Before Flipping Your Next House Watch This | An Investors Journey

are you wondering how to make 40 grand in less than a week on a renovation on a flipped property well that’s exactly what this video is about and stick around to the end because i have a killer power tip for you coming up my name is jonathan barbera and this is my business partner john barr and in this channel we share with you the tips and strategies to help you invest in real estate the right way so if this is your first time consider subscribing so we got this property a few weeks ago right when did we get it we got it from a wholesaler yeah we picked it up about three weeks ago three weeks ago where did you find the whole seller though honestly i don’t exactly remember where i found the wholesaler it was a number on my phone at one point they had text me and i put in my phone as a wholesaler i don’t know when or where they came from but i’m assuming it was probably just outward networking like how we find everybody exactly this is kind of getting out meeting people being in the industry uh you meet a lot of people along the way and that that’s really what’s funny and the point that i want to make is that a lot of people always ask us where do you get all your deals from it’s really networking we’re always out we’re always online commenting networking with people back in the day we used to be at events networking in person um but that’s where we get all our contacts from and all the people from um so how did the deal come about the whole seller reached out to you randomly texted me that they had this property over on this part of town and i knew the area uh i liked it so i just kind of started running some comps on it stuff like that you were actually gone when we first started looking at this deal out of town so i was kind of we were texting back and forth about it and the numbers looked good on paper the pictures and what the wholesaler was telling me sounded good but it’s one of those things we always got to trust and verify like all right usually this price seems too good to be true and usually nine point nine times out of ten that’s the exact case and then and that’s really the point right like how many times you get a deal from a wholesaler that they tell you hey here are the numbers these are the repairs we never this is not a knock on the whole seller or anything but like you can never go off of their repairs because you have your contractors you have the way that you manage projects they’re all different you understand when people ask us how much does it cost us to renovate a 1500 square foot home there is no clear answer on that because you don’t have my contractors you don’t manage the projects how we manage them you don’t source the materials how we source them so you can’t go off those numbers you have uh the covet prices right now where lumber and all materials have gone up 170 percent like well a wholesaler isn’t in the business of renovating they’re in the business of wholesaling buying a house they’re they’re moving paper they’re signing closing selling houses they’re not doing the renovations they have no idea they can take a rough guess at what something’s gonna cost based on doing google searches and stuff but how much does it take to paint renovate a house but then it’s also we would redone this kitchen it’s like well we rip these things down the floors look good but also they take the cabinets out and the new layout doesn’t make sense and the tile was up to the cabinets not underneath the cabinets which now means i got to tear up this tile floor that’s cost that they don’t take into consideration as just because not the knock on them it’s like but they haven’t done the renovations they haven’t gone through 15 20 30 properties and know exactly what those things are and what the unknowns could be and a budget for that they just say oh a roof some paint the kitchen’s in good enough condition you can just paint the cabinet something 15 grand and you should be good but really it’s like no this level price point where the market is things are sitting it’s like i can’t get away with doing that kind of rehab to get to that higher price so always verify the numbers yourself with things that you know for a fact get your own contractors get your own bids price out the material your numbers all right don’t go off of anybody else’s numbers so this project when it was brought to us we ran the concert ran everything and when i came to look at it with john i didn’t like it i didn’t like the project because to me it was very tight numbers yeah it’s that little funny feeling in your stomach and they wanted 155 at the time and the numbers were really tight they were 160. 160 so the numbers were really tight and we were looking at arvs of about 40. so we were just luckily we’ve been having a really good year so we didn’t really need to take on this level of risk or this project which was going to take up time and everything on the rehab because we we’ve had a good year so we’re like you know we rather focus on the stuff that’s actually growing our business right now because we don’t have to be scrounging for these kind of deals and john was more he really wanted the deal but we have an agreement between us where it’s like if one of us doesn’t agree with the other then it’s a no deal like we both need to be on board right so i wasn’t really on board he was he wasn’t a hundred percent but he he liked it so we’re like all right sure let’s just pass on but we still submitted an offer so what was the offer we submitted them like one originally we said 155 and then they

