Ha, I just did this. I spent a little under a year on a project. About 20 hours a week, went through heavy Reno with all permits. I learned a ton, and made some money equal to about $30 an hour. Looking for "light cosmetic" now with my new skillset.
I did quite a few of these major renos for a couple of years around 2014 when the quick flips reos dried up. I made really good money on them but I'm a contractor and labor was cheaper then. I haven't landed one where the numbers worked in years.
Phil is one of the best in business at serving us reality checks that could save us a lot of time and money. House flippers seem so exhausted, and like Phil said, a lot of times they're making something like $11 per hour when you really break it down. My friends bought a house in the city and spent so much time and money renovating it. I only helped for one day carry the drywall and I was exhausted. After watching my friends go through that process I started to really think about NET return vs. opportunity cost. At the end of the day, did my friends really make enough extra profit to justify their hundreds of hours of *exhausting* work, stress dealing with the city and now being deeply in debt with a mortgage compared to other forms of investments?
Did a major reno in 2007-8, sold right as the market crashed at full asking price on a cash deal. Made $50k after a full year of blood sweat and tears and more stress than I thought I could handle at times. Bought for $220k, put $80k into it, made it one amazing house, sold for $350k. Could have done a light reno and sold for $270 in a month or two and moved onto the next one. Instead I was burnt out and exhausted and swore I would never do it again. Sure I made some money, but it was a 70 hour per week job and I probably made $10/hour. RENOVATION DILUSION is REAL. Find the deals, take them to market and move on to the next one.
I've flipped, rehabbed a decent amount. People said wholesale wholesale...so i wholesaled and watched them flip the home i wholesaled them and watched make a lot of money i left behind. Then i bought and put on the market sold as is and did pretty good. I've done quite a few 50-80k rehabs and made 40k. It is a slow moving project but do 6-10 a year and its not bad. Ive found if i can do a lot of deals, then wholesaling is best. If you only do less than 6 deals per year, rehabbing with the right team is best. I agree with a lot of what you said but also have scored good on rehabs too. When i tried to ramp up marketing to do a lot of deals i never got traction. So flipping rehabbing 5-10 a year for 30-70k profit has been best for us. Thanks for the video
I've only known one person who did this successfully, and it only worked for him because this man was insanely talented at building trades. He could do tile, plumbing, electrical, paint, like the guy was amazing he could probably build a whole house by himself if you just gave him a foundation. He was also a high energy workaholic, dude probably worked 90 hours a week. In my old job I had clients who did this kind of thing and they made money but they really would have made more money just doing the same work for pay without all the complications of also owning the property and trying to sell it.
I’ve made plenty from flips. I’ve learned how to determine what strategy to use on each lead all the way down to listing a property. Wholesale, Wholetale, Flip, Sub2 or owner finance. If your narrowing yourself just to “light cosmetics” good luck at scaling.....you will be looking for that white elephant. Learn to analyze the best exit strategy for every lead. Don’t just throw away a potential deal if it doesn’t fit within a single box. I’ve bought properties with 0 Equity and I’ve also flipped burn houses, flooded houses and completely gutted. It’s a numbers game....if you buy deep enough on any deal.....it’s a deal
Interesting comment! Many would argue that scaling the generation of more leads is MUCH easier than scaling major renovations. Most of largest volume investors in America stopped doing anything but cosmetic rehabs is order to scale. Stopping major rehabs was their gateway to finally being able to scale.
I've found you only make money if you value your own labor at $0/hr. Some people like your friend can do that. But if you consider renovating a house to be "work" that takes you away from things you would rather be doing, you're losing money. Only once did it make sense for me. When I was a single 24 year old who did a live in flip. Slept on an airbed for 2 years and just slowly did work on the house via youtube university when I wasn't at work. I was depressed before moving, and had just relocated to a new city, had no friends, hated my job, and I found catharsis in building something beautiful out of that ugly ass house. Other than something like that; yeah... flipping feels like a big waste of time. I'm a buy and hold now, use a property manager, and have never spoken to a tenant. The only work I'll do on a new property is the dead simple stuff that gets overcharged. Like $50 labor to change out a deadbolt. No thanks, I'll do that in 5 minutes and make $600/hr equivalent lol.
This is powerful watching this one year later. I’ve been punting lately and loving it. Love the exclusions : cosmetic for flips and buy and holds / brrrr. Gotta be honest I was in the delusion last year when I watched this, and didn’t agree. Thankfully, I did succeed at fixing and flipping, and still did even this first quarter .. but noticing the trends of inflation, supply chain, material costs sky rocketing it’s been incredible double closing or assigning. Grateful for this discovery Phil!
You are the man. Appreciate the straight-forwardness. You just described the reality of renovations and I realize that is what has ke[t me afraid of diving into this business thinking that was an area that an investor absolutely had to first become an expert in. What a relief to hear this is not the case in reality. AS IS IS THE WAY.
