Anyone Can Flip a House After Hearing This

Anyone can flip a house after hearing this episode. If you’ve got around 30 minutes and want to make a faster return on your money than rental properties, this is how you do it. And this isn’t just hype—Dave is putting this knowledge to the test, flipping his first house with the help of expert house flipper James Dainard. James has flipped over 4,000 houses, has made more mistakes than almost any house flipper on the planet, and knows exactly what to buy, what not to buy, and how to turn an average, outdated home into a top-seller with six-figure profits. If you’re a beginner, you’re in luck—James is breaking down everything a beginner needs to know when buying, budgeting, fixing, and selling a house flip in 2026. We’ll get into it all—why house flipping still works in 2026, the best properties to flip for beginners, the red flags to avoid (unless you’re very experienced), Dave’s actual first house flip numbers (with examples), how to protect yourself in a bad market, and what to do when costs rise faster than you anticipated. Give us 30 minutes, and you’ll be ready to try your first house flip. In This Episode We Cover The best properties for beginners to flip (with the least amount of risk) Dave’s actual numbers on a house flip property he’s buying and renovating The biggest red flags a beginner must avoid when buying a house to flip Profits shrinking? Here’s what to do ASAP to lower your flipping costs How to still make a sizable profit when the market is working against you The team members that will make or break your profit (and timeline) And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠h⁠⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1290⁠⁠⁠. Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Dave Meyer?

  It's my first time flipping a house and I cannot wait to see that sweet profit when it's all done. But until the sale actually closes, I am a little bit nervous. But fortunately, I have one of the best house flippers around to hold my hand through the entire process. And today, we're going to share everything that anyone thinking about their first house flip needs to know. We'll of course, talk about how to find the right deals and maximize your profit. But we'll also talk about how to spot big risks and potential mistakes before you make them. All that and more, so you can flip with confidence. Stick around.

• 0:39Dave Meyer?

  Hey everyone, I'm Dave Meyer. I'm a housing market analyst and the head of real estate investing at BiggerPockets. I've been buying rental properties for more than 15 years, but I have never actually flipped a house until now. I am diving into a whole new realm of investing and it's one that comes with big profits, but also big risks. So today on the show, I have my on the market co-host, James Dainard with me. James is one of the most experienced flippers out there. He has flipped more than 4,000 homes in his investing career. And he literally wrote the book on it, The House Flipping Framework. So James, you ready to help me out?

• 1:18Speaker 01

  I always get so excited when people take their step into flipping houses.

• 1:23Dave Meyer?

  You have finally converted me to the dark side. After knowing you for like three or four years, I finally agreed to flip a house.

• 1:29Speaker 01

  Yeah, it starts with one and then all of a sudden.

• 1:34Dave Meyer?

  Already tried to get me to do two.

• 1:35Speaker 01

  Yeah. The first one's free, Dave, and then, then you're gonna be hooked on this.

• 1:39Dave Meyer?

  Well, we'll see. If it turns out well, I could see how it'll be addicting. But because I'm still starting my first flip, I'm more nerves than excited right now.

• 1:48Speaker 01

  Well, you should be nervous. I mean, flipping is a great tool in real estate, but it's also a very, very risky. It's probably one of the most riskiest asset classes you can buy in real estate. So I mean, I guess the real question is, Dave, I know you like hedging against risk, so why do you want to flip a house?

• 2:01Dave Meyer?

  There's a couple of reasons I want to do it. The first is, I want to get better at managing construction. I'm interested in flipping houses and if this first one goes well, I might do it more and more. But I've also been doing BRRRRs and I've been renovating rental properties for 15 years now. And I admit, I don't think I'm the best at managing construction projects. So that's my number one objective is to really learn how to work best with contractors, to do things efficiently, price efficiently, and to maximize my ROI. So that's the number one thing. The second thing is, as you know, I moved to Washington, and it is super hard to buy cash flowing profitable rental properties, but I want to invest in my own backyard. And at least right now, it seems like flipping is the best way

• 2:46Dave Meyer?

  to invest in the Seattle area.

• 2:49Speaker 01

  It is, especially in those expensive markets, because properties are expensive, they're in high demand, and if anybody can buy them, the pricing is not that good. What I always say is flipping gives you the best foundation for being a real estate investor across all asset classes. I mean, you see how we cash flow in Seattle. Like, when we're buying a rental property, it's not turnkey.

• 3:10Dave Meyer?

  Exactly, yeah.

• 3:11Speaker 01

  But that's how we create, the math will work when you can buy so deep. And that's what flipping is so important about. You can create your own returns by controlling your costs. And so it's not just about making money, it's about making you a Swiss Army knife investor for all different types of asset classes.

• 3:27Dave Meyer?

