In this solo presentation, Dr. Toby Potter (The Unshakeable Investor) draws on three decades of real‑estate experience to illustrate how a student’s rehab budget was off by $87,000 – a gap that would have turned a profitable flip into a loss. He explains that the root cause is an insufficiently detailed contractor bid and a lack of absolute, line‑by‑line budgeting. Potter outlines the 18 essential line‑item categories (including demo, HVAC, electrical, plumbing, framing, windows, doors, fixtures, etc.) and stresses the need for sub‑line items that spell out every dollar of work. He warns against lump‑sum numbers, missing start dates, and paying contractors up‑front, describing these as red flags that lenders will reject. He describes his systematic approach: a detailed scope broken into MEP (mechanical, electrical, plumbing) sections, a timeline from start to finish, permit tracking, and post‑completion inspection, all fed into an AI‑driven analysis that yields “absolutes” for the rehab cost. The video ends with an invitation to a weekly Tuesday night coaching session where participants can learn to protect themselves from similar costly mistakes.
Chapters
Hey everybody, I want to share with you a story of one of our students who almost lost their shirt, lost everything on a mistake on the rehab. If you are losing money on your deals, I can guarantee you this is because your rehab hasn't crossed all T's and dot I's. Hey everybody, I'm Dr. Toby Potter, The Unshakeable Investor, 30 years in real estate, over 7,000 transactions and $1.8 billion funded as a lender, I want to share with you the common mistake I see with all our clients when they lose money. And if you are losing money, this is going to resonate with you the most. So let's stop losing money. Let's start making a profit. One of my students almost lost every dollar they had on one flip. and I'm going to show you what they did wrong. They walked it in person and they still missed over $87,000 in the rehab estimate. Their estimate came in around $113,000. And when we got down to the nitty-gritty, when I coached them, when I ran it through our system, our tools, my understanding, my knowledge, we saw that the rehab is closer to $200,000, which is an $87,000 gap. That's significant. Here's the deal. When you're putting a budget together, you have to have absolution in your numbers. And there can be no variance of that. We know what a property retail valuation is, what the ARV is. We know this. When we walk a property correctly, we break down the scope of work line by line. And then we know what our max spendable is for the rehab. And it cannot be almost $100,000 off. It can't. That is almost 50% of the cost. That's too soon. Now, if it was $1,000, $2,000, you've got some wiggle room there. When you're looking at almost doubling your rehab cost, that breaks your pocketbook. So I need you to understand how important it is. And here's the common mistakes. The contractor bid must have all 18 of these line items. These are line items. And then inside each line item is a detailed explanation of what that scope of work is going to look like. So you have your demo. How long are they going to be on it? What are they demoing out? And when a demo is paid, is it completed? So many times it's not. Well, I had to have Johnny go back out and tear this wall out later, these cabinets out later, or rip out this bathroom later. I just needed to get this started. That's a common mistake. One and done. Stop going back and forth. It was a whole lot out there. Your HVAC system, is that just the compressor? Is it the blower unit? Is it both? Is it all the ventilation lines? What does that entail? Here's the other deal. Your contractor will put a blanket number in there. You're assuming because it was $7,000, $8,000, $10,000, it's a complete rebuild. And he said, oh no, that was just for the compressor. You're like, what about the blower unit? It's 200 years old. What about all the vent lines? They're all tore up. Well, I didn't bid those. See, there's where we're missing the communication. You've got your framing, what's being reframed, what's being rebuilt. We may have to draw that out. If you're doing a complete gut-out to where you're moving walls, there has to be a clarity of conversations because I can tell you this, your contractor's only looking to make a paycheck. You're looking to make a payday. And so you need to understand the difference of what you need accomplished. He's only going to do the minimum. I don't care how long he's been with you. He's only going to do the minimum. And if he thinks for one second he can cut a corner, he will. It's just human nature. Quit taking things for granted. Windows, doors, bathroom, all the fixtures. What kind of fixtures? What kind of mirrors? What kind of vanity? What kind of sink? What kind of toilets? Break this down so there's nothing to be assumed. And go through all 18 of these. I'm not going to read them all, but these are your line item, subject line item. Underneath that is a sub-line item spelling out dollar by dollar what's going to be spent so you know exactly what happens. If your contractor is below these numbers, they're missing. So on your electrical panel upgrades, anywhere from $5,000 to $15,000 depending upon am I replacing the whole 200-amp panel, or am I just replacing old breakers? The panel is good, I just need newer Square D breakers. I need new aluminum wiring. I gotta remove— what does that entail? HVAC, $6,000 to $15,000. Is it the compressor, the blower, the vents, or is it just the compressor? Just what is that consist of? The kitchen remodels. Ladies and gentlemen, this is where most people fall short. Your contractor is telling you, we're gonna put new cabinets up. You're like, great, that bid works. And then they go in there and they sand and paint 'em. You're like, wait a minute, this is the same crap we had from 1972. See, people know the difference. Just 'cause you painted it doesn't make it best. I understand it. Full plumbing, re-piping, line by line, roof replacements, bathrooms, so on and so forth. Those items are the ones you must fully understand. Walk the property with your contractor, With this contract in hand documenting these 5 things: foundation, the roof, MEPs— mechanical, electrical, plumbing. That's what MEP is, mechanical, electrical, plumbing. Does it have it? Is it broken out into each section? Mechanical is HVAC, electrical is electrical, plumbing is plumbing. Simple. Are they broken out by their own categories? Demo scope, And then the interior finish. What's the grade look like? Walk it, write it down, spell it out. That any person can walk in there and understand what's being done to that property. The red flags that I reject on day one: lump sum numbers. We as a hard money lender won't accept it. How do we pay on a lump sum number? My electrical is $10,000. Great. Here's what happens. They go in there and they run all new electrical, and all they've done is wire the house and they want paid on it. I'm like, well, it's not done. Nothing's hooked up. Outlets aren't set up. Switches aren't set up. Appliances. All you've done is done the electrical rough. Well, then pay me half. I'm not paying you half. I don't know that half is done. See, you do yourself a disservice when they're lump sum numbers. As a hard money lender, we don't pay on that. I want absolutes. So I can inspect what I expect. MEPs, all lumped in. So my MEPs is $15,000. What does that consist of? Come on. No start date. Oh my gosh. Our system shows you when you must start to where you must finish. And if you're in that line, your profitability, if you're outside of it, you're losing. If you're in front of it, you're winning. See, we build all this out for you. Demo timelines, permits listed, all this. If these aren't on there, it's a red flag on day one and we make you redo it. Never pay anything up front, ever. We pay everything after work is completed and inspected and approved by all parties. Okay? Always. You can't negotiate down. A contractor's bill after the walls are opened up. You have to understand that you cannot negotiate down on a contractor's bill after the walls are all opened up. Once that day is done, everybody's stuck with that property. Okay, we run this through our analysis, we run this through our AI engine, we give you Absolution. So join me Tuesday night 6:00 PM Central Standard Time, and let me show you exactly how we protect you from ever losing a dime from this day forward. Dr. Toby Potter, I'll see you Tuesday night.
