BiggerPockets Real Estate Podcast

BiggerPockets Podcast 130: Ten Smart Tips for Making $1M+ Flipping Houses with Will Barnard

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Will Barnard recently closed on a seven-figure profit house flip (that’s right… over $1M on one single house!) In this episode of the BiggerPockets Podcast, Will shares the story, as well as 10 specific and actionable tips for anyone looking to rehab a property. Be sure to grab a pen and paper for this show… you are going to need it!

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This Show Sponsored By:

b2rfinance-logoWe just wanted to give a shout out to our podcast sponsor on today’s show: B2R Finance
A new commercial lender offering loans specifically for rental investors. B2R Finance could help you unlock equity from existing properties so you can get cash out now.

Learn more by visiting: B2RFinance.com

In This Episode We Cover:

BiggerPockets-Podcast-Cover 300 300

  • How Will’s doing since the last time he was on the show
  • The famous 7 Figure Flip
  • All the details you want to hear about that flip!
  • The 10 things you need to become a better flipper
  • How to know your market
  • The importance of building a team before you buy
  • The members you need on your team
  • How to find quality contractors
  • The importance of negotiation as a real estate investor
  • The two numbers that you need in order to make an offer
  • The ins and outs of using leverage
  • How to build a reputation by taking care of your investors
  • The importance of learning how to manage efficiently
  • How to know where you can save (and where you shouldn’t) in flipping houses
  • And SO much more!

Links from the Show

Books Mentioned in this Show

Tweetable Topics:

  • “You really need to get the boots on the ground to know your market.” (Tweet This!)
  • “Trying to flip from afar is really asking for trouble.” (Tweet This!)
  • “Everything you do in the real estate field — everything — pretty much is a negotiation.” (Tweet This!)
  • “Listening to people negotiate is really helpful.” (Tweet This!)
  • “There’s no right or wrong answer here. It’s a matter of finding out what do you want.” (Tweet This!)
  • “You can’t be scared to fail because you’re going to fail.” (Tweet This!)

Connect with Will

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.

