Flipping 101 Free Monthly Zoom Call

Well, Wendy rarely does these. She's going to do more of them with me as she's the rock star behind all this genius going on. Not me, her. But the big thing is, is that Wendy does a lot of the behind the scenes stuff. So I do also want you in the chat. Like the most dying question you have to ask Wendy while she's on this call because we are going to go through those at the end of it. So make sure whatever you want to throw in there, throw in there.

And the girl will not give my hair color formula away just in case that's one of them. I checked this week.

Somebody wanted cares.

You might be surprised.

Nobody cares. Michigan. Toronto. Litchfield.

Nice.

Who wants to flip a house?

Oh, me, me, me.

You know you're out on this. You're out on this. So. Hey, honey, how was your day?

My day was a little rough today. Yeah, Steve and I switched cars today because he's pulling the can, Amy. I had to go pick it up with my. My truck. And I usually drive a big diesel and he's got this fancy car truck that goes really, really fast. And I kind of totaled it today, so it's been kind of a rough day. I see Caleb smirking. He must have already talked to Christian.

Yeah. You're a trooper for being here. I saw the pictures. I'm glad my wife is okay. The car is replaceable. We'll be all right.

Yeah, not exactly replaceable, but I'm sure you're working on it. If I know you, I wasn't finding.

A replacement for you. I was finding one for the car.

Don't worry. The fireman said that I could come and stay at the station if you decide to.

I'm sure he invite. All right, it's 604. We're gonna fire this up. Hey. One of the reasons we want to do this is that we've been doing this for a long time. We get lots of questions, and we wanted to give you kind of the basics of this. And some of you are even considering being a contractor and what does it look like? And some of you have taken on. Those of you in real estate have somewhat taken on a contractor job every now and again for a client, which I don't advise, by the way. So we're going to give you some light stuff and some heavier stuff just to kind of go down in the renovation. So I'm actually going to interview Wendy a little bit and let her kind of take this on. But first, why don't you tell them, like, background from Wendy. Wendy has served every position in the real estate business from property manager to buyer's agent, transaction coordinator to full time mom, all the other things. But she really found her passion. 2015 when we decided to do the flips right now, we started wanting to do flips and eventually started to realize like we wanted to create wealth and we could create more value by renovating things and keeping things and that was what the goal was. But we have a great system in place and she is a great contractor and designer. So I don't have to go look at the houses and pick out tile because I'm a guy and I suck at that part. So where did you find the passion 15. I mean I still remember the first fireplace you painted with watered down gray paint.

So I think that when I was working with buyers, which seems like a million years ago, I always had the, the gift of being able to walk into a house and go, oh, if that wall wasn't there, or look past this because we can change this. And I even remember working with a couple of buyers and helping them do renovations after they purchased. And then when we started working on our own renovations and doing a flip here and there, I really just, I loved it. I loved seeing the transformation. I love seeing an old house that at one point was brand new and somebody really loved. I love being able to give it a new face and refreshing it. And it of grew, it just kind of escalated. And we've, we've remodeled almost a thousand houses.

Yep. To this, this point. And they've been from painting the first fireplace to, let's see, Monte Cristo. When we move the kitchen from the middle of the house to the other side of the house and close to make another bedroom. Yeah, she's done some crazy stuff. So when, when you started though, where did you start? Like talk through that process of like, let's just start at the beginning. Right. So it was 52nd and you started with the contractors. Like let's just talk about where you found your subs.

So I started with, basically he was a handyman and I was doing some of my own electrical work, like the light stuff like changing out outlets and switches and things like that. And I would, I looked for a painter and not somebody off of Craigslist. I always wanted to bring in somebody that I knew wasn't going to run away with my money, which I'm sure.

We'Ll talk about later on. Craigslist tend to use light bulbs for crack pipes and they steal things and yeah, you just, just don't want to go down that road.

You only really know that if you've experienced it. So. Yeah, so I. That's funny. So I started with using a handyman, and actually I got lucky because the guy that lived across the street, there was two neighbors that kept coming over to check the. Check the progress. The mom was an old guy, and he's like, you need to meet the neighbor. You need to meet the neighbor. He's an electrician. And I'm like, okay, okay. Okay, thanks. And then the. The lady across the street came over. She's like, oh, you need to meet my husband. He's an electrician. And I'm like, okay, okay. And then he came over, and he was a cranky Bosnian dude. He's still my electrician, and he's still cranky. So it's. It's been trial and error. I've been super, super, super lucky with the guys that I work with. Most of the guys on my team have been with me for eight years, and it's trial and error. I mean, when we first started, I used a contractor that I kind of inherited, and he was good enough at the time. And one of the things that I realized is that he was hiring guys off of Craigslist that did meth out of a light bulb and lied to us about insurance and all kinds of crazy stuff. So, yeah, you kind of got a trial and error.

So in eight years, what is the success been for keeping your guys together and keeping them working for you as subs? Because those of you that want to flip or do these things, this is the really, really important part, because if you don't have these people, you don't have anything. You're constantly looking for the next person, and that's really hard to work with the next person because they don't know how you work. You don't know how they're going to work. You mix them up. So what was like, this is really the secret to what has. You've done so well with especially being a female contractor.

Well, I think. Honestly, I think that that's part of it, is I'm a woman, so I don't get into a pissing contest with them over things. I'm humble. I know what I don't know, and I don't have a problem saying what I don't know and asking questions. I treat my guys. We're a team. So we. We have our, you know, our core group, which is, you know, a general contractor. He does all of my flooring, my drywall, my paints. He'll Bring in guys that he knows to do concrete and stucco and block walls and things like that. My electrician, my plumber, my H Vac guy. And then I have a couple of subs on the outside that, you know, I bring in a glass guy, I bring in countertop guy, I bring in a cabinet guy and things like that. But with any of them, I think one of the things that they appreciate the most, and you know this from being in real estate, is the most annoying person you work with is the person that thinks they know everything and they really don't know what the hell they're talking about.

That's usually me.

