How to Make Massive Returns from House Flipping in 2025

Does flipping housesRates are hovering close to 7%. Buyers are sitting on the sidelines and inventory is getting harder to come by. Yet Henry Washington and Dominique Gunderson are still finding ways to stay profitable.And in today’s episode, these successful flippers are sharing exactly how they’re adapting in this tough climate climb.This is the Real Estate Rookie podcast. And I’m Ashley Care.And I’m Tony j Robinson. And let’s give a big warm welcome to Dominique Gunderson and Henry Washington. Dom Henry, thanks for joining us today.Thanks so much for having us.Yeah, thank youMan. Glad to beHere.So Henry, this first question I’ve got to ask for you, a successful flipper is in a coma. They went into coma from 2021. They wake up today. What single market change would shock the most today?2021?Yep.What were interest rates in 2021?3%.Oh, it’s by far interest rates. They’re going to lose their crap at interest rates because whatever they were getting private money or hard money at before they went into the coma, that went up by several points. I would say that is the number that would shock them the most. But I think the thing that would shock them the most from a business perspective is AI and how people are getting leads through different AI systems because finding deals has been the same for decades and now all of a sudden you’ve got AI involved and it’s changed it a little bit.And what about a certain city? Is there a certain region or city you think that they would be shocked most about? Because there are some markets that have changed since thenThey would be the most shocked about Florida because in 2021, everybody was migrating to Florida because of the tax situation and because you could remote work from anywhere and now they’re seeing that people are either leaving Florida or that the values have started to plummet. Yeah,And it’s interesting how much can change in such a short period of time. And we really are in what feels like uncharted territory when it comes to the real estate market, when you look at inventory and how that’s constrained. But you look at interest rates and where those are at and affordability being at all time low. So we really are an uncharted territory. And I definitely want to talk about the artificial intelligence piece and how you’re using that to find deals. But I think the first part, interest rates being higher, how is that impacting you as a flipper?As a flipper, everything comes down to your underwriting. So that’s how we pivot. Typically, if we’re going to continue to flip homes, the thing we can control is how we underwrite. I can’t control what the interest rates are. I can’t control what insurance costs are. I can’t control what taxes are. Well, you can fight taxes a little bit, but most of the time it’s all just how you underwrite the deal. So that’s what’s changed mostly for me, is just calculating those added expenses into my underwriting so that my offers account for the fact that they are higher. And that means I’m going to offer at lower price points and that may mean I get less deals.And Dominique, what about for you? I guess what data point are you seeing in your market that shows that we’ve kind of tipped into a buyer’s market?Yeah, I’ll piggyback a little bit off what Henry was saying too about interest rates. I think for me, the big thing I’ve seen a shift with that particular point is actually on the buyer’s side. So going to resell the properties. Sure on our end as the investor, we’re paying more maybe for interest, we’re holding properties longer so our holding costs are going up. But honestly, the biggest shift I’ve seen with the interest rate point is actually the effect that it’s had on buyer activity and it’s just significantly dropped the buyer pool, which for me has been probably one of the biggest effects and changes on my flips and the profitability of them is just that those days on market increasing so much because there’s so many less buyers and the market is so much more unaffordable than it was four years ago. So that’s been a big shift.
And I think on the other side of things too, of just what we’re seeing that’s indicating that we’re in a buyer’s market and it is going to be harder to sell. A couple of things I look at other than the higher days on market is just the overall number of homes for sale, the supply that we have right now, and a lot of states, I mean nationwide are starting to hit higher levels of inventory than even pre pandemic levels, which I mean is just a sign that inventory is rising and buyers aren’t necessarily following, they’re not getting eaten up off the market as fast as they were. So all of those things together just make it significantly harder than four years ago to resell your flips.That’s absolutely the truth. And one other metric that we track is list price to sale price ratio. So typically, and that’s very market specific, so for anybody listening, it may be drastically different in your market, but in my market, we were hovering between like 98 and 110% for the last, I don’t know, five years. And if you don’t count, COVID COVID was ridiculous. It was well over 110%. But if you take that out, if you take 2022 out, it was typically between 95 and 110%. And now we’re down somewhere around just under 90%, which doesn’t sound crazy, but that’s a significant drop to be because that means on average everything is selling for almost 10% less than it’s listed for, which shows that there’s absolutely a shift in the market.In my market too. Well in New York state in general, it can take sometimes 60 to 90 days to actually close on a property. So there is a big comparison when you look at what the list price was and what it sold for because that sold price was what somebody bought it at 90 days ago. So that price could no longer be relevant, there could already be a change happening in the market. And we really saw that this spring where comms from December, January, February, we’re not going to work anymore for what was coming up in the spring. And then even the spring ones were lagged that far behind. So that’s also something to be cautious of when looking at your market is when you’re actually closing on the property. Because when that offer goes in, that’s really when that property is being valued, not when they actually close on it. So looking at those dates can really help you make that comparison too.And Ashley Henry, both of you make very valid points about just timing and how that’s impacting your analysis when you’re getting these deals on the front end. So since we’re seeing inventory levels starting to rise, we’re seeing days on market start to rise, and Henry we can start with you, how are you adapting to this rising days on market when you’re in the underwriting phase of buying a deal?Yeah. Well first and foremost, you heard Dom say that those are metrics she tracks. I said, those are metrics I track. You really need to be plugged into your market metrics and that’s going to require you probably to have some sort of relationship with a real estate agent who can get you accurate comps so that you actually are on top of it. Because like what Ashley said, if you don’t have accurate data, you’re going to make inaccurate decisions. And the real estate agents are the gatekeepers to the most accurate data. And so I would encourage anybody, make sure that you go to your agent and you tell them, Hey, can you give me a monthly report of these 3, 4, 5 metrics? And then that way every month you can at least track, I would do it every two weeks, but every month you can at least track and see where those metrics are trending because you have to change your underwriting on the fly.
