How to start flipping houses for beginners $70,000 profit

times you pulled me up because I said to you, I started it, I get notified regardless.

First speaker off. That was it. Maybe I'm do not serve and it'll go through.

Yeah, good, because if I get hit by a car a second time, you better show up.

We're live, guys. It's closed. No. All right. Hey guys, how are you doing today? Good, good. Hey everybody, wanted to, uh, introduce you to Chandler Coker and Randall Kahutek. That's a cool name to say. If you ever have just sitting around, say his last name, Kahutek. I don't know where it came from. Yeah, is it really?

Oh, I knew somebody who had a technique similar.

Really, really? That's pretty cool. So we are here today going to, uh, visit with them about their project. So Randy and Chandler are coming here to Global Integrity Finance. They're getting ready to do their first fix and flip, and we're going to walk through this process with them from beginning to end. So they're under contract. Is that right?

Correct.

Appraisals come back. We've got the scope of work. Everything's all finalized and we're scheduled to close around the 14th. Is that correct? Great. So Global Integrity Finance has picked them as a case study, I guess is the best word. We're going to go through this from closing all the way through when you guys sell this property and we're going to run on-site video webinars, interviews with the contractors, with everything that's going on. And we're going to show everybody what we do and how we do it and how we work with you guys to ensure profit and successability. Okay, our success, not successability, profitability and success. I knew I'd get it. It's been a long day. It's been a long day. So behind us here is the property, is that correct?

Yes, sir.

4101 Dundee Lane in Plano. List price, I think, was around $450,000.

$450,000 was initial list price.

Was initial list price. You guys were able to get it at $389,000. Is that right? Tell me about the scope of work. What did you guys come up with on a final scope of work?

So I'll start off. So it's a kind of 1990s build. So it's all still kind of original build, still got wallpaper on it, all that kind of stuff. So the main thing is the whole house needs updating.

Okay.

So we're going to update the whole house, uh, new paint, new flooring, uh, cabinets were in great condition, so we're going to keep the cabinets, probably going to do new countertops. Great. Uh, the biggest thing we are focusing on is bathrooms. Bathrooms sell. Um, people love having a wonderful master bath.

Mhm.

And so the big thing for us is we're going to knock out a wall, create a, uh, really awesome shower, take the, uh, bathtub insert out, extend the, um, closet to make a larger master closet. And so that's where we're focusing the, the biggest part of our scope is on the bathrooms. 'Cause everything else is in great condition. It's got a great roof, foundation's good, HVAC system's great, electrical's all up to code, up to date. So those are the main things we're really focusing on. The beauty of this one is it's mostly cosmetic.

And if I remember right, the owner that you're buying it from was like almost the original owner. He's had it for since '99?

I believe so. He's had it a long time. He's an older gentleman. He was ready to sell. He's a motivated seller. So it worked perfect for us.

Outstanding. Go ahead, did you have something, Andy?

No, he hit it all.

Okay, um, so when we talk about this project, what made you think that this property was going to be— I mean, you guys have looked at how many properties in the last, say, 60 days?

We've probably looked at— I say looked at— we've looked at over 100 properties. We probably had— we put in offers on over 10 properties and had contracts on at least 5 properties. Then contracts fall out for whatever reason. Appraisal comes back for scope of works way more than what we anticipated. Um, but this one is the awesome deal for us, uh, because the price was a really good price. It's in a really good area. It's in a nice neighborhood in Plano, Texas, which is a very affluent neighborhood. Um, good school districts. Uh, so it's kind of everything that, that we're looking for in terms of selling it later. It checks all those boxes, right?

So We got a $389,000 purchase price. What is the scope? So we talked about the scope of work, but what is our cost? What do we budget into this for rehab?

Put $65,000 as our budget.

Is that a hard number?

Yes.

Okay.

So what we— at the end of the day, we believe we're going to come up to that.

So we're going to be in it at $455,000. Is that what we're thinking? Total cost plus closing costs, all that. But so let's just say we're at $460,000 with a little contingency. What are we going to sell this property at?

