March 3, 2021

2 Big Mistakes Kelli Haas Wants You to Avoid

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Follow along as one of my students Kelli Haas takes us on her first flip journey!

In this conversation, we discuss:

  • Working with a private lender
  • That lender ghosting her
  • How to protect yourself and also protect your private lender
  • Her budget, timeline and profit
  • How to handle budget overages
  • The 2 big mistakes she wants YOU to avoid

... and much more!

Tune in, you don't want to miss this one!


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"Leave people and places better than you find them." - Debbie DeBerry | The Flipstress®


Unknown Speaker  0:01  
You're listening to the flip houses like a girl podcast where we educate, empower and celebrate everyday women who are facing their fears, juggling family and business, embracing their awesomeness and wholeheartedly chasing their dream of flipping houses. Each episode delivers the honest to goodness tools, tips and strategies you can implement today to get closer to your first or next successful house flip. Here's your spiky haired breakfast taco loving host house flipping coach, Debbie DeBerry. Hey,

Unknown Speaker  0:40  
how are you today? I hope that whatever you're up to, you're having an easy day. How about that? Let's all have an easy day. Okay, so I'm going to share with you an interview that I just had with one of my flip sister students who just finished her first flip, or they just sold it recently. And it was a nine month journey. And lots of lessons learned. As every project is there's always something new to learn, which is one of the reasons why I freaking love this business. And she'll share with you her two biggest takeaways and their big lessons. So stay tuned and listen. But first, I want to quickly do a listener shout out. Thank you so much for leaving reviews. It helps more like minded women find this podcast. And it also lets me know that what I'm sharing with you actually resonates with you. Okay, and I appreciate it. So here's a review by Teresa Jane. She says I just listen and listen. And listen. I love the 15 second back forward buttons so I can say what and hear it again, empowering and informative. I like Debbie a lot and her work is great. I can tell she has quite a heart. How refreshing. I love that review. Thank you so much. It made me laugh the whole what I can totally relate. So thank you so much for taking the time to leave that reveal. Alright, without further ado, let's jump in and hear what Kelly hos has to say about her first flip journey. Okay, let's start with how about just like introducing yourself a little bit.

Unknown Speaker  2:28  
Okay. Um, I'm Kelly Haas. We are in the Austin area. Um, we have three small kids. We decided several years ago that we wanted to get into real estate investing, but with two tiny babies that were close together and a toddler. This mama said, okay, babe, you're on your own, figure it out. You can do whatever you want. So then as they got older, and I began to regain some mental capacity for more things, we started looking into and trying to find places where we could learn these things. So we got really big into bigger pockets and all of their podcasts and their books and all the things. And then we were we were in the Dallas area. And so about three years ago, we decided that we didn't want to stay in the Dallas area and really looked Okay, where do we want to go? We're like, we really like Central Texas, but we don't like San Antonio. Okay, Austin. It is. Right. Yeah. So, um, so we moved down to about three and a half years ago, and my husband was at the time he was working really hard to get into law enforcement. So we actually moved down here because he was accepted into the Texas State Trooper Academy, which is in Austin. Yeah. And so we've moved down here, not entirely specifically for that. But it was a deciding factor for timing. And so we came down here and it was probably it was six or eight months before he finally started. So whenever he left for that, and it was five days, there's no communication, and then he get to go home on the weekends, more like 24 hours over weekends. And so but it was kind of like, okay, we have a lot of time to mentally prepare for that. And so it was okay. But in the meantime, it was kind of like, we knew his chances of getting to stay in Austin were slim to none. We had just moved our family here. We just purchased a house and we were like, I'm not leaving. So it was kind of like okay, well then I guess his first duty station, wherever it ends up being then it's gonna just be long distance until he can get stationed here. So that was our plan initially. So during that I said, Okay, I have to do something. Yeah. Here. I was working part time with three kids at home. Yeah. And I was like, I have to do something. So I started getting into all of that a little bit more started building some really shops, local realtors and stuff like that. And then super random had was looking for real. He was looking for like local festivals and stuff for a weekend. So I'm like, okay, local events scrolling through and I'm like, see this thing and it was a women's women's gifts. I can't remember the title, but it was the women's get together in Austin, whatever month that was. And I was like, Oh my gosh, what in the world, this is a thing. I was like I'm going. And so then it just kind of snowballed from there for us. And so even my husband he had searched for he wanted to get into some sort of mentorship, we had gone to all of the free area, the Austin real estate investor group meetings that we could go to. But the buy in is out of, well, way out of what I mean, we'd have to pull a second mortgage. So we weren't gonna do so like, Well, I mean, it's a great idea and all. And so he had been searching some sort of mentorship or something like that, because it real estate's not a world that we come from. And so it's it's still just a fairly new thing for us. And so anyway, so when we found and met you, he was like, you're doing it together. You're you're doing it like this is what we're doing. Like this is awesome. I love it. So anyway, it just kind of rolled from there. But it was literally exactly the timing that we needed when we needed what we needed. And from there, we got we got two properties. 2020 kind of spun everything out of control, but here we are. 2021 We're like, Okay, back on our goals.

