. And that's essentially. What we're doing. And in addition to that, there's sort of this idea that, ⁓ well, you must be looking for something better, looking to upgrade, looking to go to the next level. But that's not essentially true because we're really evaluating this ⁓ through a completely different lens. So as we are looking, searching, and taking this step into the next, you know, we're not really looking for perfection, but we're looking more for opportunity.

speaker-1: Yeah, because the opportunity is in the deal itself. And ⁓ opportunity is ⁓ or value is often an opportunity that people miss. And where can value be added? Or is you know, from ⁓ we're looking at this as the ⁓ from the lens of an investor, really. You know, does what the house is match with what the current valuation is, or the potential value to put into it and that's where opportunity is created.

speaker-0: Yeah. I mean, we talk about this a lot, but price and value are not equal. So we're always evaluating what's the price, what's the value? Real estate language would be like what's the ARV and how much work needs to be done. So it's essentially the same thought process, but with kind of that design edge, right? So yes, when I walk into a property, I'm looking at a multitude of things. I'm not just looking at the finish finishes. Finishes do help me determine quality and the investment that was already made. So, like the appliance package, the material finishes, how much architectural detail, those are things that are immediate evaluation points for me. And it helps me to hone in on kind of the level of what we're looking at in terms of craftsmanship and quality.

speaker-1: an investor, we're looking I'm looking at it from the lens of, okay, what does it look like? What is the quality? What is it, what is the price, and what is the potential to be able to come out of it?

speaker-0: And I'm also looking at what's the flow, you know, how many, what's the space look like? Sometimes realtors will want me to tell them exactly like how much of every little thing I want, like how many rooms, how much square footage, you know, all of these more standardized questions that what more of a conventional buyer might be looking at. And that's not even what I'm thinking about. All of those things matter in the Rolodex of the full picture. It's a full picture of everything we're evaluating. And sometimes it's a give and take when you're dealing with trying to hone in on what's the best opportunity. Yeah.

speaker-1: I mean, a lot of times you get asked, you know, well, do you like the house? Well, that's ⁓ from a conventional buyer, they're walking going, ⁓ I like this house. We're looking at it from a does the value make sense? Right. You know, the it can be a great home, it can be a beautiful home, but if the overall value to cost and what and the potentials, if they don't add up on paper, then it's it's not a deal for us.

speaker-0: Yeah.

speaker-1: Even in our and we look at that from the properties in our portfolio and in our own home.

speaker-0: And this is a totally new market. So we're there's also a learning curve that we've been going through where, you know, we know what things cost in the market we're living in now. Yep. And so coming into the new market, there's sort of a a baseline. Like, let me figure out what quality expectation I have actually costs. So it's sort of looking at a vast range of, you know, price points and locations and all of the factors that play into that cost. And I honestly think the market's inflated. However, ⁓ you know, just for our listeners to keep that in mind of you have to give yourself enough space and grace to come into the new market and have the time to really assess, okay, what do things cost here? Why, why is the price pulling over here in this Range versus what I'm used to.

speaker-1: And even noticing too in this new market area the nuances within the market itself. I mean, just like we've talked about before of like knowing the neighborhood. Right. Knowing, you know, this why does this neighborhood draw a slightly higher price point than this one here when they're, you know, two minutes apart. Yeah. And those neighborhoods you find those same things in the new market and you have to learn some of those.

speaker-0: Yeah, and I'll and I will just add to that. Make sure as a realtor, you know, whether you're a realtor listening or you're looking for a good realtor, they actually know the diversity of the market. Cause a lot of them do not. They can't speak to it and they don't know enough. So things that we look at too from an opportunity standpoint when it comes to market is what's the development? Like what is the future of this area? We don't just want to know. what's happening right this minute. But we s we notice things like vacant lots that could be developed or infrastructure of the the town or city itself. Like what's really happening here? What's driving people to this area? What's the future of this area look like? And that is that's a different mindset than a conventional buyer. They might be thinking strictly neighborhood, school, and you know, whatever the checklist is for the home. But if you zoom out a little bit and you really evaluate it with a bigger lens, you can see potential opportunities or potential risk that you would have to hedge if you put yourself into that. Yeah.

speaker-1: And those those are things you've always gotta be mindful to and and continue because they they change as time goes.