There are "gurus" on other UA-cam channels who claim that renovating houses is the road to riches. I'm in Phil's camp on this. The less work you have to do while making a profit, the better. Work means risk and you don't want any more risk than is absolutely necessary.
Investment flips and even keepers keep it simple. Speaking of the renovation shows do you notice they will say a house is worth X dollars but never say what the house will actually sell for. I’ve seen it several times myself there is a major difference.
It's actually this simple: ask your realestate agent to run a comp on w/e house you found, which if they do the job right, would be based on things that are based on quantitative numbers. Such as size, number of bdroom, bathroom, master bedroom, backyard, indoor space sqft, # of garage etc. Assume that's the market price you will ultimately get AFTER renovation (a little higher maybe if renovation makes the place look very new) afk. aka. ARV (after renovation value) Now substract all and any renovation and maintaining/other expenses cost during period and seller CLOSING fee, which ranges from commission to transfer taxes and T-insurance etc, plus the big captain gain taxes from that (there are few ways to lower this such as holding house for a year). You have a final number, the tax-free money you can put into your bank account. Lets call it X, aka profit. Now it is just this: is X positive and significant? if so, is it worth your time. Yes / No should be a no brainer. That's what's good about realestate, you run the numbers, give some wiggle room and thing usually comes out as predicted.
A light renovation on a place that needs major rehab can be profitable. Clean up and seal up so potential buyers can more easily imagine fixing it up. I like to aim for clean enough so someone can imagine living there while rehabbing it.
I just adjusted my business. I was buying and holding for rentals. Central PA proved to challenging for me so I am moving everything to NC. What I do now is I have a bunch of wholesalers I buy from very cheap. Also, keep an eye out for homes in probate. Do a little cleaning and yard work. Then back for sale, it goes. Wholesale to Wholesale selling. The person that sold me the home makes a little then I sell for more profit. For the last home, I sold I did owner financing so make a little on the interest also. Seems to be working out fine so far. I like to learn so I listen to anyone that has the proper knowledge in this business.
A first time investor might want to do a rehab just to get their feet wet on learning how to do repairs and what to expect with permits and so on, knowledge pays its own dividends
im a car dealer and ive learned that when you buy the beat up and not taken care of cars, theres unlimited hidden issues youre going to deal with. when you buy something with minor costmetic issues and just needs to be cleaned up with minor, common repairs those are THE best and fastest deals that make the most if you buy it right. plus the owners dont think their car/house is worth much because they are used to the ugly, a small amount of work and it easily looks like new to a buyer
For each property we ask ourselves how can we maximize profits. Wholesale for cash, buy the wholesale property and sell with owner financing, full rehab, or light rehab (wholetailing). Many of the times wholetailing is the answer to our question. Minor renovations to make the property financeable. We usually spend $5,000 to $15,000 range on renovations and the work takes 2 weeks or less. Quick resale to a conventional loan buyer (non-investor).
If the goal is solely to make as much money as possible, renovation does not make sense. But your brother is correct that many investors gain satisfaction in creating something beautiful that will make someone a happy home. Not everyone is motivated entirely by monetary gain, and it is still possible to turn a reasonable profit after improving a building. There are, of course, expensive renovation costs (like major foundation work, mold mitigation, unsound structures) that are deal-breakers. But cosmetic updates and improvements can be profitable.
I bought a Duplex for 100K cash in bad shape both sides termite damage, mold, complete remodel whole house it cost me 39K. My Total total investment was 139K. As you said phil for me this was long term investment. I knew This was a way for me to create Passive income of $2,500.00 a Month which I did by renting out both sides and I can sell it for 200K if i need to.With these numbers I believe I can make my money back of 139K in 5 years. I say this is better then having 139K in bank earning me 0.001% interest rate. What you think Phil? Love your channel bro.🙏
I have been Flipping houses for three years. My new strategy is to purchase the property for 40k then list it OWNER FINANCE as-is for 65k at 9.5% interest with 5k down. That way they can fix it up. If the new buyer fixes it up then they have a $120,000 dollar house, which is a great deal for them. Hopefully they will refinance after a year. This is my cashflow/ wholesale hybrid
i agree, several things; the word trying has to go out, thats the root to problems and failures. another thing im discovering real estate isn't as straight forward and things have to get down to the REAL to address the estate not on PAPER
Thank you as usual! For someone who has these 3 hurdles, do you have any advice? 1) US born citizen living in Canada 2) very little liquid cash (need hard money or loan) 3) haven't done a deal yet. My long term goal is to build a rental portfolio.
I think you could be very success in Canada because so many Canadians think that what I teach "doesn't work up here". This video explains the differences: ua-cam.com/video/b93fu6jGeEo/v-deo.html
I always have to slap myself when I look at projects. I naturally think about the big changes or remodels. So I have to work my way back to the light cosmetic level. My brother is much better at starting at light cosmetic. Pretty sure it's because he has worked construction in his past and knows the pain of issues.