  That's exactly why I want to do this. Maybe you'll wear me down and I will become an addicted flipper like you are. But my objective at this point is to hopefully just build big chunks of equity that I can maybe put into other flips, but mostly use to go out and buy more rental properties, do more burrs, that kind of thing. I am also lucky, though, because you have agreed to help me find my first deal as a flipper. So maybe tell us a little bit about if someone's out there like me, looking for their first flip deal, and they want to do it in a, you know, responsible, risk-adjusted way, what do you look for in that first deal?

• 4:02Speaker 01

  Yeah, you want that cream puff for your first deal.

• 4:04Dave Meyer?

  Oh, yeah. You're getting me a cupcake.

• 4:07Speaker 01

  And that's what you want, though. Like, it's about kind of, you know, there's so many things involved in flipping, right? The first thing is, you got to learn how to underwrite a house. Like, be able to pull comparables, look at it, look at what needs to be done, and create a scope of work to create value and create equity. That's hard when you don't know what you don't know. One of the biggest mistakes that flippers make when they buy their first deals, they buy the cheapest thing. And like, well, it's gonna be safe cuz I'm buying it so low. How can this go wrong? It can go wrong.

• 4:37Dave Meyer?

  I mean, I think the cheaper deals scare me way more.

• 4:40Speaker 01

  The worst deals I ever bought were the cheapest deals.

• 4:43Dave Meyer?

  They're cheap for a reason usually, because no one wants them. There's a lot of hair on them.

• 4:47Speaker 01

  Yeah, everyone else thinks it's a tear down and maybe it really was, you know, like that's where, you know, I've had second stories fall off houses. I've had all sorts. Oh, yeah.

• 4:57Dave Meyer?

  Just like straight fall off?

• 4:58Speaker 01

  Yeah, and it was a good deal. It was cheap. I bought it sight unseen. We started a demo and all of a sudden I get a call from the contractor. The second floor just fell off. I'm like, what do you mean it just fell off? He sends me a photo. My second, it literally fell off.

• 5:10Dave Meyer?

  Did you save some money on demo at least?

• 5:12Speaker 01

  Uh, we, I've never framed a house so quickly. After that, where we just got it framed back up and yeah, the, we had throw a lot more lumber than we thought. But that's the, the hard part about flipping, right? So you wanna take steps. Like, I have flipped a lot of homes, a lot of zombie houses, a lot of beat up, beat up properties. But I didn't start with that. I started with a townhome. Or something that was simple. And cuz it was about, well, how do you purchase the property? How do you look at it to make sure it's a good deal? But then there's so many other steps, like how do you use the right leverage for that deal?

• 5:42Dave Meyer?

  Yep.

• 5:43Speaker 01

  Like, how are you gonna get your funding? Then how are you going to create a budget for that property? And that's why you want that simpler project. Like, you don't need to swing for the fences.

• 5:53Dave Meyer?

  Agreed, yeah.

• 5:54Speaker 01

  You need to take your time, you know, it's what, bases win games, right? Basics and doubles.

• 5:59Dave Meyer?

  Totally. That's the way I'm looking at it. If I can break even, I hope, obviously, I'm hoping to make money on this deal. But if I make a little bit of money, I'll be happy if I learn a lot, which I'm very sure I'm going to learn a lot. And that's why I think, you know, when you were convincing me to do this, you were sort of telling me more of a cosmetic flip. Like, we talked about not, definitely not doing any structural stuff or major structural things for the house. What are other things that first time flippers should put in their buy box? Or, or keep out of their buy box?

• 6:28Speaker 01

  Yeah, the number one is layout changes. The hard, like, it doesn't matter what the condition of the house is. It's how many spaces you have to create, right? When we're flipping a house, we can buy this house and it's in certain condition. It could be a two bed, one bath house. If your highest comp to create the most amount of value is a four bed, three bath, that means you're gonna have to move a lot of the home around to create that space or create new space. That's the thing you wanna avoid is a new flipper because you don't know what you don't know and it's hard to control those costs. That requires a lot of framing. Even if the house is in really good shape, if you have to create those spaces, you still have to rewire it, you still have to replumb it. Everything has to get done. So that's what we wanna avoid on the first one.

• 7:12Speaker 01

  Also, don't buy the dilapidated home that is melting away. Now, that's something that gets, I get excited.

• 7:20Dave Meyer?

  Leave those for you.

• 7:21Speaker 01

  You don't need to buy that deal, right? And so you wanna create standard processes as you do your first flip. When you're doing a cosmetic and maybe you have to add a bathroom or add, you know, open a kitchen wall, those are the two items that are a little bit more than unknown, but you can control your flooring costs, you can control your doors and your trim. The cosmetics are things that you can easily control if you start going over budget. It's really easy to go online and find a floor for a dollar less per square foot. It's harder to find an electrician that will be 20% less than your highest low spin. And so start with the easy stuff. Don't reconfigure the house and then don't buy the dilapidated old homes that need all the mechanicals. That's what you wanna work into, but if you can systemize the cosmetic first, then you

• 8:06Speaker 01

  go into the mechanicals.

