BiggerPockets Real Estate Podcast

BiggerPockets Podcast 024: House Flipping and Deal Analysis with Michael LaCava

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346 Articles Written

On today’s episode of the BiggerPockets Podcast, we talk with active house flipper and real estate investor Michael LaCava about flipping houses in today’s rapidly changing real estate market. Mike has been flipping houses since 2006, so he’s seen both the crash and the emergence of the market, and has a ton of great insight into building a scalable flipping business, analyzing deals quickly and efficiently, and (as a new feature on the Podcast) Mike dives into a “Fire Round” where he answers some of the most interesting questions asked by BiggerPockets members in the Forums.

Read the transcript to episode 24 with Michael LaCava here

Listen to The Show on iTunes (Preferred Method!)

Click here to listen on iTunes.

Listen to the Podcast Here

In This Show, We Cover

BiggerPockets Podcast _ Real Estate Investing and Wealth Building 9.42.11 AM

  • Finding and Working with Partners in your Investing
  • Losing money on the first deal
  • Mike’s view on the Hedge Fund problem
  • Exit strategies … “What happens IF…”
  • The $2.5 million dollar deal that fell apart
  • When to use the 70% Rule and when NOT to use it
  • Finding accurate comparable sales (Comps)
  • The best way to estimate repairs
  • Hiring your very own acquisition manager
  • Tips for wholesalers
  • The power of blogging for your business
  • The flipping “Fire-Round”
  • Flipping a “Murder House?”
  • Finding deals in a competitive market

Links from the Show

BiggerPockets Deal Analysis Forum

Books Mentioned in the Show

Think and Grow Rich by Napoleon Hill

Tweetable Topics:

“When flipping a house, you make your money on the front end. It’s understanding the numbers before getting into it.” (Tweet This!)

“Relying on the experts and building your team is crucial to being successful.” (Tweet This!)

“You need to create a plan, you need to write it down, you need to start taking action.” (Tweet This!)

“Success isn’t about how much money you make – it’s about enjoying life along the way.” (Tweet This!)

“Goals with no actions are just dreams.” (Tweet This!)

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Connect with Michael

Michael’s Website HouseFlippingSchool.com
Michael’s BiggerPockets Profile

Leave your questions or comments below for Michael, Brandon, or Josh!

Real strategies that work for real people seeking to build wealth through real estate investments. Co-hosted by Brandon Turner and David Greene, this podcast provides actionable advice from investors and other real estate professionals, who chat about failures, successes, motivations, and lessons learned.

