How Flipping Can Help You Maximize BRRRR Returns - Property Walk w/ Tarl Yarber

How Flipping Can Help You Maximize BRRRR Returns – Property Walk w/ Tarl Yarber

but the wholesaler has it for $150,000 now he only wants a $5,000 assignment fee so our purchase price if everybody's following along this is really complicated math that's one hundred fifty five thousand dollars right so that's our purchase there's some closing costs all that kind of stuff for us there's not much it's probably another thousand bucks for closing costs right a RV on this house air heat on this house is 275 we're finally live on YouTube awesome Thank You Zach the so air beyond this property is $275,000 all right so a lot of times you know this is if you're watching HGTV right right now then you'd be like wow there's a hundred and twenty thousand dollars of potential profit there but we're not watching HGTV we're watching the real thing there's things called rehab money costs all this kind of stuff that go in between closing costs blah blah blah blah blah so this house we're budgeting $50,000 for the repair I don't think we're gonna get to 50 I think we're actually gonna be less than 50 on this house but we put 50 in there because we have the margin to do it and it's all good if we decide to convert the garage to an Adu that's gonna raise the budget up but it'll also raise the property value to in comparison with it and plus all the rents and everything that go with it right so you're talking about our hard cost on this property now become two hundred five thousand dollars now breaking that down there's a $70,000 spread before you start getting into money costs closing costs or anything like that this is a normal flip right at this point and sit then the City of Seattle and Tacoma in the state of Washington we have a one point seven eight percent excise tax that we have to pay when we go to resell a property you don't need to pay that if you keep the property like as a bird how I analyze deals for our first strategy is identical to how I analyze a fix and flip property and I'll show you how to do that in a moment I want a quick and dirty analysis on any property that we use to be able to determine if we're going to be able to keep it as a flip or sell as a flip or keep it as a birth the other way you can calculate bird is really really well is used the BiggerPockets bird calculator which you guys can use I think you get a few ways to use that when you're not a pro member but you can use unlimited when you're a pro member which is another reason why it become a pro member with bigger pockets so I know that we're gonna have some closing cost so if I'm gonna sell this house then I have in our area we're gonna pay five to six percent real estate commissions we don't do that Redfin crap or any of those discount brokers I want to pay my broker good money so that way I know they sell it right and they do it right and I don't have to worry about anything we're very systemized and hands off with what we do as far as like once the property's finished the last thing I want to deal with is trying to coach a Redfin agent or that's talked about redfin but I am the in all those people out there that don't know how to actually sell a house and then I have to deal with it if you're doing 10 20 30 40 50 houses a year that's the last thing you won't worry about so so let's say for for simple math we have one point seven eight percent excise tax we'll say we have another 2% or so for miscellaneous clothing constant or anything that we got like another 5% for real estate commissions so let's call it nine percent right actually I don't want to do that math is too complicated let's call it 10% for clothes because it's not 10% let's say you to leave ba ba ba so I'm gonna spend another so 205,000 10% of that is twenty thousand five hundred dollars right so in this exact so it's going through that number so you got two hundred and twenty five thousand dollars in cost after resale including real estate commissions and so forth if you buy this house cash complete cash then you have a fifty thousand dollar profit right at that point 225 to 75 you have fifty thousand dollar profit if you bought it cash right I don't know about you guys must be born buying these houses cash they also finance costs right so your finance cost is your finance cost mines mine cost whatever it's gonna be different for you you might pay two three four five points to our my Leonard an 8 10 12 percent interest rate or more we might pay only 10 percent interest rate with no points we might pay six percentage rate and of course we might pay four points and 20 percent who knows everybody's different so I don't include any hard money cause or any finance cost into my personal analysis to do it quick and dirty analysis I think I say if I buy it cash and here's why we do that everything is on a risk i buy things as if I find it cash tick you find out what the margin of return is property the margin determines your risk rate equals risk just always remember those numbers so I remember that's a ratings risk in this example if there's a hundred and fifty thousand dollars potential net if we bought it sorry if there's fifty thousand dollars potential net if we bought it cash and our hard cost is 205 who can tell me the rate of return the ROI or the cash on cash return cash on cash return of $50,000 net profit to $205,000 hard cost Darrell you got your phone is that about 25 percent right so that equals roughly 25 percent right that's a pretty good deal if these numbers are accurate that's the if it's 50k rehab and it sells for 275 and all the closing costs in between we're now left with the net 50k you take the 50k you apply that to what the your hard costs are which is your cash for rehab and purchase and closing costs and that gets you a net 25 percent if you deal with some of the largest funds that are out there they look at this number this is one of the biggest numbers you look at for the flips right so that's why we do it for us if it's a toy this number is plus 20% I'm buying the house right the only other factor might be maybe I don't want to do a ton of rehab maybe I don't wanna do it $300,000 remodel or anything like