Unknown Speaker  6:42  
Yeah, yeah. Okay, so you did just recently close on your first flip the sale. Right? Okay. Yeah. So let's talk about that project. Like, let's rehash not to like, like dig a knife, but more like, you know what, you know, what I love? This is what I love is, and it's so important that we don't lose sight of this. It's not about everything going perfectly and smoothly all the time, because it's not going to. Yep, it's so much more about trusting yourself, that whatever does come up, you'll be okay. Right? Yes, you'll figure it out. You'll work your way through it, it will be okay. It might really suck. Like financially, emotionally, physically, it might all really suck. But ultimately, you'll get through it. And so the fact that you're, you are willing and ready to do a second flip, even though the first one didn't go the way you wanted it to go. Like, that's the whole point. So, alright, so kudos. Yep. Okay, so let's talk about Okay, when did you buy your first let's talk about the like, the details, like when you bought it, what your rental budget was the timeline, that sort of thing.

Unknown Speaker  8:07  
Okay, so we started looking, it would have been like, February of last year 2020. And so we started we, we really wanted to stay out of the Austin area completely. We had started on partnered on a flip with my parents on temple. But it wasn't ours. We found it and presented it to them for them to fund it. And then they took off with it. So, okay, we can't like so we're like, well, we partnered on it. But they kind of took off with it and basically hired my husband as their GC. Oh, that's kind of how that one went down. So it was that one was also a little squirrely and weird. But, um, if we just let it go, for the sake of family, we're so close with my parents that we were like, okay, they can do what they want. Awesome. How about it, good for you. So. So, anyway, we wanted to stay kind of, in that part of the state, essentially, out of the metro areas. So we really like land passes. But I have a lot of family there. My parents have a ranch out there. So it's familiar. So we built a relationship with a realtor out there and told her kind of what we were doing. And she was bringing us a lot of a lot of off market properties even which was interesting for her as a realtor, because she wouldn't have really made Commission on our purchase of it just only if you listed it through her anyway. And so she brought us this one, it was an MLS listing. But it had been on the market for quite some time. Um, everything sits there for an average of about 45 days. Okay. And I think in the last year, that average has actually gone down to about 30 days. But at the time, everything was sitting about 45 days this house had been on the market for I don't know, three or four months. they've reduced the price a little bit, but not a whole lot. So We went in and we were like, okay, it needed a lot of work. They were still asking too much for what it was, you know, kind of thing. It was built in the 50s. The family living in it, his dad was the one that built it, dad or granddad was the one that built the house. And then so he grew up in the house, and then him and his family were living there. And they had young kids, and they were trying to upgrade. And so, we were like, Okay, so this is, I mean, we had put in a ton of offers on houses that weren't accepted. So this was just another right what felt like lowball offer, but it was just based on our numbers and what we felt like needed to be done. And they countered, our original offer was, I think, 99. And they countered at 110. And said, this is as low as we go. What were they did the the list price was the original list price was like 159. Oh, dang it. Yeah. But then they had actually just come out of a contract, they had a buyer buyer fell out because they were furloughed, because of COVID. Just before closing, so their lender said dropped them. Yeah. So they lost them just before closing and they had already negotiated a deal of 130. Okay, we already knew that. So we kind of base it off of that a little bit like, Okay, well, that's still too high, but so it wasn't still that much crazier than what their first buyer was. So anyway, so we got it for 110. Um, original renovation budget was like 24. But at the time, we were going to use a loan at a bank, like not a mortgage, just a portfolio loan. Yeah. And we found this little bitty bank security bank out of temple that has like, really fabulous portfolio loan terms. Okay. So we're gonna do that. So we had an included like, $1,000 a month for holding costs, and that was for the loan. And that was also for, like utilities, and even property taxes. Yeah. So we kind of had all of that rolled in. Our original projected profit was like 20,000, with original ARV of 170. All of those numbers change.

Unknown Speaker  12:23  
Oh, yeah. Like the ARV? Right. It's like, yes, leader. Yeah. Yes. What? So that play like that helped us huge, right, honestly. Right. Right.