So I think one of the things that was keeping my guys, I think that's been one of my big things, is that, you know, I treat them like family. We're all in this together. If I'm not working, they're not working. If they're not working, I'm not working. And just the humbleness, really. And they love the fact that they don't have to go out and get their own work. A lot of it has been the fact that I can keep them busy enough. And they don't like to go out and talk to customers. They don't like to go out and look at, you know, eight jobs a week and put numbers together and then have to negotiate with people and all that other thing. They like going and looking at them with me and sending me the numbers and I put the proposals together and then I go out to the client and then they have one point of contact for the job, and that would be me.

So with that being said, when somebody's starting out on their first project and they're meeting somebody, this is probably the most important. We learned so much from doing these. We started out by buying materials and buying materials for jobs and having guys pick them up because we're going to get credit card points. The credit card points are not worth.

I'm all about playing the game big time. But, yeah, no, it's not worth it.

But here's. Here's what happens. And this is. This is why we don't buy the material. So when somebody. When anybody's doing a bid for you, you want them to include materials. So it's drywall, those types of things, they. In their bids, you're going to want them to give you the estimated flooring surface, like for tile, and you will buy that tile enough for that job. Because if you try to play the game of buying the materials, those materials end up at other people's job sites. Other than yours. Right. It just, it's gonna happen, right? It's. They can say it was stolen, there wasn't enough of it, you didn't buy enough. So you always want to make sure that your bids are them, including the materials. Now what materials do you buy yourself per job versus the contractor?

I buy flooring, I buy plumbing fixtures, I buy lighting fixtures, I buy cabinet poles. Sometimes I buy door handles. On my higher end flips and on my private clients, I buy door handles, mirrors, cabinets I order from a cabinet guy. Yeah, that's pretty much it. Everything else they bring in, they bring in all their lumber, all their drivewall, you know, everything else, the electric, the.

Electrician puts in all the switches, all those things are included in their bid. So you're not going to Home Depot because this is also what happens, right? The electrician's on a job and he calls, he's like, you're 10 outlets short. I need you to bring me 10 outlets. Right? So that's the issue when it comes down to it is like you want to make sure that you're able to be efficient as well. So you don't want to try to like buy all that stuff and all those things are delivered. So on those materials that you do shop for, what's the process? So you talked about light fixtures, mirrors, like, what are the best places that you're finding that you shop for that you compare with maybe even some money saving tips. Because I know that sometimes you go on houzz and you do this comparison game and you kind of.

So it kind of depends on the property. So if I'm doing just one of our regular flips that were is going to be a rental and it's like, it's not a big deal. A lot of that stuff I buy on Amazon. You can.

And trust me, the Amazon guy loves us because we get about 95 packages a day stripped of the house, which is super awesome.

What's great? Okay, so if you're doing this often, here's a little pro tip. If you're doing this often, set up a business account. Because when you are ordering for two or three properties at a time and he's literally dropping off 36 packages in a day. When you order, when you order for a property, you can put a PO number in it or a PO And I use it by address, like the, the name of the address. And every label that pops up and is on the box will have that address on it. So when you go to load up your crap, you can load up it's like loading your own UPS check. You load this address here, you load this address here and this address here, so you're not losing things at other properties. So when I do. When I.

That's on Amazon, right?

That's Amazon, yeah. Build.com I do a lot of different stuff on build.com. anything that I can get on Amazon, I will. So. And that sounds kind of cheesy, but a lot of the things that I can get, like I can go get all of my. Anything Moen or Delta I can get.

On Amazon, which are plumbing fixtures, by the way.

Yeah, sorry.

Took me a while to figure out what those were.

So Moen or Delta I can get on Amazon. And they're the same price and sometimes if you buy in volume, they'll be, you know, three or four or five dollars cheaper. They come faster. They come faster than any place else you're going to get them. I do not buy especially plumbing fixtures from Home Depot and Lowe's. And the reason is. The reason is, is that I've been told. I've not verified this, but I've been told that it's kind of like working when somebody does a contract with Walmart and they want to. So Home Depot and Lowe's wants to have a certain amount of markup on those products. And so for them to be competitive or be a little bit less expensive than online or going to a plumbing supply, they actually make the. The faucets with different parts on the inside. So you can't necessarily tell from the outside, but the things on the inside may wear down faster. They might use plastic in parts where they would use. Normally use metal or things like that. So I try not to buy. Yeah, I try not to buy those things from Home Depot. So a majority of my stuff I get at Amazon, if I'm going a little bit more upgraded, if it's, you know, a 6, $700,000 house and we're looking for specialty light fixtures or things like that, then I will go to build.com I'll go to Houzz. Sometimes if you don't use Houzz, it's freaking amazing. There's just. There's a gazillion light stores on online. But a lot of times what I'll do is I'll take the extra 20 minutes to. Once I find what I want, I find the name of it, and then I do a web search and find out where I can get it, the least expensive or who has the fastest shipping, depending on what I need it. I'm willing to pay an extra 20 bucks for it, to get it three days sooner so that my electrician isn't coming back twice, if that makes sense.

Yep. So there's. There's some people that are local, some people are out of state, but I think floor and decor is pretty much national for the most part. So is that. Is that your number one place that you should.

Is my. My go to for flooring. And there's a reason why. Number one, their prices can't be beat. Number two, their quality is usually way better than Home Depot and Lowe's. And number three, I don't have to order it. Number four, if I have extra, I can take it back. So if we go to Arizona tile or the tile store or any of your specialty tile shops, flooring shops, you order it, it might come in in three or four days, which is okay, great. Or it might take three or four weeks, who knows? But whatever you order, it's now a special order and you can't take it back. If I have 10 pieces of flooring that I'm not going to use, and they're, you know, 30 bucks a piece, because those big, you know, 24 by 48 pieces, they're 30 and $40 a piece when you get done with them. Well, it's not worth it to run across town to get three more pieces, but it is worth it to take, you know, back the extra case from the shower and the 10 pieces from here in the backsplash. So at the end of the job, it. What we don't use goes back. The other really cool thing about floor and decor is they have a point system. But what's cool is they have an app. And so everything that I purchase goes in the app. And so trying to keep track of the jobs and what I spend on the jobs, everything from those jobs is in that app. And my guys can take what's left over and actually return it to the store. And with my phone number, everything goes back to my account and it goes back on my credit card.

That's convenient.

Super convenient.

