Ep 102 - The Good, The Bad, and The Ugly

Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies, and welcome to another episode of our.

Podcast called Freedom through Passive Income.

That's right. And this episode is entitled the Good, the Bad, and the Flippy.

It is not the flippy.

Ugly. You know what I mean? This is very important because especially with social media, everyone's out there talking about the good. You know, you don't see anyone talking about the bad. Multifamily is a little bit different. Commercial is a little bit different than, like, wholesalers or whatever, because they're only talking about the good. But multifamily is a little bit different. A lot of people are being very transparent, but that's the most important part, is the importance of being transparent. We've been transparent since day one. You know, we don't hide anything. You ask us, we'll tell you. There's no hidden agendas. There's nothing. So it's very important to make sure that anyone that you're working with has that.

Yeah. And that's a lot of feedback that we've gotten as well, is that they loved our authenticity and the fact that we would just literally tell them anything, and when they would ask a question or we didn't have something that we should have, we would go, whoa, that's a good question. We just did an episode, actually, about that, and then we would implement it. But, you know, it's really important just to be real and genuine with the people that you're working with. So if you're talking to somebody and they're telling you all about the good deals, you want to ask them what was the worst deal that you've ever had? And if they say they haven't had a bad deal, number one, it's either because they haven't been in real estate long enough, because we've all had deals go south, and quite a few of them. It's a part of real estate, and I tell that all the time to people. I said, hey, look, I'm gonna lose money, but here's the deal. I'm gonna lose money. Flip's gonna lose money. We're gonna lose money. You're not gonna lose money. And I'm talking about scenarios and how we started really building our business. So either they haven't been in real estate long enough, or they're just not being truthful. But you want to get down to the answer to that question so that you can understand exactly who you're working with.

Yeah. Like, within the first year that we were in real Estate. Well, if you haven't been sued, you're not in real estate.

Yeah.

I'm like, oh, lovely. I can't wait. So our good, and this was actually at one point our bad. But you can never tell good from bad.

That's right.

Our good is our 56 unit. We're working on the process of refinancing now and anywhere from 1 to 2 million doll increase in value. And that's also led us to our most recent company, Freedom Capital Investments. So, I mean, it's huge, actually. It's hugely good.

Yeah. And so for the bad and ugly, we're just going to combine them here. And we've actually done a podcast about Bugly. Bugly. So our bugly. We've done a podcast about our worst deal ever or something. I think we talked about that one. So what I did is I went into our business metrics tracker and I don't even know if the numbers are perfect here. So I'm going to give you round numbers. Even though I actually wrote down to the cent on my notes here and 3 cents.

I like that. Talk about being accurate.

Thank you. But back when we started, we were doing everything with Google sheets, right? Tracking all the deals, tracking all the numbers and everything. So we had this huge tracker that tracked everything. How much are we over budget? How much did we lose? How much did we make? How much did we save on the budget? You know, we have all that stuff. So I looked in there and I found the three top biggest numbers. They were all happened to be duplexes and funny enough, they happen to be duplexes that we bought in a package. So here was what the. The rehab column where it says over or under? Over or under budget. The rehab column was over budget on one for 70,000, on another for 60,000 and another for $53,000. Now we don't, we're not trying to like, you know, make bank on every single deal. We are a volume business. So we want a measly like $20,000 profit on every single deal to make it worth it for us to do it and help pay for the overhead of this huge company. So having those types of over budgets, it was like, holy crap, we're Los Butt on these. But what did we do? We kept on going. We finished the rehab. We didn't even borrow enough money from the private lenders to be able to use those funds to be able to finish it. We had to use our own. And that's something that we tell our private lenders. If we go over budget on rehab, we're not asking you for more money. That's coming out of our pocket and those losses are coming out of us. So then I did another column and I saw what our losses were on those deals. Lost 47,000 on 1, 37,000 or that is 39 or 37. I can't even read my own handwriting. 31,000 and 31,000. On another, the total is around 118,000. We lost on three deals. So on an average of $20,000 profit, that's six more deals that we had to profit on to break even. That's another conversation that I have with private lenders. I say, hey, look, when you're lending a deal on us, like if we lose on one or two and we're doing 10amonth, who cares? We got eight others that are profitable. The reality is we are going to lose money on deals. That's just reality. That's real estate. And if you don't hear that from somebody, then I just would not freaking trust anyways. I'm like on a. I'm just all fired up because I believe in this so much. I believe in the authenticity and the transparency of when you're working with somebody and you're investing a lot of money with them, you want to know who they are, you want to know that they're truthful, you want to know that they're the real deal. So don't throw your money. Because I've been on too many conversations, lost money, lost money, lost money. And I'm like, ah, you're not going to lose money with us as a private lender because this $118,000 that we lost, our private lenders got paid in full. What they borrowed, they got paid in full all interest that was owed for the entire time. We didn't even go back and say, hey, can we just not pay you the interest for that time? We'll give you your money back. But can we not pay you interest because we lost our butts on these. We didn't say that. We just gave them exactly what we promised them in the very first place. Why? Because it's our reputation, it's our name, it's our brand, it's everything to us. And you want somebody that cares passionately about that stuff. I'm done.

Sorry. Well, it's funny. We've done hundreds, thousands of properties since we started.

Yes.

I could drive you to all three of those places today.

They're burned in our floor.

Yeah, one of them, one of them. And just this. And these were properties that, you know, not saying that this, it's our fault. We're at the top of the chain. So it's our fault. When we bought these properties, but we didn't walk them. And so when the second person went out to tell us how much it was going to cost for the rehab, they said, they mentioned something that one of the houses didn't have a foundation. Now, I first had thought that they meant to say furnace, but they didn't say furnace. They said foundation. And I'm like.

Excuse me, what?

I'm sorry, what?

Yes.

And so, yeah, so I could, like I said I could drive you to those properties right now.

And I think that's important too. And I think we've talked about that before and I won't go into it because I know this is supposed to be short, but it was a business lesson for us. Oh, yeah, right. Because we had a project manager and the project manager went out there to bid these properties, but that project manager was supposed to have a backup number. They didn't have the backup number. We didn't know it because we were trusting, but we weren't verifying. And so that was a lesson for us that, hey, you just lost all this money. Learn your lesson and don't let that happen again. So that's part of life.

That's right. Well, we do like to keep these as short as possible. Get her off her soapbox. But make sure you're joining our investor club right down here. FreedomCapitalInvestments.com Head over to the investor club again. This is a little different than our groups on social media, but don't stop going over there. Make sure you're hanging out with the team on the groups and social media on Facebook and LinkedIn. Make sure you subscribe on YouTube and make sure five star reviews would be awesome. Anyway, we always like to end all of our episodes with Invest Smart, Live happy. Bye. Bye, everybody. Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.

Podcast called Freedom through Passive Income.

That's right. And today's episode is called the Good, Bad and the Alarm. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss, y'.

All. Sam.