Right now the market is, I’ve never seen it so volatile where things are changing within just a few days within just a couple of months. So what we’re doing is we’re tracking the metrics and then I am very conservative within my underwriting. So typically I was underwriting a flip where my rehab time, so let’s just call it a mid-tier flip, not just cosmetic but not down to the studs. Typically that’s going to take me between 60 and 90 days. And then average days on market we’re used to, I would add for about 30 days on the market then 30 days to close. So that’s about five months total hold time, and that’s fairly normal, not anymore. I add two to three months to that because of the longer days on market specifically. So I assume it’s going to spend 90 days on the market and then another 30 to 45 days to close.
Now I haven’t actually had a house, I lied. I have one house that’s taken longer than that to sell. Most of them sell a lot faster than that. But in this scenario, had I not budgeted the time I did for the one that didn’t, I’d be losing money on it. I’m actually still going to make money on the sale, not nearly as much as I thought, but that conservative underwriting saved me from going negative on that property. So I tell everybody, I tell my students, it’s like you got to add and I’m experienced, right? So 90 days is inexperienced flipper. If you’re inexperienced, you need to add buffer for your inexperienced and then you need to add buffer for the days on market. And all of these things increase your holding costs, which is going to lower your offer price. And that has a different impact because what we haven’t talked about is not every investor is being this conservative. So I’m not winning out on offers nearly as frequently as I used to.And Dom, I want to get your take on this too because I know you’ve also made some adjustments in your buying process to account for longer days on market. But before we get to that dom him, you mentioned that there are a few data points or metrics that you want to get from your realtor on a monthly basis. Just really quickly, what are those that Ricky should be looking out for asking for from their realtor?Yep. You want to track days on market. Obviously average days on market and median days on market are two metrics to track. We also track list price to sale price ratio. So understanding, and for those who don’t know, that’s just a number, a percentage that indicates at what price point a home sells for based on what it’s listed at. So if it’s listed at a hundred K and it sells at 90 k, it’s a 10% drop. And so we track list price and we track all these both month over month and year over year because it’s good to know what’s happening in the moment month over month, but tracking it year over year helps you understand is the drop I just saw a big deal or was this pretty normal based on what’s happened in the previous years? And it also helps you track seasonality if you look at it year over year because if you see a big drop, it could just be seasonal and you can compare that to other seasons to know. Those are probably the two most important metrics to track. Everything else is kind of nerdy and not super necessary.And then Don, what about for you? What are you changing as you’re looking at deals to account for these longer days on markets that we’re seeing?Yeah, pretty similar to Henry. I used to buffer between five and six months for holding costs and my expected underwriting. Now I’m upping it to about nine months just to create that buffer for unexpected delays and you’re still seeing a lot of deals that are fully done and sold in five and then you just underwrote a deal that has extra padding. Now it can’t hurt you other than like Henry said, you might lose on some offers because you’re being more conservative. The other big change I’m making is just on resale projections. I would say I’ve always been a flipper that likes to do not high-end renovations, but stuff that doesn’t look at all rental grade or very basic on cosmetic, we do a lot of full gut renovations that are a decent quality, especially for the price point. I’m flipping in a lot of the entry level price points where some of our comps are pretty basic and rental grade, so I used to be pretty comfortable and confident in assuming that I was going to be maybe the top comp in the neighborhood or getting the really top end of the resale market.