That's convenient. Speaking of tiles, so there was, you know, when we're doing flips or renovations and we're going to go, you know, both sides of this. You know, the flip for resale and the flip for rental, we're going to break those down a little bit as to what we do process wise. One of the things I didn't realize till, you know, later on was the types of tile. Right. Because I know that you hate it when customers get tile from home Depot or Lowe's because they got it for a dollar a square foot, what are the differences that people are looking at? Like when you're doing a flip, you know, in the average price range, what's kind of the price per square foot of tile that somebody should consider?

They make tile. Odd. There's porcelain and there's ceramic, and that's great. And there's. One is not necessarily better than the other. What the difference is is one of the ones that I refuse to use is anything that's made with red clay. So they're either made with white clay or they're made with the red clay. And you can tell when you go and you look at the back of them or you flip them over and one is red and one is white. It's kind of simple. The ones with red, if something is to be dropped on them or they chip or whatever that looks like you've got a big red splotch in the middle of your floor. And it's hard to. They're. They're not made as well. They're more brittle. And so when you trying to replace that one tile, the chances are you're going to crack the ones around them. So when I do a flip or when I do a rental, I always leave a box of tile just in case something happens. It's just cool. You know, when you sell a house and they're like, we want to do this, and they're like, oh, there's six pieces in the garage. Perfect. So it's. It's one of those things that I don't like to use the red back tile. So as far as price, if we are going with our flips, I try to stay around between 2 to 250, 275 a square foot for flooring tile. And then for just a renovation that we're going to sell, it really depends on the. The price of the house. I don't like to go over $4 to 425 a square foot. I just think that with the amount of options that are out there, a lot of times I'll have a client that goes out and they bring me something back at $9 a square foot, and I can go, okay, great, thanks for the sample. I know what you want to do. And we go to floor and decor, and I can find almost the exact same thing for a third of the price. So sometimes I'll have people, they'll have two pieces of tile right next to each other, and they can't tell the difference, but one is 899 and one is 499. And I'm like, why. Why do we. Why are we choosing between these? The choice, to me is obvious. So one place that I will spend a little bit more on tile is backsplash and showers, because their statement pieces.

Wait, talk about. So you gave this explanation of the kitchen and the dress, which I thought was awesome. We were talking about the backslash. So this is when you start talking about your renovation or your clients, things like that. I love this explanation. You should totally use it. So go ahead.

So the backsplash in your kitchen. So your kitchen is your little black dress. Okay? Your cabinets are pretty standard. Your flooring, everything kind of goes together and it works together. Your little back dress is your cabinet poles or. I'm sorry, your accessories are your cabinet poles and your backsplash. So, ladies, if we go to work and we're wearing a black dress and we put a jacket over it, how easy is it to change our necklace and our shoes and go out for the evening in that same little black dress? The exact same thing with a kitchen, if you keep it neutral throughout, by the time you change up your handles, change up your backsplash, you can completely change the look of the entire kitchen and know there's the two least expensive things in your kitchen to change.

Good job.

Thanks.

I thought it was genius. When I was out on appointment with her yesterday, I'm like, all right. I like that explanation. Although, guys, just so you know, the accessories that go with a little black dress are the most expensive damn things you can buy.

Only with a little black dress.

Right.

Not with the kitchen.

Make sure I can leave the guys out of that conversation there. Where are you at right now in the trend in flooring? Because we're seeing a lot of luxury vinyl. We're seeing a lot of hardwood where. Why did you just snort?

We're. I didn't snort. I. You snorted. Trends are changing right now. We're in the process of a pretty big. Well, you just asked me.

No, I was talking about the flooring, because people are like, some of the stuff. We're starting to switch over to some of the luxury vinyl and some of those things. Right. So we were with a lot of tile, but you're starting to see some more durable.

The luxury vinyl is one thing that I will not buy at floor and decor.

Okay.

I don't like their. I don't like their vinyl selections.

Okay.

For my luxury vinyl, when I put it in higher end. So there's. With luxury vinyl, I tend to put it in higher end. And I go with a higher end luxury vinyl. It's a better feel. It's a better look. It doesn't have the grout like the. The wood plank tile, does it? I've not found one yet that doesn't scratch. I just really have. I mean, they say they're not supposed to. They say they're supposed to be waterproof. I know we put a really nice one down in our house, and when the washing machine flooded, I still had to take up the tile to get the water out from underneath it. So I mean, when you come. When it comes to durability, tile is tile is tile is tile is tile. You're not getting through it. So if it's a rental, I do not recommend the luxury vinyl. Okay.

All right, now let's talk about trends. What, what are you seeing trending in the design space right now?

We are. Grays are out. We're done. They're done. And whites are back in.

Okay.

Color is like almost non existent right now. It's like the creamy brown.

Are we bringing back travertine? No. Really hoping we're bringing back some travertine.

No, no, sure. It's too soon because not everybody's gotten rid of it yet. You know what is coming back, though? Glass block.

What?

Yeah. Rainbow colored glass block. Colored glass block.

I'm gonna keep all my comments to myself right now.

It's probably a good idea.

All right, so what, so what are you seeing? Like, because I know the other thing you said was some of the creams and some of the whites and some of that stuff, but you were also talking about staying a little bit more on the grayish side, like kind of the ultra gray stuff, but going into the grayish, that kind of goes with the brown or the girl.

Oh, yeah, I'm a fan of so what. What's coming in right now is that very natural colors, the natural woods, the draw color. Calm down. It'll be okay. I didn't say oak. I said natural woods. Straw. Just the, the. The neutral. Everything is neutral right now. So when I do flooring, I like to stay in a, in a color range that will pick up either one. It'll pick up the browns or it'll pick up the grays. And one of the things that I noticed is that it goes from the whites to the browns to the grays to the whites to the browns to the grays. And it, it makes those circles, it makes those trends, because there's really not a whole. There's no other palette to go to for your little black dress. Besides the whites, the black and the gray and the browns. So. But we're seeing very, very neutral right now.

Let's flip over to rentals. Like throw a one in the chat. If you're buying rentals or thinking about flipping houses to be a rental.

You.