• 8:08Dave Meyer?

  And I assume buying cosmetic, most of the time, your margin is gonna be a little bit thinner though, right? Because there's gonna be more demand for those kinda homes, but there's also less risk, right?

• 8:18Speaker 01

  Less risk and less time in the deal. Time kills deals. One of the biggest things, I think, mistakes that people look at when you're flipping a house is like, well, the margin's a little low. I always look at annualized return. How much money can I put into a house? What can I make? And then I look at, how many times can I do that in a year? Many times, even if you're making just a base hit, but you can do that two or three times in a year, you will actually do better than the big, big fixer. And so, you know, look at what your return is. You buy a really good house, good location, not that bad of shape, you're gonna have a slimmer margin, but there's less risk and so that's okay.

• 8:51Dave Meyer?

  Totally.

• 8:52Speaker 01

  Because the simpler product. Projects better for the new flipper.

• 8:55Dave Meyer?

  I think it's the same thing with rental properties, right? If you were just getting started investing in real estate, at least for me, you were going to take on a BRRRR rental property. I'd say probably go buy in a B-class neighborhood. You're not going to, you know, you're not going to get the best deal. You're not going to overpay for something in A-class. It's probably not going to cash, though. But just go out there and hit a double and learn as much as you can and move on.

• 9:15Speaker 01

  Yeah, don't buy weird. Buy something clean that needs minor changes. That's why we started with this one, Dave. Like, it's, we don't want to go knee-deep into a big, big project. And we've done, me and you have done some projects where you've not been running the whole project.

• 9:31Dave Meyer?

  Yeah, you want to let me near those. It's, as you shouldn't, yeah.

• 9:36Speaker 01

  No, it, because you've done, you know, you've been taking steps to get into flipping. You're like, alright, well, I want to watch the bigger project. Watch the process. Watch all the things that even if I flipped a lot of houses, mistakes happen. Things happen and you go, okay, how do I deal with this mistake? And so just baby steps. But once you get into flipping, it can change everything for you as an investor.

• 9:56Dave Meyer?

  Alright, so I want to tell everyone about the deal that you found and ask you a little bit more about flipping in the current market environment that we're in. But we got to take a quick break. We'll be right back. Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental activity. That's why investors use Steadily. They offer landlord insurance built for real estate investors, including short-term rentals. And if you're a BiggerPockets Pro member, you'll also get 5% off your landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to learn more.

• 10:39Henry Washington?

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• 11:24Henry Washington?

  minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.

• 12:02Dave Meyer?

  I just booked a backpacking trip through Olympic National Park. Two nights out on the trail, no cell service, nothing to do but eat trail mix and stare at mountains I'll never get tired of. That's the whole appeal. But while I'm off grid, my place doesn't need to sit empty. I can list my space on Airbnb and make a little extra income while I'm away. And with Airbnb's co-host network, I could partner with a vetted local co-host to help take care of the details, from guest communications to onsite support, so I can fully unplug and enjoy my time out in the backcountry. If you've got upcoming travel plans, you can find a co-host at Airbnb.com/host.

• 12:44Speaker 03

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• 13:17Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with James Daner talking about my first flip. James, you helped me find a deal in the Seattle area that fits all the criteria that we were just talking about. Something that's manageable, low risk, hopefully quick deal that I can get in and out of. Tell everyone about the deal that you found.

• 13:39Speaker 01

  This is a perfect first house. Besides, it's a little expensive.

• 13:42Dave Meyer?

  It's more than a little expensive.

• 13:44Speaker 01

  Definitely more than the last bird you buy.

• 13:46Dave Meyer?

  Yeah, for sure.

• 13:47Speaker 01

  All right. The reason I like this is great location, right? When we're flipping, the way for us to get in and out of a project is if you buy where everyone wants to live and you have the right product, it's very sellable, even when the market's slowing down. The next best reason is we can do carpet angels in this house, Dave.

• 14:06Dave Meyer?

  Yes.

• 14:06Speaker 01

  Like, very rarely-

• 14:07Dave Meyer?

  You can just live in this house. It's nice.

• 14:09Speaker 01

  It is move-in data-ready, right? And when you're buying in a more expensive market, that is the benefit in Seattle and some of these other areas like San Francisco, even Denver, right, can be expensive. Because the cost of construction is so much for the consumer, you can buy some clean homes, put in the right finishes, and really, really increase the property. And so, this house is perfect for the first-time flipper. It's built in the late 70s, so it's got good mechanicals, like the plumbing made out of copper. The wiring, not old. The light switches are kind of where they need to be.

• 14:41Dave Meyer?

  They're fine.

