You are currently viewing Flipping America 537, Top Ten Newbie Mistakes

Flipping America 537, Top Ten Newbie Mistakes

Opening:

I’ve made nearly every mistake in the book. And over the years I’ve watched other people make all the other ones. Today we are going to talk about the Top Ten Newbie Mistakes and hopefully we will help you avoid them. 

This show could save you $100,000 in mistakes. It could keep you from bankruptcy, it could also ensure that your real estate career is successful. Wow. Or, it might be just another way to fill 30 minutes on your morning commute. 

Hello America. We’re coming to you at our new time, 7:30 am, Monday, Wednesday and Friday. And we are thrilled to have you along for this ride for the next 30 minutes. 

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Text WIT (upper or lower case) to 205-858-3547, enter your email and you will be subscribed to the Weekly WIT (Whatever It Takes). It has the week’s real estate and Flipping America news, an investing tip, a joke, and a blessing. It’s usually about a 7 minute read, with some optional links. 

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Theme: 

  1. Pay too Much
  2. Rehab too big
  3. Do too much
  4. Take too long
  5. Don’t look after the nickels
  6. Getting emotionally involved
  7. Making the numbers “fit”
  8. Relying on “perfection”
  9. Flying blind
  10. Chasing Five Rabbits

Starr Has Questions: 

Interest rates went up another 75 basis points this week. What’s that going to do to home sales? Roger’s notes. Prime lending rate 2.25. Today’s 30 yr mortgage 6.3%

You saw where they announced that we are in a recession. What does it mean to investors? 

Quote of the Day

What’s the point of teaching a man to fish if he just won’t fish?

Expected Air Date: Wed 8/3/2022

Transcript

[0:00] I’ve made nearly every mistake in the book. And over the years I’ve watched other people make all the other ones. Today we’re gonna talk about the top 10 newbie mistakes and hopefully we’re gonna help you avoid them.

[0:12] Music.

[0:25] For flipping America the show that teaches you how to make money in real estate wherever you are whatever your situation there is an opportunity for you and now here’s that flipping America guy Roger Blankenship.

Hello America and welcome back,

Hello,

What?

[1:03] Well, you know, keep it, you’re not keeping this a secret, are you? I’m not. Okay, so, Star has been overseas.

And where where were you tell it by where you were?

[1:26] Yes, something did happen. Come on. Q Roger.

Then literally,

Actually this whole time she’s been.

So I I wouldn’t give it out your information to anyone that asked. Okay. I appreciate it.

[2:02] Congratulations. So, wow. That’s cool, right? I know, yes.

[2:14] No, I didn’t. You did? Yeah, I heard you said. Alright, look. We we got a lot to do today. We’re gonna cover the top 10 newbie mistakes. We don’t have time to mess around much. So,

Welcome back. Really, I am really glad to see you. Glad you’re back. I’m glad you made it safely. And congratulations on getting married. I know when you’re married to the right person, it’s the best thing in the whole wide world.

It is. Yep. Alright. Now, the show today, listeners, I’m talking to you now. The show today could save you $100 thousand. Seriously,

And avoiding some mistakes. It could also keep you from bankruptcy because I’ve seen people make some mistakes I’m gonna talk about today who have actually gone out and filed bankruptcy because they really screwed the pooch,

But it could also ensure that your real estate career is successful. So, this is kind of an important topic today,

It might be another way to fill 30 minutes in your on your morning commute and that reminds me to say hello America we’re coming at you at our new time broadcast now on AMFM stations coast to coast,

7:30 AM: monday wednesday and friday our new 30 minute format what do you think so far.

[3:23] Whatever it is you’re doing,

We’re just glad that you’re with us and we want you to let us know what you think about the show.

So, there’s some different ways to interact with this. You could find us on Twitter and Instagram at Flipping America on Facebook. It’s,

Facebook. Com forward slash Flipping America medium and we’ve got something new starting today,

Our weekly newsletter we’ve been doing the weekly newsletter again we call it the weekly wit and wit stands for whatever.

[4:02] WIT.

You can text the word wit WIT to get ready write this number down Megando with your phone.

205205 and then it’s 8583547. I gotta have the staff look up and see if I spills any word. Steph.

Get out of it.

And if I can make it spell a word I’ll let you know. Alright enter your email,

And you’re gonna be subscribed to the weekly wit whatever it takes. Now, the weekly wit is kind of an interesting little newsletter. It’s not real technical. I don’t want anything to,

Be difficult to read. It really takes about 7 minutes to read. It has the the news what’s going on in real estate? Which we talk about a little bit on the show.