And although I don’t think that’s necessarily changed and I can’t be those top comps anymore, I’m not banking on it at all. I do not want to underwrite, assuming that I’m going to be the best comp or the top seller, I’m going to be middle of the pack if not on the lower end, that’s where I’m underwriting my resale values. Again, just to put padding, if it goes really well and you end up being the top comp, that’s great, you’re just going to make a little bit more profit on that deal. But you don’t want to get into a situation where you’re banking on selling for 2020 5K higher than or at some of the very top comps and then you end up selling 20 K lower. That’s where you’re going to lose significant money.Dom, I agree 100% when I get my A RV calculations from my agent. So when I get a lead, I send that lead to my agent and they comp it for me. And typically what they send me back is a RV range of high, medium, and low. And for my entire flipping career, I was typically using the high end of the medium and the low end of the high as my a RV just because of how strong my market is and I know what people are willing to pay. So I wouldn’t always run my RV off the tippy top best comp possible. I would just do it just slightly under that. And now I’m on the low end of the medium and the high end of the low when I’m comping my A RV, which again is having an impact on my offer price and I’m losing out on offers because I just had a conversation with a wholesaler and I made an offer and he said, well, he reached out to me personally, asked me to put in an offer, I put in an offer, and he was like, you’re the lowest of about 13 offers.
We’ve just got. You’re not even close. And I’m just baffled at how people are thinking they’re going to make money.Henry and Dominique are about to reveal the acquisition rehab and listing pivots that are keeping their flips profitable in 2025. We’ll be right back after a word from our show sponsors. Okay, we are back and let’s dig into the moves Henry and Dominique are making to stay ahead. So with so much uncertainty around ARVs, it places even more pressure and finding a good deal. So what is actually working today to have profitable flips? Dom, let’s start with you.Yeah, I know Henry’s kind of mentioned this already, but totally bouncing off of what he’s saying. The reality right now I think is if you are experienced and you’re going to run your numbers properly, you’re going to lose on deals. You’re not going to be the top offer A lot of the times, the way you might get a deal is either your terms, your relationship with the person, your track record, people knowing that you’re serious and you’re going to perform and you’re going to close. And so I think some of those things have helped me get deals more than being the best offer or finding super creative ways to get deals. I don’t really do anything that’s too outside of the box to be honest. Most of my deals come from relationships. I get a ton of deals from wholesalers and agents who have closed a bunch of deals with and a lot of times they’ll just send me the deal directly and not send it to anybody else they know I can close.
They know my price is going to be fair even though it might not be the best offer, but they’re not going to lose the deal. They’re not going to go through two or three buyers. So I mean sticking to those relationships and really deepening them has probably been my biggest success in this market. Spending time with these people, taking them out to lunches and coffee meetings and catching up on what’s working in their business and what’s working in mine and just having those real relationships with people, not just seeing emails that come through from email blasts from wholesalers and trying to get deals. But I will say on another kind of side note, I think some strategies that maybe have been looked down upon a little bit more in the past, such as just looking on the MLS for deals are actually starting to work right now because there’s so much inventory and because people are price cutting so harshly, I don’t buy many deals on the MLS, but I’ve bought more deals on the MLS in the last two years than the previous three or four for sure, just because there are opportunities that are popping up as prices come down.
I’ve bought quite a few from banks that are listed as res on the MLS and they’re just cutting their prices like crazy with the amount of inventory they’re holding on their books. So there’s definitely opportunities where maybe they haven’t been as accessible beforeHenry. So Dom just kind of talked about how to source deals, but what about actually funding the deals? Have you gotten creative or maybe pivoted how your financing deals are funding them in 2025?Yeah, one thing Dom said that I want to echo is she said we can be creative with our terms and the terms of the loan and that can include the financing, right? So yeah, one of the things that sets me apart from other investors is I can close in seven days or less if I need to, and that can be attractive to a wholesaler because they know they can get the deal done fast. So yeah, strengthening relationships is hugely important. I could talk forever about that, but one of the ways I got one of our most recent deals was this thing popped up on a website that’s open to anybody, and so several investors saw this deal pop up and typically when deals pop up in our area on this website, there’s no margin, but this one had good margin and so it had a bunch of interest.
And so then I was like, okay, if I want this deal, how can I get creative and make sure that I get it? And this is where my understanding of my market and my understanding of the homes in my market came into play. I knew that this property was selling at a decent price point, but I wanted it a little lower. They were asking 180 5 and I needed to pay about 1 70, 1 75. And so I knew there was going to be a bunch of interest. And so when I saw the listing, I called the wholesaler, I didn’t just submit an offer on the website. I called the wholesaler directly, asked him about the property, and I said, what would it take for me to get in there and see it? He said, I’ve got four or five appointments set up. I said, okay, great. If I make you an offer site unseen, would that be of interest to you?
