Today’s REI Classroom Lesson
Hear from Andy McFarland as he explains the details of his little brother’s first flip.
REI Classroom Summary
Find out the successes and issues Andy’s brother ran into and how he benefited from it in the end.
Listen to this REI Classroom Lesson
Real Estate Investing Classroom Show Transcripts:
Mike: Welcome back to the FlipNerd.com REI Classroom where experts from across the real estate investing industry teach you quick lessons to take your business to the next level. And now, let’s meet today’s expert host.
Andy: Hey, everyone. My name is Andy McFarland. Today, I’m going to be your host for the REI Classroom. My topic for today is “My Little Brother’s First Flip.”
Mike: This REI Classroom real estate lesson is sponsored by UglyOpportunities.com.
Andy: I’ve been doing real estate for about 13 years now and my little brother is a lot younger than me and he recently got out of the army. He’s seen his older brother do flips for a long time so it must be easy. He told me and said, “Hey, Andy. I want to do a flip. What should I do?” I told him that he should probably look for properties or local wholesalers is probably the easiest way to get started.
He found a property from a local wholesaler and he wants to do this flip. He had his ARV down. He knew that he was going to sell for him. Of course, I was helping with that. I walked the property with him and I told him some things to look out for. And he ran his budget every which way. He told me, “Andy, I’m not going to spend more than $17,000 on this.” He said, “I’ve run my budget. I’ve got padding in that budget. This is absolutely the way I’m going to be able to this.” Now I, being an experienced flipper and have done this for a few times, I know that Murphy’s Law is always in effect, especially when you’re doing a flip. Every house is a surprise and you’re going to find something.
I tried to tell him and said, “Well, I get that you see their budget for 17,000, but things do happen to come up.” He was like, “No. Andy. Things are not going to come up. I’m going to make sure happens for this.” But I knew, as his older brother, one of the most important things he was going to get out of this flip was the experience of doing the flip. So I gave him my blessing. I said, “Move forward. Do this. Spend your $17,000 and we’ll see how that goes for you.”
He got into the house, started doing work and he quickly found out that things do come up. I remember one thing, he tore out all the kitchen cabinets because he was going to repaint the old ones, but he decided it was just as cheap to get new ones in there. So he started tearing things out and he found things behind walls when he started tearing stuff out. He also found that he was delayed in getting his cabinets and then the cabinets he got didn’t quite fit so we had to retrofit stuff. Basically, more time and a little bit more money on every little item on his budget ending up costing him more money.
And then, he got to the very end of this project, and what people don’t account for is those inspection-required repairs. So at the very end of the project, his buyer, he’s so happy to have a buyer, and they came up and they found something that he had never seen. He’d overlooked. It was underneath the house, and then that ended up cost him about $1500 to fix that as well. At the end of the day, when all was said and done, he’d spent about $28,000. He was like, “Wow, Andy. I had no idea when I first started this out, I thought it was going to be 17. I couldn’t see any way there was more and we spent $28,000.”
The best thing he got from that was, again, the experience of flipping the house, and he did end up making money from that. I was just happy that he was able to go out there and flip that property and get that experience. For you, if you’ve never flipped a property before, you owe it to yourself to go out there and do it because no amount of books you read, no amount of videos like this you watch, is going to give you the personal experience of having flipped a house. So this is your year. This is the perfect time. Go out there, find a property, get your hands dirty and flip it.
Mike: HomeVestors, the We Buy Ugly Houses folks, is a franchise system of hundreds of real estate investors that had purchased over 65,000 houses. If you’d like to learn more about the most powerful real estate investing system in existence, whether you’re a pro looking to take your business to the next level, or whether you have no experience at all, but a burning passion to be successful in real estate investing, please visit FlipNerd.com/ugly to learn more.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.
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