that so in this case we like to be an under hundred grand remodels just to make it quick and fast so it meets that it has a twenty five percent this is a great great great deal and our opinions for a flip right for a flip now here's all we do after that when it comes to a bur okay okay great I'll buy this house to split no matter what I'm buying it I'm buying the house whoo I'm gonna make some money right want to throw my finance costs in there some other things you know this number might go down to you know 35 grand right because of utilities and maybe my you know there's some random things I might go in there that maybe it goes down to 40 right but I'm buying the house rental wise so if this fits this at the end of the project now right if I wanted to find out two exit strategies number one I can flip it I'm gonna then comp the house for rent so in this example if our hard cost is 205 right we don't sell the house I don't have to worry about this $20,000 a closing cost now right because we're not selling it so this then increases my equity so you go from 50 to that they've got maybe 70 grand of equity in there right now you aren't gonna have still your finance costs you're still gonna have your refinance cost your points your lender your appraisal fees all that great stuff to be able to do that so but you have roughly 70 K of equity before you go to refi if 2 applies are hard costs I want to get that out you can only do 75% most of the time I'm 75% of your ARV so Darryl what's what is 75% of 275 25% it to so well the problem is going live is we have three folks going on right now right for those you guys behind the scenes right we're you real and yet what fall is setting the screaming one spot on your facebook the other ones modern age we don't have any more phones between three of us so we can't do math right so the to 10 to 15 to 10 to 15 all right so let's call it weather no no I'm still thinking it's life life whoo we're live I don't know I'm just gonna go I'm gonna be 10 like you guys are still watching me you might not be watching me right now you might have all disappeared right I don't care I can't talk to myself all day on this I'm the best conversation I've ever had in a long time but the yeah so Darryl now that we have our calculator has figured out we did some math wrong so we're gonna go back we calculated this twenty thousand bucks right on the run comfort because this was probably going live is that you just do right we forgot our actual costs throughout the 275 that's what you're selling it for so 10% of 275 is actually 27,000 so $500 because that's what our closing cost would actually go off of if we it's live now right I'm trying to get on to so our closing cost would actually be based off of the resale value because we need to list a house that's what so forth so it's actually twenty seven five which increases this to to 32 32 32 ah two hundred thirty two thousand five hundred which changes this to you forty three thousand roughly it would take our forty two thousand six hundred but let's just say it's 43 and then how much was the 206 so 206 so 75% of 275 is 206 thousand dollars right so this is so here's what your net would be your my net profit then changes from for 25% probably more like twenty two percent or twenty three percent so let's say twenty two point five give it take for the our line that is perfect for me if for anybody out there is that this thinks that's not good enough or a lie that's a frickin awesome ROI you can get a twenty percent plus cash on cash on a fix and flip frickin awesome if you're talking about on a little house like this seven hundred is a seven hundred square foot house and you can flip it and make forty three grand right in and out in just a couple months done right that's one the benefits of doing houses like older homes in high valued areas so for in Tacoma is going up so this who knows where that's gonna be but once you have some closing cost and also your finance cost this might go down to 35 grand who knows so but as a bird next step does it cash flow I know for a 2-bedroom 1-bath with a two-car garage in this part of the city Tacoma it's probably gonna be able to rent out for anywhere between 1650 and 1750 a month right now this area now that doesn't work were the 1% rule because if we're at two hundred and five thousand dollar mortgage one percent rule would be you need to run out of two thousand bucks however I do know that if we have an interest rate of five to six percent interest rate after we go to refile and portfolio loan or maybe we can get less who knows I'm somebody cash flow on this thing I'm still gonna cash flow somewhere between three and four hundred dollars a month probably you know roughly about three four hundred dollars a month if we kept it as a perk I'm probably to keep it right because I'm now gonna have seventy thousand dollars of equity in this property and I'm also gonna still be cash flowing three to four hundred dollars a month on it at the end of the time at the end of the project and it's gonna be all brand-new the entire house is gonna have a new electrical new plumbing new age actually gonna cadet heaters Brandon heating right brand new boy everything's will be new so one of the best things about doing a bird is that your capital expenditures like go out the window for years we've done a lot of birds and we love birds and we have houses that we've owned for three four years that we've had no maintenance calls on whatsoever why every has new electrical plumbing roof windows everything's already done on it so why should anybody call in to build it to repair anything it's already new or it's under warranty it was okay so so we're going to keep this one probably subvert now at the end of the project though if I rehabbed went up right let's say it cost us 60 grand for rehab and our and the market starts to shift and it sells for 265 or the principal comes in low right on it and I started running the numbers maybe now it's not a very good Bert maybe it's still flip we have enough margin here but if this goes up the rehab and this goes down we could still sell it maybe make 20 grand and move on with our lives right there's another strategy which