Wow. I purchased a house at auction and I’ll say broke a major rule. Now I have a house that I don’t even think I can get rid of it “as is” because the porch is caved in. Edit: however, I do want to hold it long term but it’s single family.
As a fellow Real Estate professional, I would love for you and more Real Estate UA-camrs be more vocal on the Eviction Moratorium and Landlord Rights. I know its not the popular thing to speak about, but the message needs to be sent. I have been doing everything possible to spread the word but I need more of my fellow Real Estate UA-camrs to get involved.
I moved into short term vacation rentals several years ago because laws were already so pro-tenant as to make traditional rentals very problematic. I had my best year with my vacation rentals in 2020, even with the lock downs. It's been a very hard 10 months for traditional investors out there but that's not what I preach; if anything, it's validation for why my way of residential investing, what I call Creative Real Estate Investing, is so far superior to traditional investing.
@@freedom_mentor Sound approach, the crazy thing in New York is that even the people in Vacation Rentals are working the system under the Eviction Moratorium. You have people in Vacation homes in the Hamptons that are not paying rent and continuing to squat with Eviction Moratorium protectecting them. Your approach works as long as you are not in States like New York
@no name The hotels work differently, the AirBNB people have run into the problem. Normally they would have an issue removing non paying visitors but since the moratorium took place, all actions have been halted mostly for the reason that it not has been made clear to what is legally permitted. The police themselves are not completely understanding what they are permitted to do and throw it back to having to get a court order. The problem is the courts are not reviewing any cases of this nature.
One more exclusion to mention, assuming that you are fairly competent at the following: 1) getting a great cost, 2) having cost efficient rehabbers including being hands-on, 3) sales price comps. Exclusion 1: What if comps are worth the time spent due to a hot sellers market, like now 2021?
Every other sucker investor buyer in that market can see the same comps as you. They will do the same calculation as you. So when you market it as-is, the price paid will be higher too.
There are caveats to this...if u get a major fiixer in a good area at way below asking a major reno can be profitable...also for keepers a good reno is key u dont wanna be dealing with plumbing ..leaky roof repairs over and over for a while.
Phil, would you say that Opportunity Zones now make these rehab type properties great opportunities? Maybe starting a QOZ Show could be the what makes it work. What if it were flipping not just a single house, but an entire town?
That's not how your entity qualifies for an Opportunity Zone Fund. It must add to the local economy in someway. Simply rehabbing a single family home doesn't fit the IRS definition.
Phil, I’ve bought and sold hundreds of homes over the past 20 years. I have to disagree with you, I don’t care how slow it is, if I can make 75k on a full renovation vs 30k on a flip, always go for the full Reno. I don’t like leaving that kinda money on the table. If I can make 30k on a quick flip vs 45k on a full Reno, I will take the flip. It all depends what the spread is, this is what you need to explain to your viewers.
While the argument of "not leaving money on the table" seems strong, we put a microscope to that theory many years ago and discovered that with major rehabs, opportunity costs outweigh "money on the table" loss. If you marketed harder for motivated sellers with the time, energy and money you were spending/tying up on those major rehabs, you could have done more deals and made more money. Where this concept gets into shades of grey is on the definition of "light cosmetic". You personally can probably stretch it as far as it should be stretched whereas most may not have the team of contractors, expertise, organizational skills and all the other components necessary to stretch that definition. In other words, you and I don't disagree completely, but where we do diverge is when the deal becomes a major rehab. All of our testing over the past two decades is that major rehabs are best flipped as is to sucker investor buyers; ESPECIALLY for those trying to increase scale and do 50-150 deals a year.
@@freedom_mentor I see what you are saying. 30k a month every month is better than 75k a few times a year with a potential land mine every once in a while.
@@freedom_mentor What I am trying to think through is how you apply this fully to a fix-and-rent scenario (the longterm example you gave) but in a way that allows you to still scale.
@@PierreEpage If you want to scale fix-and-rent, focus on multi-family or mobile home parks. It's much easier to scale the purchase of value-add apartments than scattered single family homes.
When does the property cross the light cosmetic money pit line? The second you go beyond paint brushes & screw drivers and start looking at a sledgehammer.
@@freedom_mentor Agreed. What’s your opinion on student rental property? I hav an opportunity for a income producer. Rents are paid in full at the beginning of the school year.
@@bobisthebuilder3982 I'm no longer excited about student rentals. I think schooling has fundamentally changed due to COVID. So many high school graduates are now going to get their degree remotely.
Good Video, but take this at face value. It really all depends on your goals. If your goals are to acquire cash flow producing rentals, and you want a lot of them, then doing this model and doing a cash out refi to pull money out to buy another one (BRRRR) Then this would be good.
