Have you ever heard the story of Goldilocks and the 3 bears? You know
where Goldilocks wants to renovate and flip their house and then the Bears eat
her alive. Guys, today we're talking about the real untold stories of what happens
in the flipping world. I am bringing my buddy Cody back. And he's going to be
laying it all out for us to share with you all the Do Not's and then the one, "Yes,
for sure. This is how you do it and how you crush it."
Goldilocks was... She was a naive investor when
those bears took her down and ate her. Because she didn't know what she was
dealing, dude. Seriously, break it on down for these people watching, it's like,
listen up. In that game of flipping, you can make so much money but you can
freaking get steamrolled and die a thousand deaths is what it feels like
when you lose at all. -This is all I got. It's just like... It's horrible
when it goes south. -Yeah. -And the thing is it's completely avoidable. And my mentor
used to always tell me, "Wingy is not a strategy." Right? And so, that's really true
when it comes to renovating houses. There's some things that you should
always have top of mind. Whenever you're going to do a rehab, you don't make
mistakes and you can avoid very, very, costly, financially, devastating
situations that are avoidable. -And this is the thing that I want you to
understand. What we're talking about flipping is not this plague that is so
risky. You can't figure it out. The reality is, there's a reason why cody has
10-12 flips going at any given moment. There's a reason why when I go in my
markets, I got my rehab crews moving through a dozen homes from the auctions
at any given moment. There is a science to this. And when you know the science,
dude, you can win but you need to know the biggest pitfalls and mistakes to
avoid. That's what we're gonna be honing on right now. So... Cody, number 1
biggest mistake you see new investors make when they get into the flipping
ranked game. Number 1 mistake? God, this one's tough. It's probably hiring the
wrong team members. I would say that's probably the biggest.
-Rehab team? -Yeah. Yeah. Your rehab team. So, I assume you have a deal. You already
have it. You're ready to go on it. Now, you have to make a decision. Do I do it
on my own or do I go higher team members to do it for me? So, my thing is you
know, talk to you offline about this is, what is your highest and best use of
your time. You should not be out swinging hammers and installing toilets.
You should be leveraging other people's time, skills, money, resources. And so, for
me, it's always go out and build a great team around you. -Yes. -But with that being
said, if you don't know the questions to ask to find a good general contractor,
right? And you want somebody who's licensed, bonded, insured and
you don't do the background research on them; And for me, when I go out
Let's say I'm moving into a new market. I want a higher general contractor. Best
source to find potential general contractors is through an investor
referral. But one time I didn't do that when I was brand new. I hired the wrong
general contractor. Next thing you know, they're coming to you. And they're like,
"Hey, man. I need to get some more money from you." I got to get materials. And then
all the sudden, I would show up and I gave him money and there's no materials
on site. And you're like, "What happened to that?" And he's like, "I don't know. The
materials must have got stolen." And all these stories start happening. Next thing
you know, you realize not only did the guy take your money. And what I found in
that situation, he actually bought materials. Then he had his friend steal
the materials and then go return them and put it on a gift card which they
then went and spent for something else. I mean the craziest things happen if you
hire the wrong team member. So, your power team is really, really essential when
you're rehabbing. So, good general contractor is reputable. They have their
in good standing. You can go the Registrar of contractors and see that
they're in good standing. You could Google their name. But get an investor
referral. Yeah, let me ask you this question though. Because this is what I
come up against. I think other people do too. You're like, "Yeah. But why do I want
to go licensed and bonded when I can get a handyman that will only cost me half
as much?" And there's this hope that if you don't go the full reputable route
that maybe you save some moneys. Are there any validity to that? You know, I do have
some projects where I send my handyman over. And normally, a handyman is more of
like a jack-of-all-trades. They can do some drywall, they can paint. They can do
some demo work. -Not well bu the can do it. -And it's cheaper. So, I use handyman for certain things like,
if I need something painted for instance, like... -Cosmetic stuff. -Yeah or like a
back wall. If I hire a painter, they might charge me $75 per square
foot or something to paint or per wall or whatever they're doing. My handyman will
go out there with his paint gun and do the whole entire thing for 75 bucks. You
know? So, there are certain situations. But I wouldn't do any major remodeling where
you're doing like full-blown kitchens and... -Redoing entire room. -Bring in a
general contractor because what's going to happen is when you go to turn on
power or any utilities, if the utility company
tells the city what you're doing and they and you don't pull permits
and stuff like that. They could shut your jobsite down. And what happens is all of
the subs that are working on your project whether it's a plumber or
whatever... They won't... They'll get fined if they go on to the property. -Yes.