Know, here's the deal. Rentals versus flip. We learned a long time ago that, hey, we want to build something that's going to be tenant proof for longevity when we're doing these renovations. And by the way, because I don't want to go too deep down this rabbit hole. Cause I just got off another podcast about talking about the difference in wanting to flip versus flip to keep. Right. So now we're doing a renovation for long term and how we renovate those differently. Not that we cut costs, because that is the one thing that you will find out about us is that we are going to do the right thing 100% of the time on our flips. We will never cut corners on things even if it costs us money when we get into stuff. I just don't believe in it. And here's the thing that, that I do believe in. If Wendy renovates a house and I end up or one of my agents takes a client over there, or one of you guys goes over and sees that house and wants to put an offer in, there's a guarantee that you guys will tell the clients like, I know these people that did this and I know their quality. And we hear that a lot. And I never want to be nervous about selling somebody one of my houses because we didn't do quality work. And so it's really important as you get into this game, if you're going to do it, do it right. And yes, you're going to learn some hard lessons and it's going to be expensive. But that's one of the reasons that we're hoping to help you cut some corners with this is just do the right thing. If you wouldn't live in it, you wouldn't buy that material. Then you shouldn't buy it for somebody else. I'm not saying to go cheap, cheap or real expensive, but I'm saying you should be putting a quality in for that purpose because I guarantee you it will bite you in the ass at the end of the day, whether it be karma or just because you did something cheap and it came up in the inspection. Right. So I just want to caution you with that. So I want to talk to you about rental versus flip renovation and some of the differences that we do. So let's just start one of the main things and flipping to keep versus flipping to profit. What do you do in the bathrooms?

When I flip for rental, I do cultured marble surrounds instead of tile showers.

Here's the reason why tenants typically will not take great care of grout. And grout has to be maintained. It has to be cleaned. When a piece of grout chips out and the shower's been leaking through it for two years that they've lived there, you've now got wet walls that have to be taken out. And marble surrounds are three panels. They're caulking and you're not going to have the potential damage to something like in a tile shower. And guess what? White marble showers are never going to go out of style. Right. They're just always going to be style. But they're the easiest thing to maintain.

They are. And that's, I mean, and I don't, I don't do fiberglass. Cultured marble surrounds is what new builds put in million dollar homes when they're doing them for specs.

Yep.

If they're good enough for, you know, for new builds to put in, then they're, they totally work for my, you know, $250,000 rental property.

Yeah.

And they'll be there forever.

Forever. So the. What about countertops in rentals versus flips right now.

So rentals. I try to stick to granite when I do rentals and we try to make as many surfaces hard as we possibly can when we do rentals. And I try to do granite over the. Everybody likes the quartz right now. Quartz countertops. Sorry, I was, had a little brain fog. Everybody likes the quartz countertop. So there's, there's quartz, there's quartzite and then there's granite. So a lot of people don't understand the difference between the quartz and the quartzite. Quartzite is a natural stone. Granite is a natural stone. And they cut them out of the mountain. They cut them in slices like they do a loaf of bread. They polish them up and the slab is what they, what it is and everyone is slightly different. Quartz is a man made material and it's. You were used with little pieces of quartzite, it's used with stone and then they put like a, a resin in to make it a solid surface. And then it's usually some sort of printed so that when you pick quartz slabs, every single one of them will be the same. Whereas with quartzite and granite they are not. So quartzite and granite can go everywhere between $9 and square square foot to all the way up to 70, 80, 90, $100 a square foot, depending on what it is, the colors, all this other stuff. Whereas quartz I can get for quart. So the quartz slabs tend to be smaller where granite and quartzite will be bigger. So if you've got a large island or something like that, you're going to want quartzite or granite. The quartz everybody is in love with, because you can get true colors. So you can get a true white, you can get a gray without having to go to marble, which is a whole nother topic in itself. But you can get the white. You can get, you know, predictable veining. You can get different things with the quartz that you can't get with quartzite and with granite. So the look that everybody likes comes from the quartz. The durability that I like as a homeowner when putting a renter in comes from the granite or the quartzite. The quartzite is too expensive. So the quartz does not handle the heat the way that granite would or the way that quartzite would. So if somebody puts a really hot pan on the counter or something like that, it only goes up to like 450 degrees. They shouldn't be too much hotter than that. But I don't know that I want to take the chance. So I have. I have sources that I work through where I can get slabs of quartz for 700 to $750 a piece instead of paying the 12 to $1500 a piece that you normally do. So I've shopped around and I buy in bundles of 15. And then my fabricator puts. Keeps them in his yard, and we just use it from the stock. But the difference in my. In my rentals is I do like to use granite because the quartz will. Sometimes the edges will chip and things like that.

So one of the things, if you heard, I just want to go back on this is that as you do more, or if you can, you know, afford to do it in bulk pricing, depending on what you're doing or how many you're doing, you can make some agreements with people where it's like, I mean, the first time she came home and said, I bought 25 slabs of granite, I'm like, huh? Like, where are we going to keep all that?

They were going to run out. I needed it.

And we had a lot of projects going at the time, but she was able to get a pretty substantial discount by buying all that. And we were putting the same granite in all these houses, so it was just easier. And it keeps, you know, when you run out of granite and you're in the middle of a kitchen, it doesn't work. You can't just go get another piece of granite that's supposed to match. Right? That's, that's the hard part about granite is like, unless you're buying in bulk and have enough for it, you, you run into a problem.

So the nice thing about it too, about using the same thing, is that when I work, when I do a job for a client, I have to go in and estimate how many slabs they need something. So if they need five and a quarter slabs, we have to buy six. And then other three quarters of a slab gets wasted. It, you know, stays in the boneyard at the fabricators, and a lot of times he'll sell it to somebody that's doing a countertop. Whereas if I use the same material on multiple jobs, what's left over that three quarters of a slab goes to the next job, goes to the next job, goes to the next job. So I build the job for full slabs, but we end up with some leftover from each job that we can carry over to the next. So it helps to bring down our cost of our, our slabs.

We. So on the rentals, how are you. Like, this will come from both of us, right. Is just when you're going through and doing it, what's. What kind of tile are you putting in? What kind of paint are you putting in? Are we doing all the rentals very similar? And why would we do that?