we'll get out of the move some other video about what entities you should put it in because typically you don't want to mix your flips and the same entity that you have your rentals in so it's very important that you realize if you're gonna keep it or not keep it but that's I'm not an attorney that's for another day to make me tell you guys more about that for tax purposes so would you keep this as a bird yeah the way you do it too for the last bit before we got cut off for our live video you can also go to BiggerPockets comm go to the burr calculator and you can do all these numbers in there as well put in your your what's a call when people don't they can see rate right now they can see range you can put it in you can you can calculate your capital expenditures taxes all that great stuff and see what your real return is for you those are your numbers not my numbers the other benefit to for doing this over the long run with it is that we when you have a fully fixed up property this thing is decked out to the nines with tile and all that stuff and the cops support it it's all about the comparables then you're also gonna get up to much higher quality tenant one of these side effects that my wife and I officiate handles are property management that we didn't really realize what we were doing when we first started doing bur is that we might do a bur in a not-so-good neighborhood and all the sudden it's the nicest house on the market for rental right and that might not always be the best thing to do for a flip is have the nicest house on the market for a flip in a neighborhood but it is actually really good for rentals to have one of the nicest homes in the area for a rental right then you get a higher quality tenant we were blown away by some of the tenants we at some of the pet neighborhoods we got our properties into you we also get a higher rent that we didn't even think we might be thinking oh cool this house and all the other houses might be confident fifteen fifteen fifty a month for rent but then all of a sudden like because we made this the nicest house they rinse for sixteen fifty or seventeen fifty a month and we get a a quality tenant friggin awesome right those are all side of the VEX are doing a great verse strategy and the right numbers but also don't do more rehab than you need to right don't fall in love with it you're not gonna run it you're not gonna live in this house yourself it's still a rental now how do we change our rental rehab and stuff is in this house if it was a flip I probably put some sort of nice laminate down right and do that but because it's a rental I don't want to laminate down it scratches I the only pretty much the only thing that changes on my scope of work from a flip in a rental as I felt luxury vinyl planking down on a house that's a rental because it lasts longer and it's a better quality material than some of the laminate we use in our lower end flips like this be Lauren clip so I might change that so maybe I spend an extra like fifty cents a square foot for fluorine on the rental it actually cost me a little courted yeah so idiot or we actually used to live we're good we're live also any questions from anybody so far we can ask questions rehab numbers and that kind of stuff and so who would buy this property maybe you want to uh might now want to test the rehab but the but think this is going back full circle if you oh let's show you the crawlspace that's a good one right yeah we found out from one of the neighbors that the tenant had to cut the floor in here at one point we didn't do that so they you see that so the tenant had actually cut this floor right the original owner didn't do this and they had like a carpet over it and everything and this is where they hide their drugs right so the tenant that's all I love this story sometimes with some of the properties that we don't buy but the tenant actually would hide their drugs in here and go for it now as a remodel this actually is now a a access point to be able to fix the property a little bit better we know that it's thinking over there and there's some issue so let's check out there was a few people interested about the growhouse update yeah oh yeah there was several people also so just okay so we have a you guys are familiar on YouTube there is a grow house that we there's two videos right now on YouTube once our initial walkthrough it's the grow house at that place most rush like the cops like busted the door down yeah they're rated the poor homeowner who was just trying to start his business and grow a business right plunder and but anyway we go into business and so they raided it they got the house we bought it from them it was great so there's a great video about that on YouTube for VP then we did an update about the demo of that property and after demo and kind of walk through and we just yesterday Nate and I just filmed the update on it so all the framing and all electrical all the plumbing everything is ready for sheetrock we're actually starting to shoot rock on Monday on that house so you could check that out I just sent it to Zach at BiggerPockets and he he's supposed to put that video and put it together on BP probably next week for you guys so Zach if you're listening that people want that video so let's get it on YouTube alright because all and you're a learner we got some questions on YouTube yep we just wants to know how much is too much on a rehab oh is that a dollar very slow yeah yeah crying we'll let him clarify whether it's a dollar value okay we got another question I can answer I can give you answer that question to level so how much is too much everything once again I'll rip sound like a like a broken record everything is based on comparables comparables comparables comparables a lot of people go in when they when they do these houses like and the number one reason why I think people lose money on fix and flips burgers rentals multifamily commercial anything that you do in real estate is emotion and emotion is what kills pretty much everything he says real estate is math that's all it is it's just math if the numbers say hey pudding remodeling the bath might cost you another five grand but it raises the value of