And it has some resources from the topics that we’re covering in the show. We put some links in there,

And it also just whatever they you know real estate news am flipping American news what’s happening here cuz there’s a lot happening here flipping America right now I’m telling you.

[5:07] It’s almost a little bit overwhelming,

One joke since it’s called the the wit and in the latest issue I I explained why they’re all like dad jokes because we have to be in offensive we have to be clean and.

[5:28] Innovative about the time you’re clean and inoffensive it’s hard to have a joke it’s actually funny

You know that most of the really funny jokes are offensive. So, what I decided a long time ago is this is a little small part of my philosophy of humor. What I decided when I was in high school is I thought you know what?

Most jokes are corny but i also know,

It’s good for the soul. It’s good for the body to laugh. So, since,

And growners and puns i’m gonna laugh for at least chuckle at everything that’s remotely humorous for the rest of my life,

And I honestly think that’s why I look 20 years younger than I am because I laugh a lot.

And I laugh at stupid jokes. I laugh at corny jokes. I laugh at all kinds of stuff and I encourage you to do the same. It’ll make your life better.

[6:27] You know, and so most of the jokes that we’re going to be telling on the show are like nice one, dad, kinda jokes.

Alright.

If you want to get in touch with us you can call 877 55 Roger that’s (877) 557-6437 press extension one you can leave your messenger your question,

And we’re always glad to hear from you. If you have questions about real estate or real estate investing.

Questions at Flipping America. Net. We answer every question. Some of them we bring to the show. I think in the two or 323 more shows we’re gonna have a whole show of just questions.

It’s it’s coming. I mean maybe six or seven more shows. I don’t know. We’ve got a lot of stuff in the pipeline here. But alright let’s get right to the theme. Let’s see where we are.

Can we do it?

[7:18] Alright. Wait a minute. You wanted to interrupt about something. Okay, we gotta talk a little bit about current events. Star wants to talk about current events. So, here we go. Bring it up.

Oh god. I try to leave. Totally

Oh, that’s right. You forgot all about me. I’ve been going too long.

Tell her by how they can follow you. You guys can follow me and reach me at real estate is life Atlanta on Instagram and Facebook.

Don’t hesitate.

Or tell you where she lives or anything like that but you can reach out to her there and if you wanna ask her the question, you can ask her the questions. She’ll pass them on to me. Either way,

But Star Wars also,

Of course. Except don’t ask questions about Jerry. I learned that earlier and the pre show. Really Roger. Oh my god.

[8:22] Anywho, so one of my main things I wanted to ask you really is interest rates went up another 75 basis points this week.

What do you think this is gonna do for a home sales.

[8:37] Well it’s gonna cool it off and actually though it it it needs to.

I’ll tell you what, you young adults, you young whipper snappers. Those of you that have only a pantician stuff for the last 5 or 6 years.

You don’t realize that for the past 5 or 6 years interest rates have been at and historic low and historic low point.

The lowest interest rates of my entire life.

And it may surprise you to know that the average mortgage rate was considered an average regular mortgage rate is around eight%.

[9:16] And it’s been like three% for years.

And I looked and today, the 30 year fixed rate is six. Three. I actually talked to a mortgage broker the other day because I’m always interested in what the people who are in it day to day, what they think,

And she told me that she thinks that it’ll be they’ll be at eight% by the end of the year. I don’t know if they’ll be quite eight. We’ve got 6 months to go.

And the feds just signal that then they’re gonna do another rate increase. Wow. But it’s not gonna be as much. And so now really to your question. What does it do to home sales?

It’s gonna slow it down a little bit but.

[9:57] Gets a little.

And,

Market killer that people think it’s going to be I think demand is going to remain high i have been for a couple of years predicting the man’s venture gonna slow down and I hate to admit it but I’ve been wrong.

Wow I have also been predicting that the values were going to go up and even during the pandemic and a lot of people don’t remember this but I wanna take credit about myself on the back,

Patman’s up on the back.

And the man was going to continue to increase,

And,

That that just had people out there,

All that created intense demand which has driven up prices and driven up prices and I keep saying it’s gonna cool off. It’s gonna continue to increase but the rate of increase is gonna slow. I’ve been saying that for 2 years but i just saw a core logic report,

The home values are up 20%.

[11:25] Over last year. Wow. So, I think that the interest rates going up are finally going to level that off and,

I have been saying for a few weeks now that I think that by the end of the year 6 months from now we will see a balanced market,

A balanced market means we have as many buyers as we have sellers.

And the average there’s there’s an average 3 months supply of homes on the marketplace,

It would take 3 months to sell everything that’s out there,

So

2 days isn’t gonna change the reality of a recession.