    Darren Sager realtor from Summit, NJ
    Replied over 4 years ago
    Finally we get to hear from Will Barnard again! What a great podcast. Big chunky nuggets of gold in this one! Will is a BP Rockstar. He’s one of the long standing members that have helped make BP an incredible community online. We owe so much to Will for his insight and knowledge he’s shared with community for years. It’s all here for us to go to at any time of day. Thanks Will for this. BP should have you on annually! There’s no need to pay any guru to learn how to flip when you have the resources that BiggerPockets brings to the table. Excellent Podcast!!! Thanks again Will for all you’re tireless contributions with all of us! I’m truly grateful for it.
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    It was a long time between but hopefully worth the wait Darren! Thanks for all your kind words and support. I look forward to my next trip to NY to see you and the crew.
    Stephanie Dobbs real_estate_broker from Bowie, Maryland
    Replied over 4 years ago
    This podcast was awesome! Tons of great information and I am definitely inspired to move forward with investments! I have my first deal underway with a partner, and I’m nervous, slightly procrastinating, so I am motivated to move forward and do what’s necessary to make this happen – so thanks Will, Brandon, and Josh. I do have a question though – when you gave evidence of why you were asking the sellers to lower the price of the home by about $1 Million or so, did you expound upon your intent of reselling the property? Also, I’ve studied real estate and gained my bachelor’s in the topic, so I know about cash on cash return, IRR, and ROI, but what is most important and do you find a pattern between what’s shown in these equations and the final outcomes?
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Stephanie, thank you for your comments and your questions. Yes, I absolutely provided info to the sellerbthatbi was gong to renovate the property and resell. I used holding costs and rehab costs to present my case and get my price. Patterns change so often due to different market conditions, different areas, and investing in different price points, therefore patterns are not really relevant in my opinion. The one pattern that is and is most important is profit. I like to have a pattern of large profits and although that does not always occur, it is always the goal. Ultimately, time and profit vs amount of cash invested is most important to me. This is not to say it is the right answer for all, as others may have different processes and goals. Thanks again for listening and for your comments.
    Michael Woodward from Greenback, Tennessee
    Replied over 4 years ago
    Great podcast Will! You mentioned that you’re going to get back into the sub-$100k houses again but given the huge profit you made on your recent luxury flip, I was wondering why you’re making the change. Profit from that single flip was worth about 50 “typical” flips. Do you feel that the risk is too high or is there another reason?
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Michael, glad you caught that, I actually meant sub $1M (more specifically, the $300k-$800k properties) and misspoke on the podcast. Lots of numbers flying around I guess. To get to the last part of your question, I feel I made a mistake my completely abandoning these flips and sticking solely with multi million dollar ones. The reason being was that I could do one flip and make more than I could flipping 10-30 small ones, however, what I missed was the fact that each of these takes a good year or more and that is a long time to go without any paycheck/income. Had I mixed in some small ones, I could easily have done them and added some needed cash flow in between. Secondly, I have lost on two big flips which can happen and having multiple small ones provides not only the needed cash flows quicker, but diversities between multiple properties.
    Account Closed investor from Camp Springs, Maryland
    Replied over 4 years ago
    Another amazing podcast! I always feel so far behind when I listen to these podcasts but then I am also equally inspired!!
    Patrick Desjardins from Amherst, Virginia
    Replied over 4 years ago
    Haven’t listened to it yet but I’m expecting tip #1 – live in California, NY or Miami? There’s only a handful of 1m dollar houses in our local market lol.
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    LOL, good point! I do recommend you listen as the majority of the tips and conversation applies to the small stuff too.
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Darren thank you so much for the kind words and your text message at 6am this morning, lol. I can’t marine having a better compliment than that. You also provide an invaluable service to this community through the live events you organize in NY. I cantbwaitbto get back out there and help you contribute again.
    Jonathan Makovsky investor from Fairfield-New Haven-Hartford County, Connecticut
    Replied over 4 years ago
    Congrats on the killer flip Will! Awesome show and keep crushing it.
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Thank you. I had fun on the show.
    Mark Lopez investor from Cedar Hill, Texas
    Replied over 4 years ago
    Will, Great insights, this was a very inspiring podcast. Your point on creating values in the kitchen and bathrooms is so true, on a recent flip I decided to skimp on the kitchen and it influence the end sale timeline. A lesson learned, I will never do that again. Great show as usual.
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Thank you for listening and for your comments. Kitchens are in my opinion the highest return on your investment when doing a renovation.
    Jeffrey Stevens investor from Orlando, Florida
    Replied over 4 years ago
    Thank you for the podcast, very informative, I could relate to many points. Congrats on you flip! Done 1, looking for more!
    Daniel Huang investor from San Jose, California
    Replied over 4 years ago
    “Every single lender on these projects is getting paid back 100% of their principal and 100% of every interest they were promised.” – WILL BARNARD This is an excellent commitment and something lenders should keep in mind when considering which borrowers to fund.
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    I am quite sure this fact is a large reason why I have the private lenders I do. Thanks for listening.
    John Drinkwater from Los Angeles, California
    Replied over 3 years ago
    Hi Will – Just starting out on the platform. Curious about your above comment; do you actually promise investors a specific interest return on top of their principal? Or do you show them your typically return, and state that is something you aim for? I just figured you couldn’t hard line a return to investors on these types of projects. (Unlike notes payable/ Bonds payable) Thanks for the info!
    Mike Kelley investor from Gardendale, Alabama
    Replied over 4 years ago
    Great podcast. I built my systems and processes from @J scott “The complete guide to flipping houses.” So much easier to take the time to build linear systems. Always work on the business, Not In the business. Thank you for the invaluable information
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    I agree, having systems in place is crucial to both expansion and success. Thanks for listening.
    Michael Rogers from Chattanooga, Tennessee
    Replied over 4 years ago
    I enjoyed the podcast, Will! Great information!
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Thank you Michael, glad you enjoyed it. Don’t forget yo share and like it on the social network sites as well as on ITunes.
    Hugh Nelson investor from Ashburn, Virginia
    Replied over 4 years ago
    A suggestion about how to learn negotiation skills: check out the free Slate Negotiation Academy podcast. It’s only about 10 short podcasts, it’s entertaining, and I can tell you the techniques they discuss are based on sound psychological research. It’s not specific to real estate, but the points apply. It’s based on the podcasting journalists’ attendance at a Columbia University class on negotiation. Thanks for the great podcast!
    Alex Vargas from Lawrence, Massachusetts
    Replied over 4 years ago