• 14:42Speaker 01

  It's been-

• 14:42Dave Meyer?

  The roof's good.

• 14:43Speaker 01

  Roof's good. Windows have been updated. The mechanicals of the house is a very well-kept home. It just was out of date.

• 14:50Dave Meyer?

  Yeah, it just looks like grandma's house.

• 14:51Speaker 01

  Yeah, and the issue with the house is the layouts are just not modernized.

• 14:55Dave Meyer?

  Right.

• 14:56Speaker 01

  It's got a closed-off kitchen, a little bit smaller primary bedroom. And those are things we're going to have to fix, but they're minor changes. So that's why I liked that part. But you had good mechanicals. It's in a great location, we're a product that everyone wants to buy. Like, right now, the market's a little risky, right? You, Dave's getting into flipping right now. When things are compressing and they're hard to sell.

• 15:17Dave Meyer?

  I don't know why I'm doing it.

• 15:19Speaker 01

  You know, because that's kind of the best time to jump into something. When everybody else is terrified.

• 15:23Dave Meyer?

  There's truth to that.

• 15:24Speaker 01

  It it leaves more opportunities. Like, I wouldn't be able to buy this house for this price in this condition a year ago.

• 15:31Dave Meyer?

  Yeah, for sure. No way.

• 15:32Speaker 01

  It would have got multiple bids and probably sold for one, three to one, four. We got you this house for a million, one ninety.

• 15:41Dave Meyer?

  Yep.

• 15:42Speaker 01

  And so the reason I liked it for you as your first flip is also low risk. We knew the as is value was one point three five million walking in. So the day you walked in, you had some equity on it.

• 15:52Dave Meyer?

  Yep.

• 15:53Speaker 01

  Mechanicals are good, so we don't have to rearrange a lot of things. The layout, bedrooms and bathrooms are where they need to be.

• 16:00Dave Meyer?

  Yeah, I mean, all we're doing is, well, we got the bathroom a little bit in the primary and opening up the kitchen from a structural perspective.

• 16:07Speaker 01

  And the slider.

• 16:08Dave Meyer?

  The slider.

• 16:09Speaker 01

  The slider is the, yes, the slider in, you know, the basement, we gotta, we gotta get access out there, right? We still gotta create those spaces. But yeah, everything's kind of where it needs to be. It just needs to be modernized and improved slightly. So that's why it's a good first deal.

• 16:22Dave Meyer?

  Yeah, I like this as the next step for me because no individual element of the project I haven't done before. Like, you know, what we're framing in the primary. I've done projects like that. Opening up a kitchen, I've done projects like that. Haven't done the slider exactly, but I've done some things similar to that. So all those things I've done, I've just never done it under time pressure. You know, like, that's sort of the big difference for me. With rental properties, it's less sensitive to how long it takes. But, you know, I took, you know, it's a one point two million dollar property. It's very expensive or have hard money loan on it. So it's costing me, you know, eight, nine thousand dollars a month just to hold on to this thing. So I feel comfortable with the construction

• 17:05Dave Meyer?

  part of it, but trying to do this really, really quickly so we can get it back on the market is the piece that's new, but that's the exciting part. Like, that, that's why this feels good to me is I know I can handle the individual elements and I'm challenging myself in one way instead of trying a ton of new things all at once. So obviously, this deal is very expensive. If you live anywhere near Seattle or California, you will understand that this is what things cost. But for a lot of people out there probably don't have the capital to pull down something like this. But before you said people shouldn't be buying the cheapest deal. So what do you recommend for new flippers who want to get into this and do what you're saying?

• 17:44Dave Meyer?

  Not take on a really big project, but maybe don't have the capital to buy something that's in a little bit better condition? How do you navigate that?

• 17:53Speaker 01

  So one thing right now, market's a little riskier, things are slower. That creates more opportunities. Those opportunities for a new flipper, even though the market's riskier, there's more available inventory to negotiate. And we've been able to secure, when the market changes, we've been able to secure a lot cleaner houses on better buys. Because there's just less demand overall. And so the cheap stuff we want to stay away from are the really, really old ones. You know, and so like as a new flipper, I always tell people, don't buy anything. Like I think when we talked, I was like, don't buy, we want to stay 1960s or newer.

• 18:29Dave Meyer?

  Yep.

• 18:30Speaker 01

  Better layouts, better mechanicals, that's our hard rule, right? And when you're new flipping, you gotta create your own buy box. This is what I'm good at. This is the contractor I have, like you're partnered with your brother-in-law.

• 18:43Dave Meyer?

  Yep.

• 18:43Speaker 01

  Greg on this one. He has construction background, but not like a heavy, heavy studs down flip.

• 18:50Dave Meyer?

  No.

• 18:50Speaker 01

  I know.

• 18:50Dave Meyer?

  He's commercial construction, not doing this kind of stuff.