Unknown Speaker  12:34  
It changed how it changed it from losing money. Had we listed it? The way everything went down? Had we gotten it finished that summer? Like planned right, to taking nine months? Right, right, nine months, seven months to get it listed nine months before we sold it? And so yeah, I mean, the market just went up that much. So that played in our favor. But yeah, but so we so we were gonna do that. But we had a partner friend, who he was a broker in the Austin area. And so now all he does is he's just a private lender for real estate deals, as all he does. So we partnered with him. So he was going to be our downpayment. He was going to be a cosigner, because we were supposed to show a certain amount in the bank, which we didn't have. So he said, You know what, I'll guarantor that and they were like, awesome. That's good enough. So then he was gonna be a second lien holder. Um, basically, because he was guarantor and had put up money for the down payment. He was also he was going to provide the loan for the renovations. And then, instead of paying him a percentage, because our projected original projected profit was only 20, we were also asking for his help and a lot of things. So we worked out a deal where we were just going to split the profits at the end. Got it? Yeah. So then, the lender wanted all these things from him that he didn't want to do. Which was weird. It wasn't anything out of were anything out of ordinary remembering this I'm remembering this weird stuff. Yeah. And it was like, we I mean, we already had the contract on the house and everything. And the lender was like, Okay, I need this and this and this, and this. He was going to be your guarantor, and this and this, this and he was finally he called us and he was like, sorry, I can't do that. You know what he's like, I'm just going to purchase the property. We're not gonna use a lender will still that'll save us lender costs. And he was like, in belleair, okay with it. We'll just split the profits at the end. He was like because, and so he wanted to go in and we purchased the property jointly, okay. But it was all his money. So we had agreed 24,000 for renovation we were going to cover still the like the escrow and earnest money which isn't much but that's currently earnest money for the purchase, and the utilities during the, you know, during and all of that. So he gave us an additional $20,000 and then ghosted. That's wrong. And we were like, Okay. And so we thought, Well, you know, it'll be okay. When we run out, like, then we'll come back to him, we thought, well, maybe he's just playing it safe, you know, just given us a little bit of time. And then, three weeks into the project, we had started demo, our original timeline was like, eight to 12 weeks for for renovation. And then we knew that it was going to sit on market for 45 days or so plus a 45 to 30 day closing. So we figured four to six months for the entire project. So here we are three weeks in, and our partner who we didn't know at the time, has a business partner. So the pert the property was purchased to my business entities name, and his business entities name. But his business entity is two owners, which we were unaware of. Okay, that's fine, I guess. Okay. That partner shows up to the property to check it out. Cool, okay. And then he says, we'll all this and this, and this. And this needs to be done to the house. Also, the bathrooms were nearly new. And the kitchen we were doing pretty extensively, but we weren't getting it. We were gonna be able to keep the original cabinets because they were great. Get new doors, paint, stuff like that. And then unbeknownst to us, they came in but next week, and demoed the whole kitchen and both bathrooms. And then we, my husband showed up for work. And he's like, what is happening? Oh my gosh. Like, we said this and this and this needs to be done. And he was like, it's not in the budget. Like you just doubled our budget, right? Literally. It was bizarre. And then they disappeared again. We can get a hold of him for like two months.

Unknown Speaker  17:08  
Oh my gosh, after they demoed the frickin house. They're like, okay, here you go. Oh, demos done for you guys. You're welcome. Oh, my gosh, Kelly.

Unknown Speaker  17:22  
We were like, this is gonna be some really good lemonade when we're done. Oh, yeah.

Unknown Speaker  17:30  
Okay, so they come in the beginning of the project, and they demo everything without telling you. And then they disappear again. Uh huh.

Unknown Speaker  17:43  
So by this time, we, actually my husband was like, like, literally what is happening? I can't get this done in the in with the money that he gave us. I don't want to do. So we actually quit working on the place for like four weeks. We didn't go back, because it was trying to get a hold of them trying to figure out what is going on. It's his money. And he's, it's his money. He's the one that fronted it. We told him what the budget was, and what was included in that budget all the way down to the nitty gritty. Yeah, cabinet costs and the countertops, you know, all of it. And so we just quit working on it for like four weeks. In that time. Um, in the beginning, we asked, we said, Hey, we have this really great JV contract. It's a little bitty one page. Let's talk about it. Let's talk about our expectations. Let's sign this little contract. So everybody's protected. And he was like, No, no, no, no, we don't need to do that. He's like, I've never signed a JV contract. I don't need to, it'll be fine. And we said, okay. Yeah. So then here we are four weeks into the project. And we're like, oh, my God, have we signed that that JV contract. We would have had some a little bit more legal protection in that situation. Right. And yeah, some guidelines to go by like, exactly, yeah, exactly. Yeah. So but we felt like, you know, it turned into, um, that helped increase the ARV. And the list price. Because it was better finish outs and stuff. It was more renovated, more things were new. And that kind of thing. But it was a perfect example of just over renovating. Yeah. Because the the ROI on that wasn't right. Yeah. You know what I mean? There was a better profit. Yep, doing less renovation. Yeah. Yep, I get that. So that was one of our biggest lessons in that is Yeah. Don't you always Tonight don't over renovate. Right? It's but it's it's been. Oh my gosh, it's my biggest struggle. I still struggled because so hard but some of the things that I still wanted to put in the house, I was like, Oh, I can't put those cabinets in. They're so cheap. And he's like, babe, it's a cheap house. I know. It's so hard. I'm like, Oh, okay. I know. And then it was like, Oh, I don't like those ceiling fans are so crappy. And he's like, babe, it's a cheap house.

