3 House Flipping Mistakes EVERY Real Estate Investor Should Avoid
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- Опубликовано: 19 июн 2024
- House flipping mistakes. Even if you’re not a house flipper, you’ve probably made them. Real estate investors alike can all come together to let out a collective groan when we talk about project management hiccups, renovations going over budget, or keeping a bad team member on for far too long. In the best case, you can walk away from these bad situations unscathed, but in the worst cases, you’ll be out tens of thousands of dollars (if not more).
Even the best investors can make some of these so-called “rookie mistakes.” And here to put himself on blast is expert flipper, BRRRRer, and buy-and-hold convert, Tarl Yarber. When Tarl’s head hits the pillow at night, the only thing haunting his dreams are these three house-flipping mistakes he’s made. These combined mistakes have cost him hundreds of thousands, and countless hours on top of that.
Even if you haven’t bought your first rental property, done your first flip, or wholesaled your first house, these mistakes should be avoided at all costs. Take it from Tarl, no matter how well you know your stuff, there are always errors to be made if you put your ego in the driver's seat.
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00:00 3 Biggest Investing Mistakes
01:42 1. Short-Term Thinking
02:55 Giving Up on $800K
07:22 2. Emotional Decision Making
08:34 n Ego-Fueled $86K Loss
13:45 3. Hiring Fast and Firing Slow
16:17 The Screaming Match Project Manager
19:48 Who's to Blame?
#biggerpockets #tarlyarber
For some reason I have never heard "hire slowly and fire quickly," but that is a good one. I think just not wanting to deal with a problem is a very common mistake. Great video!
using your Seattle example and as a fellow flipper, we all wish we still owned all the properties we have sold in the past…when we start out we usually need all our cash back with profit and we have to pay back any loans if any
i also wish i bought and held apple stock since i was a baby but that’s how investing goes
yea, it's always hindsight
I also flip homes, but just one at a time, normally averaging 2 months to 5 months in duration. Your advice about firing a project manager quickly, when that manager is costly and counter productive, hit home. Also, not letting subjectivity take precedence over objectivity. Both of these examples can have devastating consequences.
Proof that real estate is definitely local. That $784k identically renovated crackerbox house would be about $150-200k today in a mid-tier southeastern US city, and it probably would have sold for around $50-60k back in 2014.
The before-and-after shots never cease to amaze me. This is so inspiring.
That’s funny because as soon as I actually knew what I was doing, the exact moment that I “woke” in my RE knowledge, I was hit with the rather sobering understanding that every property I’ve ever sold for its market appreciation value would’ve outperformed those returns as a long term investment. Basically it boiled down to a choice: either sell it and make $100K+, or keep it and make that same amount every 5 or 6 years plus its rental income and capital value. Like you, I have actually lived to regret every piece of property that I ever sold.
Love the "extreme ownership" tie-in at the end.
This hits me on so many levels! Especially the hire fast fire slow part. Guilty as charged!
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Oj
Great video, very candid, really appreciate the transparency and knowledge sharing!
Thank you for sharing your experience and valuable tips with us! Much appreciated.
Thanks so much for your transparency, I think many of us make the same mistakes - it's very easy to get emotionally involved in a project for whatever reason.
Thank you so much, very helpful and interesting points, especially accepting the mistakes and learning from them.
Very helpful Thank you for sharing
Tarl. Thank you for your expertise.
One of my favorites in bigger pockets.
Great segment! As a 4 year old investor we have hit all three! We flipped 5 properties and kept 2 single families ( destination rentals ) using management company and building 8 unit apartment. Projection for next 6 months: 4 more properties to use as destination rentals. Watch this channel daily! Thanks for all the good content !
great video. Thanks a lot man
Nice video.... I will begin increasing my inventory with some of my flips! Good 👍 advice...
Great video! If you reinvested that profit from 2015 and bought another 2-3 homes, in reality you made way more than just by selling it for $800k in 2022, correct?
Great video
Nicee, good job!
Love when he’s on he’s funny lol
Great advice specially the long term thinking.