And they said yes. So I offered 1 65 site unseen and we ended up at 1 70, 1 70 site unseen. I signed a contract that day and sent my earnest money. Now that’s not something you want to do as an inexperienced investor. What gave me the confidence to do that was because I know the area, I know the floor plan. I know it’s a floor plan that’ll sell and it was currently being lived in, so I saw the pictures of the outside and pictures of the inside and before I made this sight unseen offer, I went and I drove by the outside of the house just to make sure that what I saw wasn’t months sold pictures and the condition was completely different and there was enough margin for me to know that if something catastrophic goes wrong, it’s probably going to cost me somewhere between 20 and $50,000, and if I lose $50,000 in profitability on this deal, I’d probably still make about 20 to 25, maybe $30,000.
So I was okay taking the risk because I figured worst case scenario, something terrible is wrong that I can’t see, it costs me 50 grand and I’d still end up profitable. I’m willing to take that risk in order to get that deal. So I made the offer site unseen and then I actually was able to sweet talk the wholesaler into letting me go see it after I put up my earnest money. So then my only loss was if I didn’t want it, I’d lose the $5,000 earnest money. So I got really creative. I ended up getting a great deal and that property was in way better condition than the pictures indicated. When I went to go see it, I walked out of there clicking my heels in the air it was got ’em.You guys both mentioned building relationships, your network that has really helped you this year getting deals and getting financing, but Dom, what if you’re a rookie investor that’s just getting started, you’ve never done a deal, so you’ve never worked with a wholesaler, you’ve never worked with a lender. What should a rookie investor be doing today to start building those relationships and those connections?Yeah, it’s definitely tougher when you’re starting. You don’t have that track record that people can bank on that you’ve closed 10 deals with them already. So I think it’s a combination of one, as a rookie, you may have to pay a little bit more. You might not get that deal for one 70 like Henry got, you might have to pay 180, 180 5. The actual ask price, your margins might be a little bit lower unless you’re going to partner with a more experienced investor to start getting those reps and building those relationships that way. But I think that is the reality when you’re starting, you’re not going to get the best deals, you don’t have the best relationships. You might have to take slightly reduced margins because of that or you’re going to have to put out 10 times more offers than an experienced investor will in order to get one accepted right, you’re going to have to be just at the right place at the right time where someone else didn’t come in or their terms weren’t as good and the deal kind of falls in your lap and you happen to get a great one, but it’s going to take those reps.
You have to be prepared that you’re not going to have the same opportunity as someone who’s done it a hundred times.I absolutely agree with you. You’re right. You got to figure out how to get your reps in to build your reputation and that’s going to help you from a relationship standpoint. Another thing you want to think about doing is put yourself in the shoes of a wholesaler because if you’re going to want to build this relationship with a wholesaler, you got to understand what they want. What’s a wholesaler want? A wholesaler wants to make their fee as quickly as possible with as little hassle as possible. And so as a rookie, how can you set yourself up to be able to provide a wholesaler with those things? It’s going to take time. You’re not going to be able to do it on your very first deal. This is how you need to be thinking so that your second or third or fourth deal, you’re able to do those things.
So a wholesaler wants to get their fee fast without hassle, so that means you’re going to need, here’s some things you can think about lining up. If you can find a title company who is okay with assignments, that helps a wholesaler because typically a wholesaler, especially a newer wholesaler, they either don’t have that relationship yet or they only have one relationship with one title company. Maybe they don’t close deals in every state. That’s something of value you can bring to a wholesaler. I’ve got a title company, they have no problem with doing assignments. That’s valuable. Another thing is can you close fast? If you can’t close fast, as you’re out here shopping for financing, you want to find and build relationships with lenders who can help you get money quickly. If you can get a lender under your belt that can get you money within seven days for a deal, that’s going to position you better.
Even if an experienced investor is making an offer and they know this experienced investor takes 30 days to close, they may go with you for the same price or lower because you have this relationship with a lender who can help you close faster. So you want to be looking for title companies that can do assignments, lenders that can get you money fast. And then you want to think about, a wholesaler wants to be able to assign a deal with as little hassle as possible to the seller. They don’t want to arrange 14 different showings for 14 different people. They don’t want to arrange five different showings for you, one for you to see it, one for you to come back with your contractor, one for you to come back with your, that’s a hassle to them. And every time they do that, they fear they’re going to lose their deal. The seller might get annoyed that this keeps happening and they’re not sure that this house is actually going to sell. So if you can organize yourself in a way to know, I just need to go see the house one time, I’m going to bring my trusted contractor or agent or whoever with me, and that’s going to help me estimate the rehab and get my offer and stand on that number, you’ll have more success.There’s probably a formula that we can put together because you’re absolutely right, Henry, the elements that dictate the strength of an offer are certainty of closing speed, convenience, and price. And it’s like you can adjust each one of those levers to try and increase. So if your price is maybe a little bit lower, how can you increase your strength? One of the other areas, so there’s probably some formula that we can put together for that. We’re talking about profitability for your flips, and I guess I’m curious, what changes are you guys making on the actual rehab side, like your actual scope of work, managing the rehabs themselves to try and reduce costs and keep your profits? And Dom, we can start with you on that one.Yeah, I’m going to take a little bit of a different approach on this question because I think I’ve tried to do that a couple of times in the past few years as the market’s been slowing and it’s never worked. That could just be me personally, that could be in my market. But anytime I’ve tried to, oh, I think this layout is not too bad, I’ll leave it as is, see what happens, or let’s try to finish the bathrooms nicely, but not super, super nice, try to save some money. It’s never worked. Not in this market. There’s too much inventory, there’s too many options for too few buyers that your properties have to stand out so much and be priced so low and you’re still going to get 20 buyers walk through the property and have nitpicky feedback for you. That’s just what I’ve been noticing.