I tend to do them similar. Um, and one of the reasons that I do that is like we talked about pricing. Okay. So again, it depends on the pricing of the home. If we're, we don't usually do high dollar rentals, but if for some reason we would, I would put nicer things in it than I would, you know, a medium price rental. Just because you got to know your audience, I tend to do them very similarly. One of them is because of sharing materials.

Right.

Another is that if I've got a case left over here in a year from now, something happens over here, I know what my product is and it's a little bit more available if I have four rentals that all have the same thing in it and I need something, I can go steal from one to fix something at another. And honestly, it's just easier.

Yeah.

It just saves me a lot of time. I get sick of looking at the same thing over and over again, I will tell you that.

So one of the things, one of the things that's nice about Doing the rentals is, you know, for those of you that have experienced it or not, it's, you know, a lot of times when we started we're like, oh, we want to flip houses because we want to make money. So let me give you some really quick numbers on this because one of our goals and our passions is, is showing people like yourselves on this call that, you know, while, yes, you can make one time source of income flipping a house, you can build a legacy with the same house for your kids and your kids kids, and create a massive amount of wealth down the road. So while all these people have flipped houses and they made money and they've spent it, they have nothing to show for it at the end of the day. Now, it's not that we don't do it, but we have a system for it and we do it in volume, right? So when we're doing this and we're flipping and there's enough money in there, keep this in mind every time you flip between cost of sale of paying real estate agents or paying yourself the taxes you're going to pay. Because when you flip a home, it's ordinary income and the money you're going to spend to sell it usually is the equivalent of about 20% of that sales price when you actually factor it all in. So what is that 20% at the end of the day? Well, if you bought at a decent price, you added value to it. You did the upgrades, you just created the down payment to keep that property. Now you're not paying taxes. Yes, you didn't create income right now, but you're creating something long term. So my advice when you're doing this is that have some sort of goal. If you want to flip houses to create income for down payments or whatever that case is, find a goal. I've mentioned this a couple of times. The buy box, you know, in different areas is that you now have something that you know that you're like, this is a property I want to keep, which means I'm going to renovate it differently because I'm going to keep it, I'm going to renovate it and I'm going to refinance it and I'm going to use the equity that I created as the down payment, which gives you the ability to start accumulating wealth through real estate rather than just accumulating income and paying taxes on it. Okay, that, that is like the number one thing in this, is that yes, you could make a profit. I can also tell you you can lose your ass. Been there Done that. High five. Not super proud of it, but it happens, Right. Because there's risk.

Well, you gotta have losses to know your wins, right?

True. But there's. There's nothing worse than flipping a house and making $50,000 and flipping another house and losing $50,000 going, man, we did all that work for nothing.

Yeah, there is losing 100 grand on both of them. That really blows.

You know, it blows wrecking my car. Okay. On the. So on the rentals and flips, it's also one of those things, too. I want to go into either one of these scenarios where we start and why we started this way. I don't know if anybody in here. And you can throw a number one in the chat if you have gotten started on a flip and then realized at the inspection that something has gone terribly wrong that you missed. We have. And I want to share a story with you as to why we do this. If you're buying a home pre1980, you want to start and might even not look, it's 250 bucks to have the plumbing scoped, right. The sewer system scoped. It is the number one thing we see go wrong with, you know, when we're representing buyers, when we've seen flips, is that somebody gets done with all the pretty stuff and all the sewer lines are collapsed underneath because of the age of the home, because they've got clay or orange burst or something of that nature.

Orangeburg.

Or Orangeburg. And cast iron. Right. So we always start by inspecting the property and going through it. We inspect the roof, the AC water heater, the plumbing. Like the major things, we can mostly see the rest of it. But those are like three or four things that are going to cause you major headaches that you need to be prepared for. So when you start a property, before you go and do all the pretty stuff and before you swing the first hammer, take the time to do those inspections, take the time to get bids together.

The other one, that is a big one that's showing up a lot. And you wouldn't. You would think that it's a newer house and you wouldn't have this problem. But properties built in the 80s and some even in the early 90s, have the poly plumbing, plumbing. And so checking your hose bibs, checking underneath your sinks to see what condition the. The pipes under there are in. If they're copper, you're in good shape. If they look like their pvc, have them checked. Because there's PVC and then there's pvcc and those Are the polybuty lane. And they are brittle. They just. They just crumble. And so there's roof inspection, AC inspection, which you can usually have those done for free. A sewer scope, and then check your plumbing.

Yeah. So those are. Those are the major things. So I want to tell you a story. One of my students, actually, before he was a student, I'm not sure how we salvage this, but house in Tempe, like, there's a couple of lessons in this. If you're flipping houses. There was a money guy that was involved, and there was a partner here in Phoenix. And the partner in Phoenix, like, oh, I found this great deal. Money guy bought it, paid cash for it. Well, neither one of them decided to talk about who was going to insure the property. Well, during the flip, the property burned down. Okay. So the partner that had no money into it bailed. And this guy got stuck with rebuilding this house in Tempe. And what happened was he rebuilt it himself, subbing things out from California. And the house was built in 1960 in Tempe. They added a thousand square feet to it. Like, he just went rogue on what he thought would make a great house. And it was a great lot. There was so much to it. By the time I got to them, it was just floor plan.

It was horrible.

It was terrible. And so now we get to inspections. The house is finally put back together, and it was terrible. Like, when you open the front door, it almost hit the kitchen island. You're like, nothing like being able to off a cocktail, offer a cocktail right from the front door to the kitchen. And we get to the inspection. This is 2,600 square feet. Every inch of the sewer was collapsed in it. After the house burned down, nobody decided to check the sewer system. And so we had to go back in and do $30,000 worth of removing cabinets and jackhaming the flooring and doing all this stuff. So the plumbing is the one thing that we see a ton of people, like, just forget about, not think about it. So I'm going to tell you right now, it's $250 for a sewer scope. Do it before you touch something, because you'll be really thankful for it, because it's a lot cheaper at the beginning.