So we actually Um, the appraisal came back at $570,000, which we were ecstatic.

Nice.

So the appraisal, uh, was a huge bonus, kind of cherry on top. We were expecting about a $450,000 appraisal, give or take.

So that $550,000—

$550,000, I'm sorry, $550,000 appraisal. So that $570,000 is a huge cherry on top. We're still thinking worst case scenario, we sell it $550,000.

So we got about $90,000 of equity there in this project when it's all said and done to be able to move with. And what, uh, what are our normal days on the market in Plano? We all— and if you don't know, Plano is a hotbed here in Texas. But what is— do you guys remember off top of your head the normal days on the market?

We have, depending on each neighborhood, we have some days on market we're looking at, you know, 30. Some of the rougher neighborhoods are kind of closer to 60, but most of them in this area, we're looking at about a month on market.

Okay, so 30-day turn time once completed. Uh, are we listing it? Are we doing for sale by owner? What is our game plan to, to maximize?

Still exploring some of those options. Talk to another to kind of get his input on it to see, because we know he does sell by owner.

Mhm.

So we're gonna try to learn from him, his tactics and how he does it and his, uh, success rate has been with it and to see if that's something we want to do. Or, uh, the alternative is, you know, Chandler's actually in the middle of real estate school right now. So he's close to getting his—

didn't he start that like 2 years ago?

Like 6 months ago.

6 months ago. You know, time flies. So, so that's what I was going to get into. So let's talk about this. Is not you guys' full-time job. This is something that you're kind of evolving into, trying to build a portfolio, trying to build some financial future balance. So what do you do as a full-time job?

So I'm a full-time firefighter paramedic. Been doing that almost 4 years.

Okay.

Love it. It's a great opportunity. The beauty of the schedule is I work a 24/48 schedule, so I work a full 24-hour shift and I get 2 days off. So most firemen are known by their side job. Yeah, yeah, they all have some kind of side job.

Roofing, construction, you know, Christmas lights, fencing. I mean, they're always got some kind of construction gig, maintenance, landscape, all that stuff. Great. And Randall, what do you do for a living? Work for you, buddy.

Operations there, so I help out on, on the lending side of things, uh, the operations there. On the Global Territory Investment side, I'm helping project manage the renovations that are happening at some of our acquisitions.

Okay, so you're managing some of our construction work doing on our multifamily, correct? So, um, so that helps me get into the next area So have you guys ever flipped a property?

No, sir.

So what makes you think that you can take on a half a million dollar project and turn it into profit when we tell most people that's probably too big of a chunk to be biting off?

The thing with this one, the thing I like personally is there's not a lot of major issues with the house.

Okay.

It is mainly cosmetic. Okay.

It's kind of hard to screw that up, right?

We'll see.

I'm sure, I'm sure.

In our minds, it's something— it's going to be a perfect deal for our first project. Okay. So, because like I said, there's not a lot of major issues.

And you're kind of already overseeing pretty much a major construction site for me in Longview, correct? We've got 94 units over there. We're taking those down to the bones, bringing them back to life. You've been overseeing that for 60, 90 days now?

Since mid-November has come a lot longer than that.

Oh, okay, good. And Chandler, you had commented how you feel like you're comfortable and confident enough to ensure success on this deal.

Um, I think the biggest key, um, and you, you've talked about this before, the biggest key when you determine success, especially in real estate, is are you growing and learning from the opportunity? Like Randy was saying, we feel this is a very, um, somewhat safe— I, I don't think real estate's ever completely safe, but it's a somewhat safe investment because like you you said we have a $90,000 spread in here, which is a healthy enough buffer for us to feel like it's a good deal. One, to learn on. Two, as barring anything absolutely catastrophic happening, we're going to at least break even, if not walk away with something, which is a huge win and a huge success for your first deal, is to walk away, uh, in the green, positive.