Unknown Speaker  20:26  
Yeah, it did end up getting a higher ARV. But the timeline helps, too, because I want her like, I mean, it's all hypothetical, right? Like, what would have happened? Yeah. And done. But still, the the biggest problem here is the people ghosting you. And like, that's just little weird, very weird. And they just showed back up and they're like, oh, here's some more money.

Unknown Speaker  20:53  
Yeah, literally, he just all of a sudden called one day and said, he, he called asking for an update on the property. So in that, okay, so that four weeks, so we didn't work on it at all. He called he finally called us back and was like an asking for an update on the property. So my husband and him kind of had a little hash, you kind of had to hash some things out. And essentially, it was a lot of it had to do with his business partner and was like, he was never supposed to be involved. Like that was never the agreement. And he's the one that came in and renovated and demoed all these things. And so there was that. And so they hashed some things out and ultimately was like, I want you to understand, not only have you increased our budget by literally double, I mean, full double, because those are really expensive things to redo that we weren't going to be reviewing. But also our timeline has now quadrupled. Yeah. And he's like an especially at that point. That would have been like, April. No, wasn't April, this would have been May May. And June was when this was. Well, you couldn't even buy cabinets anymore at that point. Oh, yeah. Everything was shut down. Yeah.

Unknown Speaker  22:13  
Right. Appliances for like two months behind. Like, it was crazy. Yeah.

Unknown Speaker  22:18  
Yes. So um, he was like, and now because of everything being shut down with COVID, and delays and things already. He was like, now our timeline has been quadrupled. Oh my gosh. And so he was like, and understand there were a lot of things that we were already planning to do ourselves, like, as sweat equity. Yeah. So we hired essentially my husband's company. My husband owns a renovation company, right. We hired his company to do the renovations. But then there were still things beyond that, that were just us personally, not neither of our businesses paying for doing got it as sweat equity. Um, so there was that still those things, but he was like, I mean, he was like, even if I do all of it for free labor, he was like, our budget is still doubled. Right? And so anyway, so they kind of after their little coming to Jesus meeting. He kind of understood a little bit more, went ahead and gave us the additional that all he gave us. It was all he gave us. He was like, Well, I can give you the rest of the 25,000. So $5,000 more what we agreed upon. He was like, but that's all I can cover and your business partner came in and destroyed everything. Oh, oh, it was so weird. So we were like, Okay, well, luckily, my husband's company was in a position to be like, okay, he could pay off his guys and stuff like that, from his business. But it it was still a disadvantage to his business. Because for subs, he has a markup. Sure, though, he couldn't charge that markup at that point. Because you know what I mean? Yeah. I mean, not really. Yeah. So he lost that. And then there was a lot of nights and weekends. Oh, I'm sure out there. Oh, my God, it sounds miserable. It just it kind of was Yeah, initially, it was fun. those nights and weekends. were fun. Yeah, at first. Yeah. Before it turned into what it did.

Unknown Speaker  24:34  
Yeah. I mean, it's just it's way that all of that was way more stress than it needed to be. And I just don't understand the lack of communication on their part. And, and on top of that, not acknowledging the lack of communication. Yes, like that. make me lose my mind because it drives me crazy. Ese like,

Unknown Speaker  25:01  
oh my gosh. Okay, it drives me crazy. And I'm a planner. So I Oh, yeah. So last year, it was like I was already dealing with an eight year old that was going through some stuff with school, not in schools. Now here I am with kids. I was furloughed from my job. And then my husband's work was fairly, I mean, slightly impacted at the very beginning of COVID. So we had all that, and then this and it was just like, and I'm done. Like that had my sufficiency. Thank you. This is it. I'm done with the year. It's May Wow. You know, the rest of the seven months? Oh, my gosh,

Unknown Speaker  25:53  
okay, so he gave you $5,000. And y'all get out like you figured out how to handle the double budget. The labor materials all that jazz. Good guess, reef? Was y'all split? 5050 in the end?