the property ten grand you do it it's math remodeling the bathroom cost 5 min and their raises the value of the property five grand don't do it you two net sum zero unless it makes the house sell faster then it's still math how much faster if you're holding costs on the house is only a thousand bucks a month and it saves you 30 days to sell the house you're negative for grant in that example right so everything is math in this business when we do any kind of remodel is it gonna give us a direct increase in ARV in price right for the property or is it going to be a WOW factor or something that's gonna help the house sell faster and then third final piece is it actually needed structurally like do you actually have to do it like stuff does this house sinking over here for some reason because the foundation is 100 years old and there's probably no footing whatsoever and I'm just good and I know that just from doing houses like this for a long time and that's why it's something it's my I gotta go anymore we can jack it up and fix it but that's needed right it's not gonna raise the value but it definitely will help to sell the house faster and some of that code is needed so that's always a way they'll do that and then Carl would like to know how do you find the right areas to rehab or birth Carl Carl with the sea Cara Lynn a/c man I'm taro I'm Terrell at the Tito I'm sorry I'm Carl with the tea I'm sure you get that confused all the time in your name I'm sure people think that your name is taro because nobody ever confuses my name with Carl but the size of it so the how do you know the area sober everything is like I said it goes back to comparables like our downtown area Seattle you're talking about you know a really high-end not a really high valued area of Seattle Washington where you can buy a house like this 780 square foot house looking like this crookedest as blank right and in the middle of a nice area a core area of downtown Seattle this house is gonna be at least 500 grandeur right as is right so okay even at those numbers and you don't do any repairs you're not renting that house out for for five grand a month right so your one percent rules out the window Yuri habit the house actually might be worth 700 grand by the time you're done right great that's why you flipping that area but as a rental now you got six hundred something thousand dollars a hard cost in that area Seattle I'm sure you got a hundred hundred fifty grand the equity in there and stuff like that but you're not going you got a alone now for six hundred grand or you have to leave $7,000 of cash into the project to be able to refinance it you pencil those numbers out no boy no you're not renting that house out four four five six seven grandma didn't see how that no matter what so that's how you know in this area in Tacoma I know we can buy it cheaper this is going to be two hundred seven thousand dollars a hard cost by the time we've done we're gonna be able to get all our cash out as long as it appraises for 275 yeah and it's we're moving cash welcome let's say it let's say let's say we had to leave some money in it right let's say I'd to leave ten grand in it but this thing's still cash flipped three hundred dollars a month right leaving ten grand if you're a traditional buying bold guy if you if I told you hey put 10 grand into this property that's the only money you have to leave in and you're gonna get $3,600 a year back in cash flow what kind of rate of return is that a year that's thirty six percent ROI on your money when most landlord most landlords these days are looking between 6% and 12% return on their money you're doing triple what they would think is an awesome awesome deal so yes it's still a great burger but then you have to thank liquidity can you leave ten granite or can you leave 20 grand neither can you and do care you need that money the worst thing to have to do is run a big business like we used to do a lot of used to do tons of tons and tons of flips have lots of staff and then have to sell a house like a house like this that would be a great bird to feed the Machine right feed the Machine being overhead costs so yeah that like so there's a difference between it sounds awesome when you see all these people in bigger pockets saying that they flip 50 houses a year 60 houses a year 80 houses a year but what's their overhead are they doing it by themselves do they have a bunch of staff right sure you can deal for us we flip 45 well my whole partnerships us up of that we just do 70 plus houses a year so but nobody knew that we also have overhead hard cost everything else that goes with it so it sounds great on paper but when you get down to it what's the real net profit of that business not to go on a rant like that but that's something to consider as you're looking to build and scale I know people that do hundreds of houses a year that I'm like okay well how much money do you really make we make more money doing less than that because we have a larger net profit than we do less work so but that came from years of doing too many projects little ran just like you guys should know last question you yeah Lamar wants to know what you pay price per square foot performing or flooring readily so in the Omar if you do Florida near the Pacific who s communal but for the in this area it's all about material cost first and then install so for luxury vinyl planking in this area here the kind that we use is anywhere between a dollar 75 and 225 a square foot for the LVP that we use here the laminate that we use is anywhere between 149 and $1.99 a square foot for the material for the laminate that we use in this area this is like laminate and it'll be P luxury vinyl planking for us material costs sucks in the Pacific Northwest there's a lot of things I can bend about for construction costs where you know some of you guys have really cheap construction costs and if we told you the numbers you look at why is this house cost 50 grand it's because we live in Seattle Tacoma Washington that's why it's 50 grand I just entropy there's a lot of people this would be a $70,000 Imam so maybe some other video at another time we can break down that so we're gonna pay here