• 18:53Speaker 01

  No, and so he's gonna learn his trades in, you know, I always say buy what your resources have. Now, if Greg, your brother-in-law, was an experienced home contractor and done big projects, your buy box might have expanded out.

• 19:06Dave Meyer?

  That's fair, yep.

• 19:06Speaker 01

  It's not always about price and in location, it's about what resources do you have? And just stay away from the old stuff.

• 19:13Dave Meyer?

  Yeah.

• 19:13Speaker 01

  Like everyone getting new flipping, you don't need to buy the oldest thing. The oldest thing will give you the most amount of problems.

• 19:19Dave Meyer?

  So you'd rather see a new investor go to a cheaper market and buy the buy box you're describing 1960s or newer? Then stay in like downtown Seattle, which is, could have really high upside? But then you'd be buying something from 1910 or something and that just brings on too much risk.

• 19:36Speaker 01

  Yeah, and people get that in their brain all the time, like I want to buy a flip in this area. And I'm like, why? Well, because I'm close to it, I like that neighborhood, I like the schools, fair.

• 19:45Dave Meyer?

  Yeah.

• 19:46Speaker 01

  Those are all valid points. You have no business mind in this neighborhood, though. Because the homes are old.

• 19:51Dave Meyer?

  Yeah.

• 19:51Speaker 01

  And you don't know what you're doing. We want to go here, right? The most important thing is flipping is buy what your resources can do.

• 19:56Dave Meyer?

  Mm hmm. That makes a lot of sense.

• 19:58Speaker 01

  I'll go anywhere. I have really good contractors in Nebraska. And they're really good at turning condos and I can get deals on condos. I will flip in Nebraska. That's how you control the cost because your core team, the fundamental of flipping is to improve the value with a strategic rehab plan. The middle part's the most important part of flipping. The money's not made on the buy. It's made on the plan and the resources you have. And new, you can be way more fluid. So go where you are capable of, not the location that's in your brain.

• 20:26Dave Meyer?

  That's great advice. And I think it just speaks to the fact, this same thing with rental properties, right? Like, it really is just math. For you, you are just targeting a return, a specific amount of return, a specific risk reward profile, and you're willing to do that almost anywhere if the math makes sense, rather than sort of being somewhat emotional about it and just like falling in love with a specific property or location.

• 20:48Speaker 01

  I'll go anywhere, anywhere. Like, people always think we do these massive homes and we do.

• 20:53Dave Meyer?

  Yeah.

• 20:54Speaker 01

  But one of the best deals I ever did this year was an hour north out of Seattle. It was a mobile home. It was not sexy and I had to go there zero times. My contractor knew how to get in and out real quick and we ended up doing, you know, we paid like 290,000 for it. We put 100 in. It was a big project, a mobile home, and we sold it for six.

• 21:18Dave Meyer?

  Wow.

• 21:19Speaker 01

  So just buy what your resources can do. That's the most important thing.

• 21:22Dave Meyer?

  Wow, that's great advice. Especially for new flippers, just trying to take on something that is reasonable and responsible for you and that you are confident that you can pull off with the time and the money that you have to contribute to the project. I am feeling pretty good about the construction. I feel pretty good about the plan. The market is what worries me right now because we are seeing in Seattle and in most places in the country, days on market are going up. It's not as hot of a market as it used to be. So is it still a good market to be flipping in?

• 21:52Speaker 01

  Yeah, the market, I mean, it goes up and down and it transitions. And that's the risky part about flipping. Timing is everything in this business. Whether you buy the right rental property, it appreciates, rents go up, right? It's just, what is it, you know, we're so tied to the economy that you don't know what could happen at any time. That's why it's really, really risky. It is very normal what's going on right now and I'm just used to it. Like what wasn't normal for me was like 2008 when we were flipping. And then we would look at a house and it was like gonna be worth 10%, 15% less than the day we bought. And so that was hard, right? We were trying to time it on the way down. Where it hurts in this business is when you get stuck in the middle, right? Like I have right now nine houses for sale of my own.

• 22:36Dave Meyer?

  Yeah.

• 22:36Speaker 01

  You know, I ran a performa when I bought those properties. I thought I would have them for a certain amount of time. Market time, all my comps might have been five days during that time. Now they're 45. And so that extra cost, you know, the more time in a deal will slow down. And so it does come with a certain amount of risk, but that doesn't mean it's not solvable. You just have to do the underwriting upfront. Your house that you bought a year ago, we would have ran the performa at a four month buy and hold. Renovate it in eight weeks, get on market, we'll sell it in the first week, close in 30 days, we'll be in and out of this deal in four. Now, when we looked at the performa, we ran it at six months. We had an extra two months of time. Also, when it transitions, you don't want to go to the high end of the comps.

• 23:21Speaker 01

  So when we looked at this, we thought the value was 1.6 million.