    Maurice
    Replied about 6 years ago
    Another great show! Michael was knowledgeable and informative. His down to earth approach to real estate investing was motivational. Thanks for sharing.
    Michael
    Replied about 6 years ago
    Thanks Maurice Just keepin it real. Not like the tv shows. LOL. Thanks for listening. Are you investing in real estate currently or looking to get started?
    Joshua Dorkin
    Replied about 6 years ago
    Thanks for listening, Maurice! We appreciate the note.
    Taylor Jennings
    Replied about 6 years ago
    Fiiiire Round! I visualize Josh and Brandon posing like the statue from ‘Night at the Museum’ ha
    Michael
    Replied about 6 years ago
    Ok then. I have to admit they did make it fun! Thanks for listening Taylor as I know it is not alway easy to find and extra hour to listen to a podcast or any other venue. If you have any questions don’t hesitate to ask me as I will do my best to answer. You doing any real estate investing yourself?
    Taylor Jennings
    Replied about 6 years ago
    Michael thanks for taking the time to respond! I just listened to this interview for the second time. Really solid stuff. I am past the beginning of my REI adventure, but I haven’t yet bought any houses/wholesale. I love how you mention “just keep taking steps forward.” I believe getting started in REI is really up to your frame of mind. I try not to think of all the things that have to be done and rather think about what has to be done next. Hearing that phrase from you was motivating =) Thanks. Reply Report comment
    Taylor Jennings
    Replied about 6 years ago
    Michael thanks for taking the time to respond! I just listened to this interview for the second time. Really solid stuff. I am past the beginning of my REI adventure, but I haven’t yet bought any houses/wholesale. I love how you mention “just keep taking steps forward.” I believe getting started in REI is really up to your frame of mind. I try not to think of all the things that have to be done and rather think about what has to be done next. Hearing that phrase from you was motivating =) Thanks.
    Joshua Dorkin
    Replied about 6 years ago
    Ha . . . that would be awesome!
    James
    Replied about 6 years ago
    Really great show and guest today! I was taking notes like crazy. Thanks for sharing Michael.
    Joshua Dorkin
    Replied about 6 years ago
    Thanks for listening, James. It was definitely a great show.
    Michael
    Replied about 6 years ago
    Thanks James. I appreciate you listening. Let me know if you have any questions I will be happy to answer them for you. Make it a great day!
    Eve
    Replied about 6 years ago
    Hi Michael, i am in the same price range neighborhood as you described in the show: 150K-350K. It has the best employment rate in the country and lots of ppl are moving in from other States. Most of the houses are snapped within a week if it’s priced right which is already 10% higher than last year. So I don’t know how am I able to purchase the property with 70% ARV rule. Those ppl will make a lot more money by selling it on MLS. Can you share your thoughts on it? BTW; I am a newbie and getting into Wholesaling. BTW: love the fire xx, sorry not sure what it’s called. Make the show more educational and excited to listen to.
    Michael
    Replied about 6 years ago
    Hi EVe, Where are you from. I completely understand what youre talking about. You are in a hot sellers market so it is more difficult to stay in that 70% range. You either have to look into different markets or try and buy properties that are not listed on MLS through direct marketing to sellers in distressed situations or absentee landlords, probates…… wholesaling is another business that is equaling challenging and my opinion can be even more difficult but is a great way to learn how to acquire properties and valuate them for investors…..If you have the will and passion there is nothing you can’t do I just want you know it is not easy so don’t fall for the hype. Let me know if there is anything else I can answer for you. Go check out my website and you will get so much of your questions answered there with my videos and blogs. Thanks for listening to the podcast
    Ralph
    Replied about 6 years ago
    Great job Mike. Especially like your insights on where the hedge funds are going now.
    Michael
    Replied about 6 years ago
    Thanks Ralph. Time will tell on the hedge funds. How is the ship treating you.
    Ralph
    Replied about 6 years ago
    I had no idea Josh and Brandon were so funny! 🙂 Great job to all you guys.
    Brandon Turner
    Replied about 6 years ago
    Thanks Ralph! And we’re not … it’s all just for show. 😉
    Joshua Dorkin
    Replied about 6 years ago
    I’ll take that as a complement, Ralph! Thanks.
    Ryan
    Replied about 6 years ago
    “Goals with no actions are just dreams” – great quote that could not be any more truer in my personal experience. Mike, do you have or utilize any goal setting formulas, checklists or detailed strategies to help you reach your real estate goals? Developing a plan of action to reach my dream goals has always been a challenge for me. I know I am always moving in the right direction, however sometimes I feel scattered, and I feel as if I could be more effective and efficient with an actual gameplan for success. Thanks for any insight – by the way nice work everyone on the podcast! First one I have ever listened to. Thanks, Ryan
    Michael
    Replied about 6 years ago