And now.

[12:28] Music.

[13:03] Of the year and most of us know the pain and maybe the self-inflicted shame of not reaching those goals.

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[14:54] Oh, wait. You already have the life of your dreams. You have it now. Well, thank you.

And I mean, how could life get any better than that?

Alright, here are the mistakes and that there’s not any particular order of these. It’s 10 things that I thought of and I just wrote it down and probably should have rank ordered them but

Here we go. One of the biggest mistakes that I see new people make is pay too much and that’s especially happened in the last few years. Yeah. Just pay too much. If you pay too much for your project, there is no way it’s gonna work out. You can’t make it work,

If you pay too much.

[15:42] I have.

There. They’d already bought a house,

They were having contractor problems or whatever and then we set down and looked at the numbers they should have never bought that house. And I know what causes it. You go to these hotel room gurus and you pay

30 or 50 $1000 and get all fired up about real estate and you got it you feel like you gotta get out there and you know

Make it happen to pay back all that money you borrowed from your 401 K or whatever to pay for that expensive course and so your heart is in it and your head is not necessarily and

People buy projects. I’ve got I’ve got some others.

[16:33] Hey.

Rehabs too big as a new investor I urge beg plead with you don’t do a big rehab don’t make your first,

Project right out of the box I pop the top or even adding square footage onto a house can get

Way more complex. What you want is a house that they say in the jargon here. Although I never say it, I just repeat it.

Has good bones. The house is basically okay. It just needs to be updated. That’s what you want. That’s the first first flip you wanna do. And I got news for you Miss Star and all of you that are listening,

That’s the only flips I still wanna do.

[17:19] I know how to pull permits and pop the top and all that I’ve done all that stuff but guess what I don’t wanna do it again,

Move in, move through, move out, because the point of this whole thing is much as I have enjoyed watching this old house over the years.

I don’t really watch the shows on ACTV very much. I’m grateful for him because they drive the interest in this show, but

I I got my interest in this whole thing watching this old house and they would create a recreation of historical house and it would be beautiful so made beautiful lovely things throughout the house it’s almost like art

That’s not what we do,

And the way you make money is you move through the properties. You keep the money moving. So, don’t do a big rehab,

Alright and that gets to point number three mistake number three they take they do too much

I can’t tell you how many times I’ve set down with somebody so and look at their scope of work and say, well, why you wanna do this? Well, I just think it would be great. Yeah, but.

[18:30] Does a 1200 foot square to 1200 square foot starter home need a 1000 square foot wooden deck built on top of a perfectly fine concrete patio,

You don’t need the deck to sell it. Well, I thought it would be nice. Yeah, I would be nice but it’s a budget buster.

And you know, so here’s the the word to the wise here.

[19:02] Don’t make a house that you wanna live in. Make a house that you can sell.

[19:12] Okay?

Number four take too long,

If you borrow money for fixing flip project and that project last longer than 6 months.

Your profit is going to be eaten up in interest payments ask me how I know,

And we have a saying around here that it is a sad day when one of our properties has a birthday.

Because we don’t wanna buy those projects. We don’t wanna do the big flips. We don’t wanna do the things that take a long time.

In out move your money and gone because,

The next one, number five, I call it, don’t look after the nickels.

[20:21] Yeah. Okay, I did. Yeah. So,

Puppies become dogs,

Failed.

But you also don’t wanna get rolled over on.

[20:50] He he got over $100.

There are some like for example,

There are some out there unscrupulous people that will prey up on the people that don’t know what they’re talking about.

And septic thing guys are in notorious for this but they’re not the only ones. HVAC guys are too. They’ll say, well, you got a problem that’s gonna take 8000 bucks. When the real problem is,

Hey a crack lid on a septic tank that may take 300 bucks.

And they can get all into and then you know if you’re making $50 thousand on a on a flip.

Paying an extra.

But if you pay an extra $1000 on this thing and pay an extra $1000 on the paint.

[21:55] Yep. That’s a car.

A nice night out on the town in Midtown Atlanta.

Cheap and you don’t even have to be a tight wod but you do need to be a good steward.

Yeah. I love it. Alright. Number six, getting emotionally involved.

I see this happen when people find a deal that they think looks like a deal and then when they start looking at the numbers,

It’s starting to not look like a deal.

Running out the the house that they used to live in. Maybe the house were they raised their kids for a few years in.

That house carry certain memories you’ve got marks on the door jam where the kids were growing up and then when you rent it to somebody it doesn’t mean anything to them and they start tearing it up you get,

It really that creates opportunities from people like me people who have rented out the house they used to live in when they see what their tenants have done to the house they freak out and they just went out.