between a dollar fifty and two dollars a square foot for material on this property and then we usually pay our guys about a buck fifty a square foot to install any kind of hard floor you call for art for any services so we might pay 250 to 3 bucks a square foot total for our hard surface flooring in this particular house right or labor and material another question then we get to the cones all right let's get the density he wants to know how long you have to wait in order to refinance after you find tenant Sofer so that's a good question everything is determined on your lender you could refinance immediately if you want to right you can refinance at the very next day but it all depends on do you want cash out on your refinance if you are like in this case here we can get on another video about some creative ways to structure deals for financing but if you want to get a cash out refinance that may be your first more you're giving example you go buy from a hard money lender most hard money lenders are gonna want you to put 20% down on a property so it's $100,000 purchase they're gonna want you to put 20 grand down as a deposit and they'll go to finance the other 80 right when I go to refinance with a traditional mortgage lender they're gonna look at there's an $80,000 mortgage already on it though refinance that immediately the very next day you don't need to wait six months to refinance that $80,000 mortgage from the heart Leonard it's called a great refi you meet it however if you want your $20,000 deposit back right or a down payment back that's called a cash out so you need to cash out refinance went you to wait six months nowadays to season the loan before they'll give you cash out so there's a lot of ways to structure with some creative lenders out there and some ways to do with private lending to where you can have an entire hundred grand you'll basically be a debt on the property so you can do a great refight immediately as you want to but perhaps maybe later on another video or another live video when these days I'll break down how to do that a little more creatively and how we do it but everybody's a little different but your traditional time period is six months for seasoning before you need to kiss yet cash out but you only got to wait one day to do a rate refine hold that answers a question for you now let's that's why you go meet lots of lenders build relationships you know talk to everybody don't go to your local like big box store bank they're not gonna understand most of this stuff you usually want to find your traditional mortgage brokers portfolio lenders credit unions those are always gonna be your better places to refinance at your mortgages going to the big big companies that everybody knows they are gonna just want to check boxes they don't understand any this crap so all right let's look at the crawlspace look a look there might be drugs here great tips tips which kind of drugs would you take date I would take all the drugs okay so look at that first thing I see there is a joist cut right that doesn't look so good also there's a contractor's dream there which means that they're probably using that to level something which is probably this beam when we open this up earlier like oh cool they started doing some repairs and then I touched it ah yeah did you guys see this all right cool so this way the world is watching hey Tara your shirt on you guys can see down here hopefully that this is a new beam it's a fir hemlock whatever the it was whatever the hell it is that they have it on the exterior wall here this post isn't doing anything right it Wiggles right going down there I see that a light some of you guys out there in the US might not have crawl spaces but this is a crawl space mostly you guys in California we have crawl spaces so you can see down there there's a temporary post and a footing and this beam goes all the way down there that's not gonna really work out too well for us and maybe that I guess you down there there's some other posts out there that don't look good none of those four by fours are strapped probably another repair the previous homeowner was trying to sneak in here one of the downsides now of doing this house is that we have permits with the city Tacoma and the city Tacoma is going to assume that we did all that work right and it sucks it's shitty work and so the because of that I now know well we have inspectors here they're not gonna say hey let's sign off on the structure that's good to go no and I also know that look like they tried to repair one of those when I showed you guys the section over there looks like they tried the level that area out over there with some another post and beam that's not good right so they did a very bad job but that's what they did so we're gonna have to go in there and basically tear out what they did and set this stuff right so that is correct which is another cost for the construction rehab and that's what you get – no – I don't I know a lot about construction rehab now but I didn't always write when I was brand new in this business I hated construction in rehab I wanted nothing to do with it I sourced out deals I negotiate I was able to work with Realtors I could work with contractors but I had a business part of that new construction area he handled all these details and I didn't want anything to do with it that one day I found myself without business partners because and that's a long story and if you listen to I think I was on bigger pockets 189 I think I'll talk about that a little bit the if you give you and actually Zack you could post our podcast on the comments that we create episode 189 the after I found myself knit learning how to do I need to learn rehab myself to negotiate with contractors better I found a book write a book Josephine I looked at her classes I looked for books I look for courses I looked for something that would teach me construction rehab there's freaking nothing out there except for one book that I found that was actually worth a damn reading which was Jay Scott my bro Jay Scott so you guys might know him he wrote a book called how to ask maybe he had which bigger pocket cells not just plugging that book because BBS sells