• 23:25Dave Meyer?

  Yeah, that's the performa.

• 23:26Speaker 01

  The performa is 1.6. Our comps are 1.625 and 1.7 when you bought it. We didn't go to the high end of the comps. And, and so that's the important part. You can't get deal goggles.

• 23:38Dave Meyer?

  Yeah.

• 23:39Speaker 01

  I can buy this thing, how do I mitigate risk? Market's slow or not, as long as I buy it right and I look at and have the right expectations upfront, that's how it becomes a lot safer, right?

• 23:49Dave Meyer?

  So it sounds like really what you have to do is the same thing I recommend to people about rental property investing right now. It's just extremely conservative underwriting. And, you know, when you're buying a rental property these days, I often caution people to really put low expectations for appreciation, low expectations for rental growth, high expectations for property tax growth, right? Like you need to account for all of those things. You don't know if they're gonna happen, but you need to sort of assume, for me, I, not the worst, but I assume a pretty negative scenario going forward. Not because I necessarily think that's going to happen, but I want to protect myself in case that does happen. And if things kind of keep going like there, which is kind of flat-ish, then you're gonna be fine.

• 24:33Dave Meyer?

  And you actually might do better than your performa. Is that sort of how you would approach it?

• 24:37Speaker 01

  Yeah, it's a high risk. So you just wanna, you wanna be conservative right now. Like it's, don't go to the high end of everything and build in the worst case scenario. Like on this deal, the reason I liked it for you, you know, because this is a lot of pressure for me, Dave.

• 24:50Dave Meyer?

  Yeah. Oh, I know. That's why I'm airing this to make sure this deal goes well.

• 24:54Speaker 01

  Yeah, this, this deal better go well, or I'm gonna have to retire. No, I'll just get you a better deal next time. But then also make sure that you have a very sellable product. That's where people get jammed up on. They're missing an amenity. They're on a busier road. There's negative impact properties right now in a slow market. You wanna be, stay away from. And this house had all the things that the buyer and the demographic wanted. Two-car garage, big backyard, right bedrooms, right bathrooms, right layout, right location. That's sellable even in a slow market.

• 25:24Dave Meyer?

  Yeah. You don't wanna like cut costs and make a worse house because you're in a not good market. And in other ways, you wanna almost make a better house. You need your house to check every single box because buyers are gonna have more options. And they, you wanna make it that yours is easily the best product on the market, right? So that when they go and tour three or four or five houses in a day or in a weekend, yours is the best one.

• 25:45Speaker 01

  Sometimes you wanna lean into it. 2008, when we were flipping, nobody wanted to spend money flipping a house, right? These were very basic jobs. We used to do a couple of little things, though, that would separate us from the rest of the inventory. And this is when there'd be like six months of inventory in the market, nine months of inventory. And we'd somehow be the magical house that got plucked out. It was fancy back then. People laugh now, but we would like throw really nice tile in the kitchen backsplash. It was like, whoa, you got full tile backsplash. Or we were doing stainless steel appliances. It was like these little differences that made the buyer go, I want that one.

• 26:18Dave Meyer?

  Right. And people think that's gonna cut into your margin, but not necessarily, right? Because if that means you have 30 days on market instead of 90 days on market, you're making, you're saving a lot of money in holding costs that probably at least makes up for those upgrades on the appliances or the backsplash or whatever.

• 26:35Speaker 01

  And I'm frugal with things. I'll cut costs, but when you gotta lean into it, you gotta lean into it. And that's why it's really important, when you're a first-time flipper, you gotta surround yourself with the right team. This is a huge mistake people make. They go, well, I just need to go meet a bunch of wholesalers. I need to meet a bunch of brokers. You need that dependable team. You need a really good lender that can fund your deal. You need a contractor that can implement that process. But you also need a broker to keep you up to date with real time market updates. So you gotta have a broker that can not just send you comps, go, hey, I think this is what you should be doing. Right? Like, pay attention to those comps. Follow your broker's opinion because the broker can help you vet the deal, look at it, but then give you advice on how to maximize that sale price when they go to sell it.

• 27:19Speaker 01

  So don't, I see a lot of people make that mistake. They, they go find the discount broker because they're saving money. Well, the guy's doing it for 1% and that could be beneficial.

• 27:28Dave Meyer?

  Not if they don't know what they're doing.

• 27:30Speaker 01

  If they don't know what they're doing.

• 27:31Dave Meyer?

  Not if they can't sell the house quickly.

• 27:32Speaker 01

  If they give you bad advice and they tell you to go, you know, they don't give you an update that, hey, someone just spent a hundred thousand dollars more.

• 27:39Dave Meyer?

  Yeah.

• 27:39Speaker 01

  Because they have a slider out to their backyard, probably want to invest that slider.

• 27:42Dave Meyer?

  Right.