Phil, what are your thoughts on buying properties to flip with the banks money? I know it's a little more risky than paying cash. Some people don't have enough cash to buy and remodel a home.
making 10k on a quick flip is a million times better than dealing with time and effort and money and crap to renovate and make a FAR smaller return on your time and money.
I like Phil . I want to disagree with this video. Reno’s are also done to command market rents as a lot of investors are buy and holders. You can’t command good rents without renovating poor shape properties. You can’t built lots of equity without renovating. I have 30 units and renovated all of them. This seems to be a good formula to keep repeating it. I renovated an 11 plex for 200 k which is major , it’s flipped for 1 million dollars in one year. Also your statement about a quick nickle is better then slow dime that is true. However I’m in a market where you buy that dime and just holding it prices are doubling within 2 to 3 years. I do like that statement though . Also another point is being in a market that is difficult to find properties, finding the properties that have barriers to entry allows you to find deals other people can’t find. Also the premise of most people who grow large in real estate use the BRRRR technique how can you implement that without doing large renovations to build equity to refinance and pull towards another property ?
This is very valuable content, but should not supersede an investor actually getting into the field and getting experience. If a UA-cam video is all it takes for you to not educate yourself or take any investment risks, it wasn’t for you
For major rehabs, absolutely. And no matter how many times I preach this message, very smart people still fall into the trap of taking on major renovation projects. The advice is simple to understand but shockingly difficult for many people to follow.
If the margins are significantly higher say like a 50k purchase 45k rehab. 180k resale would you proceed with it? At least, those are the margins im seeing in NW PA. I Thought you fix and flipped Phil?
But if you sell it as-is right now, on the example you provided, you may be able to sell for $120,000 or more, thereby collecting $70,000 in profits without any of the risks or hassles.
It is a big opportunity - a big opportunity for “unforeseen difficulties!!!” and a big opportunity to go upside down on an immovable, illiquid asset! Check book termite ;)
Poor video, and like other vides I saw from you. You never explained why this was a delusion. Many investors are doing this and making money. So why is this a delusion? Because most people underestimate rehab cost? You never clearly explained
Every successful real estate investor has a mentor. Get your mentor here: www.freedommentor.com/apprentice
Renovating homes is SUCH a tempting idea... Glad you are out here talking sense in to me, thank you...
HGTV has worked so well in creating the renovation delusion 😂
Ha, I just did this. I spent a little under a year on a project. About 20 hours a week, went through heavy Reno with all permits. I learned a ton, and made some money equal to about $30 an hour. Looking for "light cosmetic" now with my new skillset.
Thank you! I never realized I was doing this. Now I understand why I get so tired just walking through a fixer upper.
I did quite a few of these major renos for a couple of years around 2014 when the quick flips reos dried up. I made really good money on them but I'm a contractor and labor was cheaper then. I haven't landed one where the numbers worked in years.
Phil is one of the best in business at serving us reality checks that could save us a lot of time and money. House flippers seem so exhausted, and like Phil said, a lot of times they're making something like $11 per hour when you really break it down. My friends bought a house in the city and spent so much time and money renovating it. I only helped for one day carry the drywall and I was exhausted. After watching my friends go through that process I started to really think about NET return vs. opportunity cost. At the end of the day, did my friends really make enough extra profit to justify their hundreds of hours of *exhausting* work, stress dealing with the city and now being deeply in debt with a mortgage compared to other forms of investments?
Did a major reno in 2007-8, sold right as the market crashed at full asking price on a cash deal. Made $50k after a full year of blood sweat and tears and more stress than I thought I could handle at times. Bought for $220k, put $80k into it, made it one amazing house, sold for $350k. Could have done a light reno and sold for $270 in a month or two and moved onto the next one. Instead I was burnt out and exhausted and swore I would never do it again. Sure I made some money, but it was a 70 hour per week job and I probably made $10/hour. RENOVATION DILUSION is REAL. Find the deals, take them to market and move on to the next one.
I've flipped, rehabbed a decent amount. People said wholesale wholesale...so i wholesaled and watched them flip the home i wholesaled them and watched make a lot of money i left behind. Then i bought and put on the market sold as is and did pretty good. I've done quite a few 50-80k rehabs and made 40k. It is a slow moving project but do 6-10 a year and its not bad. Ive found if i can do a lot of deals, then wholesaling is best. If you only do less than 6 deals per year, rehabbing with the right team is best. I agree with a lot of what you said but also have scored good on rehabs too. When i tried to ramp up marketing to do a lot of deals i never got traction. So flipping rehabbing 5-10 a year for 30-70k profit has been best for us. Thanks for the video
I've only known one person who did this successfully, and it only worked for him because this man was insanely talented at building trades. He could do tile, plumbing, electrical, paint, like the guy was amazing he could probably build a whole house by himself if you just gave him a foundation. He was also a high energy workaholic, dude probably worked 90 hours a week.