it it's a great book and he just did a new addition to it and even though it might not teach you like specifically your area it teaches you the flow of rehab construction it also made me sound smart so when I would sit there and talk to a contractor I always get stuck on this one because I didn't know what the hell a ledger board was for a really really long time and a ledger board is what holds the deck on to the house and stuff and when you go to the contractor and you like hey that that thing you over there looks like it's not good should we replace it the contractor goes yes we should replace that and they write a big number for you on that right but if you like and that ledger board looks like it's running it out right do you have that in the bid when you do that they're like oh yeah I mean this guy knows what he's talking about or lady knows what he's talking about I can't then jack up his bid and so just that that you might not actually know what you're talking about but if you could say those key words right and you know sound a little bit smarter than that on a construction rehab then you might not get taken advantage of this much onyx treasury yeah but we can go on another topic in another day how to learn guitar to rehab because there's a lot of something but check that book out great book we never show the rest of the house so let's show that and we'll wrap up this video soon unless there's more questions yeah so the bathroom right if you remember if you watch the original in the very beginning of this video live before we got cut off earlier you're on the exterior of the house and I talked about window on the exterior a hollow there's used to be a big window that went here right and on the exterior you can still see where it was this is bubblegum on the whatever the color shoes the I promise you when we rip this thing out and start trying to mess around all of it this is all rotted out and they started trying to cut do stuff in there we're going to get this whole thing out another way to tell about floors if they're like not level of the houses and level another trick is to look at the flooring itself right this is probably this gap here this house kind of sinks this way so this is either because the house sunk more or because maybe the laminates just messed up already it's probably cuz Alam is messed up but if you're looking at hard floors like I think there's some examples like over here so if I'm looking at part of the floors you can see that they replace this piece here why did they replace this piece most of the time why this might have out before they replaced it you can see that the hardwoods in gapped a bit further and they're not all flush and stuff together that's a sign to me that this house is not level also right because your floors are splitting so look for you're looking for all these little red flags all these little details on your rehabs to be able to say there's something around here you might not know what it is but as long as you see I think there's something around here then you get a professional go look at it go get a home inspector go get a good contractor that you trust to go look at these properties in more detail before you just jump into it and also to find out the whole house is sinking any new to replace the foundation right that would suck really pad especially when you got in this house sure has a net profit of forty thousand we buy cash and stuff like that but you can spend then Olson they have a don't know where twenty grand goes into a new foundation there goes happy profit we'll see you guys Brian house is that your profit is 20 grand 30 grand so here why to help why did they rip out this wine already probably because they jacked up the house I promise you this they were repairing the house where that was where the crawlspace area over there was eating repaired we're repairing that they jacked the house up and when he did this whole area the flooring just buckled right and I guarantee you that's what happened here why did they rip out all this lath and plaster I guarantee you this because it all started destroying and cracking it up when they were jacking the house up and they try to get out because it's not because they're gonna do any framing there's there's nothing to do right just because the lack of plaster you got destroyed that's why oh man I can talk about this over ever so any other questions you guys have anything on the other homes currently rent yeah right now we have a twenty two doors Berbers and growing right the first strategy for us we only started about a year and a half two years ago we still flew up a bunch of houses and lately we've just been keeping more of a little more last year my wife and I here's the thing a lifestyle we used to do and entertaining 40-plus houses a year every single year for Flip's and then in the end of 2017 my wife and I said why the hell are we working our asses off all the time so we took we spent 2018 and we traveled 102 days in 2018 and didn't less lives less business less stuff on purpose so that we can actually have a quality lifestyle and so keep that in mind that we're really big fans of that know why you're doing your business right now and at the end of 2017 we only had a few rounds because Burt was just kind of an afterthought for us and we're like we want to make our money in passive income so then in 2018 we started trying to keep almost everything we got yeah we still flipped a few houses in out 2019 same thing a few houses that were flipping and we're keeping probably about a 50% ratio of the houses that we buy are going to become first strategy properties so we're still kind of new to work with an uber but we mastered fix and flip so first such an easy thing now that we mastered flirting with a fix and flip because we could see because of the value we can raise the value of these properties get huge equity and cash flow still run numbers now so that's the answer long would answer your question but that's only because last year we traveled one or two days and had a hell of a lot of fun and we're still traveling a whole bunch so we actually go to Maui next week and remember that next week 12 p.m. actually I can't guarantee