    Thanks Ryan. You’re not alone and I find no matter what stage of growth I am always trying to be more productive and efficient at the same time. I have tried a few things like using the wheel of life to see how the different aspects of my life are balanced like family, god, health/fitness, business, money……I then divide the wheel like spokes and shade in the area’s to where I think I am. If the wheel starts to have very little shaded areas and other areas almost filled that is a sign your not in balance and need to adjust your wheel. For example I use to work out 3 days a week and could not believe it was almost 18 months that i did not go to the gym. Well I fixed that to paying a personal trainer to get me motivated to get back in a routine and it has been 2 months now and I forgot how good it feels to be working out again. The other great exercise which takes some time is to write down what you want your life to look like in 20 years from now, then 15, then 10, then 5, then 3 and then 1 year. Then break down the 1 year into 9 months, 6 months, 3 months, 1 month, then 1 week. It may take a while and requires some deep thinking. What I found when I did this is at first it seemed complicated to think that far ahead but as I started to do it and as I started to break it down backwards the more achievable it appeared. I am at the 4 year mark when I first started it and look at from time to time to see how the plan is going. Very cool. Of course there is the usual goal setting, tasks, business planning and so on. Sometimes it seems overwhelming just to plan. I don’t have the perfect solution and i am always looking to improve. Sharon Vornholt recommended a book called Eat that Frog by Brian Tracy so I will read it and let you know. It is about this same subject and offers strategies for accomplishing your tasks with an emphasis on doing the largest one first which sometimes is hard to do.Sorry that was long.
    Ryan
    Replied about 6 years ago
    Awesome response. Thanks Mike!
    John Fossetti
    Replied about 6 years ago
    Hey Michael, fantastic show! Another Great episode for Josh and Brandon on Bigger Pockets. Eve, as a wholesaler, you need to market to find the deals, there are plenty of them out there that will work with the 70% formula, don’t expect them to call you and say they want to sell at 70%. A great wholesaler needs to know how to Market and Negotiate! You won’t find a good deal, you need to make the good deal!
    Michael
    Replied about 6 years ago
    I like that John. You won’t find a good deal you need to make a good deal. Thanks for listening and your comments.
    Michela
    Replied about 6 years ago
    Such a great talk! I definitely learned a lot, and it was all very thorough and helpful. Thank you! Best, Michela
    Michael
    Replied about 6 years ago
    Thanks Michela. Glad you learned a lot. Let me know if I can be of any further assistance.
    Marissa
    Replied about 6 years ago
    Hi guys, great show! -I really appreciate the Marshalls/ Tj Maxx tip! They have a lot of nice and affordable stuff. Much cheaper than paying for staging. -Definitely learned a lot from this post especially from Mike and his experiences. -The 70% Rule is very useful, the ARB number x 70% is a great starting point. -Really helpful information! Thanks a lot!
    Michael
    Replied about 6 years ago
    Thanks Marissa – Glad you found it helpful! If you have any questions don’t hesitate to ask.
    Michael
    Replied about 6 years ago
    Thanks Marissa – Glad you found it helpful! If you have any questions don’t hesitate to ask.
    Michelle
    Replied about 6 years ago
    Great podcast and lots of fantastic information. Thank you for sharing your story and experiences, Michael.
    Michael
    Replied about 6 years ago
    Thanks Michelle for watching and let me know if you have any questions I can answer for you.
    Michael
    Replied about 6 years ago
    Thanks Michelle for watching and let me know if you have any questions I can answer for you.
    Nicolas
    Replied about 6 years ago
    Like always a great podcast!! Napoleon Hill’s is a great book but when you get a chance read “Law of success” is the extended version of Think and grow Rich. I am half way done and can say that it is possible my favorite book, it really goes in depth on how to achieve your dreams and goals Thanks!
    Taylor Jennings
    Replied about 6 years ago
    Law of Success. I still need to finish up on Think and Grow Rich. From what you are saying though it looks like I better hurry up!
    Michael
    Replied about 6 years ago
    Hey Taylor. How do you like Think and Grow Rich?
    Michael
    Replied about 6 years ago
    Thanks Nicolas I think I will check it out.
    Shaun
    Replied about 6 years ago
    Wow definitely one of the best podcasts yet! @Mike LaCava you gave a ton of great information. I have been looking forward to finally have the time to listen to this one (busy with work and a little vacation with the family, to enjoy life along the way:) ) and it was well worth it. @Josh and @Brandon really liked the rapid fire questions from the forums, hope that will be a regular part in future ones as well!
    Joshua Dorkin
    Replied about 6 years ago
    Hey Shaun – It was definitely a great show! As for the rapid fire questions, we do plan on making it a part of future shows for sure! I’m glad you liked it.
    Michael
    Replied about 6 years ago
    Thanks Shaun I appreciate the time you took to listen to it and thanks for the positive comments. I really enjoyed it and Josh and Brandon are cool guys and down to earth so it made it real easy and relaxing. Funny because I was actually nervous the night before doing it. I know can you imagine. LOL.
    alex anderson
    Replied almost 6 years ago
    great show guys!! i’m enjoying listening to all the advice and hearing how the show has been progressing!
    Vana G.
    Replied over 5 years ago
    Wow! I learned so much with this podcast! Especially his thorough explanation on the ARV, and 70% rule. I especially found his opening story insightful in that sometimes our lack of confidence in the knowledge we have about a topic makes us believe the other person knows more. Thanks for sharing your story Michael!
    Warren
    Replied over 5 years ago
    Awesome show! Very informative. I loved the fire-round. Michael, I look forward to following in your footsteps.
    Julie Marquez Investor from Seattle, Washington
    Replied about 3 years ago
    Great podcast! I once looked at a house where a murdered occurred, and the biggest deal breaker was that when you searched the previous owner, so many news stories popped up. So I didn’t go with that deal. Thanks for sharing all your tips with Bigger Pockets!
    Matthew Jones from Moreno Valley, California
    Replied almost 3 years ago
    Great episode!
    Raheem Akers from Philadelphia, PA
    Replied 8 months ago
    I appreciate the information, great breakdown of the 70% rule and I like the idea of having a checklist of repairs + cost when walking thru a property to give a bid. I couldn’t help but laugh every time Mike said, “We could do a another podcast on that topic” or “I could talk about that for another hour” lol.