they came down close to it then after you walked it you’re like yeah man i really don’t know about 155 and he felt more comfortable at 150 so obviously if i thought 155 was good 150 would work anyways so we kind of walked this house and then went and walked some of the comps that were in the area being an agent we can get into a lot of houses so i went and walked and see what what our competition level was there just so happened to be a house basically caddy corner this one that was wasn’t updated but it was clean to where you could tell that somebody probably bought this house and lived in their entire lives and took good care of the house it was just extremely dated moved out and that was our really our comp but at that time we didn’t know what it was going to sell at and we could see that it was pending on the mls which means it had a contract it was through the option period and somebody was already determined to close on a set price we just don’t know what that price was until the property actually closed is listed for 240 but is it going to close at 220 is it going to close the 210 we had no idea but i went ahead and called that agent and asked and said hey what’s are you guys going to close near uh uh offer price or your list price and that’s what they told usually won’t tell you exactly what the number is but they’ll say yes we’re very close to list or we’re above list or we’re somewhere in there and they told us that they’re very close to list now that gave us confidence seeing that house to do what the whole premise of the story of how we made how much we did in such a little amount of time is because that house was clean nicely or just dated and it was closing at that to around that 240 000 price point and it was very comparable to this one as far as size so that’s kind of how we got to being all right let’s take a shot at this and see where and really at the time like what what got me over the that little hump was more of i’m not superstitious but when something comes back to you you know because we we put it off like ah here’s the offer the whole seller rejected it and then we lowered it to 150 yeah would you feel more confident at that 150 and we submitted the offer to the wholesaler saying look things change after walking it looking at some kind of like 155 is too high we’ll do 150 and and he they rejected it they said they didn’t even have it that low so we just let it go but then a week or so later the wholesaler came back to us at what was this counter 152 152 i believe yeah so he came back at 152 and i was still kind of on the edge so when he came back i was like all right that’s true let’s just do it because there was something inside of me like saying like ah i don’t know let’s just give it a shot and what we were thinking is that house does have better curve appeal than this one that house did have a better yard than this one it wasn’t it was cleaner on the inside than this one for sure right but the hose still was very dated yeah it was dated but it still had some features that in my opinion they put it a little bit above this one so we’re like all right let’s do the bare minimum the bare minimum that we have to do to this house to just clean it up and put it on the market right and let’s see what kind of feedback we get and also what really started just putting on the market to see what happened is also there’s a seasoning period to where san antonio has a lot of fha buyers and they have fha has a guideline of what they call like the anti-flipping rule to where we have to own the house for 90 days before we can contract to sell the property with somebody getting fha financing well looking at this house it’s like we only need maybe five six weeks to do the renovation i don’t need 12. so what a lot of times what we’ll do is if a house is clean enough it’s like we’ll price it just below market put it on the market and see if somebody else wants to come buy the house out or go buy it and take the renovations on themselves so that’s kind of what we did so we accomplished two things we put it on the market to see if somebody wants to buy the house from us at that price and we just kind of make a decision at that time like hey clean our hands walk away and move on to the next one but it also starts counting those days for we actually own the house so instead of just sitting here vacant nothing happening we might as well just put it on the market and see if somebody else is coming one to buy the property and do the renovation themselves we’re kind of one of your uh diy homeowners like hey i want to kind of clean canvas i want to do the renovations myself the way i like it so we get those two things accomplished by putting in the market and that’s kind of how this strategy first started for us yeah and so originally what we were thinking is if we had to take it down and actually do a full renovation or the renovation to get it to that arv we were needing to come in do the roof we needed to do paint interior exterior the flooring the kitchen as you guys can see the cabinets you know as you as you can see right now you can see the landscaping we were going to do a nice little rock formation where they used to have a pool so we were going to fix that whole section up um we were going to maybe see how the bathrooms cleaned up and possibly redo the bathrooms as well what am i missing what else oh yeah do some stuff to this back room over here there’s some uh uncounted square footage back there that we convert huge tip here hold on huge tip

the whole seller when they brought us the house was originally 1500 square feet 1500 feet yeah so square footage affects greatly the price of your house right and and if all of you watch and understand that the bigger the house the more it’s going uh cost right so when we came in and john had already told me he says they have a utility room that’s not accounted for because it doesn’t have an ac dog so by not having an ac duct it’s not livable space considered conditioned space exactly but it had the walls it had an exterior door it just needed to make air conditioning ducts the one thing we did um and we had the room for it so yeah we had to we had the room we had the duct we could drop an ac duct change out the exterior door to get some light in there to make it look more a little more appealing it was in poor condition so we had to kind of tape float texture paint it put some new flooring down to make it look a little more appealing to the eye but that was something that we knew we had that extra square footage hidden here that would bump our arv that somebody else might not have known just like looking at the paper of it or somebody new not knowing that they could do that to increase the value and a lot of times it’s not even the bump of arv but just the the speed of sale of saying hey i’m putting a bigger house for a cheaper price right so now you’re buying you’re getting essentially a much bigger house even though it’s the same house as it was before all we did was just drop an ac done but it’s now considered livable space so it’s a bigger house for the same price or less than another one so that gives you that added value of you’re getting a much better deal so that was a huge perk that we were looking at when we were doing this so it was all of that work and really that was the stuff that kind of worried me is that when you’re ripping out cabinets and you’re doing all these things there’s a lot of times you start ripping them out and you