In my old job I had clients who did this kind of thing and they made money but they really would have made more money just doing the same work for pay without all the complications of also owning the property and trying to sell it.
Thank you for that wonderful comment full of signal and truth!
I’ve made plenty from flips. I’ve learned how to determine what strategy to use on each lead all the way down to listing a property. Wholesale, Wholetale, Flip, Sub2 or owner finance. If your narrowing yourself just to “light cosmetics” good luck at scaling.....you will be looking for that white elephant.
Learn to analyze the best exit strategy for every lead. Don’t just throw away a potential deal if it doesn’t fit within a single box. I’ve bought properties with 0 Equity and I’ve also flipped burn houses, flooded houses and completely gutted. It’s a numbers game....if you buy deep enough on any deal.....it’s a deal
Interesting comment! Many would argue that scaling the generation of more leads is MUCH easier than scaling major renovations. Most of largest volume investors in America stopped doing anything but cosmetic rehabs is order to scale. Stopping major rehabs was their gateway to finally being able to scale.
I've found you only make money if you value your own labor at $0/hr. Some people like your friend can do that. But if you consider renovating a house to be "work" that takes you away from things you would rather be doing, you're losing money. Only once did it make sense for me. When I was a single 24 year old who did a live in flip. Slept on an airbed for 2 years and just slowly did work on the house via youtube university when I wasn't at work. I was depressed before moving, and had just relocated to a new city, had no friends, hated my job, and I found catharsis in building something beautiful out of that ugly ass house.
Other than something like that; yeah... flipping feels like a big waste of time. I'm a buy and hold now, use a property manager, and have never spoken to a tenant. The only work I'll do on a new property is the dead simple stuff that gets overcharged. Like $50 labor to change out a deadbolt. No thanks, I'll do that in 5 minutes and make $600/hr equivalent lol.
@@freedom_mentor i guess this applies to flippers but considerations might differ for buy and hold
This is powerful watching this one year later. I’ve been punting lately and loving it.
Love the exclusions : cosmetic for flips and buy and holds / brrrr.
Gotta be honest I was in the delusion last year when I watched this, and didn’t agree.
Thankfully, I did succeed at fixing and flipping, and still did even this first quarter .. but noticing the trends of inflation, supply chain, material costs sky rocketing it’s been incredible double closing or assigning.
Grateful for this discovery Phil!
You are the man. Appreciate the straight-forwardness. You just described the reality of renovations and I realize that is what has ke[t me afraid of diving into this business thinking that was an area that an investor absolutely had to first become an expert in. What a relief to hear this is not the case in reality. AS IS IS THE WAY.
There are "gurus" on other UA-cam channels who claim that renovating houses is the road to riches. I'm in Phil's camp on this. The less work you have to do while making a profit, the better. Work means risk and you don't want any more risk than is absolutely necessary.
Investment flips and even keepers keep it simple. Speaking of the renovation shows do you notice they will say a house is worth X dollars but never say what the house will actually sell for. I’ve seen it several times myself there is a major difference.
So true! Great content, thank you very much!
It's actually this simple: ask your realestate agent to run a comp on w/e house you found, which if they do the job right, would be based on things that are based on quantitative numbers. Such as size, number of bdroom, bathroom, master bedroom, backyard, indoor space sqft, # of garage etc. Assume that's the market price you will ultimately get AFTER renovation (a little higher maybe if renovation makes the place look very new) afk. aka. ARV (after renovation value)
Now substract all and any renovation and maintaining/other expenses cost during period and seller CLOSING fee, which ranges from commission to transfer taxes and T-insurance etc, plus the big captain gain taxes from that (there are few ways to lower this such as holding house for a year). You have a final number, the tax-free money you can put into your bank account. Lets call it X, aka profit. Now it is just this: is X positive and significant? if so, is it worth your time. Yes / No should be a no brainer. That's what's good about realestate, you run the numbers, give some wiggle room and thing usually comes out as predicted.
This is pretty much what happened to Detroit. There was no profit to fix up homes so entire neighborhoods went vacant and homes fell to the ground.
Exactly. Whole neighborhoods I guess should be abandoned I guess according to this.
@@curtishancock432if nobody wants to live there then of course they get abandoned 🤣
While your money and time is tied up knocking down walls...great deals are coming on the market that require nothing.
A light renovation on a place that needs major rehab can be profitable. Clean up and seal up so potential buyers can more easily imagine fixing it up. I like to aim for clean enough so someone can imagine living there while rehabbing it.
I just adjusted my business. I was buying and holding for rentals. Central PA proved to challenging for me so I am moving everything to NC. What I do now is I have a bunch of wholesalers I buy from very cheap. Also, keep an eye out for homes in probate. Do a little cleaning and yard work. Then back for sale, it goes. Wholesale to Wholesale selling. The person that sold me the home makes a little then I sell for more profit. For the last home, I sold I did owner financing so make a little on the interest also. Seems to be working out fine so far. I like to learn so I listen to anyone that has the proper knowledge in this business.