Unknown Speaker  26:13  
Um, mmm, no, no, but he wanted 10% of his investment would have, which would have been more like he would have gotten more than a splitting. Splitting. Does that make sense? Okay. So that was part of why we said no, I can't give you 10% on investment, because he was fronting so much. Because originally we had said, Yeah, sure. 10% on investment whenever it was our down payment of $10,000, or whatever. The team, I think is what it was. Yeah.

Unknown Speaker  26:49  
versus 110 plus the 25. For the renovation.

Unknown Speaker  26:54  
Right? Yeah. Right. And so, and then he was okay with that. He understood. He was like, okay, that's great. And he then we were, we got to a point that my husband was like, I, he was already working there. Every single Saturday, we were there most Sundays. He was there, he would go there a lot of evenings after getting done with clients jobs. But it was just, it was just him because he was like, I can't afford to pay for anybody's labor. So it's just me. So it was very, very, very slow going for one person. Um, so it got to a point where our investor had called him was asking for an update. And this was like, August or September, and I was like, why isn't the place done yet? And he's like, Are you kidding me? And then finally, all the sudden one day he calls me says, hey, I've gathered up a group of guys, we're gonna be there next weekend, and we're all working for like, four straight days. And these guys are working for free. And he was like, make sure you've got flooring there, they're gonna lay flooring, they're gonna paint, they're gonna put up trim, they're gonna hang doors, and hardware and stuff like that. He's like, whatever, we can do this for days. They're going to work on they're going to help you out. So that was that kind of helped get it? nearly to the finish line. And then we spent like, another month of hustling. Yeah. And got it finally through the finish line in November.

Unknown Speaker  28:27  
Yeah, no, we're

Unknown Speaker  28:28  
just left with all of the stress, which is what really appealed to me. Yes. infuriating. Um, yeah, yeah. Okay. So would you partner with this person again?

Unknown Speaker  28:43  
Only if it is truly. I mean, honestly, we were able to work out our stuff. I say we mostly my husband and him, because they were friends prior to this. And they were really able to work out all their stuff. He actually he's not much of an apologizer. But he actually semi apologized. And, and but he admitted some faults was the big deal. He was like, You know what, I know, I should, which I should not have let my partner come in and demo this stuff. I should not have. I should have helped you guys more or this or that, you know, and he kind of admitted some fault. So we appreciated that. And then we really were worried that we were going to get pushed back at closing even have a splitting the 5050 because it wasn't much to split, right. I'm sure it was okay. But it wasn't a whole lot to split. Sure. Sure. And considering the amount of his investment and so we were afraid that we were going to get a little pushback, but nothing. He was it was fine and dandy and whatever and Okay, do whatever and he was easy at that point. Okay, yeah, he was money. So maybe, yeah, exactly. Maybe if it was truly Linda Only situation and if we can only with a signed contract. Yeah, we would consider it.

Unknown Speaker  30:06  
Yeah. Nine months later right from purchase to closing those nine months What? What ended up being the profit. So the total profit was I had it written down right here.

Unknown Speaker  30:25  
total profit was 16,800. So we split that so we each got 8400. What was the sales price? sales price was 190. Okay, nice 20 over original ARV. We originally listed it for 204, which was a little aggressive. But our realtor felt like if we listed it over 200 a lot of people in that area will instead of when they have a budget, she said it's weird over there. They will look okay houses over 200,000 or houses over 250 or houses over 150 rather than the other way around. Interesting. Yeah. But they also mostly work as referrals from other agents. So people that are shopping in that area are primarily relying on their agents. Gotcha. Yeah, that makes sense. Other than Yeah, MLS and yeah, yeah,

Unknown Speaker  31:21  
yeah. Yeah, that makes sense. Um, so it was almost 10% of your ARV was the profit. That's not terrible. Especially for nine months. Like, yes. That's what we thought too. It wasn't terrible considering right. No, it wasn't even though Yeah, the nine months were terrible. Yeah, like, I know, that was stressful. And it doesn't it feels like pennies when you were like, that was really stressful. Not being able to find your partner not being able to find your buddy partner not being able to communicate, having to, you know, spend all your weekends and evenings working on this project by yourself. Like, all of that is really stressful. And it's not fun, man. This is This should be fun. Exactly. None of that sounds fun. It sounds fun for a minute. And then it's not anymore. Yeah. Right. Right.

