Do do do do da beep… goodbye? It’s time to hear how Alissa’s most recent flip project turned out. What had her stressed? Why didn’t her buyer buy the house and who actually did? Where did she find the property and how much did it cost to acquire it? We get into ALL the nitty gritty numbers of this house and even compare it with the last. We learn some valuable lessons about market shifts and pricing as well as Alissa’s final takeaways. Will there be another flip in the future? You’ll have to tune in to find out. Do do do do do do do do…
The following is a rough transcript provided by Otter.ai.
I’m concerned about a tree limb. Okay, which has since been removed for like 400 bucks wasn’t a big deal. Do
you want the whole tree to come down?
Yeah, I’m not done yet. I told my broker I said, I’m probably like doing a liability nightmare because I’m owner agent dual agent. I have learned that I don’t necessarily like managing it. Yeah, I just I need to care for and I I’m more like, let me know when it’s done and I’ll come by, you gotta pay it and I don’t want to pay it when it’s six figures. Hi, y’all. Welcome to hustle humbly. It’s Alyssa and Katie. And we are two top producing realtors in the Baton Rouge market. We work for two different companies where we should be competitors. But we have chosen community over competition. The goal of our podcasts is to encourage you to find your own way in business to stop comparing yourself and start embracing your strengths.
Hi, Alyssa. Hey, Katie. It’s episode number 175.
Okay, we’re gonna do a final flip report. The final flip going?
Yes. In theory, I don’t need to beat me. You don’t need to beat beat the beat because we’re not breaking in. Oh, doo doo doo doo doo doo doo doo doo.
This is just the whole episode today.
Yeah, we should just play that in the background. That would be horrible.
Doo doo doo doo doo doo. I had an agent email me the other day and was like, Hey, how are things going with your flip? Doo doo doo dee doo. In the email. That’s amazing. So far. I
love that. Okay, so as of the airing of this episode, we’ve sold the house it is gone. Okay, so let’s go back to where we last were I last left off where I had a buyer that was looking at it because let’s go even further about oh, man, if you’re a new listener, okay, or maybe a listener who just hasn’t been through all the episodes. This is the second time we’ve flipped a house along with you on the show. Correct? Okay. But the first time it started off was um, you were like, I’m buying this house to flip it. You know, you can kind of give us a brief story on that. But why don’t we just break in on like episodes and just do like a little update as I go through it. Okay, so back in what year? Was that? Still in? 2020? That must have been 2021. Okay, two houses this year. So if you’re a new ish listener, you may go back to a random episode and be like, what is happened? What
is this doo doo doo doo doo to be? Yeah, so we purport we would break in
like a news report. And we would tell you what was happening with the flip.
Yeah. How’s the progress going? Any surprises?
So then, not long after that one was gone. What happened?
I just so happened to get a call from a client a past client of mine, one street over I just
the fact that they’re so close together is weird bananas, because y’all our market isn’t small geographically, you know, at large.
And I sold this house to these clients back in 2013. And they were just looking to buy their first investment property. And this had a tenant that had been there long term, okay, that the house was disgusting, right? But the tenant was not going anywhere. And from 2013 till 2020 to 2020 was Hannah, same tenant wild, but they had a pipe burst in the kitchen. Okay, earlier this year, and they had to get the kitchen. Okay. And so the tenant just moved out
and you tried to let her bought let you buy it gutted.
Yes, I wanted to buy it gutted, but be due to insurance reasons. She had to use the insurance money to put the kitchen back together. Okay, I would have preferred to open the kitchen and do an island. Right, but I wasn’t going to rip out cabinets because they were fine. The granite was there. So it was fine. I did open up the wall a little bit more and rearranged a few things but the kitchen was done. Okay. The rest of the house however, was a disaster. Okay, total total disaster, you know, and so they didn’t know they didn’t want to fit was moldy. Right? Yeah, the ACS had been like condensating for too, like the ceilings lately around all the AC events. Okay. And the problem was that the AC was newer, but the ductwork was original and it was too small to support a modern day AC Yeah, so it was just condensating and the tenant never said anything. And it just became I mean, it was it was bad house in 2013. Really? Oh yeah. And they didn’t do anything. No, no, no, no, just put this poor person now Now. Now. In all fairness, they had replaced the roof Okay, and 2017 Okay. And they AC was an AC was new. They did that. Okay, yes. So,
but aesthetically nothing had changed. Correct and wasn’t great to start with. No. Okay, bad. Okay, very bad. Okay.