Well, and every person that I've coached and every person that we've mentored, I've always told them, if you can break even on your first deal you win. Yeah, the education, the experience, the life experience. I don't care how many seminars you've been to. I don't care how many podcasts you watch. I don't care how many books you've read. It does not match life experiences. And so when you can take on a project like this, that is not going to be a heavy rehab to where it's cosmetic, like you said, you're going to have some good reconstruction in the bathrooms. But if you can not only break even but even make $20,000, $30,000, $40,000, $50,000, that is astronomical in this world, especially in today's economic situation.

Uh, maybe 4 or 5 years ago, right? A while ago.

Yeah. You're going to set up your LLC and all that. Yeah.

Trying to get advice, but they let me go. And you sat down and told me the exact same thing that you just said now is if you make money on your deal, you're doing fantastic. I mean, if you just break even, that's a win. Yes. Because there's so many investors that on their first couple of deals they don't make money.

And, and why do you think that is? Why do you think that somebody can get into real estate as lucrative as it is And as plethora as it is, the properties, the everything that's going on, why do you believe, or what makes you think that somebody would get into a project and lose money?

It's a lot of things. Not looking into details early enough into the deal, getting into bad contracts. I mean, because even you taught me this as well, you make money on purchase.

Yep.

If you buy a bad deal up front, then you're only gets worse. It only gets worse. Only gets worse because more often than not, you're going to run into issues. There's going to be something that pops up in the construction, most likely, that wasn't accounted for.

And so would you agree that, that, that the reason why people would ever fail is— and it's not because they make bad decisions, but it's because they don't know what they don't know? Exactly.

That's what I was going to get to, is at least for me, I learn by doing.

Yeah.

And I got to do it first. Adjustments.

And I don't know if Chandler remembers, but you did. You came to us about 4 years ago, kind of asked, you're going to set up an LLC, how do you do that? We kind of walked you through the process of that. And, and then I think you came back 6 months or 8 months or a period of time later and you had some more questions. And I told Chandler, I don't know that he'll ever do it. And it's not a bad thing, but there's those people out there that want to jump into it. And they don't know what they don't know. And some people like you recognize, I don't know what I'm doing and I don't know where to turn. And this is where companies like Global Integrity Finance comes in, because not only do we finance the deal, we oversee it. We make sure we coach, we mentor. We, we, we— how many properties have I walked with you guys and said, you know, we can do it, here's how we would do it. And in order for it to be successful, this is the scope of work we have to do. And then you guys went back and crunched the numbers and said, We can't make it work. It didn't, you know, it looks good on that. What do you call it? Phantom, phantom profit. Yeah, it looks good on phantom profit. But then when you start really peeling it back and really looking at what is it going to take to take this rundown, dilapidated old building and bring it back to valuation, maybe more work than what it's worth. And so this is where you're correct. People make mistakes. Not because they make bad decisions. They just don't know what they don't know. They don't know to ask these questions. They don't know to look into the carrying cost, all this, the scope of work, the redesigns, the redevelopment. And so without a coach, without a mentor, or without somebody who's been there, done that, this is why we see people fail day in and day out. And we see so many of them as a lender. We get applications every day, all day long, and we're like, this deal doesn't work. And most people get mad. Nobody wants to be told no. You guys have gotten frustrated. You've looked at 100 deals online. You've walked 25, 30 deals. You've made offers on a dozen. And then you've had some of those go into contract and then walk away after the fact. And that's the smart thing to do. It's not easy, right? It's frustrating. I mean, I've seen you come in here just beat up because, oh my God, I don't think this deal is going to work. And I'm like, I agree with you. I agree. And that's where the maturity has to come into play. Do we go forward and lose our butt hoping we can make, you know, something out of it? Or do we realize that it won't work and I'm going to lose more than my earnest money or lose more than my option fee money and just, you know, I need to get out now. I will tell you after, you know, the 60, 90 days that we've been going through this process with you and kind of me watching from afar, you guys have grown so much in your due diligence. It's— I, I go back to it in my mind, to the first few that you guys presented, and I like— I would never tell you it's a shithole. I would never tell you it's a dump. I would tell you what I thought. I would tell you what you needed to look at, and then you guys evolved it into this is shithole. I never wanted to plant that seed. I wanted— because this allowed you to grow. This allowed you to see what I saw through your own eyes, and that's what was so— what was really so remarkable. So we're going to take this property. I don't think we can— yeah, we can. So we're going to take this property. You can see it's a beautiful brick home. Are we seeing this, Nick, up here? Can we zoom up here at all? Is it not an option, bud? I can throw it up on the screen for people to see. Yeah, that's all right. So I'll just— so it's a beautiful brick home, beautiful front entrance. Love that patio. You can see got some wallpaper there, flooring. Now, how much of this are we opening up? Have we talked about that with our contractor? Yes.