Unknown Speaker  32:15  
It was fun for the first two weeks. Yeah. And then over it, that was enough fun. And we were done. Closing day was fun.

Unknown Speaker  32:23  
Yeah. Closing. Yes. Totally, totally. Um, okay. So when you went under contract. Okay. Did you have to do any price reductions?

Unknown Speaker  32:33  
Um, we did, we did a, so we listed it for two or four after a week. And we had had several people look at the home, but nobody wanted to submit it offer. So we went ahead and we reduced it to 199. So we reduced it by 5000. Yeah. And then when we got our first contract, that's what it was listed for. Got it. Got it. But it was from somebody in the area that was doing a 1031 exchange. So it was cash purchase. So and just like we do started as low as he could go. And we basically were like, no. So eventually we in it, we literally took a solid week of negotiations back and forth, and back and forth, and back and forth. And to the point that it almost became comical. But we met the, the guy that purchased the property, he purchased it for a cousin who's going to rent it from him or something like that, and got to talking with him. And he was like, Man, that was the funnest negotiations I've ever done. He's like, My God, like a week.

Unknown Speaker  33:39  
Okay, so you went under contract. Now, were there any things that came up? Once you were under contract? Any, like repairs or like big, big ticket items, any surprises that

Unknown Speaker  33:55  
came up while you were under contract that you had to handle? Actually, no, we there were several things that we actually fully expected to come up. And it was something that we decided, you know, what, we had literally reached our peak with our renovation and it were things that were kind of like maybe it'll be called out maybe not. You know, maybe people are care, maybe they won't, so we left it. Yep. And they actually elected to not have an inspection, which was weird.

Unknown Speaker  34:27  
That's very weird after a week long negotiation. I mean, that does not make sense. But dude, who does a week worth of negotiating definitely has an inspection.

Unknown Speaker  34:41  
Yeah, yeah. He was like, and I think that's what he wanted. He still wanted lower. Like he wanted like 180 or 185, I think was actually like his top dollar. And so we were like, no 195 and He he came back and said, Okay, fine. 190 and I won't do an inspection. And we were like, okay. But that was literally one of his negotiating. Things was weird, but okay, it worked out. We'll take it. Yeah, we'll take it. I'm not gonna argue.

Unknown Speaker  35:25  
Okay, and then. So I guess your escrow your closing escrow must have been pretty fast. Was it fast?

Unknown Speaker  35:34  
Um, it's still 30. It wasn't, that was the other thing. He only wanted to put up $100 for his. This option, he wanted a 10 day option, but then he didn't even do an inspection. He walked the property himself. So that was it. He said he felt like that was good enough. And they're like, Okay, cool. And then he wanted a it was like a 4550. Day closing. But it was because he was waiting for the closing of the sale of his ranch. For his 1031. Like, yeah, so we understood that. And we were like, yeah,

Unknown Speaker  36:19  
1030 ones are tricky, because the timing has to be right. And especially in this kind of market where it is not fun to be a buyer. And it's really hard to be a buyer. It's a, it's a tricky transaction to have to try to time and coordinate. So yeah, I get that. I totally get that. Well, that's awesome. Like, I'm, after all of that. I'm glad that you guys made a very respectable profit for that length of time. And that price point like is very respectable. But Geez.

Unknown Speaker  36:58  
I mean, I mean, yeah. And it's not bad. I mean, it pays back my husband's company for everything that he put into it. Our total renovation at the end was 45,000. From 20 Oh, and we only got 25. Or Yeah, from 2014. We only got 25. From our, so everything gets paid off. And we have a net profit of 884. Yeah, so Okay, get good with less.

Unknown Speaker  37:29  
Yeah, exactly. And the thing is, is there will always be lessons, and sometimes they're, they're more fun than other lessons. Yeah. Well, what was your favorite part of the process? The design piece?

Unknown Speaker  37:43  
Yeah, the design was fun. Honestly, I feel like my favorite part was finding the property. And the whole process of purchasing the property. Interesting. And then the process of listing it and selling it. Yeah. Like those were actually my favorite. Interesting. I love that. Oh, yeah. It surprised me to Holly.

Unknown Speaker  38:08  
It's the I told I can totally get that. It's the excitement of the new project, right? Like, oh, gosh, and what are we going to do with it? And what are the like, all these possibilities and look at the potential and, and then so the listing it, it's my favorite listing, it is one of my favorite parts. Once it actually goes under contract. I actually hate the listing part because it makes me I'm so anxious. It's like every time I'm like, Am I gonna be rejected? Right? Like, I'm putting my heart out there.