So she had some people at work that were maybe interested and you know, when it came time that nobody was interested and it was time to list it. I was pretty familiar with the numbers just don’t just done it. And I could tell my contractor, what you did over here. Same, same thing. Same colors, same tile is
the difference in sizes though. So the house you had done the year before was how big
it was 21 it was 2000 square feet, but it was only a two bedroom. It was weird. It had a big sunroom. Yeah, big sunroom. This one was a four bedroom much better. But it was only like 1750. So
so weird that it actually the sizes were it was smaller, but it was better floorplan
Yes. Okay, more usable for che. So, that’s what I did. I made them an offer. I paid $180,000 for the house. Okay, great. Great. I’m writing down my notes. I paid 140 For the other house. Okay. And it was bigger and it was bigger. Okay, so
that was because the market had changed. Yes. That’s very interesting. Because it’s we were in that hot hot hot market.
Yes. During flip number one market was super super hot during flip number two, when I purchased it, the market was super hot. And when I was done and ready to elicit the market was not
okay, we’re gonna get to that. Yeah, we’re gonna get to that. Okay, so where are you last left us if someone has been following along? We’ve been we’ve missed it for a few episodes. We kind of just cool larger report. Okay, so when last week I talked to you, you had a buyer who went and then had all these like,
well, she had her dad objection that was concerned about a tree limb. Okay, which has since been removed for like 400 bucks. wasn’t a big deal. She wanted the whole tree to come down. Yeah, I’m not yet.
so the tree was addressed, but it’s just not the house for this file was fine. I proceeded with listing it.
Okay. And you were basically almost done by the time yeah, when she
went I was okay. It would just needed a final clean in some stage. Okay.
All right. So you listed it? And did you have to change what you thought was going to be the list price when you bought the house to to the market? Now? I didn’t, but I should have. Okay, you didn’t. But you should have. Let’s back that up. How long did the work take? How long Oh, shoot, from where you bought it to where you were finished? It was like,
we can take three to four months. Okay. About the same about the same
amount of time. Okay. So, you listed it for how much? I listed
it for 329. And which is funny, because that’s what I listed the last one, four. Okay, but you feel like you should have listed it for maybe 319 Okay, you were not that far off. No, here’s the thing. Okay. 329 I had comps, okay, I could, but they were comps from a shifting market shifting market. Like I could say, well, this one just sold in May. Well, not may anymore, right? But I thought who knows? Like could have it could and so I just didn’t know. And I also you know, because I have that buyer that went and looked at it I’m very familiar with pretty much I have walked through almost every house on your competition and it was not good. No, like there is not any good houses in that area. You know, I’m a seller. I think my house is the best house lay. So I decided 329 was would be fine. But and we did have a good amount of showings but buyers were just very gun shy. Like they were just like just
right. When did you list Do you know what date like they listed it about
45 days ago? 60 Well, probably 60 days ago so two months ago
so we’re at we’re recording at the end of November so like October I listed it in October beginning of October.
Well that says the rates have just been like jumped and that’s when people were really panicking and adjusting like everyone was saying like if you don’t have to buy right now wait or don’t you know, it’s just It was a crazy time. Okay, and
let’s talk a little bit about the area where you did this project. It is a very kind of like maybe young professionals Yeah,
like mid city day there’s you walk into what happened. It is
right and it’s so maybe you would potentially be talking about first time buyers.
I think the majority of people that looked at it were first time buyer
Okay, so they’re super gun shy because they’re like, Well wait a minute now. Oh, the interest rate is seven. And you know, six months ago it was four or three. Yeah. And so I’m like really having this moment like, do I want to buy a house? Maybe I don’t even want to buy a house.