Than it is at the end, Especially if the. The house has been vacant for a while or we will be vacant for a while because the people can move out and the plumbing is working just fine. But if they move out in May and you're flipping that and nobody's using that until August, it's sitting in the hot Arizona sun and it's just baking. And so if you've got the orange burger, you've got the cast iron and it's sitting there baking and there's no water going through it and no waste going through it regularly. And then they go to use it, all of a sudden it just crumbles because it's not being used. So the older houses, if it's continuously being used and you're only doing a light reno on it, it's not as big of a deal as if it's been sitting for a long time. Yeah.

What are some of the online apps and things that you're using?

Hand me my phone.

There you go.

So we use for our. To run our jobs, we use a program called BuilderTrend. And I have not. Unless we run into something that we weren't expecting. I don't think I've gone over budget on a job since I started using.

Buildertrend, Only our personal shit. Well, that's because you always likes to spend money.

You always have these great ideas when I'm in the middle of something. So that one, if you're. If you're running several jobs, that builder trend is great because it helps with subs, it helps keep things in order. I use it with my private clients they absolutely love. Can get a little bit pricey depending on what you're using. It's a great CRM and it's just, it's really nice. It holds schedules, it holds billing, it holds. It can take the place of your QuickBooks. You can pay out of it, you can pay, people can pay into it. It's really great. But two that are my favorite is one I use is called Cam to Plan. And it's really, really cool because I can use my phone and go around an entire house and trace out a floor plan with my phone, which makes it really, really awesome because then I can take that and transfer it to. It's not on my phone. There's another one. I'll have to post it. I don't remember what.

The measurement tool?

No, the one that I draw out all my floor plans on. It's on my iPad. I don't remember the name of it, but that's the other one that I love. So I can take the plan that I trace out and I can put it in into my iPad for an existing floor plan, and then I can move stuff around and put walls in and move the cabinets and move doors and windows and all kinds of stuff with it and come to A client or even to you with a concept of this is what I see happening. And we can go through it with that that way before I take it off to an architect. Those are a couple of my favorites. Awesome blowing decor. Okay.

One of the things, because most of you are not contractors in here, and one of the things that we learned early on, kind of going back to buying materials, was how do you do your deposits with your contractors? Because I think all of us can probably raise our hand that we've been ripped off by somebody, that we paid them either money up front or too much or whatnot, and it becomes a problem. So how do you work that?

So, first of all, if you're working with somebody who's licensed, bonded and insured, there's a really good chance they're not going to take off with your money because they report to the registrar of contractors. So if you work with somebody that's licensed, bonded and insured and you haven't found them on Craigslist, and it's not Uncle Louie's brother, the chances of them absconding with your money are slim. Because just like the real estate fund has a recovery fund, the registrar of contractors has the same thing. So you can go to them and say, hey, I had this deal here, my text messages, whatever that looks like, this is the check I paid him. And then they'll do the investigating, they'll reach out to him and they could lose their license, all kinds of other things. The other thing is work with some kind of a contract, putting, you know, putting a contract together, having before and before pictures so that you can say, no, this is what it was, you know, they didn't do what they say they were going to do. As far as deposits with my guys, it depends on what it is. If it's a really big job, if it's, you know, if it's a $10,000 job, then I give them half up front and the other half when it's done. If it's eighty or a hundred thousand dollar job, then they get it in 25% increments. With my normal guys, on an average job, I give them 20% up front, another 20 or, I'm sorry, 50% up front, another 25% when they're, you know, just before trim, and then the rest of it when they're finished.

Awesome. So either way, if you're using a pro. Hold on, she's got a thought. Go ahead.

From the very beginning, the relationship with my guys, one of the reasons that I've been able to keep the guys that I keep is that I pay every two weeks. So I go through the invoice, everything that I have, and I go through every two weeks, and I make sure that if I can, that they get some kind of money every two weeks so that they're not waiting for 30 days after the job is done to get paid.

Yeah, I think what's important about that is that we've seen it happen where people try to float their jobs with the contract on, the contractors back. The contractors have materials out, they're paying labor, they're doing those things. So don't put that on their back for them to carry your. Your money load. You know, really try to stay on top of them. And that's another way that they'll keep coming back and doing a great job for you, because they know that you pay and you pay on and you're not. I mean, God, we've worked with so many people that are just. They shouldn't be in the business because of the way they treat people, and they hold stuff back and they. They hold people hostage, and it's just not a great way to do business. And if you're working with good people, you're not going to have to. But I think it's always important to have something left over at the job. Even though our guys are trusted, they'll come back as many times as we need them to. But as you're working with new people, make sure there's something held back until everything is complete.

Yeah.

Okay. That was a lot. And I know that some of you probably still have some questions, so we're going to open it up for Q and A in just a second. I've got kind of a cool announcement, a bonus for you. And if you want to see and do more of what we're doing here, Wendy and I have created something called the Limitless Circle. And one of the reasons that we did that was because when I was doing coaching, it was a little bit pricey for a lot of people. And we really want to continue to share how to build wealth, some of the things that we've done with our kids as far as budgeting, getting them involved in it, and just some of the life lessons that we've Learned after being 23 years. So here's the bonus part.

Don't drive your husband's truck.

That is not the bonus tip. Garrett's going to put the link in the comment section. It's called Limitless Circle dot com. That's where you can sign up through the month of May. You are. Well, here's my announcement. I've written my first book. It's being released on June 13th. So when you sign up during the month of May for the Limitless Circle, you get a free copy of book and a ticket to our exclusive launch party, which is going to be a blast at an auto museum here in Phoenix. So that is something that we're just going to jump in. We're really wanting to build a community that is of high value and. And a low ticket price. Right. But it's going to deliver the value every month and then you are going to get a lot of great stuff out of it, which we're really excited to talk about and share with you guys from more of this stuff, things that we're seeing. Sometimes there'll be deals posted in there. So would love to have you part of that.

And went through like half of our questions.

No, I went through all of them. You just didn't read. You can't even see that far.

I can't.

You can have your glasses on. All right, we want to. We're going to open it up for Q A. So you can either type it in or raise your hand. Either way. Would love to hear your voice if you got questions. And we'll jump in.

Cam to plan. Yeah, it's. Let me pull it up. Yeah. C A M C O P L A N Pro. It's actually a really cool.

90S red oak cabinets. When wanting to rent or keep as refinish.