A first time investor might want to do a rehab just to get their feet wet on learning how to do repairs and what to expect with permits and so on, knowledge pays its own dividends
Golden Statement here is get the house off market, them put them on market
Wonderful value and wisdom being shared
im a car dealer and ive learned that when you buy the beat up and not taken care of cars, theres unlimited hidden issues youre going to deal with. when you buy something with minor costmetic issues and just needs to be cleaned up with minor, common repairs those are THE best and fastest deals that make the most if you buy it right. plus the owners dont think their car/house is worth much because they are used to the ugly, a small amount of work and it easily looks like new to a buyer
For each property we ask ourselves how can we maximize profits. Wholesale for cash, buy the wholesale property and sell with owner financing, full rehab, or light rehab (wholetailing). Many of the times wholetailing is the answer to our question. Minor renovations to make the property financeable. We usually spend $5,000 to $15,000 range on renovations and the work takes 2 weeks or less. Quick resale to a conventional loan buyer (non-investor).
Phil thank you sooo much for all the advice & knowledge you give , you are really the best !!!
If the goal is solely to make as much money as possible, renovation does not make sense. But your brother is correct that many investors gain satisfaction in creating something beautiful that will make someone a happy home. Not everyone is motivated entirely by monetary gain, and it is still possible to turn a reasonable profit after improving a building. There are, of course, expensive renovation costs (like major foundation work, mold mitigation, unsound structures) that are deal-breakers. But cosmetic updates and improvements can be profitable.
I think this is the most valuable video/topic you have put out!
Thank you!!!
I'm new to your channel, and I love it! I love your information and honesty!
Also, you remind me of Corbin Bernsen. Am I watching L.A Law? :P
Merry Christmas to you and your family. Happy New Year to you as well.
I bought a Duplex for 100K cash in bad shape both sides termite damage, mold, complete remodel whole house it cost me 39K. My Total total investment was 139K. As you said phil for me this was long term investment. I knew This was a way for me to create Passive income of $2,500.00 a Month which I did by renting out both sides and I can sell it for 200K if i need to.With these numbers I believe I can make my money back of 139K in 5 years. I say this is better then having 139K in bank earning me 0.001% interest rate. What you think Phil? Love your channel bro.🙏
Very good!
Thank you.
God bless you
Yep...find homes that need less work. "
The HGTV programs purchase and do a rehab in 60 minutes.
Well, more like 30 min.
I have been Flipping houses for three years. My new strategy is to purchase the property for 40k then list it OWNER FINANCE as-is for 65k at 9.5% interest with 5k down. That way they can fix it up. If the new buyer fixes it up then they have a $120,000 dollar house, which is a great deal for them. Hopefully they will refinance after a year. This is my cashflow/ wholesale hybrid
Yep that couple on TV fully renovated a house in one hour! I watched them do it!
i agree, several things; the word trying has to go out, thats the root to problems and failures. another thing im discovering real estate isn't as straight forward and things have to get down to the REAL to address the estate not on PAPER
Thanks Phil.. God bless for your shared wisdom about real estate.
Thank you as usual! For someone who has these 3 hurdles, do you have any advice?
1) US born citizen living in Canada
2) very little liquid cash (need hard money or loan)
3) haven't done a deal yet.
My long term goal is to build a rental portfolio.
I think you could be very success in Canada because so many Canadians think that what I teach "doesn't work up here". This video explains the differences: ua-cam.com/video/b93fu6jGeEo/v-deo.html
I always have to slap myself when I look at projects. I naturally think about the big changes or remodels. So I have to work my way back to the light cosmetic level. My brother is much better at starting at light cosmetic. Pretty sure it's because he has worked construction in his past and knows the pain of issues.
Wow. I purchased a house at auction and I’ll say broke a major rule. Now I have a house that I don’t even think I can get rid of it “as is” because the porch is caved in.
Edit: however, I do want to hold it long term but it’s single family.
Dear Phil with the inflation coming every renovation will be cheap overtime.
Ridiculous! This should have 100,000 views at least. It'll save people at least $100,000 in stepping in it. Great stuff Phil.
Good morning 🌞
As a fellow Real Estate professional, I would love for you and more Real Estate UA-camrs be more vocal on the Eviction Moratorium and Landlord Rights. I know its not the popular thing to speak about, but the message needs to be sent. I have been doing everything possible to spread the word but I need more of my fellow Real Estate UA-camrs to get involved.
I moved into short term vacation rentals several years ago because laws were already so pro-tenant as to make traditional rentals very problematic. I had my best year with my vacation rentals in 2020, even with the lock downs. It's been a very hard 10 months for traditional investors out there but that's not what I preach; if anything, it's validation for why my way of residential investing, what I call Creative Real Estate Investing, is so far superior to traditional investing.