Yes. Now I did get some feedback, okay, that the fourth bedroom is small, which it is. And I even wrote in the description that it could be a great office bonus space, the people before us use it as a kid’s bedroom, which I still think would be fine, like a little nursery or something. But I got feedback on the fact that the people that needed for bed wasn’t going to work. It wasn’t going to work for a lot of them. Okay. I also got feedback that the master closet was small. And it is it’s an old house, it’s an old house and that there was no way to feasibly get the closet any different. It just kind of is what it is. Well,
good news, take that small fourth bedroom and make it a closet. Yeah.
So that that was the feedback I got. Okay,
what type of Do you want to tell us how? Okay, so it was on the market? You were having good showings, but you were getting some feedback with some objections and people were generally worried about the market. Yes, the market in the bedroom. Did
you have to change the price? When I went like 10 days without a showing?
I dropped the price. What Where did that fall? Like Halloween ish. Were you on the market? Okay, Halloween. So you’ve been on the market, like a month and you were like we want 10 days? No showing? Yeah, you dropped it to what 319? What you now say is what you should have listed up? Sure. Yeah, fine. Yeah. How did that work? Did you get some interest?
Okay, so here’s what’s interesting. Whenever I first listed it, I had another set of buyers that I had been working with, okay, my buyers, different people. And they immediately emailed me the link did not know it was my house when you listed it when it was the beginning. And they were like, this house just popped up. We love it. Okay. Here’s the thing. They are investors, okay. They want to buy their first investment property. Okay. They would like to diversify their retirement. Sure. So they love mid city. Okay, I had been showing them houses and other areas that I thought would be better for investment, right. But at the end of the day, they’re kind of like me, they want they want to live something they would want. Yes. Okay. So I understand. Well, here’s what’s interesting. We have been looking, okay. They when I gave them the code, and they just wanted, I said, Why don’t you go look at it on your own, so you can speak freely, right? It doesn’t bother me at all. They were like, Okay, great. We’ll go after work. Okay, they were like, we love it. I said, Great. Let’s check some numbers with the lender. Okay. And
that was the beginning of when you first listed it. Okay, go on at 329.
Okay. The lender comes back and says, putting this is when I was like, wow, this is how interest rates affect your mortarless. Because that you told me and it’s crazy at 329. Putting 20 to 25%. Down, their monthly note was going to be like $2,200 in some chain. Right. And they plan to rent it. Yeah. Okay. And I was like, well, y’all because of the size of the home. I think this is a bad decision.
Because you thought the rent for the house would be what? Like 1900? At best at best. 2000 for 2200 a month. Yeah. So
you’re kind of leasing down? Yeah. Okay, so I was like, I don’t think it’s gonna work. And I also said, this was a really great exercise because I need to adjust the search to where the price point is 300,000. And the House has to be at least 1800 square feet, right
rent to them. All they wanted to do was cover the mortgage.
Yeah, yeah. Because they have jobs. They don’t they’re not looking for income. Yeah, they are looking for a long term investment where somebody else is paying the note. If the AC goes out, they have a job. They can replace the AC Right? Like, it’s fine. So when I went in and edited my buyer search I had for them, I adjusted the square footage to 1800 and brought the price down to like 310. Okay, let’s
also explain to anyone who maybe it’s like, why did you change the square footage so they could get the rent they need? Yes,
you can’t rent a 1500 square foot house out here for 2200 is still just over $1 a square foot ish. Yeah, yeah. So it’s just, it just wasn’t gonna work. But I thought now that we really have seen these updated numbers and ran a real life example. This is what it needs to be. Yeah. And there was like four houses, okay, that met that criteria, right? We take a look at those houses. And I actually thought one of them was a really good option. And I was like, Maybe I want to buy it because I think it would be great. And she at the end of the day was like, Look, there’s nothing wrong with it. I just don’t want to buy it. I said okay. It’s okay, you need to like it. So we were just waiting on something new to pop up. So then I dropped the price. And she emailed me free
19. She was like, go away. And she said, Okay.
We can’t stop thinking about this house, like, we really want it. And I was like, but the numbers don’t work. And so we got with the lender. And I said, Well, here’s the crazy thing. I’m not really having to pay a second agent. Right? So if you sell them the house, yes. So we basically asked the lender, what would we need to do to get their mortgage to like, 2000 a month, okay. And it came out to like, 300, okay. And I was like, I don’t want to do that. I don’t want to go to 300. Okay, I would like it. I would, it’s not the end of the world, but it’s not where I want to be. Okay. So they originally said, would you do 305 with 5000? In closing, okay. And I said, I’ll do 305 with 2500 and closing. Okay, and they were like, sure. Okay, so I’m basically under contract for three Oh, to 500. Okay. With my, with my buyers, with your buyers. I said I told my broker I said, I’m probably like doing a liability nightmare, because I’m Boehner agent, dual agent.