• 27:43Speaker 01

  And so, you know, just hire the right team around you as a flipper. You need the right support because all sorts of other things are going to go off in this. Permits, neighbors, construction issues, contractor issues. You need that net to catch you and to help you work through those items.

• 27:57Dave Meyer?

  That's great advice. I think this is something I've just learned in the last couple of weeks that like, you need to really, the whole game is like figuring out where to spend money. Right? It's like you have a budget. There are some things that you can save money on, some you have to go a little bit over on. And that's what's kind of fun about it, you know? It just feels like, sort of like a puzzle that you're constantly trying to maneuver and move around. And I really have been enjoying the problem solving part of it, but I'm also lucky because Craig does all the construction management for me.

• 28:22Speaker 01

  And I've enjoyed working with Greg because he's, he's frugal in his own way.

• 28:26Dave Meyer?

  Yeah. Oh, yeah.

• 28:26Speaker 01

  And I was thinking, commercial contractor, he's going to spend all this money. I'm going to have to watch him. But he's, he's like, I think I can get this for this. And I'm like, hey, I can get you this floor for this price. And he's like, oh, really? Like, and so it's like, because we're, you know, I'm not, I don't own the house, but we're helping with the house, right? Because we're the broker, by even putting me and his brains together, we've saved thousands of dollars about that construction.

• 28:48Dave Meyer?

  Absolutely.

• 28:49Speaker 01

  But that's what you want. You want, because flipping can be lonely.

• 28:52Dave Meyer?

  Oh, yeah.

• 28:52Speaker 01

  If you're in this house by yourself and it starts snowballing, you just, you're like, I'm the guy that's not getting this done, right? Or I'm the gal not getting this done. So just have the right team around you.

• 29:01Dave Meyer?

  We'll talk more about flipping in the very weird market that we're in right after this quick break. Stick with us.

• 29:10Dave Meyer?

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• 33:48Dave Meyer?

  Welcome back to the BiggerPockets Podcast. James and I are here talking about my first flip and how to navigate the tricky, somewhat confusing market that we're in. One more question for you. We've been on the topic of controlling costs. How are you handling changes in material costs? Cause we're seeing tariffs over the course of the last year impact everything from lumber prices, cabinet prices, construction trucks, which sort of trickles into the services side of the industry. How are you personally mitigating the risk of price increases even over the course of the hold of a single project?

• 34:24Speaker 01

  That's a tough thing. We had to get really good at this during the pandemic too, because there was a shortage on things and the pricing got out of control. You have to pause and go, okay, can we lean into this? And if you start going over budget, do you just go for a different plan and upgrade the house a little bit more if you have some comparables that will support that plan? So sometimes it's going, okay, well, we had this, like your house, a more basic plan, had a little bit of creep going on.

• 34:50Dave Meyer?

  Yeah.

• 34:50Speaker 01

  Like all of a sudden, we were three to 4% over budget for some unexpected. And then we were looking at the comps and we go, well, we can just upgrade another 5% costs and go for this price. So you gotta look at, can you lean into it and switch your plan up? But a lot of times you just gotta go, okay, well, what can I go find cheaper? And you always want to focus on the cosmetics. The way to get your cost down, if you start getting creeped, is you've gotta make multiple phone calls. We get more bids now than we did a year ago. It's like, all right, we're going to get five roof bids, five electrical bids, five plumbing bids, and we'll just call, call, call. But some of the stuff you can, you can always find a deal, tariffs aside. Okay, appliances go up, okay. I can go to a clearance center, I can mix match my appliances.

• 35:34Speaker 01

  I can probably shave a thousand dollars off. You can always find, you know, I was talking to Greg. I'm like, hey, these floors are only three bucks and we had a 350 allowance. So that's picking up $3,000 in costs across your budget. And so, you know, when you go into your first flip, always put in, I said, set allowances. What do you want to put in the property? You need to put yourself on an allowance so you don't spend anymore, right? That's our ceiling cap. But it also allows you to be more flexible and that's as a new investor. That's how you control because it's very tangible for anybody going, okay, my floors are four bucks. If I can get it for three, that's a dollar cheaper. So in these times, pad your budgets, throw contingency on and then have a little bit bigger

• 36:16Speaker 01

  material allowances because you're more flexible on those than you are rewiring a house.

• 36:21Dave Meyer?

  Right, well, so you're saying though, you, you want to stick to that allowance and budget, but you want flexibility about the actual product that you do, right? So you say it's 350, maybe you on your spec sheet, when you're specing out, you have some floor that you really like. And then all of a sudden it goes up to four bucks. You gotta stick to the 350 and sort of adjust what material you put into the house because you sort of set that unless you're going to upgrade the whole plan and go for a higher price point.

• 36:47Speaker 01

  Yeah, you either got to switch your plan, upgrade the house to a new value or the floors you really love, you can't love them anymore, go find something else.