Unknown Speaker  38:37  
Are y'all getting rejected? Does anybody get rejected my heart? Are you gonna be gentle? Yes. To me.

Unknown Speaker  38:47  
Yes, yes. And I did feel a little of that. But mostly, it was just just exciting, I think. And maybe because it was our first and that long.

Unknown Speaker  38:57  
I mean, I mean, at that point, yeah. Like, Oh, just the elation of getting it on the market. It's like,

Unknown Speaker  39:03  
yes, being done with the Saturdays and Sundays and the evenings and the

Unknown Speaker  39:08  
Yeah, yeah. Um, when you guys were starting out. What were you like thinking about like going into your first flip? What was one of your biggest fears?

Unknown Speaker  39:22  
Honestly, I think my biggest fear and it literally, it was also a limiting belief, because it also held me back a little bit and still does to a degree. But it was literally this fear of getting into a project that we didn't evaluate properly and losing everybody else's money. Like, that was my biggest thing. I mean, it held me back. Yeah,

Unknown Speaker  39:47  
no, I get that. I totally get that. It doesn't really go away. Which, yeah, it doesn't really go away. I mean, it's stressful. It's somebody Absolutely, absolutely. Um, you But you get more comfortable, like you get used to it, you're like, Okay, it's just that again, like, it's just that once again, yeah. I'm, like every time I'm under contract on the property, I'm like, Okay, what am I missing? What am I missing? So I'm like, Okay, let me do my checklist. And then I know I'm not missing anything. But then I'm like, But wait, what am I missing? What not? I know it's constant. It's constant. And I think it's good. Like it means we care. Yeah, yeah. We don't want to screw it up. Anybody know? We want to be good stewards of people's money? For sure. Yeah, um, anything that we haven't touched on that you want to? You want people to hear or take away? Honestly, I

Unknown Speaker  40:41  
think our biggest biggest lesson was making sure that you always have a joint venture contract. I mean, it doesn't matter if it's your parents, your best friend, your sister, like, have a freaking contract. That's where we got burned with my parents. Because we went into it. We and and the deal is, is with that? I feel like you're you're also hashing out what everybody's expectations only? Because that's half the point of the contract. Yes. And so in that, then there's not the unmet expectations, because that's what happened, yes. Where we brought a deal, we asked them to fund it. And we've already been talking to them about this for months, and how this could look because they'd gotten like this little bit of inheritance and money that they wanted to do that with. And so we've literally been talking to him about how it could look like and, and they have said repeatedly that they didn't want to be involved, but just want to put out my money and make some money back and blah, blah, blah, Okay, awesome. And then we find this property. And so then it was instead of doing it as a deal where they were a lender, and a lien holder on it, then it was just, we'll just purchase the property under us. And we'll just make it easy. And so we said, okay, we also brought up the JV contract with them. And they said, they actually thought we were completely insane. Because and they were offended because we are close family. And so yeah, that was weird. And so um, then expectations were never discussed. And that one was a major major project, it was sinking into the ground and structural issues, had a pool that had to be filled. driveway that had to be taken out and relayed, and then it was a full gut to the studs with mold and the whole bit removal of AC that was totally redone and and moved that hot water heater was moved into another place. I mean, we're talking it was a major project, which was awesome. The numbers were great. But it was again, just those met expert unmet expectations. And so we went into it thinking, Oh, okay, there are lenders, and then all of a sudden they started getting more involved. And then it was What are you guys doing? What are you? Why are you making these? Why did you already order for without us? Why did you do this without us? And then it turned into No, this is our project? What do you mean? And so we kind of were like, okay, yep, it's your project? Oh, gosh,

Unknown Speaker  43:14  
I and that's why I don't reach it so much. Because that was one of my biggest lessons too. It's freaking hard. It's freaking hard. It's hard. Like, it's though, there has to be a mindset shift around it instead of it being like, it is more about and that's how I approach it now is it's more about, look, let's let's be really clear on expectations. So everybody's happy at the end, because we want to do this again, right? Like, let's do this in a way that makes us want to do it again. So let me be really clear on expectations. I don't want to let you down. I know you don't want to let me down. And so I did have to have that mindset shift around it. Because initially I wasn't and I wasn't using JV agreements, and it was just like, you know, partnering with friends, and they would be disappointed in 100% return on their investment. Yeah, yeah. You disappointed that. We've doubled your money, like what do you mean? Yeah, but it was a few of those. And then it's like, okay, let's get let's just like, salvage what we can and set it up to be successful. And it's just about being clear. And the you know, just like you said, setting expectations. does help. Yeah, I get that. It's, it's one of those things that you have to go through. And you have to learn it on your own. Yeah. Because I can tell you till I'm blue in the face, right. And, like, they could tell me until I was blue in them until they were blue in the face. And I'm like, no, not until I go through it maybe once or twice. Well, I'm glad you made it out. I'm glad you're glad you made it out of that. And yeah, like I was So happy when I saw that post in the group. Because I noticed, of course, I noticed you weren't in the group very much. And I knew like, given that you work in a salon, like I knew, like your life was crazy. I knew that. I was so happy to see that. Yeah. So yeah. All right. Well, I don't want to take up too much more of your time. Do you have anything you want to share? Before we get off, I don't want to, I want to make sure you you share everything you want to share? I think you just did by saying use the JV agreement people.