If there’s anything to complain about these days or any negatives that might be able to be picked apart with your rehab at your property, the layout, the location, whatever it is, buyers are going to pick it apart and they’re going to be very particular with what they’re buying because the reality is they can see 10 other houses that day that are priced the same and look very similar to yours. And so that’s just what comes with being in a buyer’s market as a seller, you have to be way more strategic about putting out an incredible product. So I’ve actually taken the opposite approach right now. I’m not overspending obviously on rehabs, but if there’s any question marks as far as should we open up this kitchen living room layout, should we make this change a hundred percent of the time we’re spending the extra money to make the house as good as it can possibly be?Henry, are you seeing the same thing in your market? Is it difficult to try and control costs on the rehab side?Oh, 100%. Yeah. We’re not spending less on our rehabs, we’re spending the same, if not more. We we’re getting strategic is using my experienced investor eyes. So someone may send me a deal and that deal is underwritten at a certain A RV, but that deal may have a sunroom under roof that’s not heated and cooled or that deal may have a three car garage and I know I only needed a two car garage, and so I can take that third car garage and create additional living space. Seeing those things are things that I can see and go, okay, for a little bit of money I can increase my A RV substantially, which means I can pay pretty close to what they’re asking, maybe even more than what they’re asking because I’m going to sell this at a higher a RV than what they’re projecting that a RV of the property is, right.
So in those situations, we’re being creative and understanding that we can sell for more than what’s listed there on the sales side, not saving money on the rehabs, but what we’re doing is we’re saving time on market and the way we’re capitalizing on eyeballs and saving time on market. So yeah, we’re going to spend the same amount. We’re going to do the thing that just like I laughed when Dom said that, should I open up those walls? Yes, yes, you should need to make your home as desirable as possible to the most amount of people. And then what we are doing to increase the time on market is we’re getting all of the eyeballs on our property and forcing people to see my property, even though there’s a lot of comps. And the way we do that is I may underwrite a deal at conservatively, let’s say I underwrite it, we just did this recently.
I conservatively underwrote a deal at 375 arv and I had a get a bit of margin in it When it was time to go list the property, we pulled the comps again and I looked specifically at what does every comp have in terms of level of finishes and when we were making sure, when we were planning our finishes, we made sure that we looked nicer than every home listed on the market. That would be our competition. And then I priced my home lower than all of the homes that were in that competition. Now that cut down some of my profitability. I was planning on listing for 3 75. I think we ended up listing for like three, no, sorry, I was planning on listing for three 50. I think we ended up listing at like 3 39 because that’s what I needed to do to beat out a comp that wasn’t as nice as mine but was in the same neighborhood.
And what that did was it forced anybody who was going to look at houses in that market, in that neighborhood, they were going to go see mine. I looked nicer and I was priced lower. So that gave us tons of showings and it’s a numbers game. There’s typically another metric you can have your agent track for you is how many showings to offers your showing to offer ratio. In every market there’s a showing to offer ratio. And so for us it was about nine to 10 showings per offer. So I said, if I can get 30 showings in the first 30 days, I should get at least three offers. And sure enough, we got two offers both at list price and then I was able to push one of them up because there was competition. And so we sold at under our projected, but we got under contract fast and we closed 30 days later. So we were very strategic in making sure we got those eyeballs.I just had a friend that purchased a property and they paid $75,000 over asking, and it was like, I think it was listed at like 335,000 or something like that. So it was like a lower price point for that 75,000 over asking, and they weren’t the only one. There was down to three offers that were right around that same price point and they just had different contingencies, things like that. But it is crazy. It definitely was priced lower than the other comps and it ended up driving the price higher than the other comes because so many people, I mean she said the showing was just mobbed with people. There was an open house that they did and then back to back showings until they accepted offers. So yeah, it is very interesting to see.Yeah, just being super creative with that list price and not being people want to be aggressive. It’s the opposite time to be aggressive.I love the idea of using pricing as one strategy to get more eyeballs on your flip, but aside from pricing, what do you guys do in to try and get your property sold more quickly? Are there any other levers aside from, Hey, we just want to price lower than the next comparable listing?There’s definitely things for me. I don’t think I’ve changed too much in this area, but I, I’ve always made it a point to make sure we have really high quality photos of the property. Sometimes even implementing either live staging or at least digital staging to give people an idea of what they can do with the house. Not a lot of people are doing that. Not a lot of listings are doing that. You might be one in the top 10% or something that has high quality photos, digitally staged or live staging, just presenting the property in a really positive light. I see so many listings that are just, it looks like they just got thrown up. They decided yesterday afternoon to sell and took some photos with their iPhone. And that’s not to Henry’s point, if you’re trying to drive traffic to your listing and it’s a numbers game, you’re trying to get 30 showings so you can get the three offers, how are you going to get the clicks? The clicks on your listing that leads to the showing request that leads to people through the door. And so it was just presentation I think is the biggest thing.That’s really funny because I just sold a rental property and it was a single family home and it’s nice inside, but we didn’t completely remodel it or anything. And I remember my listing agent lived pretty far from where the house actually was. And when we were ready for pictures, I said, I’ll just send you some pictures or whatever, and she was like, oh no, the photographer will be here on this day. I am not going to put my name on something that has your iPhone photos.You know what? It happens all the time. I see listings go up and I see the pictures and I’m like, what agent was okay with this? My agent pays for all the pictures themselves. They’re like, look, I’m not putting that on you. I am taking care of that because that is in presentation matters. I just saw a reel making fun of agents where it was like an agent skipping into the title company and collecting their, it was like my agent skipping into the title company to collect their $25,000 check for doing the okayest realtor job in America.