-So, they will stay away from your project. So, that can really screw you up.
-Okay. So let me ask you this. So, we're talking about how reputable and when you
need them. I love it. This is amazing information. Here's the other one though
that I just kind of get hung up on which is time. How do you find some little
freaking stay on the jobsite and actually deliver because these guys...
It is amazing. You want to pay them. They're so hungry for the work and then
they take twice as long to take the project down. They're not there when you
show up. How do you get them motivated to like freaking beast that project out
till it's done. -Great, great question and it's so easy with today's world full of
technology. They never know what I'm going to show up and I call them all the
time. And tell them I'm always on my way. And I'm always faced timing them. So, I'm
constantly saying, "Hey, you know, hit... Go live. Go FaceTime with me. Show me what
you just installed. Show me the quartz countertop. Show me this." And they're
always on their toes. So, they're like, "Oh, my God. Cody calls me and I'm not and
I'm not working. I'm going to get in hot water." So, yeah. -Okay, so dude. Horror number
1 is you get the wrong team. Horror number 2... By the way, just real quick.
Before we go to number 2, just want to tell you guys something. There are ways to do this
the right way. And it was kind of cool. In in Cody flying out, here's been super
generous with his time. And he's someone that I definitely want to promote
because I know his background, his history. And I believe in Cody. I believe
in his company Clever Investor in what they do. If you guys want to get more
information on how to do this actually the right way, there's a link in the
description below and you actually can get a chance to work with Cody and his
team for 70 solid minutes of training. And I recommend it to anyone that is
saying, "I need to go down this road, this is the road that I need to travel." Then
listen, this is the man that I'm telling you. He's got it already all figured out.
And you're going to want to play in his camp. So, make sure you click the link if
you want to do that. But horror number 2. -Horror number 2 is getting stuck in a
deal with bad financing. Alright. When I say bad
financing, I'm talking mainly about hard money loans. Which are very high-interest
rate asset based-only loans. Meaning that you can go to a hard money lender right
now and they will lend you money based on the property itself so you don't need
good credit or anything like that. But it's very high interest rate. It can be
very expensive. And if you don't buy the property right and you don't sell it
fast enough when it's done, you can get stuck in a bad deal. And I'll never
forget the property on Georgia Avenue. I have nightmares about it. -Okay. -I got
stuck into this stinking deal. My partner wanted to buy. I didn't want to
buy it. So first off, you already get that gut instinct where you don't
want to... "Just don't do it. Follow your gut." But I didn't because my partner
was kind of talking me into it even though I had my one foot out. We ended up
going and buying the property. As soon as we got into the actual remodel, it cost
more than we thought because old plumbing, you know,
unforeseen things when you start opening up walls. And the financing we had on
there was a hard money loan. I thought I was going to be able to sell it for a
certain amount. When the project finally got completed, a house down the street
sold and they took a rock-bottom price. So, they lowered the comps. As soon as
that happened, I knew I was in trouble. My sales price went from here to here to
here to here to here. Over time, I just kept lowering it and lowering it. And
lowering it. And what what did I have to keep doing? Keep paying that hard money
loans months after months. Before, you know, it it goes like this. The the hard
money loan costs are like this in your profits down here and I probably lost 35-
40 grand by the time I got myself out of that. I never forgot it. It's very
rare that these things ever happen. And it hasn't happened since. -Yes. -But I
learned a very expensive lesson. And here's the thing about watching these
types of videos and following guys like Kris, is you don't have to make the same
mistakes that we did. -Can I just drop it right now? Don't go it alone. Everyone is
this lone wolf and then watch some videos and they're going to do a house. Do
you know the majority of investors I've ever met that flip the deal. The majority
of them, they regret it. And here's what they all share in common. They didn't
have a professional at their side. They didn't have someone like you at their
side that was actually walking them through it,
reviewing things and making sure that you were actually following the rules of the
game. If you follow the rules, you're going to win. Our emotions can absolutely
run away with us. And so dude, I'm glad that you learned that because I'm sure
you've saved a ton of people from that mistake. -You're welcome. Yeah. Alright. So,
we want to go one more? -Dude, you know what? I wanted to hit 3.