that actually on Wednesday we are going to go live with Brandon Turner in Maui I'm going there to go with some friends and stuff of that sort gonna be hanging out at Brandon and Maui for about a week next week so Wednesday next week tune in we're doing live event with Brandon Turner him and I gonna go over some more per strategy some pics of flip who knows where to go over but you might just watch a surfing who knows that's gonna be a lot of fun so check them out Wednesday next week we'll post the event so you guys can follow it as well we're also gonna do future live videos every single week starting typically around Pacific Standard Time I have a question more I have a little quickly uh are you guys gonna talk about the big giant BP conference coming up Oh oh my god thanks Zach yeah I'm curious about it so if you guys don't know what's super exciting how do you guys have ever wanted to go to it you guys go to seminars you've got a conference in this who knows where you go to local events that suck and there's bigger pox has been going to do a conference for years and BP just announced that in October I think it's October 7th and 8th they're doing BP con right so BiggerPockets conference right they're getting creative with their names so BP con so I think it's October 7th and 8th it's in Nashville it's where it's gonna be they just announced it ticket sales going next week I'll be there my buddies J Scott will be there Brandon Turner will be there David Green will be there Darren sagres probably be there he was watching earlier pretty much all the BP names that you can better you know that you guys are familiar with they're gonna be Fe become we're gonna be speaking on the stage live for you guys and it's it's just like anything else you know there's no green room in the back where we like the IPS we're gonna be in it with you guys because we're interested nesters like quality we started somewhere so we want to hang out I think ticket sales go up next week for you guys so check that out it's all over bigger pockets look for that announcement ticket sales will sell out I think they're only allowing a thousand people to go which sounds like a lot but they have 1.3 million users on bigger pockets so if you want your ticket get ready we host an annual event ourselves in the Pacific Northwest we had 950 people the last one that we did that stuff this stuff sells out fast so II think you're gonna hear ticket you're gonna get turned away unless you jump on that stuff as soon as it goes for sale another question yeah we're just wants to know a couple questions what does the pros vs. cons of just demolishing the house again and also wants us to do day-by-day reports to show the time-lapse great Hey come flat to Seattle will pay you tens of dollars to do that for us right so we great now that's it but to you to tearing it down to started over I said it earlier in the live numbers numbers numbers numbers it's all this this house the dirt for over buying it for and what the hell would a brand-new house of this neighborhood would cost us are being worth versus what the dirt cost is price per square foot to build all that kind of stuff does not pencil out whatsoever to Tara there's a lot of people in different parts of the US but you see a house like this yeah the numbers totally make more sense to tear it down because maybe you'd be buying this house for 40 grand as is and then you can build a brand new house and sell it for yelling that would be 150 200 whatever yeah so your dirt costs then becomes you know 10 20 grand at that point with not in this case in these in these inner-city areas right now these height you know these are basically like City of Seattle to kind of stuff you're not gonna get that you look buying this house at this price you know that house is what it is it's worth more fixing it up math all comes back to math guys so do your new area there's different parts of Eastern Washington where the art that yes the dirt work would be it'd be cheaper to buy the dirt and just or didn't we we streaming signals how are you determining how much your rehab is gonna increase the total value and then also Guru wants to know how do you get into buy-and-hold coming from the wholesaling side oh good question so what's the first question how you it how would you rehab how do you determine how you rehab is going to increase the value all right so the well okay that's a good question so I'm gonna upset in a bunch we were said it earlier in the live video as comparables comps that kind of stuff if you're looking at a house this is a two-bedroom one-bath home 780 square feet with a two bedroom with a two-car garage if we then go to if we look at other 2-bedroom 1-bath of the area and they have fully tiled bathrooms looking good with laminate quartz countertop kitchen and that house sells for 275 then we got to do that same thing right however if their houses are for with sheet vinyl and all that kind of stuff and they're selling for 275 I'm not putting in luxury vinyl 19 and all the quartz countertops in the numbers work there's no cops or no comparables to tell me that putting higher-end finishes is going to get me that value then why would I do that if I could just do basic I'm doing it right so keep it simple the other thing is if you're a wholesaler how'd you get in Vine hole everything comes back to financials your personal finances it is so important for you guys to keep good financials for your for you right if you have a full-time w-2 job there's sometimes a reason to keep your w-2 job so that you can qualify and become bankable for your property if you've quit your job to go full-time we'll sailor and you've only been doing it for six months and you have no tax returns a banks gonna look at you saying you need two years you need two years of tax returns in your business to actually be able to qualify for a traditional mortgage portfolio loan there are other ways there's plenty of portfolio loan companies out there that won't look at your tax returns they'll just look at the fact that the property values acts and they'll do that debt service ratios and all stuff totally another live video for another day doesn't matter what you choose get