You have the presentation is right and we’re doing the same thing. Previously, I’ve been able to put a home on the market and maybe it wasn’t as buttoned up as it needed to be, but because inventory was so low and our market’s so in demand, that stuff didn’t matter. We could be finishing up the buttoning up as the property was getting listed, and it was more important to me to get that thing on the market than it was for me to make sure every last detail was done before getting it on the market. You cannot do that anymore. All the blue tape items need to be knocked out. You don’t want anybody. The eyeballs are so important now that you don’t want anybody to walk into your house and see something and think, ah, what else might not be done? Because there’s 15 other options for them to look at now. So you got to be buttoned up, done nothing left. It needs to be as clean and crisp as possible when you put it on the market. Every eyeball is so important right now.
And then, yeah, we are physically staging every property and that’s because I hate virtual staging, so come at me bro in the comments. I freaking hate virtual staging. It pisses me off. And if I do virtual staging, it’s with my physical staging pictures. I may virtually stage bedrooms because I don’t physically stage bedrooms. Everybody knows what a bed looks like in a room, but people struggle to understand where their furniture can go in a living room or how to utilize a weird space in a home, maybe like it’s a super wide hallway. They don’t realize, well, there’s enough room to put a desk in here and use it as an office in a transitional space. So we stage weird unusual spaces and we stage living spaces and kitchens and sometimes people don’t even understand where to put their dining room table. It’s weird, but we physically stage everything. I need it to be buttoned up and look amazing on first day on market.Lots of amazing tips to try and stay competitive in this landscape. And you guys have talked about the market shifts. You guys have talked about what you’re doing differently. What I want to hear from you guys next is what are the Ricky mistakes that you see folks making that our audience should avoid? And we’re going to cover that right after a word from today’s show sponsors. Alright guys, we’re back here with Henry and Dominique, and again, we heard the pivots they’re making, but we now want to map out what should rookies be doing today? What are some of the mistakes? How can we avoid those? So what is the number one mistake, Henry, right now that you see new flippers making and how can they avoid those or what should they be doing instead?Here’s a mistake. I don’t think it’s the number one mistake new flippers make, but I think it’s a mistake a lot of flippers make, especially flippers who are trying to churn and burn. I feel like people are taught, even new flippers are taught to have your spec use the same tile and the same paint colors and the same everything so that you can just build this system. So as you scale, you’ve got this system for flipping houses and it gets really easy. And I think that’s silly because every neighborhood is different and your buyer for a property may be different in one neighborhood than the other. And so I don’t have these systematic finishes. We rehab every home for the person that wants to live in that neighborhood, and that means our finishes are going to be different for different homes. We’ll change how that property is either renovated or will appear based on who we think is the main buyer in that neighborhood. I don’t want anybody to walk in and feel like this is another version of a builder grade, like an investor grade rehab. I want people to walk into a property and think this is exactly what I want a home to feel like in this area. It’s a very personalized thing. And so I think people make flipping too impersonal sometimes and that can affect you negatively in terms of days on market and profitability.Yeah, it’s such an interesting point, Henry, because honestly that’s one of the things that attracts me to flipping is the idea that you can in some degree turn it into more of a factory output. In the short term rental space, every property has to be unique and you do that 30 times and you’re just burned out of like, oh my God, how many more designs can we come up with? And in my mind, part of the appeal of flipping is the idea that we could again get this assembly line going, but I get what you’re saying. It’s like the dynamics have shifted, there’s too much inventory out there, and if your property looks like all of the other properties that are out there, it’s going to be harder for you to actually get that property sold. I think that’s a mindset shift that even I need to make. As we look at flipping in our business,One of the things that we do is we go and look at new construction. So if there’s new construction around neighborhoods where we’re buying a property or even just in general, I just love real estate, so I want to go inside everybody’s house regardless of who it is. And even when I go over to friends’ houses, they’re talking and I’m like, oh, it’s interesting. I like how they did that wall over there. So I go see new construction. But what I’m really looking for is what’s the level of finishes that they’re doing? How are they improving the products that they’re putting out? Are they still putting in two centimeter granite everywhere? Have they moved onto quartz? Are they doing accent walls? What kind of tile? Are they putting tile in the bathrooms at all? Are they still doing surrounds? Because I want to make sure I’m looking for where are the areas in my properties where I can spend the least but give the best impact?