So, dude. I think you're giving us really beautiful perfect advice today. Third
biggest thing to make sure that you avoid when you're rehabbing to make sure
you don't make that bigger. -Alright. So the the third thing is having irrational
fears. Alright? And a lot of people. I know I did when I first started, right?
It's new. -I think actually anyone who's new to the game of
real estate, feels this big and the house feels that big and they're like, "I am
nervous or I got anxiety." And fears absolutely a real component. And fear can
totally take a deal down. -Yeah. And I've seen it where a student of mine or even
even me, I get a hold of a really good deal but I start second-guessing myself.
Because I talked to somebody at a networking meeting and they tell me that
they think the markets going to change or you know, I talked to the neighbor and
they're like, "Oh, houses in this area sit forever."And it's like, I started
panicking. Second-guessing myself." I actually had a student do this one time.
She missed out on a whole bunch of money because she's kind of in the
middle of a rehab panic. And fire sold the property for much less than what she
should of. She called me up and said, "I sold it." I'm like, "Why would you do that?"
And she missed out on a great opportunity. So, irrational fears are real.
They really do get in the way of a lot of people's dreams. But you know... -Dude, I
was working with this older couple. They have bought 2 homes in this hot market.
The values were going up like crazy. And they sat down with me 2 years in.
They're like, "Oh, Kris. We're nervous. I'm like, I had just reviewed their numbers I'm in."
Okay, what's going on? They're like, "Oh, man. We're really nervous about that debt." I'm
like, "What do you mean?" Like, "Well, you know, we bought these houses that we went to
the bank and got mortgages. We have this debt.." I'm like, "Uh-huh.
But have you balance that against what you guys are making?" Like, "I know. But the
debt is really keeping us tonight." And I look down with a sheet I'm like, "Alright,
I got a deal for you. I'm going to take both these off your hands at the
price you bought them for. I'll cash you out, okay?" And also they're like, "No." I'm like,
"Why not?" Like, "We made 50,000 of growth on each of these properties.
Grew up a 100 grand." I'm like, "What else?" "We're cash flowing like
hundreds of dollars every month on them." I'm like, "So, what's up with the fear?" And
irrational fear can get us to do irrational crazy crap. So, crazy crap is
the one thing you don't want to do. You've cited an example. I've cited
examples of it. You got to find a way to actually have your psychology screwed on
right. I recommend for people to just positivity and having a mentor. Reading
good books, finding yourself in good places, surrounding yourself with the
right people versus the naysayers. If you got a mentor who's at your side and
you're their student, there's nothing more powerful. There's nothing more
powerful than having that mentor. It's not that they're there to guarantee that
you'll never make a mistake. But what it does mean is that when you are doubting
yourself they can help correct your thinking. And that's the most important
thing is dude if you're gonna make this money miles well enjoy your life along
the way, right? -That's it. That's why we got into real estate in the beginning. So,
yeah. -So, you should start like taking that upon you now.
So, listen Cody, man. Dude, you totally delivered. Thank you. -Alright. One more
back there. -Thanks for rocking it out with us today. Sharing the 3 biggest
fears that get in people's way. And the obverse. If you actually want to go out
there in the marketplace and start winning and crushing it at a whole new
level, all you got to do my friend is click the link below because Cody got
together with those famous people in Atlanta that around that flip no TV
show. -Yeah. -You put together like a masterclass on how to do this the right
way. I fully endorse working with this man. That's why we've been friends for
all this time. And dude, I'm just telling you right now. Check him out on his
YouTube channel. Like and subscribe and for those of you, if you like to see this,
Give this a thumbs up. Share it the people who are interested in being in the game and we
will see you on tomorrow's video.