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Flip or Flop: 5 Things you can learn

So I’ve got to admit that I’m a little late to the party on this one. Over the last couple months I’ve been getting calls from people suddenly interested in flipping houses. I’m always curious to know what someone’s “Big Why” (as Gary Keller would say) or big motivation for getting into investing and more and more people would mention seeing a couple on HGTV.

Since every month there seems to be another reality show I didn’t pay much attention. Last night however I finally took a second (30 minutes actually) to sit down and see what the fuss was about and Yeah I can see the appeal. In case you’ve been under a rock like me here’s a synopsis:

Married couple Tarek and Christina El Moussa (and their little daughter) are trying to make a living flipping distressed properties. They buy, fix & resell Orange County homes for a huge profit!

The show is filled with it share of ups and downs and the it’s hard for the audience not to fall in love with them. This is definitely the couple that you would want to invite over for dinner. They don’t yell and scream like the other guy and honestly their just plain likable.

So are they really that good? Does he really flip homes? Where’d he get the money from? I had to find out…

Here’s 5 things you can learn from Tarek:

1.STUDY, STUDY, STUDY:

All I do all day everyday is study and buy real estate. I am starting to learn more about construction. I went to auctions all day for weeks to study how the process works. I got into real estate when I was 20 so I have extensive knowledge of property value. You make the money when you buy, not when you sell.

2.LEVERAGE:

I started flipping in 2008. I decided I wanted to flip houses so I approached a friend of mine that was 10 years older who owned a mortgage company and instead of blowing his money he invested it, very smart business man that can see opportunity. I knew nothing about how to buy at auction. He said we could flip one together but first I had to prove I knew what I was doing. I had like 30k from stocks but we had to come up with 60k. We borrowed against credit cards to cover the difference, very scary. So we bought and flipped our first place, a condo, and after all costs I made a net profit of $13,000.00 that is above 20 percent roi in 90 days which is 80 percent annualized. My partner was happy so he said let’s do it again.

3. YOU GET WHAT YOU PAY FOR:

I interviewed contractors and went with the cheapest, terrible mistake, you get what you pay for I learned!!!!! I spent 6 miserable months with a job I can do today in 30 days. At the end of all that work I made $6,000.00. Partner was not so happy. The deal was, he put up the $ I did the work. The good thing now is that my construction team is good and honest and one contractor, Battres construction, runs all my jobs. It takes a good team to be successful. It took years to put my teams together.

4. LEARN AS YOU GROW:

In 2008 I did 3 flips, 2009 4 flips. It got better and better every time. My partner said he would give me a huge opportunity based on my proven track record with him. He said if you can find the deals he can find the money. In 2012 we flipped 17 houses. Last year by mid 2013 we had closed 14 year to date and had 17 either listed, under construction or in escrow. We are on track to do 50 this year, of course I have hired my 5 best friends to work for me so the growth has been great

5.WEALTH IS IN THE HOLD:

I started a new business about 8 months ago buying rentals. I have purchased 11 so far with creative financing. I buy them cash than I get a blanket loan(1 loan) against 5 properties at a time at 10 percent interest at 65 percent Ltv. Even with the high rate I cash flow because I only buy really good deals

Over all these folks seems genuine and I definitely encourage you to take a look at the show. You can’t learn everything by watching it and you’re not supposed to. It’s entertainment! Nonetheless if it inspires you to a take a leap of faith and believe in yourself than that’s great too. In conclusion, I’ll leave you with one more quote from Tarek:

So bottom line I was a kid from Buena Park and got into real estate at 20, made a lot of money, than lost it all. The difference is, I never stopped making payments, I have dercent credit. When I couldn’t afford the payments I sold the items. I never short sold or had a car taken away, I sold everything. I had a 90k Mercedes and an escalade and a beautiful home. I sold my cars and bought a Honda civic, that was a day I will never forget. I have worked for and earned everything I have and have learned valuable lessons along the way. Please watch and I hope you enjoy the series!

Posted by: sealeyteam on June 18, 2014
Posted in: Sealey Blog