speaker-0: ⁓ So yes, it's not just we're not just asking what is the house cost. Of course we ask that. What's the list price as we're evaluating and scoping out all of the checkpoints in our own mind, but it's really about the deal. Yeah. So it's not just if I love this house, I'm immediately gonna make an offer on it because there's layers in depth too. No, it has to still make sense and become the right deal in order to actually Take that step and actually acquire the property. And that's how you can hone in on this whole return on design concept that we talk about so much. But we're not just talking about it. I mean, we're living it. This is what we do in our business, of course. But also here we are, real life situation. Many people can relate to moving. We've moved more than most people. We've moved a lot. And it does give us a different perspective.

speaker-1: We've moved a lot.

speaker-0: And a different level of experience of going into a whole new market and how to get acclimated quickly. That's ultimately what we want people to understand here too. Because if you don't buy at the right price or in the right area or with the right opportunities and you take on more risk, you know, you could put yourself in a situation that is not it doesn't matter what you do from a design perspective, you're never gonna get a return.

speaker-1: Be the absolute perfect home for you. But you are you still have to hedge those thoughts of, you know, like this, we weren't planning to move this quickly. But here we are. Okay, let's say we buy the next, you know, you you find that perfect house. Well, what is the potential for something to come up? Are you still going to be able to move forward with it? Is it still going to work within your asset portfolio to gain you that value and bring you the return on the design that you put into it? Yeah, I've said it before, nobody buys a house and expects that, ⁓ in you know, three to five years I'll sell it and I'm gonna I'm gonna lose a couple hundred thousand dollars. No.

speaker-0: So when we're when we are looking at these though, it's it's always that return on design perspective. Like, where's the opportunity? What's the opportunity that maybe others are not seeing that we could leverage? Exactly. What is that future potential or risk? Like we said, you've got to be able to spend enough time to really evaluate it from a risk perspective as well. Because right now there's a lot of markets, not just this one we're talking about. But there's a lot of areas that are overinflated and you know, prices have surged and they're not necessarily warranted. And the last thing you want to do is overpay.

speaker-1: And then the market correction happens and you know, then you get back into what a position of like, ⁓ wait. That was yeah, that was a bad one.

speaker-0: Yeah, I mean that would be but it's something that as you're buying, you know, you should be considering. So a couple things to look for from an opportunity standpoint. Let's run through the I know we do. Let's just tell our listeners here. Is what are the days on market? Has the house been sitting for a really long time? And if so, you need to start thinking about why. Yeah. That's number one, I would say. Secondly, is it vacant or occupied? occupied and is it occupied by a homeowner or a renter? Because again, that's going to

speaker-1: It's gonna play into motivations, that's gonna play in that's gonna give you understanding of what's going on with the property or another ins another another level of insight into the property.

speaker-0: And as investors, we're always looking up the deed record. Who owns the house? How long have they owned it? And what they buy it for. But you can also ask your realtor that. So if you don't have the capability to look that up yourself, find a realtor who's willing to help you identify some of these questions. It's good to know because you want to know what they paid for it, how long ago, and have there been any improvements to the property. So sometimes it's that simple and there's a level of justification of okay, you know, they bought it for five hundred thousand and now they're listing it at eight hundred thousand, but they did X, Y, and Z to the property and put this much.

speaker-1: And where some of that valuations coming from.

speaker-0: Yeah. And it's good to understand, has there been work done? What type? ⁓ sometimes it can be difficult to acquire this information, but that's the way you gotta do your own research to dig in there a little bit.

speaker-1: Again, underst understanding the deal, understanding what's out there, what has happened and and getting your insights into the property so that you understand one, your cost versus your value, potential value adds and what is that cost what is that going to cost you to come up with a final valuation.

speaker-0: Mm-hmm.

speaker-1: And do those do those numbers still make sense on paper for you? Mm-hmm. And if so, then it it could be a potential deal. And then can you make the deal?

speaker-0: Yeah. And another opportunity I'd like to focus in from a design perspective is, you know, upgrade potentials and not just aesthetic upgrades. ⁓ although those are typically the easiest, right? So I'm evaluating the flow, the form, the function of the space as it sits, ⁓ what has been done, anything cosmetically. And I'm evaluating the quality of that. ⁓ so we'll give a we'll give a real case study here in just a second for our listeners, but You know, if if I can see the floors have potentially been redone, we're really honing in on quality around the application of it itself as an example. ⁓ And so those are things we're just really zoning in on, or I am from a design perspective. And then I'm thinking of, okay, if I were to, you know, renovate and get this more up.