Why do you use private lenders and hard money instead of buying properties on your own? I’m assuming volume is the answer but just wondering if there’s another benefit I’m missing. Also, if you could go back in time at what point would you stop flipping and start with the brrrr method?
Exactly, it’s all about leverage. Same concept as using a mortgage to buy a house…to buy investment properties you could:
Save up, buy it all cash, and make Dave Ramsey proud - Least “risky,” but lowest ROI (and you own 100% of the risk)
Get a traditional loan for 70-80% LTV, and bring the other 20-30% to the table yourself - slightly more risk (but spread between you and the bank), and greater ROI as your initial investment is lower, bank makes money off fees/interest, etc
Use a combination of hard money and private investor money to buy and rehab the house, then refinance to hold as a rental or flip and cash in the profits - most risk requiring more careful underwriting and execution of the business plan, greatest potential ROI for much less out of pocket, allows you to do much more deals with less up front capital, allows you to offer a great investment opportunity to investors instead of just paying more money to banks
Very helpful and important lessons to remember. Thanks for trying to help people learn from your paradoxically bad-to-good experiences!
Tarl. Is there a way to connect with you? I live in SW Washington
2:57 which area of seattle?
Hi Tarl, What order would you recommend for updates on a partially occupied 4-plex? The goal would be to give the entire place, inside and out, a face lift remodel. But what would be best to do first?
Tell existing tenants your rent increase plans so they can plan to stay or leave.
Make sure everything is working and reasonably updated - nicer than other rentals in The area. Clean floors - updating old linoleum to new vinyl is not expensive and gives a high return. Fresh paint and even simple window dressing to make the building look higher end inside and out.
Then, move good existing tenants or get new ones at top market rates.
Meanwhile, plan on bigger or general items like the roof, storage areas, secure entry doors too. Make the common stair clean with fresh carpet or finished wood. It will last and give you top cash out on refi after the place is fully rented, too.
Whenever you start buying in Milwaukee, send me a DM and I'll help you out!
My brother and i are considering trying to do a flip for the first time. We'd consider holding it, even living in it. Neither of us have any experience with flipping. Do you recommend we try to partner up with someone with more experience? Should we join a flipper network group to meet others, network and get referrals to good contractors? Anything else you'd recommend to us newbies? Also we're in Portland, Oregon. Any areas around here that you think are best to buy? We'll probably have to start off fairly small -like under $500k all in.
Have the same questions and situation, hopefully those with more experience can add their comments and help!
I live in Clark County. Wonder if you were able to get into flipping
@@elvozelka3200 We are waiting until after the new year because we think prices are going to continue coming down and my brother will qualify for more of a loan next year. But also, I'm a little afraid to purchase anything here in Portland, because it's one of the fastest shrinking cities in the country. ...it does seem to be coming apart at the seams. Probably not the best place to invest, but maybe in another year everything will be on sale.
A live-in flip could be a great way to jump start your investing career in this case. Buy the property and move in - as your primary residence you will get the most competitive interest rates for your credit score and financial situation, and you can take advantage of lower down payment loan programs like FHA and VA loans (pro tip: consider FHA 203k as this will let you roll rehab costs INTO THE LOAN, but there is additional red tape and hoops to jump through here).
Slowly rehab over the next 2 years while living in it as your primary residence, then sell and take advantage of the IRS Section 121 Exclusion - allows for up to $250k of profit (or $500k married filing jointly) TAX FREE if used as your primary residence for any 2 of the last 5 years!
Not sure about the Portland area specifically, but this applies anywhere as it is an IRS rule. Best of luck!
NOT TAX ADVICE - ALWAYS CONSULT WITH AN ATTORNEY / CPA.
simple solution for #1, flip 2 or 3 and keep the 4th, rinse and repeat
Thank you for the knowledge!👍🏻😁✌🏻
👍
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The fact that a pos property like that is 3/4 m because it is in Seattle is one of the most ridiculous things about it all. 😂
Hanging onto a property only makes sense if it will cash flow.
We’re you going through something in your personal life to cause you to make those rash decisions?
A real estate investor does not invest for capital gains he invests for cashflow.
Rich people sell, wealthy people don't
The intro song is WAY too long.