But you could have done minutes, you probably have to do ministerial at
getting paid not. I’m not collecting my stuff. Yeah, yeah, it’s fine. It’s just an interesting to talk about like, this is an interesting situation I find,
but how is that? How has the process gone? There? It’s gone really well. When you change the price, you just didn’t get a rush of new activity. And so when they were like, well,
they emailed me the day that I changed the price. I had two more showings. Not really any feedback from those showings? Yeah, at 319. So I was getting nervous. I think like any seller, every time I saw like a news article come out, and I’m like, come on, like the interest rate the loan, leave the buyers believe maybe. So I was getting a little nervous. And they were getting nervous my buyers because they were like, the interest rates are going up every day. We need to be a contract thing, right? I wanted to offload and they needed to purchase. Okay, so it just worked out. It just worked out. And I told them many, many times. I want to make sure this is good for you. All right. You know, I want this to be a good thing. So they’re super excited. When I was driving to the home inspection. I was kind of like, this is a little weird.
You’re like you’re the owner. You felt like you wanted to be there.
Yes. Okay. They’re very nervous. Okay. Very nervous about this process. In general, yeah. Like, these are buyers that I was going to hold their hand, right through the whole thing. Yeah, no matter what it just so happened. I’m holding their hand through,
don’t worry, I’m okay. Everything’s fine. So
the second I got there, I the first thing I said was, look, this is not my personal home, right? I have no emotional attachment here. Right? If there is a problem, I need to fix it no matter who buys it. So speak freely.
Did you do a pre inspection? Not really, because on the other flip, you had an inspector come and take a I
did I did and I had a few things done. Okay. But um, it wasn’t fully finished at that time. I was close to being finished. So he kind of just did like a walkthrough for me. So now that it was finished, I knew okay, but the inspection went, well. A few things that we had to do. Nothing crazy. Okay. Just you know, that’s good. Yeah. And she felt good about it. Okay. So we are under contract closing? Well, by the time this airs, we do like December night, and they’re going to rent it out. They’re going to rent it out for what they’re going to rent. I think they’re gonna list it for like 2000. Okay, and here’s the thing, you know, what it was what I really loved. The lender said, I know that y’all are talking about quote, unquote, losing money. And she said, I’m just letting y’all know, I have a tenant that’s been in one of my houses for a decade, right? And this person has paid me over $100,000 to live in that to live in the house. Like it’s not necessarily because they about
finance when the rates, the rates change, right? Well, it’s gonna be great too, because you have to think as the market shifted and made it harder for them to invest. It’s also made it harder for people to buy so they’re probably going to put a tenant in that was trying to buy but can’t get into that area or like can’t afford, you know, the or didn’t have the down payment to do like, okay, now I can’t afford this area in this mortgage rate. So it might be not like yeah, I’m probably gonna get someone who wanted to buy it. that house. Correct? Do you know what I mean? It’s very interesting. Yeah. Okay, so tell us how much money you put into this one. Okay. We like numbers. I put in.
You bought it for 180. And I’m all in at 261. Okay. 600
to 61 600. Oh my gosh. Okay, so I mean to say, I mean, that’s a pretty lot. That’s a lot at 1000. Yeah, but a lot. It is a lot. Okay, so what is your profit ended up being?
Do you know that to be around? $40,900?
Okay, what was your profit on the one the year before? It was exactly. 50,000. Okay, so about $9,000 less. But the market obviously changed.