@@freedom_mentor Sound approach, the crazy thing in New York is that even the people in Vacation Rentals are working the system under the Eviction Moratorium. You have people in Vacation homes in the Hamptons that are not paying rent and continuing to squat with Eviction Moratorium protectecting them. Your approach works as long as you are not in States like New York
@no name Good approach, hopefully the eviction moratorium will get lifted soon and we will be able to apply these strategies
@no name Thats meaningless here in New York, we can't even get rid of squatters under this moratorium
@no name The hotels work differently, the AirBNB people have run into the problem. Normally they would have an issue removing non paying visitors but since the moratorium took place, all actions have been halted mostly for the reason that it not has been made clear to what is legally permitted. The police themselves are not completely understanding what they are permitted to do and throw it back to having to get a court order. The problem is the courts are not reviewing any cases of this nature.
Renovation is ok as long as you do that for rental business. Especially for Airbnb, renovation is important.
Thinking you can learn to become a real estate investor by watching HGTV is like thinking you can learn to be a cop by watching "CHiPs".
Thanks for reminding us of reality 👍
Great Video! Would it make sense to make every sale “as is” just to cover yourself? Even the homes that don’t need much work. Thanks
The best video so far, thanks. I am selling my car and I will evaluate how much I can get as it is, no fixing.
One more exclusion to mention, assuming that you are fairly competent at the following: 1) getting a great cost, 2) having cost efficient rehabbers including being hands-on, 3) sales price comps.
Exclusion 1: What if comps are worth the time spent due to a hot sellers market, like now 2021?
Every other sucker investor buyer in that market can see the same comps as you. They will do the same calculation as you. So when you market it as-is, the price paid will be higher too.
Buying raw land is not safe; it should at least be pasteurized. Love your videos, Phil!
There are caveats to this...if u get a major fiixer in a good area at way below asking a major reno can be profitable...also for keepers a good reno is key u dont wanna be dealing with plumbing ..leaky roof repairs over and over for a while.
Thank you for this great video.
Can you please talk about how and where we can buy good deal material especially lumber? thanks.
Search your area for privately owned saw mills.
Mill your own
Merry Christmas Phil from the Gulf Side of Florida ❤✝️🌴🇺🇸🌴
excellent information phil, it is a great help for me thanks🏠🏠🏡
Another great video! Thanks Phil! Cheers Oliver
Phil, would you say that Opportunity Zones now make these rehab type properties great opportunities? Maybe starting a QOZ Show could be the what makes it work. What if it were flipping not just a single house, but an entire town?
That's not how your entity qualifies for an Opportunity Zone Fund. It must add to the local economy in someway. Simply rehabbing a single family home doesn't fit the IRS definition.
Thanks for great videos. Could you please let us know how can we get that book?! Thanks
Get it here: www.freedommentor.com/free-book
The Mind Master Phil. Love your knowledge in your head.
Phil, I’ve bought and sold hundreds of homes over the past 20 years. I have to disagree with you, I don’t care how slow it is, if I can make 75k on a full renovation vs 30k on a flip, always go for the full Reno. I don’t like leaving that kinda money on the table. If I can make 30k on a quick flip vs 45k on a full Reno, I will take the flip. It all depends what the spread is, this is what you need to explain to your viewers.
While the argument of "not leaving money on the table" seems strong, we put a microscope to that theory many years ago and discovered that with major rehabs, opportunity costs outweigh "money on the table" loss. If you marketed harder for motivated sellers with the time, energy and money you were spending/tying up on those major rehabs, you could have done more deals and made more money. Where this concept gets into shades of grey is on the definition of "light cosmetic". You personally can probably stretch it as far as it should be stretched whereas most may not have the team of contractors, expertise, organizational skills and all the other components necessary to stretch that definition. In other words, you and I don't disagree completely, but where we do diverge is when the deal becomes a major rehab. All of our testing over the past two decades is that major rehabs are best flipped as is to sucker investor buyers; ESPECIALLY for those trying to increase scale and do 50-150 deals a year.
@@freedom_mentor I see what you are saying. 30k a month every month is better than 75k a few times a year with a potential land mine every once in a while.
@@freedom_mentor What I am trying to think through is how you apply this fully to a fix-and-rent scenario (the longterm example you gave) but in a way that allows you to still scale.
@@PierreEpage If you want to scale fix-and-rent, focus on multi-family or mobile home parks. It's much easier to scale the purchase of value-add apartments than scattered single family homes.
Merry Christmas Weekend to you and your family.
So how much money can you put into a property without being a sucker?
Thanks for the wisdom Phil
When does the property cross the light cosmetic money pit line? The second you go beyond paint brushes & screw drivers and start looking at a sledgehammer.