speaker-1: Mm-hmm.

speaker-0: par from a updated standpoint, like maybe the bathrooms are super dated or something. I'm evaluating, well, what's the effort involved? Am I is it a simple surface issue, or do I need to totally gut this thing and relay out the the whole room? And so when I'm looking at a property, those are all just a a few actually of the layers of depth that I'm thinking of versus just, ⁓ yeah, those, you know, I love the paint color or these light fixtures are really pretty or Because to me, all of those things are s are very ⁓ surface level. Surface level. They're not gonna really move the needle. In certain respects. Not from a opportunity standpoint, like where we could really leverage because once we're evaluating in this regard, I'm also thinking about the price, the price justification in my mind of what it's actually gonna take to accomplish all of these things and what the market's really pulling at.

speaker-1: Yeah, and then also understanding what the market around you is actually dictating. I mean, just because that's what a house is, you know, the price on a house, it's the list price. What are the houses actually closing for? And that's another conversation to have with your realtor of like, okay, the house up the street sold for X. What did they originally list for? How long did it sit on the market? You know, these are questions. And what did it actually sell for?

speaker-0: And what did it actually for So getting the accurate comps?

speaker-1: But with that too, it's it's knowing the information in the comp and being able to see ⁓ some of the more finite details because you know, some of those comp numbers can be misleading. If if they don't if they don't show you the details.

speaker-0: Yes. You know. So let's talk about a case study and break that down because that's a lot of information to digest, especially if you don't like do this professionally. Let's start off with a a real example of a house that we looked at recently that had great potential, but it also had great risk. And how we evaluated it, how it could meet our needs as a family, but also meet the growing needs as we want to. continue to build out, you know, our own investment portfolio. And yeah, getting a little long-winded. Anyhow, we found a property. It was relatively close to the school that our children will be attending. We already know that fact. And it had enough bedrooms. It had enough square footage. And it had some privacy, which which we want. Yeah. It was in a nice area. So it kind of checked off a few of what I would say the basic boxes are. Because even though We are evaluating it as real estate investors. We still have to live. You know. So there's there's some practical components that are, you know, necessary. Not deal breakers, but but definitely influence a lot.

speaker-1: Yeah. And then so with that, it met some of the basic boxes. It also had some of the other boxes that we had kind of looked at of like, I wanted some land. I want, you know, we wanted a pool. We want, you know, we like these would be great to have. And opportunity for a few other things that we like to do. And I know from a development standpoint, this appeared to have some potential to be able to do a lot of that.

speaker-0: Yeah. And so now let's shift for our listeners into more of the risk or questionable things. So the it the home has been on the market for quite some time.

speaker-1: Almost a year actually.

speaker-0: So that definitely as an investor that piques our interest 'cause that that immediately becomes a leverage point of why is your house sitting so long? Mm-hmm. And honestly, that's just a buyer in general. So even if you're you know, you're moving personally, if a home's been sitting for a long time, that's a leverage point.

speaker-1: Or it's at least should spark some questions.

speaker-0: Agree. And then secondly, the home had people living in it, but we began to understand that I don't think these people actually own this house. And so after probing a few more questions, we did confirm that it was it was renting, but it was like this service, this rental service, where it's almost like a short-term rental agreement to make the house look and appear as though someone's actively living in it. Although without that, it would probably be vacant or just staged. So we knew at that point that the owner of the property, this was not their primary residence. Mm-hmm. And possibly never was. So those are some opportunity things that as you dig a little deeper, like don't be afraid to ask questions. Don't be afraid to dig in, especially if you're doing this professionally. You know, network with people, whether it's other investors or a realtor to Dig a little deeper, find out a little more history about this property. Yeah. What could be lying under the surface that maybe you can't see if you're just kind of going through the motions of a conventional buyer? Yeah.