Was I for this one. I made 10,000. Less? Uh huh. I paid 40,000 more
to fix it. I mean, to buy it. Yeah. And buy it. Yeah, yeah. That’s interesting. Yeah. So you really had to put a lot more into this one, money wise. I mean, you were all in for a lot less than 260. On the other one. Huh? How much did you pay to renovate the other one? Do you remember?
If we show it abroad that it was it was about the same?
Okay, so All right. Well, like another 80,000. On that
I had to spend a little bit more on the first one, because I replaced all the windows. Yeah, that was like $12,000. I did not have to do that here. I had to replace right a few of them. And then on the first house, I had to replace the HVAC. Yes, it was and that was about 10,000. New one, you had to replace all ductwork which there’s only like four coats and all the ceilings, though. Yeah. Okay. Well, here’s
my question. Have you listed the first one last year for 329? Yeah. Did it sell right away? I don’t remember it
took like two weeks. Okay. Felt like for ever. But it sold for 319.
So Okay, interesting. So interesting. I guess this is a great episode, too. We have some like, you know, people who listen that are investors, it’s just so important to remember that the market does change how you price what you can afford to fix, like what you’re going to pay to get the property like, how long is it going to be on the market? So there’s more carrying cost, right? So all of the in the market shifts and changes. It’s not always one way it was done always.
Yeah, and even like we’re working with these particular buyers, and pretty much every buyer I’m working with right now, before we make an offer on a house, or if I haven’t shown them house in a while, and then they send me one, I’m like, hey, you need to check with the lender and make sure I still feel comfortable in price point. Because if their interest rate has gone up, it may kick you out of the price point you were having to be in. So I’m relying heavily on my relationship with my lenders right now because I need them to be very responsive, very on top of crunching numbers for us.
Hey, Alyssa pKb. What do we mention almost every episode, email template, you’re right, we sure do. And after every time, we mentioned an email template, do you know what we get
emails asking if they can have copies of the email template, send
me a copy of that template? I would like that, that sounds great. And you know what the good news is, you can get all of our email templates from our course, email templates, one on one, tell the people about it,
our course has all of the email templates you would need to send to your buyers and your sellers and your clients that are buying and selling at the same time. Exactly. To get through every step of the transaction and giving them information that they need for where they are in the transaction. It’s great because you never forget to tell them something. Yeah. So
we’ve already done all the work for you. Yeah, we wrote them and you can personalize them. Yes. And just feel organized, knowing that you have all the information where it needs to be. And if you purchase email templates, 101, you do get lifetime access. So occasionally, we like to go in and make updates based on the market or if we find a new best practice. So we put that right into the template and you get that updated straightaway.
It just goes straight to your core. Yes.
It’s already there. It’s just already in there. You don’t have to worry about it. Well,
email will say updated. That’s great. Where can they find these email templates?
You can find the email templates at email templates with an S one Oh one.com email templates. One Oh one.com Yes. Head over for reviews and all of the specifics. Wonderful. Okay, enjoy. Okay, as an agent who has now flipped two houses in the last two years Okay, what have you learned
that I have learned that, that I don’t necessarily, like? managing it? Yeah, cuz it takes time. Yeah, I just I need to care for I see. And I I’m more like, let me know when it’s done and I’ll come by
I think you could have made more money if you were more micromanaging. No. Okay, that all the whole goal is to make money. That’s right. That’s right. So it doesn’t matter.
Um, this one made me a little more nervous, because I was just starting to like, question, what will I sell it for? Yeah, no, I’m
now what it was the worst case scenario Plan B, for our listeners, what follows just another month? Like how long were you going to let it sit on the market? I think,
I mean, I’m not paying anything on it. Except utilities. Okay. So I was okay. You were like, let it sit. Now, Tanner, my husband was kind of like, Hey,
where’s the where’s that check? Right?
Like, how long do you was asking that question? And I was like, I’m not stressed out about it. Like,
was there ever a, like,
forget this, we’ll rent it. You were you were going to say I was going to sell it because we were going to go to shape. Okay, um,
because you were all in for 260. And there was no way that I wouldn’t sell more than that. Right? Right.