The second you have to pull a permit.
@@freedom_mentor
Agreed.
What’s your opinion on student rental property? I hav an opportunity for a income producer. Rents are paid in full at the beginning of the school year.
@@bobisthebuilder3982 I'm no longer excited about student rentals. I think schooling has fundamentally changed due to COVID. So many high school graduates are now going to get their degree remotely.
Ok so what if it's a property that's in the family(paid for) so no down payment. Does that change anything
Good Video, but take this at face value. It really all depends on your goals. If your goals are to acquire cash flow producing rentals, and you want a lot of them, then doing this model and doing a cash out refi to pull money out to buy another one (BRRRR) Then this would be good.
aaand i shouldn't comment until I finish watching the whole video, because what I said was his last exclusion to the rule for long holds lol.
Well said and done! Thanks a million
Had a buddy who did live and flips. Seems like one of the few places it works.
I am a former interior designer but I still would rather wholetail houses.
Its a contractors game. If you have to hire every single thing out its gonna be hard to make money
Phil, what are your thoughts on buying properties to flip with the banks money? I know it's a little more risky than paying cash. Some people don't have enough cash to buy and remodel a home.
I am a HUGE fan of borrowing money for real estate. It's incredibly financially intelligent. Those who fear using leverage wisely and missing out.
@@freedom_mentor awesome thanks. Keep up the great videos!
Making money as “a middle man “ is contributing. You pay taxes feed your family and spend money locally
making 10k on a quick flip is a million times better than dealing with time and effort and money and crap to renovate and make a FAR smaller return on your time and money.
I like Phil . I want to disagree with this video. Reno’s are also done to command market rents as a lot of investors are buy and holders. You can’t command good rents without renovating poor shape properties. You can’t built lots of equity without renovating. I have 30 units and renovated all of them. This seems to be a good formula to keep repeating it. I renovated an 11 plex for 200 k which is major , it’s flipped for 1 million dollars in one year. Also your statement about a quick nickle is better then slow dime that is true. However I’m in a market where you buy that dime and just holding it prices are doubling within 2 to 3 years. I do like that statement though . Also another point is being in a market that is difficult to find properties, finding the properties that have barriers to entry allows you to find deals other people can’t find. Also the premise of most people who grow large in real estate use the BRRRR technique how can you implement that without doing large renovations to build equity to refinance and pull towards another property ?
I agree with you and what you shared doesn’t disagree with this video. It’s a classic exception to the rule.
Do you take on investors who want a passive return?
Ok, so your main point is this model works, all you need is a hit rap song - booking my recording studio now... :)
All those slow nickels don't pay the creditor when they're asking for dimes.
What about rent to own, vacation rental, student housing, or reguler rental getting maximum rate after renovation?
Do a cash out refi after reno to pay yourself back.
That is one of the exclusions at the end of the video
This is very valuable content, but should not supersede an investor actually getting into the field and getting experience. If a UA-cam video is all it takes for you to not educate yourself or take any investment risks, it wasn’t for you
Phil Pustejovsky is a god damn Genius
Appreciate that!
He’s basically saying wholesale or whole tail the property. 🤷🏽♂️
For major rehabs, absolutely. And no matter how many times I preach this message, very smart people still fall into the trap of taking on major renovation projects. The advice is simple to understand but shockingly difficult for many people to follow.
@@freedom_mentor people get caught up into those TV shows way too much. You’re absolutely right about this method. I call it work smarter not harder.
Hell yes another video!!!!
Don't hate the player hate the game
Nice
If the margins are significantly higher say like a 50k purchase 45k rehab. 180k resale would you proceed with it? At least, those are the margins im seeing in NW PA.
I Thought you fix and flipped Phil?
But if you sell it as-is right now, on the example you provided, you may be able to sell for $120,000 or more, thereby collecting $70,000 in profits without any of the risks or hassles.
Phil Pustejovsky touché
I did start my REI business because of you your books and vids so now 3 years later I highly value your signal and truth.
Also it’s under the flipping automation 👌🏾👌🏾👌🏾
Based on supply and demand. Would you run comps based and square feet? With same amount of rooms and bath rooms?
This is how I estimate the final sales price of a property: ua-cam.com/video/wQ643vPoGmU/v-deo.html
1,000 deals? 🤔
Over 2,000 these days
20k. Max or no way.
It is a big opportunity - a big opportunity for “unforeseen difficulties!!!” and a big opportunity to go upside down on an immovable, illiquid asset! Check book termite ;)
Amen!
liked ! by a sucker investor
Poor video, and like other vides I saw from you. You never explained why this was a delusion. Many investors are doing this and making money. So why is this a delusion? Because most people underestimate rehab cost? You never clearly explained
The proof is described in this video: ua-cam.com/video/EudeRC3p5rQ/v-deo.html
👇👀👂