speaker-1: And a few other things because we dug a little bit, those you know, there's some property around. And it's like, okay, what's what's going on with this? Is it owned by somebody? Is it what? And come to find out that one of the actual adjoining parcels of land was actually fixing to be developed ⁓ by the city. And was going to become a new like town municipality, you know, community center and and other other among other things, because it was actually it was a decent sized Lotta land there, but

speaker-0: And so we share this because again, as you learn more, you probe more, you're evaluating, you're also now looking at well, what potential risks are involved. Because if I buy this property and right now it seemingly looks undeveloped around it, like, you know, all this open space, but it's it could drastically change.

speaker-1: Just the change and a lot of my privacy that I had in the property can go away.

speaker-0: And all of those developments can in turn affect your valuation. And it could affect it positively or negatively, depending on, you know, the situation. So these are reasons why we analyze it from a whole perspective like this. And it, like we say, it's a deal. Because if we just rush in there and buy it and we're only focused on what the aesthetic design changes can do and we're not focused on the development of the community, the real estate side of actually building up a property, you know, we're we're missing it. Where it's like we're only looking out of one eye and not two. That's not a great analogy. But anyways, okay.

speaker-1: You're just you're just not evaluating everything from its fullest potential. You're yeah. You're only looking at one aspect of a multifaceted piece of the puzzle. Exactly. You know, ⁓ you don't put a pe you don't put a puzzle together and take five pieces and ⁓ I'm done. No, you you put the whole puzzle together. So let's put the puzzle together.

speaker-0: Exactly. Mm-hmm. Another thing definitely you want to do is find out is there an HOA or or any type of bylaws for the community and get a copy of that, read through it and make sure you thoroughly understand. Because if you have some great future idea for a property and there's a governing entity that can intervene, you know, that's problematic. And for us, we we've are also looking at properties ⁓ from a rental perspective. So that's another perspective of okay, what do the deeds say about this? Or

speaker-1: H O A Covenant say about having a rental property within the neighborhood confines, you know, 'cause there are those places that that's that's not allowed.

speaker-0: Well, and there's also places where it is allowed and you may not want an Airbnb next to you. True. So just more reason to to do some due diligence.

speaker-1: Yeah, and that's that's why we call this a return on design is looking at you know it it's not just design. This is yes, the design is important and and it matters, but it's all the things that go into the fullness of the design, the design of your property, your whole property, not just the interior.

speaker-0: It's the real estate side of it because you've gotta you don't wanna overpay for the property, especially if it needs a lot of design and updating and okay, there was a second example I was going to pose and now my mind is going blank.

speaker-1: Okay. I've I've got another example of of one that, you know, we looked at here just recently. And yeah, this was a a little bit smaller home than what we were really kind of wanting to evaluate, but it showed a lot of potential. And I think still has a lot of potential. ⁓ it's just maybe it's not maybe not the right deal for us in that, but it was a this particular home was a four bedroom and not five, which we wanted. You know, because of all of our children, you know. Interior was very nice. I think they had ⁓ pointed it pretty well. And in the out the outdoor space in the backyard with the pool and just the whole outdoor backyard space had been really, really done well, but a little bit overkilled. Honestly, I think I think they put a little bit more into that than they were really ever probably gonna get out of it. And when you look at it is I'm thinking from it at it of, you know, wow, this could actually be a pretty good rental in the future if I could get this property at the right price. Unfortunately, just for what I'm needing right now, if if I'm looking at it from our pers potential perspectives, it just wasn't the right home for us because it didn't, it didn't check some of those boxes that the other one did. Yeah. You know, with having enough bedrooms and just the space. And you know, it did have a pretty decent appliance package and and spaciously in inside it was, you know, the common areas were very nice and large and open for us, but you know, there were just those key things for us that is like that one

speaker-0: didn't change. I was talking about the one with the putt putt putt course. Okay. Yeah. Yes. Yeah, I mean that house is beautiful. Another problem with that house was it was the top price point for the neighborhood.

speaker-1: Probably not at that not that neighborhood.

speaker-0: Which is something we also evaluate. I mean, that's a risk, right? You don't want to be at the very, very top price of the neighborhood when you're first coming in, especially unfamiliar. I mean, you just have to understand your it's a risk. Are you willing to hedge the risk? So of course we were not. and the valuation we didn't think was there because, like I said earlier, price and value. So I'm always I'm always analyzing. Okay, I see the price. I understand what you're asking, but what where's the value? And it has to they're not equal at all. Just because price is this doesn't mean value is equal to that price. So that's the whole negotiating factor. And being able to kind of take the emotion out of the buying process. Because if you fall in love with something, you could easily fall into the trap of I want it, even if it doesn't make sense.