    Hey Will My wife and I have listened to your Podcast at 3 or 4 times and we just keep learning new stuff every time.. Thank you so much for sharing not only your time but also your knowledge in RE. I am just getting started in the field my wife and I are considering Flipping to start and build up to eventually build a Rental Portfolio. Where would you start if you were starting in today;s market? Please advise we are determined to make it happen. Thank you .. Best to you!
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Thanks for listening and commenting Alex. Without knowing your market, it is difficult to answer but generally speaking, I would start with the proper education (both books, live events, and driving neighborhoods getting “in touch” with your market. Then I would start building your team including all needed subcontractors, suppliers, agents, attorney, insurance agent, title, escrow,, mentor, etc. Once you have some knowledge, have most of your team built, and have a good grasp of your local market conditions, then you start making offers on the MLS, direct market for seller leads, develop relationships with a real and viable wholesalers (if you can find one), and even drive for dollars. Having systems in place is also a key factor to help you grow and expand after your first deal.
    Vincent Crane realtor from Atlanta, GA
    Replied over 4 years ago
    Great Podcast, thanks for sharing Will. I’d definitely love to see a podcast where someone goes into the order of rehab work, and the type of ROI you can expect from doing different things, like redoing a driveway, adding a front porch, flipping the kitchen, baths, etc. I’ve got J Scott’s book on my reading list so maybe once I get through that it’ll fill that gap anyway though
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Great idea Vincent, perhaps I will do something like that. Thanks for listening.
    Farhad Houriani from Los Angeles, California
    Replied over 4 years ago
    Great Podcast! Congrats on the big returns on your flip, and thanks for sharing your experience. I live in Santa Monica and see a lot of developments by big time investors near me (with lot prices over 2-3 million) and always find it a very scary and a daunting task of how much goes into some of these big development projects. I am hoping to get my feet wet, and greatly appreciate your words of wisdom. I am thinking of buying a lot and developing or rehabbing it for resale in the West L.A., and was wondering if you recommend partnering with an investor or developer (as I have a full time job), versus getting hard money and hiring a developer who has more experience doing these projects? Thanks again for a great podcast!
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    With a full time job, it would be difficult at best to go about that on your own so I personally would recommend you partner with a developer, they have the know how and teams, you provide the deal and perhaps the money or some of it. This is not to say you or anyone else could not do it by hiring out and going about this without an experienced partner, however, my advice is to go with the partner on this one. Ground up development deals also can take time and if enough time passes, the market conditions could swing negative so it is of vital importance that if and when you take on a project like this, you know exactly where you are in the market and how long you have (approx – nobody has a crystal ball) before a change or correction could hurt you.
    Julie Macd investor from Seattle, Washington
    Replied over 4 years ago
    Great podcast full of very useful information as I am putting together my real estate plan. I especially liked the reminder on the importance of negotiations in every step of the process. Thanks
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Thanks Julie, I try and leave as many good nuggets as I can. Thanks for commenting.
    Tanner Gish from Whittier, California
    Replied over 4 years ago
    Hey Will, Thank you again for your insight, and, the most valuable parts- getting down to specifics about details you’ve done. It’s easy for a 60 minute show to talk theory, and the internet is full of that. It’s the minute details, lessons learned from failures, and ah-ha’s that constitute experience, and what makes you a valuable and reputable investor. Thank you SO much! A couple other questions for you: a) Are there Sourthern California market factors leading you to realign your focus on lower priced home ( I see your reply above that part of it is to smooth out your cash flow)? b)I know you said the 7-figure flip was found on MLS. When you do shift this focus, what are you finding to be your most successful marketing/ lead generation strategies? And, what is your system for it (do you have a hired office staff or VA to handles this process? Are you primarily handling it)? c) Lastly, to all those in Metro Los Angeles/ Orange County- what is the one strategy you would use to find your first deal in this market to enter into real estate (Other than taking an FHA or low downpayment option in low-moderate income neighborhood that might at best break even on cash flow… which as we know, is VERY rare). Thanks Will! -Tanner
    Will Barnard developer from Santa Clarita, CA
    Replied over 4 years ago
    Great questions Tanner, thank you for them and for listening. A) Part of it (less than 50%) is due to market conditions, however, the major part is the need for the cash flow. A large luxury renovation and sell project can take 9-18 months or more before you see a paycheck and that is a long time to go without any influx of capital. This is my main reason for switching a large focus back to the under $1M exit values (on the podcast I accidentally stated under $100,000 instead of $1M). B) My previous and early strategy was building relationships with those who could deliver deals to me (Top REO brokers, asset managers, etc) but the rules changed and that is difficult at best now. So I switched to the MLS, built a system for it, and have been doing that ever since. To date, I have only purchased one deal from a wholesaler (99.9% of everything I see from them is garbage) and I never did get a direct marketing strategy going, though I talked about it many times and intended to. I never did because I was finding enough deals with my systems and contacts in the luxury market. I wish I had kept up with the smaller stuff though, but lesson learned. C) Starting out today is very difficult due to the highly competitive market conditions we have and the fact that the sale side is so difficult due to the tight lending criteria. So in our area, the sub $800k price points go like wildfire and the spreads are super thin on deals from the MLS. So with that, you have to make literally hundreds and hundreds of offers to find that sweet one. To do that, you must have systems in place to handle both the offer process and the follow up. I due always recommend direct marketing and I also recommend driving for dollars (you actually tackle to items in one with this – learn your market and find potential leads). I am a big proponent of casting a wide net when you have to and this market is almost demanding you do. While doing so, you are less focused on one thing which can lead to some tire spinning so be careful, but, with enough persistence, systems in place, and dedication, you can make it happen.
    Tanner Gish from Whittier, California
    Replied over 4 years ago
    Thanks Will! It’s… encouraging (?) to know that even the “BP Heroes” admit that deals in Southern California really are that tough (all our brothers and sisters in the mid-west, where you can find deals on the MLS and HUD… buy those now! It’s such a convenience to be able to cash flow on almost anything you could buy!). I’ve done postcard direct mail, with no returns. After listening to Bre Schmidt this week, though, I think I need to contact that guy who organized her letter campaign- those response rates seem out of this world! Thanks Will- best of luck finding the smaller deals too! -Tanner
    Phillip Y. from Birmingham, Alabama
    Replied almost 4 years ago
    Just listened to the podcast, good stuff Will! Thanks for taking the time to share some of your tips.
    Sunny Shakhawala from Parsippany, New Jersey
    Replied over 2 years ago
    Hey Will, Just listened to your podcast episode. I wish there was time to dig into point 7: Doing things in order. Are there any resources you can recommend that outline the order of operations for a “gut” rehab? -Sunny