Like maybe worst case scenario, I make 15,000. But you still were
not going to lose? I’m not going to sell it. No, no. But it would just take time. Yeah, this is a great reminder for investors and agents. And just anyone who would listen to this be like, you have to have thick skin and patients like Yeah, can’t be like on edge and worried about what’s gonna, what’s gonna happen, right? You knew you were like, I’m okay. Um, it’s gonna sit there also, I think is a case for you were cash in, you weren’t
paying a mortgage, I would be feeling much different about the situation. I would definitely be thinking I need to rent this thing out to cover the mortgage. Yeah, I don’t want to go win
or lose every month you would be losing. Okay, so here’s, here’s my big question. Will you do another? No, that’s it. We’re done. Done more flip report. This
is this is 99. All flip report report, unless all it I mean,
to be fair, both of these houses came to you because the seller called me to list them. Yeah. So are you telling me that if another seller called you to list the perfect flip, you would be like, I can’t do it?
No. I just says
this feels like the end of a movie when it’s like the third in a series and they kind of leave and out like, yeah, maybe
there’s gonna be another way maybe. This one just really was. I don’t know, oh, I wish I could buy something for like 100 and list it for 250. You know, doesn’t everyone. But it’s that I think that 300 price point in our market right now. are affected by this interest rate change. I
agree. I think that it almost feels as if we’ve reached this weird ceiling of value to where it’s like there aren’t the right buyers for that property anymore. Yeah, it’s just got to take the affordability in general in the entire nation is this is the problem. I think that people are starting to feel Yeah, like what can a first time buyer can’t buy? That’s what you were flipping first time buyer type properties right? Now they’re like in a bit of a pickle. Okay, it’s very interesting. Tell us though, this was the first time you ever did two in a row like this? Yeah. When was the last flip before
these in 2017?
So you had five years to like, get over your emotional drama? I’m flipping the house. So it may be five more years
maybe if I were to ask you again and again and five more years. It’s not that I don’t know I think that the last the end of the process is what gets me the most Yeah, that’s when like, you have to get down to the nitty gritty details like I like going in when the ceilings are down and it’s gutted
like right question you do like the vision part like what it could be like yeah, what to do
not necessarily picking out tile the overall I like seeing the nasty stuff come out and I like seeing it you know, you want to
see the transformation. Yeah, you’re not so particular.
It was so great having Whitney pick out like tile and colors, but it was also easier this time in that sense because we had just done it so you kept
a lot of the same finish everything everything was the same. Yeah, except the outdoor colors.
Yes. You were like brighter than one color. Okay, Brandy. helped us do that. So
you had all kinds of fancy colors. I do also want to say because we had a few you may have missed the episode The episode when you You got to hear the story of Celia. Yeah, this flip turned out to be the next door house to our office manager to my office. Yes. And you know, you were in this driveway. This is my favorite story, but it was
in the driveway. Like, I don’t know if I should do I was like, normally when I buy a house, there’s always been some sort of sign, right? Whether it be a tree, or the street name, or just something about the house that gives me confirmation, right? That it’s for me that it’s the right and I didn’t have anything. And I was almost didn’t buy it. I know I was in the driveway. I had just finished meeting with the sellers and done a walkthrough and they had left and I was just kind of praying like what am I said, Am I supposed to do this? And then all of a sudden I hear Alyssa. And I’m like, why? I just think this is so funny. Alyssa is that you? Yeah. And I turned and she was like it’s me Celia and I was like, Oh my God, because I had just met her for the first time. Right, like a week before the pier when we had picked up superior. Yeah. And I was like, Oh my gosh, hay and she was like, Oh, are you buying this house? Like please, she was like, please, it has been such a headache for us as neighbors. The whole street is just so sad with how badly kept this house has been. We need someone to come fix it up. And we’re just so sad. And I was just like, This is the sign and then I said, Yeah, I am buying. And she was like I’m so excited. I’ll help you with anything. You need pink colors, this or that. Or right.
that was my sign for this one.
I just liked that. I like that you’re trying to feel it’s not just an investment. Like you are really giving it some like emotional investment. Honestly, yeah. You liked that. You made that house nice for the street.
Right? Right. Yeah. And I was a me you know, making a little bit just you knowing that it Uh huh. It helps.