[23:11] Til I come along and buy it not treat it like the inventory it should have been treated like all along. It’s just a house. Anyway, take the emotions out and another thing is when we’ve got a flip that we’re not getting what we thought we should’ve got for it.

The tendency is just to hang on, hang in there. We gotta make this money without we’re gonna make $30 thousand. We can’t make 20.

And we certainly can’t let it go and only make 10 cuz we thought we’re gonna make 30. Well, I got news for you. Listings go stale.

And you need to think of it like you think of used car lot. They get they put a car out there. They think they’re gonna sell. If it’s since there for 90 days, they will unload it.

And maybe be willing to not make anything because it’s not necessarily what you’re not making on this it’s the opportunity cost with a capital you have tied up,

So don’t get emotionally involved with your properties and number seven is connected to it make in the numbers fit,

Sometimes when people get emotionally attached to this deal they thought they found and it’s starting to not look they start doing things to make the numbers fit,

They’re making a decision with the emotional side of their brain or I guess what is that the lizard brain and.

[24:23] Make the numbers fit. Well, you say, well, we could trim some stuff out of the rehab budget or well,

We don’t have to have such a big contingency. I think everything’s gonna be okay. Or

You know it’s an up market maybe we’ll sell it for more than it looks like right now we’re gonna sell it for and all those maybes and probably just say if it’s a nuts or candy and nuts we’d all have a very merry Christmas.

You can’t build a business on what you hope will happen. Yeah. Well, I guess you can. But I’m not going to. That’s why I,

There’s some total of all the money I’ve ever lost on gambling at at Blackjack table is $100 and that was on a cruise. Oh wow. I never won any money. I’ve never won.

But I’ve only ever lost 100. You know why? Because after that and I lost that 100 in like 15 minutes. It was just all,

Okay, you know what? I’m done.

Skydiving if it want if a first you don’t succeed then skydiving’s probably not for you.

[25:30] Anyway.

Oh

You have to build margin in everywhere and when we get into our courses and and teaching in in my own practice I built margin in I estimate,

The ARV to be low i estimate the repairs to be high and i put a contingency on top of that i estimate it’ll take longer than i really think it will I build margin in there all the way through,

So

That’s gets closer to reality most of the time and I know that most of the people that are in this are optimistic people so you need to do that,

That was one of my mistakes,

Almost nothing goes perfect what’s funny to me is when people will do something like buy a car they could barely afford and cars come with things that are designed to wear out yeah so how you plan on buying tires.

[26:48] Oh, I don’t know. I have so many kids, I guess. A liability.

Flying blind.

[27:02] Where I I’ve actually done this roll up to a house. Yeah, it looks good. Yeah, the price looks good. I’ll take it.

And you get yourself committed to get yourself under contract and you haven’t really looked it over. You haven’t done a diligence on the property. You have an inspected it and,

I know that some of those details can be tedious and boring and well you just really,

Don’t wanna do that and I also know what it likes to feel like you’re getting older. I don’t wanna get up on roofs anymore. I don’t wanna crawl around in crawl spaces anymore.

Are nowadays you can get a drone and fly it up to look at the roof. Yeah. Which sounds pretty cool to me.

[27:47] If you’re if you fly blind then sooner or later.

You’re gonna hit something and it’s gonna it’s gonna smack you hard.

Are good friend has a saying the fox to chases five rabbits,

Catches none i don’t think he made that up but I first heard it from him so always attributed to him anyway the fox chases five rabbits catches nun,

And I see this a lot new investors are just trying to find something to break in,

A way to break into the business and get going something so they’re trying different things all the same time they’re trying wholesaling note buying fixing and flipping and looking for,

Attention is diffused and they’re not focused and.

What I would suggest that you do is go to flipping America. Net forward slash find your fit,

Just look for the find your fit course. It’s only 49 bucks and.

[28:48] Find your fit in real estate investing. Get an idea before you start. Okay, look, we are almost at a time. Those are your top 10 and I have a quote for the day and this is from yours truly. This is a Rogerism. I was thinking about, you know.

[29:04] Feed a man or give a man a fish and feed him for a day. Teach a man to fish. You feed him for a lifetime. My quote for today is what’s the point of teaching a man to fish if he just won’t fish?

That’s deep. Yeah, think about that. Alright,

Thanks for listening everybody. We’re out of time. I’m gonna let start take it out. Here we go.

[29:24] Music.

[29:30] You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app

Free in the app store be sure to like us on Facebook find and follow us on Twitter and Instagram and keep your eyes open.

[29:48] Music.