So a lot of new developers are still putting tubs surrounds in the hall bathroom. So the primary bathroom, they’ll tile a shower, but in the hall bathrooms they’ll put us around in. So I do nice tile in my bathrooms because if you’re buying new construction, you can’t get those kind of finishes in the same price point I look at, are they putting backsplashes in? A lot of new developers don’t put back splashes in, they just do a little lip on the granite around the side. So I put fancy backsplashes in. Typically your backsplash is only a few hundred square feet if that or not even a hundred square feet sometimes. So you can buy it expensive, dramatic tile and put it in your backsplash. It’s not going to cost you a ton of money. So I’m always looking to see what are new construction builders doing, and then I put way nicer finishes without spending much more money so that I can compete.Now Dom, I want to give you a scenario here. If we dropped you into a brand new market and give you $50,000 and said you had 30 days, how would you find a profitable flip? What would be the first steps you’d take?So I think, I hate to say this answer, but I think there’s so many more steps that would have to come before buying the profitable flip that I would actually on first, such as networking, meeting local investors, wholesalers, agents, building up a team of people that’s going to actually help you execute that flip. Just because you buy a flip where the numbers look good on paper doesn’t mean you can execute it and make it profitable. That’s way more difficult than just buying a flip that looks good. So I think I would spend my time obviously looking for a deal, whatever source you’re going to use, if you’re going to spend money on your own marketing, if you’re going to network with agents, if you’re going to look on the MLS, whatever it is, I would spend some time trying to start underwriting and analyzing deals, but I would spend even more time getting to know the market, driving the streets myself, going to all the local meetups, networking with as many people as I can to actually start building a team that’s going to help me execute the deal.And Henry, what about for you? I’m curious.Let’s see. I would take 10 grand of that, 50 grand and I’d fly to Maui because I’m probably not going to use any of it to actually buy the deal. So I take a vacation on Ashley and then I would start looking at MLS listings and leads from wholesalers and buy, no, I’m playing. What I would do absolutely is go for low hanging fruit first. So I think Dom’s answer is spot on because execution and finding are two different things. So I’m going to assume I’ll be able to execute. We’ll just put that assumption out there. So what I would do is I would immediately start looking at the low hanging fruit first. The low hanging fruit are MLS deals and the low hanging fruit is deals listed by wholesalers we already know these are things that are currently for sale. Then I would start looking at what are the opportunities for me to add value to what’s already listed.
So similar to what I talked about before, Tony, looking for properties where I can add square footage, heated and cooled without having to do an addition. So can I convert part of a garage? Can I convert a sunroom? Can I take in one house specifically? It had a big laundry room. So we took the laundry out of that big laundry room and we stuck it in the hallway and then we turned that laundry room into a bedroom. It was big enough to be a bedroom. So then I was able to add a bedroom which added value. So I’m looking creatively at what the low hanging fruit is to see what opportunities are currently there or what opportunities I can create based on what I know. And then I would try to buy something that’s not going to cost me money to buy a deal. And if I couldn’t find any low hanging fruit, then I would try a more costly approach, which would be using some of that money to market for some sort of off market deal.
And again, being super creative. So you want to understand that market and understand what’s desirable in that market. And then you want to understand who you should reach out to. So one thing I might do is try to take advantage of the silver tsunami for my area. So I would maybe market specifically to senior owners who have owned property that they don’t live in, but they own that property in their personal name or in a trust no LLC. So I would be looking for mom and pop senior owners who own real estate as rental properties and banking on that. If I reach out to a thousand senior owners in this range, that 10% of them are looking to get out of the game and making offers to them on those properties and banking on the fact that I’m an investor too and they may want to help me, I would probably send a personalized letter, something that says, Hey, hey, I’m Henry.