speaker-1: They have to align. They have to And I'll overpay for it and then I put myself into a bind later on.

speaker-0: So you want to really try to give yourself enough time to not have that emotional charge. Which oftentimes when it comes to real estate, that's actually a a tactic that buyers will do is put you under tremendous pressure and not give you enough time to evaluate and analyze the deal, which is typically a red flag as well. Yeah. You know, if if someone's gonna come at you and put some you know, aggressive deadline on your decision and not even give you twenty four hours. That's that's not always go probably in your favor. Cause they're trying to evoke that

speaker-1: Trying to get the emotional decision. Yeah. And the emotional decision is the one that's gonna hurt you. Yeah.

speaker-0: Yeah. So if you can give yourself like a good twenty four hours, sleep on it if you need to and make sure you're thinking clearly, logically, and not letting your emotions take over. Yeah. We'll tell you a funny story of our very first move as a married couple years ago. I mean, I guess it wasn't that long ago, but it's a while. But we were moving to a new state. This time we're not, but that time we were. And we were relatively newly married and I remember falling in love with this house and it was a very competitive market in the Denver, Colorado area at that time. And we made an offer on the house. I think we were at full full price.

speaker-1: It was it was a full price, ⁓ full ass.

speaker-0: Yeah. And there were I think three other offers, three or four other offers, and we didn't get it. So at that point in that market, people were were paying over asking. And it was just real competitive. And I remember if we flew home that night. Yep. And I was just so upset. I cried. It was very emotional. It was like, I don't understand. And you know, thank God I've come a long way from then.

speaker-1: Know what and honestly it was the best thing that we didn't get that house because we wound up finding an even bigger home, mm-hmm, which at the time we didn't really need, but it was a bigger home with a whole lot more potential to for growth and and value add into it. Mm-hmm. And after when it was time for us to actually leave the area, the the design and this was long before we had ever thought of return on design or even working our business and all of that, but it was it was still something that was stirring right ⁓ and growing with our knowledge and our abilities. But we we made money on that house. And it and and we did rather well with it. And it was it was a great thing for us because, you know, when we that house when we bought it, we came at it from a much more logical standpoint of what is it. what's the potential of it, how that can benefit us in the growth of our family, because we were s you know, we were young and newly married and we knew we were gonna have a family and it showed the potential for us to grow and, you know, it it checked off so many more boxes in that in that what is the cost, the value, and the value adds.

speaker-0: And the house sold really fast.

speaker-1: When when it was time for us to go, it sold very quickly with multiple offers and you know, made us feel really happy.

speaker-0: So I guess just a little throwback story for humor for our audience because you know it's it's it's it's normal to feel a lot of emotion and buying a house and selling a house. Yeah, I mean it's a stressful it's a stressful thing. And that's something we don't take lightly. We don't take lightly with our our clients either, because doing a remodel undergoing a major

speaker-1: It's your home.

speaker-0: design implementation or new construction home, it's it's not for the faint of heart. ⁓ it can be very stressful. And so we get it. We get it.

speaker-1: It is emotional. It is trying. It's

speaker-0: It's okay. You know. So some good takeaways for this talking point. We might have to do a part two for the move and get our listeners up to date as we continue to take steps and move forward. ⁓ and we'll definitely want to be sharing some stories about the cell of this home when the time is right. But if this conversation has resonated with you, ⁓ You know, make sure you subscribe, you like, and you know, share it. If you know someone going through a move and feeling all kinds of things and unsure, overwhelmed, not sure how to even begin, like this is an episode that I feel like can help a lot of people. Just give you a baseline framework for kind of how to step into a new market, where to begin, what are the type of questions I should be asking? What's the mindset I need to have going into this? You know, these are the type of topics that I really feel like can move the needle and get get people headed in the right direction.

speaker-1: Yeah, so make sure you hit that like button, subscribe, follow along, send us your questions. We'd love to hear from you more. And ⁓ we appreciate you guys joining us and we will see you next time.

speaker-0: Thanks for tuning in.