You know what, it depends on the price range of the house. So if you are. If it's just, you know, not just if it's a, you know, an 1800amonth rental. And here's the thing with cabinets. And that is on this list. And we didn't cover it. When to paint, when not to paint. So if the cabinets are still in very good working condition, if they've got the soft clothing doors and drawers and blah, blah, blah, blah, then paint them. Okay. If they're starting to fall apart and they're a little funky and you're going, well, repaint the countertops. It'll look a lot better in here. Well, if it looks great, that's awesome. But what is it like to use every single day? Because it's a kitchen and it gets used every single day. So you don't want tenants to go in there and every time they open the drawer fall from their foot. You don't want doors falling off you because then you're constantly getting phone calls to fix things. So the average Kitchen. And the average rental for new cabinets costs me about seven grand, give or take, you know, especially if I don't put in a bunch of drawers and it's not, you know, too big and things like that. So you look at it and say, okay, so seven grand, and then another three to four for countertops. So for 10 grand, am I going to be able to put this. That's okay for you. For ten grand, am I going to be able to put a brand new kitchen in this? And it lasts for the next 20 years. The average kitchen lasts about 20 years. So is it worth it to not have to? Because while you're already going through and renovating the house and getting it ready for a tenant, and maybe you're working something into financing or, you know, something like that, it's much easier to do it now than it is in between the tenant and now you're renovating again.

Yeah.

People are also much more likely to take care of things that are new and are nice than they are. If you paint over a kitchen and it looks great in pictures and they get there at the rental and it's a piece of shit.

The. The other advantage to that is, you know, what we've seen on our rentals is that when we do do the renovations and we put the money in front, up front, obviously it's increasing the value of the house. We also see higher rents, less time on market for a rental, and our tenants tend to stay a lot longer because it does feel like a home. And they can live there and they can stay there. I mean, we have one house which was one of our original renovations in 15. That tenant is still there.

Like more than one?

Yeah, we've got more than one. But that one's been there for almost nine years. Right. After we renovated it, we made it new, we capitalized on the refinance, and they're still there. Right. And they probably will continue to be there for a long time. So that is the nice thing. And also keep this in mind. We're talking about people, right? We're not just talking about houses. We're talking about people. And, you know, we. We want to treat people like, with the golden rule, the way you want to be treated. I don't want to move into a piece of crap rental property that somebody's cut corners on and I'm going to have all these problems with. I want to live somewhere that somebody thinks I'm a person. Right?

Yeah.

Because remember, your tenants are kind of your partners at the end of the day. And the People that are going to pay the most money for your house when you flip it are going to see the value and what you put into it. Some of the agents might not, but that's their problem. Right. So it is one of those pieces where we do these things and we want to create that value because, again, we're dealing with humans and we want to be treated like humans.

You know, Stevie said something that I think is really, really important. And I remember talking to somebody about this one day because she was talking about raising their rent. And I'm like, they've lived there for 13 years and you are going to let them go find a new place to live over $100 a month? That makes absolutely no sense to me whatsoever. So when you take care, you called them partners. And think about this, guys, think about this. You have somebody living in a house that, if you follow Steven, you did it well. You have almost no money into. And at the end of the mortgage, you have almost no money into. The person living in that house had just bought you a house. How are you going to take care of them? Right?

Yep. Great point. Good job.

Okay, thanks.

Good job.

Maybe you'll have me back someday.

Maybe. Maybe once every couple of years we get you out and put you in the general public.

Yeah. Apparently it doesn't work well.

I would say follow on Instagram, but she posts like every 12 months.

Last time I posted, you sent me flowers. Maybe you should send me flowers more often.

We're working on that part. Is there any questions that we can answer? If not, we're going to let everybody go get dinner.

I do have one. Steve, this is Danielle Zampino. How's it going? First of all, I wanted to. I wanted to speak to the integrity that you guys have in your remodels. I live in one, so I love it. And really, like, one of the deciding factors when we were looking at properties was that we knew that this was a flip when we were purchasing it. But we knew that you guys had such high integrity that we believed in the product, which I think is really important, which you kind of talked on. I also had a quick question on what your guys's opinion is on replacing single pane windows to dual pane windows if you know that it's going to become a rental property.

I think it really depends on the age of the property and where you're at with your budget. And so the average home in Phenix, and I say average because John F. Long only puts five windows in their entire house. So a John F. Longhouse, I can do windows for about 2500 bucks. The average house is about 4500. If it is in your budget, I am going to say yes. And the reason why isn't so much. Well, number one, obviously we just got done covering the tenants. Number two is it just makes the property look upgraded automatically. It looks like somebody gives a crap. It also makes it look like one of the nicer homes on the block. And if you don't do it and your other neighbors have, it's one of those things that makes the house look crappy and you're going to end up doing it eventually. The single pane windows, they just, they're, they're the, the, the. It's not caulk. It's the clay around them. Break. The windows break. They're just, they're, they're, they weren't made to last 40 years. And a lot of the windows in the valley that are single pane windows have been in there for 40 years. Right. They put block houses with these little windows.

Yeah. And, and to speak to that too, Danielle, it's also one of those things when you're in the process of renovating something, whether it's a flip or rental, when you're doing it, it's like we're already here, we're, we're replacing stucco, we're doing some of those things. We might as well get it done. Right. You don't have to do an ultra upgraded dual pane, but it certainly does make the house feel much different when you do have those things.

And here's a little tip for you guys too. If you're flipping, if you've got stuff that does have dual pane windows, but it was that funky area in the late 90s, early 2000s when they were using tan on everything. They spray paint beautifully.

There you go.

Yeah. I might have to grab a contact from you guys for windows.

So we'll talk.

Yeah, absolutely. Absolutely.

I can't click to see who's next. Who's next? I think Kurt had had a question. Yeah, Kurt. What's up, buddy?

Not much. How are you?

Good.

Aside from your truck.

Thank you.

It's been mentioned a couple times. So just one more time before we go, you know?

Yeah, yeah. No, no, bring it on. Yeah.

So.

So the question I have is I love the idea of building a portfolio, rental portfolio. What are the three biggest factors that would make you say, I am going to flip this to sell it. I'm going to sell it. You don't want to hang on to it for what reason? What are the common ones? You see for yourself.