So the—

there's a—

there's really two walls. That divide currently the living room, which is what you're seeing here.

Okay.

And that dining room. So yeah, you can see in that picture above right there, uh-huh, this wall should be this wall right here beside us.

Yeah, this wall here, which is walking into that room there, right?

Okay, this wall right here, this one, this wall right here, that wall is what we're opening up.

Oh, okay, that's right, that's right. Yeah, he's taking this wall out right here. This is that dining room, and then that opens up. So this will be the formal dining That would be the living, and the kitchen over to my back, correct?

Kitchen, that, that's right, outside the—

yeah, this would become your, your, your living room, right? That— this is the formal dining, this is the living room now. And then, but that wall's— this wall's coming out right here, and this is coming out, these two.

Yeah, part of that, we're going to open up that, because if you go through this door right here, you can kind of see those cabinets. That leads into the kitchen. So obviously this is load-bearing right here, so we can't take that center part out, but we'll take that left wall out and we'll open this up. And that has like a little little, um, kind of informal breakfast area.

Nice dining. Nice.

So it'll just open up a lot, um, just because, you know, those— the 1990s floor plans are a little bit more closed off.

Yeah, very boxy.

Very boxy. What sells now is open concept floor plans. That's what people really like. So I think, um, once we do that, this house will look completely different. It'll feel like a modern build that was just built within the last few years, which is what is selling, especially in Plano.

Yeah, in Plano, it's old money trying to get new, new, uh, generations in there. So we got to bring it up to their standards. What kind of timeline are we looking at on construction? So if we close on the 14th, what's, what's the next move?

So we're—

if we close on the 14th, uh, we're getting crews ready to go that Monday. So the Monday would be the 17th.

Okay.

Uh, we're looking at 4 weeks as our goal to complete.

So we'll be in and out with construction 30, 45 days max, ideally.

And then, um, by the time we get close to construction, we'll start getting— compiling pictures, and we'll kind of get it ready to list. We may even list it prior. Right, um, just to get people— get eyes on it, get people looking at it. Then we'll probably do like some kind of open house or something once it's completely ready, uh, that way people can come tour it if, if desired.

Now, if I remember right, this house is on a corner. It is a corner, so we got lots of traffic, lots of traffic, lots of exposure.

I believe it's, uh, 2 miles— within 2 miles of one of the Plano Senior Campuses, which I think has several thousand students.

Nice.

So it's very—

Also the hospitals, it's a very populated area, very, very dense, very populated area.

Nice, nice. So we got closing in a week, we got construction in 45 days. So you guys are projecting to be in and out of this in, say, 90 days based upon your days on the market. And you're looking at it, let's just say conservatively $70,000 profit, give or take.

Give or take.

So I think that's a great return on investment. I really do. I think if I can, if I can invest in you guys and make, you know, $70,000 every 90 days, we can flip a lot of houses.

We absolutely can. And one thing we're talking about scope work and all that, um, one thing you taught us is having the crew and having guys that can actually do the work adequately.

Yeah.

Is, is major for something like that. If you don't have crews and if you don't have the ability to turn these houses over, you're not gonna one, you're going to struggle to be profitable, and two, you're not going to be able to turn out volume. Because I mean, we both work full-time in other jobs, so we're not going out there. We don't have the time to go out there and actually do work on this to ensure profitability. So building a team, you talk about lending us having the crew on the ground, creating that team of guys that actually can make this whole system profitable You take out one cog in that wheel, it doesn't work.

It doesn't work.