• 36:54Dave Meyer?

  Yeah, exactly. So you need to be a little bit flexible there. All right, well, this has been a great conversation. You've helped me obviously so much in the last couple of weeks. I'm looking forward to finishing this thing out. Any last advice for people like me who are sort of curious about flipping, not fully sold, want to dip their toe into it? Any last words of wisdom?

• 37:12Speaker 01

  You know, I think start, you don't have to buy your first flip. You can work into it, like right now. I've explored some other markets. I don't have the same skill set and resources. I have experience, like Newport Beach, I got this big flip going on right now. I didn't have the contractor, I didn't have the resources, so I partnered with someone on that project. Because they can run the job site, they know the cities, they know the permits, they know the trades, they will control the cost. He will probably get this budget done for about 400 grand less than I could do it right now.

• 37:43Dave Meyer?

  400 grand?

• 37:44Speaker 01

  It's a big budget, it's 1.6 million, so it's a, it's a different thing, right?

• 37:49Dave Meyer?

  What?

• 37:49Speaker 01

  Yeah, it's the most expensive property, but I did that because I wanted to reduce my risk. Now, do I think I could figure it out? I can, but it's gonna take time, it's gonna take effort, it's gonna cause stress. So, you can partner with someone first, watch the process going on, and then take your step into cosmetic. You don't have to rush into this.

• 38:08Dave Meyer?

  Yeah, totally agree.

• 38:10Speaker 01

  Find the people doing it, that have been doing it for a while, because we've gone through all different types of market cycles. We felt different types of pains, different types of wins. Learn that way, you can still make money, and then branch off, you know, baby steps. Don't jump in too deep on any heavy construction project, burrs, flips. They can eat you alive, and eat your numbers alive.

• 38:31Dave Meyer?

  For sure. This is the kind of market, whether you're, like you said, burrs, flips, rental properties, whatever, it's a time to be patient right now.

• 38:36Speaker 01

  Yep.

• 38:36Dave Meyer?

  To not patient in finding deals, but also just not rushing to try and make massive returns on your first deal. Or jumping into a project that you're not equipped to handle. Just be patient and disciplined about your approach, and trust that if you do this responsibly over a consistent amount of time, you're gonna be successful in this industry.

• 38:58Speaker 01

  You're gonna run into some rock walls at some point, it's frustrating. Can you learn from them? Can you systemize around it? Learn from your mistake. I learn, I make mistakes on every house. I have to learn around those.

• 39:10Dave Meyer?

  That's good to hear, because you've done a lot.

• 39:12Speaker 01

  I've made the most mistakes probably in the nation flipping houses.

• 39:17Dave Meyer?

  And you say it proudly.

• 39:18Speaker 01

  I'm probably the worst flipper in the room, or if we're going by mistakes, right?

• 39:21Dave Meyer?

  That's true, I haven't made any yet.

• 39:22Speaker 01

  Yeah, you're, you got a perfect scorecard right now. Mine is very battled. And so, and that's the thing, you guys, it's just learning. You don't know what you don't know. You don't know what's inside houses. But have the right team around you, you can always get through those problems. And so, don't get frustrated. I'm excited, not for you just to make some money on this flip. I'm excited to see what kind of multifamily deal you take down in a year.

• 39:45Dave Meyer?

  Yeah, exactly.

• 39:46Speaker 01

  That's what I'm most excited for.

• 39:47Dave Meyer?

  Yeah, for sure. Well, thank you so much for sharing your knowledge with the entire BiggerPockets community today. Thank you so much for holding my hand on this first flip. We'll of course, update everyone as this project progresses and tell you how it winds up.

• 40:02Speaker 01

  Yeah, and hopefully, I don't look bad. The pressure's real.

• 40:07Dave Meyer?

  Greg and I are gonna work very hard to make this look good. And for everyone listening, if you want to learn how to flip from James, obviously you can hear him here on BiggerPockets, but also check out his TV show on A and E Million Dollar Zombie Flip.

• 40:21Speaker 01

  Well, and you got to make a special guest appearance.

• 40:24Dave Meyer?

  I'm also gonna be on it this season, so come check it out.

• 40:26Speaker 01

  Yeah, you guys, not only talking about flipping the house, you get to watch us.

• 40:31Dave Meyer?

  Yeah, you can actually see the house I'm gonna be flipping.

• 40:33Speaker 01

  That's why the pressure's extra for me.

• 40:35Dave Meyer?

  Yeah, cuz it's going on TV, for both of us.

• 40:37Speaker 01

  Yeah, TV podcast world.

• 40:39Dave Meyer?

  Yeah, definitely better go well, but I have confidence that it's going to. Well, thanks so much, man. And thank you so much for listening to this episode of the BiggerPockets Podcast. We'll see you next time.