see man you know maybe the the plumbing is bad now or the electrical wasn’t done right or this and you start getting these added costs because the more you do to a renovation the more you start taking out and stuff that’s how you can get the cost going up more and more because you start pretty much exposing a lot of things we wanted to scrape the popcorn ceiling a lot of times what happens is you start scraping and the popcorn doesn’t come out very well or starts damaging the ceiling so you have sheetrock damage so i mean it’s a lot of unknowns when you start taking on a project of that size which is why we were like all right what is the bare minimum that we need to do where it would still qualify for financing that’s the biggest key here because that’s your biggest buyer pool is the financing route so out of everything we decided to do the roof because the roof was just shot through the ac duct and then we did some minor tweaks inside with the cabinet yeah we cleaned up we converted went ahead and converted this utility room to get that additional square footage so we knew we’d need that come towards appraisal time uh then we did some work in the kitchen to kind of redo a bottom of the cabinet that was kind of destroyed kind of adjust some cabinet uh faces to make them uh function a little better in the roof clean up the backyard because it was severely overgrown so we tore all that stuff out cleaned everything up and then we just did a good deep clean of the entire house to get all the dirt and grime and the bathrooms uh there’s a lot of leftover hairspray and dirt all over the tile scrub all that stuff out and then we went ahead and um power washed the driveway to make it a little better curb appeal and i think that was that’s a lot of them yeah and really the biggest thing that you want to keep in mind being that you’re selling to a retail buyer is that when you want to go through the house saying okay can the buyer move in and start living here tomorrow right because if the answer is yes then you’re good right it will qualify for financing and somebody can live here so that’s what matters so that’s what we were looking at so when the cabinet doors were kind of crooked and not really swinging right all those things we wanted to make things functional so a buyer can move in even though they want to renovate it but they can still live here until they decide to do so so we had some wood boards that were coming up in one of the bedrooms and we went ahead we left they were loose so we lifted them up we cleaned them up we put new glue put them down right so if they didn’t want to do anything they didn’t have to everything was still functional and they can still move in so we went ahead and that took about a week and after doing that we did that little bit of work and we put the house on the market friday morning right within that next week got the pictures taken got him back got on the market that uh friday and how quickly was it i mean within the first hour i had somebody i was like i’m on the way to the house right now i know the area and they were just gung-ho about it they were going above and beyond the station was going above and beyond for her client telling me the process they’ve gone through to try to find a house they’ve been outbid a couple different times and they wanted to come see the house

and i called her and gave her a pre-warning like hey just let you know it needs some tlc i was like all the big stuff is taken care of but like your paint uh the cabinets aren’t the best conditions like you let your client know it needs some work but i did discount the price accordingly to the amount of work that needed to where we were looking at 240 if it was cleaned up i we went ahead and listed it at 210 that’s our yeah just a dollar under 210 it’s like no there’s a price difference she goes okay that makes sense because i knew the area i saw the pictures i knew that area is probably a little more than the 210 you’re asking but that makes sense why but she appreciate it they came take a look at it and they had an offer to me within the first night and that’s really key right there right that is something that you need to understand why we work so well is the fact that john has an agent he takes the time to educate the other agents and set expectations correctly because when you’re just kind of i don’t i don’t want this to offend anybody but when you’re like a thirsty agent that just goes for stuff and you don’t disclose these things all you’re doing is wasting everybody’s time so we told people this house does need work we’re setting expectations low already we’re saying it needs work it needs updating you understand yes it’s livable but you need to put in some work so when you do that you they set the expectations to their buyers so then it’s not a shock when they show up they’re expecting a house that needs work and now here’s a good kind of like psychological trick that works when you tell a future homeowner that a house needs to work they’re picturing the worst case scenario all right because they don’t look at a house how we look at a house we look at a house like this we’re like this doesn’t need anything you know what it means just like cosmetic but a homeowner everything is a big deal because they don’t have the contractors they don’t have the experience so having to redo the floors or replace the cabinets or you know scrape the popcorn ceiling to them it’s like oh man that’s probably gonna cost like ten thousand dollars just to do the ceilings right like they they always overshoot and over correct so many things so when you’re already setting that expectation and they show up and they see a house like this they’re like oh man this house is beautiful right like there’s no big deal and and again like i said at the beginning we’re gonna share a power tip with you towards the end of the biggest reason why this house sold but when they came over the the person like that and everything submitted an offer that same day that friday we had a full price offer um there was a little bit of negotiation back and forth yeah it was a contingency well not a contingency they just wanted some concessions and they kind of they wanted full price concessions uh a couple grand i came back said full price add the concessions to the sales price and then you can have those full concessions and they came back said yes we’re good with it they’ll go ahead and execute on the option yeah a lot of times with the concession it’s not that they want to beat you down on the price is that