It also reminds me because we’ve talked about this before, houses are like beings like they’re, they’re alive or they’re dead. Right? Like there is a you go into a vacant house that hasn’t been lived in in a while. It just feels like it’s not alive anymore. Right. And you made that even if someone had lived there pretty recently that hasn’t been done. It was
a law. I’ll tell you this. They should not have been living in danger. It was not livable. Yeah. Not livable. Okay, so
you’ve made that house come back to life. So exciting. Okay, anything else you want us to know about flipping the process? what your thoughts are, you know,
I have found that I have trouble making more like I had more trouble making a decision on this purchase, because it was a cash purchase. I am not used to writing all
your money. Yes. You’re like, Whoa, my account looks really drained.
Right. So I mean, I have cushion of, you know, I’m not going to totally drain it, but it made me very, you know, a lot more hesitant. Have it all tied up. Yes. Because if it was a mortgage, I it’s like, well, I have my cushion to to pay the mortgage, as needed. But this was like a larger investment. It’s harder the I have found that the bigger the check gets to right? Uh huh. It makes me more cautious, more hesitant or no. So while in some ways, it made me feel good. Like when it when I was buying it, it made me nervous not to be getting a mortgage. Like I even thought maybe I should just put 50% down and get a mortgage. Right. But when you had it, but then when it was sitting, I was very thankful. I was like, It’s okay, you know, I still have a job. Tanner still has a job. We don’t need the income. We this is our investment. And I’m just paying the utilities on it. So I’m just gonna let it run its course I love that. Okay, so that was, you know, just an interesting observation a mortgage on the one before either though. No, I just wasn’t worried about it that time because
it was fresh. Oh, my market was that’s a great point to just because the market was
different. I wasn’t worried. And I paid 140. So it was less Yeah, one at smaller. Yeah, one ad was really hard for me like, Whoa, yeah.
But I guess two it was more that you had the money from the Yes. Last one to put in this one. So a lot of people go through that investment journey. They just take the money from the one thing and then they put it into the next thing and then it’s sort of a stepping so each time the check does get bigger, right? Because they made some money. Now on that note,
I have had a few people ask Did I do a 1031 exchange right? I did not write why you could save so much money on taxes. I I’m not a CPA, right and this view of it may not be 100% but Yeah, but this is how I feel about it because this is my experience with a 1031 exchange, it does not exempt you from taxes, right? It delays you paying them, right. So for example, if I owed $30,000, in taxes from flip number one, and I didn’t pay them, I just did a 1031 exchange. So for those of you a 1031 exchange is when investors when they sell an investment property, they have a certain amount of time to reinvest it in a another property right to defer taxes. Okay. So that’s they don’t want to pay the taxes right? Now. They’re just going to take that money and put it here, right
is the theory that you just keep kicking this rock, do my hit, like ball down the field, whatever it
is, from my understanding, and my research, this is only helpful if you never plan to cash out. Right? Oh, because eventually, I will die, right? And then the tax is basically forgiven. Because Haven and Tate will now inherit.