Unknown Speaker  45:32  
Huge, you know, we learned a big lesson about sweat equity, and what it really should mean, because we always had this mentality of Oh, yes, that's what I think that means your profits bigger, right. But we started doing that. And that was part of that was built into our original renovation budget. And then whenever we were forced into so much sweat equity, that we realized, okay, hold on, we need to look at this differently, because our time is still worth the money. But we would have made so much more money, in the last nine months, had my husband been doing all of this work for clients and charging appropriately than what we made on the end. So it's like, it's making sure that even if you know that you're going to have some sweat equity, that you're the value of your time is built in either in your profit, or on the front end, you have to make sure that you're paying yourself somewhere, you know, a few hours here and there of Okay, I'm gonna paint these three rooms, or I'm just gonna paint the cabinets and, you know, that kind of thing. But whenever you start really thinking, Okay, I'm going to do all of this, I'm gonna do all of this, I'm gonna do all of this sweet, awesome that like cuts my budgets, you know, so far down. But if you're putting so much work into it, you've got to value your time somewhere totally makes sense.

Unknown Speaker  46:57  
The sweat equity, it can't be zero. Yeah. Right. That makes perfect sense. That's interesting. Yeah, that's really interesting. How, what would you do differently around that?

Unknown Speaker  47:12  
Um, we in future profit projects, like if there's anything that we decide that we don't want to include on the actual renovation budget, you know, like, Okay, well, we'll put in that sweat equity, well, we'll do that ourselves, we're not going to hire anybody for this, we're not going to pay you from our company, to do that kind of thing. It has to be counted, at least on the back end, got it built into our profits. Because if we're doing 15,000, or $10,000 worth of sweat equity labor, but our profits only going to be at 400. There's no net profit, we're actually negative. Yep. So got it. You know, it's keeping that valuation appropriate. Yeah. And of course, you're always gonna have some work. That's just extra work on you. But if you're really going to take on all of the landscaping, and I'm going to do all of the painting, and I'm going to do all of the demo, and you know, those things that are usually pretty easy for all of us to do, I mean, and then you've spent a total of, you know, solid four weeks of solid time there. That's not zero, but you haven't built in that valuation.

Unknown Speaker  48:22  
Yeah, that's a good, that's a great point. And I appreciate you saying that, because I've, I've never really heard it said that way, but it makes perfect sense. Um, okay. Well, I can talk to you all day. I've enjoyed chatting with you. And I got three kids that are ready for you and ready for you're there, you're really doing a good job. They've been very good. We've been very good. Thank you for sharing your experience with us, because I know it's going to inspire somebody somewhere to go do this thing. So thank you. I'm super grateful that you took the time to share with us. Well, thank you for having me. This has been fun. There you go. There's part of Kelly houses first flip journey. And if you noticed, it didn't go the way she planned. problems come up and you have to be okay with that. This is a problem solving business. And here's the thing, the ultimate thing is she wants to do it again. That's the whole point of the first flip, do it in a way that makes you want to do it again. And if you're sick of being on the sideline, and not taking action because you're scared and you don't want to do this alone, you don't have to. Alright, get on my waitlist, because the women inside my program. First of all, the community is on beatable, the places awesome All right, I guarantee you you've never experienced anything like it. Secondly, we are closing on deals left and right. We have so many first flips happening right now. Yes, in the middle of a pandemic right now. And they're smart flips and they're doing good in their communities. If you want to be part of something really incredible, we would love to have you if you resonate with my message. If you resonate with my vibe, I know that you're going to love the other women inside the community. Alright, go to first flip get on the waitlist, and you'll have first dibs on the next opening. Because I give so much personal attention to people inside my community. I don't let a ton of people join at once. So it's on a rolling ongoing basis. Alright, so put your name on that list. You will be notified within a week or two of your chance to join. Alright, first clip done right calm. Until next time, go out there flip houses like a girl. Leave people in places better than you find them and make it a great day. Bye, y'all.