they want that money so if you just negotiate with them and you tell them all right that’s fine we wanted you know 2099 let’s make it 212 and you can get that money back they don’t care because the loan is the same to them right they’re just getting it from the lowering that that’s way to get cheaper and especially when you know you’re going to renovate they were doing a renovation it’s a cheap way to borrow money tied into your real estate value it’s the cheapest money you’re probably going to get for construction renovations exactly so so that always works um so we got that then inspection was held wednesday which was crazy fast right i i’ve been talking to a lot of people that inspections have been taking some time uh the inspection was wednesday and we were kind of like all right here we go because i mean to be honest every project that we’ve done it’s like 50 60 000 renovation and up um you know it’s always been a project so this is the really one of the few projects that we’ve taken on that’s been just like you know one two three and just moving on so we were anticipating something coming back with the inspection and what was it yeah you called me and you’re like well the the inspection report well it wasn’t anything they didn’t already expect and anticipate so i told them there’s gonna be a project we had uh other offers come in over the weekend even though we already accepted this one so i told the lady up front it’s like hey you guys weren’t the only offer so there’s not gonna be a whole lot if you guys don’t want the house let me know because i got a backup offer and it was very it was true we did uh and i’m letting her know that it’s like because she was very appreciative of how we worked i worked with her that first day to get her client’s offer in here says don’t worry if they don’t like something i’ll let you know right away and i asked her on wednesday and she said oh there’s there wasn’t anything in the inspection period or the inspection they didn’t already anticipate so they were good with that they came through and did their termite inspection no real problems there um and so they said hey we’re good good to go to proceed they’re ordering the appraisal so they’re having the appraisal um and we’re on the way to closing yep so that’s how fast it was so now the power tip that i told you about what made this possible is the market that we’re in none of this stuff

was done by guessing all right we did not guess this was gonna work out this is not a strategy we would have typically done pre-covet we would we wouldn’t have done this if this was our only exit oh wow this just happened to work out because of the perfect storm of the market we were in and we knew that there’s extremely low inventory and is a very hot market people are crawling over each other for houses and we knew this one could qualify for financing get a little cleaned up and somebody might come along but our end goal was always if this doesn’t work we’re gonna flip the house that was what we were anticipating because this might also work if we go this route yeah we always have more than one extra strategy with every deal like you don’t want to go into a deal that it’s only going to work with this if everything works out perfectly because now you’re setting yourself up that’s just gambling you’re setting yourself up for something that you know if anything goes wrong now you’re definitely screwed so this one we said worst case scenario we’ll do what we typically do flip it and you know we’ll make some money that way as well it wasn’t going to be you know pennies but it was going to be a good amount of money but it wasn’t going to be as simple or as quick and as low risk as this was going to be so when we ran the comps and we ran everything this is located in a part of town where a lot of people want to live because you’re right there from you know one of the major highways of 410 you’re right in between uh i-10 281 you’re very centrally located medical center by the medical center i mean you’re you’re in a spot that a lot of people want to be in so low inventory nobody’s here low interest rates so now people can afford more right but the purchasing power has gone up so all of this perfect storm comes together we know we have an oversupply of buyers in the market so we took a very calculated gamble on this where we knew that it’s like we put the price at 210 and we were happy to get a price at what 200 100 yeah something averages 200 around that price will probably go with it seeing where everything’s at because in this cobit era like prices went up but it’s also like uh at any minute this stuff could buyers could turn off lending or basically turn off lending and the buyers disappear something could spook them and they could all go away towards very cautious of what we’re trying to buy right now because if we would have bought it had to wait 90 days to list it we’re in now in the winter time there’s another wave come along things change so fast like that was a big risk that’s why we went ahead and listed it and took the well winter times is usually you know you have slower market people are not out there shopping as much this winter might be different but you just don’t know if we would have taken on a full renovation now you add a whole different set of variables that you did not account for initially because now you’re adding more time more work more money being spent and essentially the profit probably would have came out to about the same maybe a little less if we would have flipped it this way we’re walking away with nearly forty thousand dollars in less than a week with virtually very little risk very little capital invested in the property and really fast so that was the biggest thing and and i hope this power tip really resonates with you guys and again it’s again it’s the facts it’s not opinion and it’s not emotions it’s not what we want we look at what the market is doing what is the data showing us and that’s where we invest in we always go off the data we don’t assume anything and we never use our opinions so i hope you guys really enjoyed this video and the walkthrough that we did and you saw all the work that we did and again if you haven’t subscribed make sure you subscribe and check out this video right here for more videos and more training on the stuff that we’re doing and the work that we’re doing here and share this with friends family everybody needs to know about real estate smash that like button so thank you guys for watching and we’ll catch you on the next one