So it really only works if you don’t plan to so yeah. So for example,
I had a rental property on tulip Street. It was up here and beam home. I bought it because it was tenant occupied and the tenants wanted to stay. The house needed work, right. But I didn’t have to do any of the work right away. So I got a mortgage I rented, I kept them in there. I sold it when they moved out because I didn’t want to own an a house that old. Right? Right, right. So I kind of flipped it. I flipped it, you sold it. And I bought my cabin. Okay, I did a 1031 exchange and I took all my profit from tulip and I bought my cabin. I did not write a check to the IRS. Okay. I paid like, I paid 299 For my cabin. i During the craziness of the pandemic had a real person, legitimate person reach out and make me an offer of 850 for my cabin. And I was like, Whoa, like, I would be dumb not to at least check the numbers, right? So I email my CPA, and I was like, Look, I have this guy who wants the cabin for 850. What does that look like for me tax wise? And I don’t remember the exact figure, but she was like, well, you’re gonna owe and it was like a huge number. Yeah, like, more than $150,000. Now. So the check I was going to be getting back. While still a big sum. If I kept the cabin for five years, I would make that that was okay. Okay. Okay. So I said, But why is that number so big? She said, Well, you would have to pay your capital gains on to lob and your capital gains on the cabin. Like you’re you’re paying taxes on two properties. So then in my brain, I thought, okay, let’s pretend I sell the cabinet and then quickly buy something else and 31 exchange at some point, aren’t you going to owe more in taxes than your profit altogether? Because it’s only capital gains you’d have to but if I’m rolling over tulip in the cabin, and the
only way that would happen is if the thing you bought decreased in value? No. Well, because if you look,
I would let’s say I owe $50,000 in taxes on tulip okay, but I’m not paying it. I still owe it but I’m not paying it by now for the cabin. I sell the cabin and I owe $100,000 in capital gains. So I’m now up to owing the IRS $150,000 But I’m not going to pay it okay, I’m going to roll it over into Eastwood Okay, now I owe $40,000 in capital gains on Eastwood Okay, so I’m up to $190,000 owed to the IRS on all these games. Eventually that number is going to keep growing and growing and growing and if I ever sell something, they’re gonna want to collect it all. In my mind, I would rather close out like I just don’t want this and I’m like look, I want when I’m done with Eastwood. I am the first thing I’m doing is writing a check with the IRS
as to you know who would be great for this. Sarah I would love to get a financial or a CPA or someone or Karen somebody to really talk us through that because I think you are probably miss Well, I
have I called and what did they say they are your Are there like, you’re correct there like at some point, at some point you would owe, if you keep rolling it and rolling eventually have to pay it. You gotta pay it and I don’t want to pay it when it’s six figures. That’s like funny. I would rather close the account to like I’m done with this. Like it annoys me still, that I still owe taxes on tulip and I sold it in 2020.
They were the taxes whether they were paid then or later, I guess is the theory. Yeah, I just like
to close it out and be done and know that this account is settled. I don’t owe taxes on all the house as long as you never do another one. You know what you’ll right? The only thing that I did the 1031 exchange on is the cabin. And now that I’ve seen what happens, like habit, I’m like, well, that’s terrible. I don’t want to do I wish I was done with that. Oh my god, that’s so that’s just my personal experience. I’m fine. Fine. But if you’re, I feel like if I was older, like maybe if I was like 70. And I was approaching preparing for, like leaving an inheritance for my children, right? At that time, I could totally see doing a 1031 exchange and not paying the taxes. Because there is they don’t tax the inheritance the same way. So you’re basically if you plan to never ever sell, then it’s fine, then it’s fine. When I’m too young to know that you’re like, I don’t know, I may sell the cabin one day. Try and pay my six figure check to the IRS. You’re still gonna make a pretty penny. Yeah, that’s fine. Totally fine. Okay, well,
that was riveting. No, she wants to know, that’s it. Okay, great. Oh, I have a toast. Okay, good. We’re gonna we’re gonna toast somebody. And just kind of sad. I mean, I enjoyed hearing about the flipping.
So, goodbye to the flipping goodbye doo doo doo doo doo doo beep
I know. It’s a sad time. Y’all can go by the left but all the shirts that are left we have some flippin really future so cute little dude, dude. Made I know so good. Okay, today’s toast, or is Danielle Burleson. They, she’s in Dallas, Texas being toasted by Courtney Whitford. Okay. And the message reads Danielle says we met early on in 2022. As I hosted an open house for one of her listings and immediately they hit it off. Oh, she’s a veteran agent with an extensive knowledge of everything and it’s never made me feel like my baby agent questions were dumb baby agent question. If anything, she she’s always built me up and tells me how great I’m doing constantly. Over the years. We’ve established a great friendship and talk almost daily. She told me about your podcast and we talked about almost every episode and how we can incorporate some of what y’all do in your business. I’m so thankful God brought me a new bestie and a real estate fairy godmother.
Oh, that’s so cute. A fairy godmother. So
cheers to Courtney. She sounds delightful. Yeah. I’ll help you little baby aja. Yeah. And thank you to Danielle. I think that’s just so cute. That is a good one. So be nice to those baby agents when they come to your open house. Yeah, you might become besties Yeah, okay, Cheers. Bye guys. Goodbye.
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