So if you don't have a good lender such as yourself that is constantly underwriting, helping underwrite these deals, helping ensure quality lending, because if we don't get good quality lending, the house doesn't work, right? So if we don't have good quality guys on the ground doing the work, we're going to lose money.

Yeah.

Creating that team, that whole team is so essential to creating.

You're right. You can have the, you can have the absolute best lending program. Low rates, low down payment, all that, but a crappy contractor that drags his feet for 6 months. Now that interest rate starts compounding, starts building up, vice versa. If I've got a terrible loan that I'm having to dump, you know, 20, 30, 40, 50% down, doesn't matter how good my contractor is. I really got to put pressure on them because I got to get my money back. So there's got to be a fit all the way around. Like you said, a good, you know, spoken, all that to really tie it in. Make it nice and neat and clean so that everything is frictionless and sticky. And it's—

guys are look out for you too. It takes time to find right contractors who are looking out for you with best interest.

Totally.

Um, just not everybody is.

Not everybody is. And I can tell you, we had a, a membership program a few years back where we brought in about 50 people. We, we helped them find houses. We, we did all the backend work for them. And then we would help them execute, kind of like we're doing with you guys, walk through from beginning to end. And when they would go pick their own contractor, we, we'd give them a list of contractors, but they would actually pick their own because we don't want to be responsible for that. But we'd let them. And then I would go out to do an inspection. So the contractor said they did the demo, no big deal, you can't really screw up a demo. But then they start putting work into the house and be ready for their next draw, and we would look at it, we— I would walk it, and I would like No, I'm not paying for this. I'm not paying for this. This is crappy work. And so, and there would be many, many times that I would tell the clients, I said, hey, you got to fire the contractor and we got to get somebody else in here. So I'll, I'll help you find somebody else. But this guy's not cutting it. I'm not paying for this. You shouldn't want me to pay for it. And we got to get somebody else. And there'll be many, many times. And they would, at the end of the day, when they went to sell. And here's what happens if you use a bad contractor and they hide crappy work, it will be discovered when you go to sell it through that home inspection, because that's a homeowner looking to buy that. They're going to do a home inspection, they're going to do an appraisal, and that home inspector's job is to find everything that isn't, uh, open to the eye, that's hidden. So, and I would tell them, if you don't get rid of this now, you're going to lose money. But they would, they would get rid of the contractor, we'd bring another contractor in, they'd fix all this, they'd go to sell it and that inspection would go through clean. Maybe 10 items, 10 minor items. And like, oh my gosh. And I say, hey, this is what we do. We protect you. We're protecting our money just as much. But if you have success, you have profitability, you're going to keep doing this. And I always say, if you don't, if you do your first deal and you lose your shirt, guess what? You're done. And so many times people would do it their way. They would go on their own. They would get their own contractor. They wouldn't use our advice. They knew it all. And they're not in the business today. And that breaks my heart because there is so much money to make— be made in real estate. But you've got to have the knowledge one way or the other. I tell everybody, you have 3 things. Number 1, you got to have the right property. First and foremost, you have to have the right property. Out of the hundreds you guys have looked at, you found one. I believe it to be the right property. Number 2, you have to have the right financing. You have to have the money, whether it's cash or financing, but you have to have money. Property, then money. The 3rd thing is knowledge. Without those 3 things, you will fail every time. When you have those 3 things, doesn't matter how— whether it's, you know, finding the property, 85% of your time is spent finding the right deal. Then you line up the money, bank or investors. And number 3, knowledge. Do you have the knowledge yourself or do you partner with somebody, a coach or a partner, to help you learn what you don't know? Those 3 things ensures success and profitability. Hey guys, I appreciate it. I thank you so much. Everybody watch for the next episode. This is episode number 1, Chandler and Randy. Episode number 2 will be closing and walking the property, showing, kind of walking through live on site. As to what they're doing, the remodel. And then as the remodel is going, 3, 4, 5, 6, 7, all the way through, we'll be doing this. And you guys will see these two gentlemen come into an immense amount of success over the next 90 days. Stay tuned. Thanks, Nick. Good job, guys.

Yeah, we're good.