I invest in northwest Arkansas as well. I see you own 1, 2, 3 Main Street and 4 5 6 second Street. I’d love to sit down and just talk real estate with you. I want to learn what’s kept you in the game for so long, and that’ll get me a higher response than just saying, Hey, I want to make a cash offer for your home because one thing boomers love to do is yip yap. And if I can get them yip yapping to me about real estate and them wanting to help me, they may sell me a great deal.I love that. We might have to have both of you guys back on just to talk about deal finding because I know each of you have taken a slightly different approach. Dom, you’re very much like the relationship focus you’re hosting and events, going to the meetups. Henry, obviously you’re building relationships which you’re doing. You mentioned ai, you mentioned wholesalers, your own direct mail, so it might be a good follow-up episode, but before we let you guys go, I guess last question, Don, we’ll start with you. Fast forward 12 months, what additional market shifts are you anticipating and how are you preparing your business for those now?Yeah, it’s a great question. I want to piggyback a little bit backtrack to the question about the rookie mistakes right now because I think a really big thing here is expectations. I think that’s a big mistake that I see a lot of newer investors making is having really high expectations for what your flips can do and how things can perform right now and not expecting or taking to heart conversations like this with experienced investors that are trying to tell you the reality of what’s going on right now. Just thinking that it’s going to work out. Thinking your flip is going to sell faster than everyone. You can design it better, you can cut costs, whatever, and it’s just not, you have to go into it with the expectation of where the market really is right now. And so I think looking forward, that is probably the best advice I could give.
And what I’m personally doing as well is I’m fully with reality of where we’re at right now and not really expecting it to change much for the better. I mean in the last couple of months we have started seeing a lot more showing activity, more offers coming through, more houses going pending the active to pending ratio, shifting up a little bit. There are some good signs happening, but I’m not changing the underwriting of my deals at all anywhere in the near future expecting that we’re just going to see this huge jump. Or even if rates drop a little bit, that buyers are going to just flood the market and everything’s going to be like COVID years again. So I’m staying conservative. I’m not expecting positive changes to happen even though they may slowly start coming in. I think it’s going to take a while for us to be able to really change our underwriting or change what we’re doing to where we can start banking on higher sales prices or more transaction volume. I think that’s going to take more than 12 months.Same. I could look at my crystal ball and every time I look at my crystal ball, it’s foggy. So I have no idea what’s going to happen. Every time I think I might have an understanding of what’s going to happen, the opposite happens. And so when there’s uncertainty, then I get super conservative. And so that is what we’ve been doing is just super conservative underwriting and making offers. And what that’s meant for my business is I have to spend more money on marketing to generate more leads than I would normally generate, and I have to make probably twice as many offers to stay in the same volume range. I would argue that it’s probably more than twice as many offers because we’re being so conservative, which means you’re right. A lot of the things Dom said earlier, like relationships are helping getting belly to belly with sellers and building trust and showing them that I truly want to help them.
My offer is not going to be the best offer, but my offer will. There’s compassion in my offer. I’m willing to do things that other people aren’t willing to do in order to help you. I’ll hire movers. I’ve showed up and moved people myself, like things that show that you’re there to help, things that show that I will help you even if it costs me money and you don’t sell me your house. Those things, those relationships have helped me get deals that maybe weren’t the best price deal. And so it’s just more about right now for us it’s we’re staying conservative and if things change for the better for the real estate market, that’s great, that’s helpful. And if things change for the worst, I’m not going to lose my shirt and I can sleep at night. So conservative is the name of the game for me right now.Well, Henry, I’ll be selling my live and flip in a year and a half and I’ll give you a call to help me move and maybe I’ll tell you a property I haveFor 50% of the profit. I would gladly come help you move. Ashley, I’m on the next flightAnd thank you so much for joining us today. You both are going to be at BP Con, so maybe you could tell us what you’re speaking on and where people can find out more information about you. Dominique, let’s start with you.Yeah, I will be at BP Con speaking about mastering rehab estimates. So James, Dan and I are going to talk all about building scopes of work, how you can keep your rehab costs in line, what to look for when you’re buying site unseen, all those great things. I am on all the social channels. You can find me on BiggerPockets, you can find me on Instagram at dom flips Nola. So any questions I can help with or any way I can help anyone that’s trying to get started or has questions about flipping, feel free to reach out.Awesome. And I will be doing a workshop on finding deals the day before the actual conference starts. And then I will be doing a talk during the conference on understanding how to evaluate your portfolio so you can know whether to keep an asset or sell an asset. And you can find me on Instagram. I’m at the Henry Washington on Instagram.Thank you guys so much for joining us today and we can’t wait to see you guys at BP Con. I’m Ashley. He’s Tony. And we’ll see you guys in the next episode.