good financials and I don't mean that yet make much money I just mean records keep records I see this all the time with house flippers is let's go flip houses and do and then we'll figure out our bookkeeping and everything later and then six months go by twelve months go by and they're booked here twenty four thirty six months go by and their bookkeeping is a nightmare and they then have to spend tens of thousand dollars just to get it fixed so just start right would you would you recommend wholesalers do partnerships no I think I think that's great so there's good things so joint venture contracts we do that with people where we'll sit there and you know if somebody brings us a deal that's a wholesaler and it's a good enough deal and they want to be a part of maybe project manage the deal with us and stuff and take some of the load off of us because they have time to do that we might give them a percentage of that if the wholesaler has enough experience where they bring the deal and they got it another house flipper or buy an old person that that is willing to do it they can create a partnership to where like hey all I'll not charge an assignment fee if you give me a percentage of the and the deal that's a great way to for a wholesaler to get involved go find other fix and flip guys and buy a bowl guys to say if I bring you a deal instead of charging your $20,000 Simon for your $10,000 assignment fee let's keep I'll keep that off the table but I want you know 10% of the dl 20% the deal on the back end or 50/50 depending on what it is and you get it and that's another way to transition into it as well completely great idea any last questions before we sign off this less thank you pretty good you want how do you make sure your appraisal doesn't come into a list comparable so good I'll tell you what we do I don't like taking chances so number one definitely comparables convertibles comparables make sure you know your numbers and that area but number two we make packets right so I'm a huge fan on this I know it works I've seen it work a bunch of times where we will have we take photos of everything we already have a hundred and eighty photos of this house and you're like a 780 square feet right yeah trust me we have underneath photos and we'll take photos weekly of this house appraisers are gonna be like looking crooked we're four months from now when we refinance his house and we bought it for 150 and they're like this house is worth two seventy-five four months ago how did you buy it for 150 they have to answer that question because of the bank so what do we do I make a little packet or one of our team members makes a little packet that has the before photos of the same we bought the house of this really crappy condition right and then here's a little scope of work what we did brand-new electrical brand new plumbing brand new sheetrock brand new kitchen cabinets stainless steel appliances and I list out all the great features the appraiser loves that because they need to prove to the bank because the pressure is not your you're not a client of the appraiser they don't care about you they they work for the bank that you're getting the refinance work so all I paid the appraiser know the bank's paying the appraiser your than paying the bank right so they don't work for you they work for the bank now that said you then provide them that info here's the before photos here's the scope of work what we did every all the new roof all this kind of stuff they can then take that and justify an argument with the bank later if the bank challenges the appraisal for some reason saying why is it 275 they bought for 150 four months ago he can then submit that she can be then to submit that and say here's the proof why they did it they did a lot of work to it and that'll also help get your praise Allah up can't guarantee it there's never ever guarantees you just might have it I'm sorry guys there's these guys out there that you know people out there that are quote quote professionals know what they're doing right so so there is that crapshoot or you might not know what you're doing that's where you have to you know learn this education stuff to you as much as possible but if you if you walk it with him if you with unless you get one with the appraiser become besties never argue write all that is important right Jose I push the value on my house is yeah way more than this should've camera got Nate is he just got done with his own live in Burr so he half house had what he went to go do his appraisal he took her advice and he did a package he showed up to the property made best friends with the appraiser right and as Italian that doesn't you know like not phony steps just like talking to him biessing with them showing what they did a lot of appraisers are super excited to see the photos of the before they're like oh my god that place looked like right and they are they joke about it you have a good time guess what I know it says like I said professional but they might like say oh well maybe the house is worth another five grand board because I like the guy I write or tear down more right let me get like goeth arse against the law those yeah I'm sorry guys grow so they definitely hurt the appraisers have power to keep their people their people their people and they hate your guts right then alright so tune in next week Wednesday we're to go and live in Maui with Brandon I don't know what time exactly yet but traditionally 12 p.m. Pacific Standard Time over live every week for perpetuity that's a big word and forever until I get tired of doing this crap so ah check this out a finger pocket so you want to follow us on bigger pockets you can also check me out on Facebook we do a lot of work there fixated Real Estate's the name of my company we do a lot so we post stuff on Facebook all the time Instagram for me Starla are very straightforward I'm the only person there with that name and we hope to see you guys more in our future live videos and you guys like this type of stuff keep commenting so that we'll keep doing it if you hate it don't comment at all and go away I got a VG con and checked it out as we go go see you guys later let me go find some drugs drugs