The biggest factor is knowing what your buy box is. So the buy box for me that we've created is, you know, it's usually a single family home, no HOA, no pool, and under 2,000 square feet and single AC unit. The reason being is that those homes tend to stay rented the longest. There are people that may or may not ever be a home buyer and they will stay longer. And so with that buy box, it also reduces your long term liabilities. I don't want two AC units unless I have two roofs. Right. Because it's an extra AC unit, it's an extra problem. The older homes tend to be easier. Like you look at, like homes that were built in 2000. Somebody's like, yeah, I want something that's in 2000. Well, it needs to be renovated. Right. I like the older home renovation. I like the smaller ones. They're easier to go through and do. And we tend to keep our buy box inside the Loop 101, which is the older neighborhoods. And I'm not a huge fan of when it comes down to the rentals because they're just one additional tattletale source. Right. I don't care if they're not pulling the weeds, are they. Taking care of the house and paying the payment is what I more care about. And I don't care if you park in the gravel in the front yard. Right. So those are. Those are the biggest factors. We don't like large rentals. So those are, those are the biggest ones. Do that answer your question?

Yeah, it sure does. I mean, yeah, it does. Thank you.

One of the other deciding factors for us, Kurt, is that if we, if we get one and we've got a really good spread on it, a lot of times it depends on where the money is. Some of our rentals have actually they started out being sales, and then we get into them and it's like, oh, we have the sewer and the roof and the AC and the this. And when those start getting ticked off at $15,000 a pop, we look at it and go, okay, so we're going to hang on to this one for a little while because if we try to sell it right now, we're going to lose our ass on it. Or cash is a little bit tight right now and we're going to make 100 grand on that one. So we're going to go ahead and get rid of that one and keep our money moving. So sometimes it really depends on the deal and where we end up in it, too, is the deciding factor.

Yeah, those are, those are valid points. Yeah. Because there are times that one of the reasons we've kept some of our homes is because once we buy them and we start getting bids and we're like, okay, we might make 20 grand on this, but. Or. And you look at, you're like, I can make 20 grand once. Or the sewer's new, the roof is new, the AC is new. I'm not going to have any problems with this house for a really long time. Is it worth it to make 20 grand versus just going over and hanging onto this? Right. Because that 20 grand also is going to be cut down with taxes. And by the way, where can I buy another deal like this once I put all this renovation into it, that's going to be the same caliber. Right. And you know, what you put into it, that's one of the reasons that, you know, when we, when we buy rental properties, I want to buy the. The worst property possible, and I want to put all the new stuff in with our guys. And then I know what I have. I know when the sewer is replaced, I know when the AC was replaced. I know what all the stuff is, and I don't have to worry about going back in on it.

Yep. Okay. We have a couple of questions, and I can't read them. There's like three or four of them up there. Yeah. When painting cabinets, what kind of paint do you use that doesn't peel off? I painted cabinets, spray paint, stop moving them, but they peeled when they were washed. So the bigger paint stores, Sherwood Williams, Dunn Edwards, they do carry a paint that is specifically for painting cabinets. One of the really big things is not necessarily so much the paint is part of it. The other part is the prep, some kind of sanding or something. And you think about kitchen cabinets, they are made to be wiped down. So if you don't go through and sand that protective clear coat off of them, nothing's going to stick to them. So a lot of times people don't go through and sand off that protective coating because that's just too much work. And then they paint over the top of them, and then within six months, they're they're being wiped down. Painted cabinets, generally the paint on them will last three to five years. It's not a lifetime thing. When we paint cabinets, it's usually to get us through from A to B. Or they're not like, I can still get five to seven years of life out of them or something of that nature. So yeah, Painted cabinets. It's. I always. We. We have a cabinet painter that comes out and does them. I find that anytime a homeowner has done them, it's usually a. No, no, no bueno.

I think there's one.

There's one above that one too. Garrett, if the home is block on the inside, do you just paint the block or do you drywall over it with insulation? Okay, so that is. That depends.

That one.

So if we have to go in and do a bunch of electrical work in the house. So if we have a house that is block and it's got all aluminum wiring and we have to go in and redo all the wiring in the house, then we will fur out the walls is what it's called. And you use one by two. So it's a. It's not a two by four. It's a little strip of wood. And you glue them to the block walls. And then you can screw the drywall to those spurred out pieces. The first strips, you don't insulate with block, so you don't have to add insulation in between the block and the drywall. If we're not doing a bunch of work and it's been painted 96 times and it's in an area that doesn't necessarily require us to do drywall, then we tend to leave a block. The homeowners like to know that it's blocked. And it's really interesting a lot of times when they try to hang things on exterior walls and they don't realize it's block, what a mess they can make out of it. So a lot of it, again, it's knowing your neighborhood, knowing your audience, knowing what you're, what you're doing when you, you know, with who you're renting to. But we don't for it out unless we have to.

Yep, just on. And Lauren, what's up? It's always good to see you guys. Okay, so here's the flooring tip on tenants is we always put tile in all the traffic areas, all the family rooms, living rooms, bathrooms, anywhere that's there. We always put tile. We put carpet in the bedrooms because carpet makes it feel a little bit more like home. And the other reason for that is that when you have the. The carpet never meets up. Right. So we have a lot of houses where again, we use kind of a similar color of carpet. So let's say the two year old's room has black Sharpie marker all over the carpet in that one room. But the other two rooms can be cleaned. You're only replacing carpet in one bedroom because the dye lots don't have to match up so you don't see that weird seam of where something is so we always put carpet in the bedrooms tile in the family room. I think a house feels really really cold when it's all tile flooring. I understand the purpose behind it but again that's just my opinion and what we do on our rentals so that's, that's how we operate it and it's the same thing with the paint when you keep it more neutral it's really easy to go in and do a corner to corner touch up on a wall than it is to have to paint the whole room again and so that's why we started doing the the carpet in that that nature there.

Thank you.

Appreciate it.

Of course.

Anybody else? No.

Doesn't look like it. Well you guys have been awesome. Thanks for joining us tonight. I hope you guys all have an amazing night. See ya.

Bye guys.