Doing a lot of reflection this week on real estate as a whole & my approach to fix & flips. This journey has been filled with various lessons to learn along with real time experience. I jumped into real estate 1.5 years ago & started flipping mobile homes- that was a bust for various reasons.Now I'm fixing & flipping SFHs & this deal I'm FINALLY getting to the closing table has brought me to my knees. In this 1.5 year, I've LOST $27K.....& that number hit very hard. This SFH flip was in FL. The next is Texas.
#1 this # is PERSPECTIVE & SUBJECTIVE! So to ME, that's a decent amount of cash. I've reframed my thought process to "okay losing 200-ish dollars when gambling is akin to having thousands & now losing $20K+." I know it takes money to make money... However- I HATE losing. The ending of this deal has me wondering, do I KEEP going? I could list all the lessons I've learned, all of the extra fees that I NOW know will need to be added in, etc. but I won't. I know real estate isn't for the faint of heart & my skin is definitely in the game. My capital, although decreased, I still have enough to do it again & do it as RIGHT as I possibly know how to do with these expensive lessons I've learned. I didn't have a guru, I am self-taught.
My conclusion is, I'll do 1 more flip to recoup my money & build from there. This next flip has to be a win- otherwise I'll stick to what my MA is actually in.
My question to the BP community is, when you've lost BIG how do you stay in the game & motivate yourself? I want to hear a few war stories.
First and foremost thank you for posting this.. takes a lot to post on an open forum about a loss especially when you have very new to the industry. Thank you for doing that and keep it up!
1. Take this as a learning lesson! The market the last three years has been a tough one, not only in our industry (sales, flipping, wholesaling etc.) but all. I was just networking with some other people in completely different businesses and careers and they sold me basically the last three years has been very tough. 2. Stick to the game, you have learned a ton in this short time, and keep going! This gives you more info to do a big deal and make a ton more money on it! 3. Not sure if you have one, but bring in a partner/mentor to the deal make them a equity partner and do a bigger deal with them knowing they have more experience and could make sure it is a solid deal to close and win. 4. Pick on market, do not jump around from FL to TX to other places. Or even jumping around from city to city is tough too since Dallas is different than Austin and so on. Stick to a place you know. For example, I buy rentals in a city I grew up in till I was in my early 20s. That helps me know the area really well when a deal comes up I know about it and know the area really well! 5. When vetting the deals, make sure you know the numbers and review the numbers with other local professionals; contractors you are going to use, get them to actually see the deal and realtors/investors to really vet the deal making sure they are seeing what you are seeing.
The key is to learn from your mistakes and not to continue to repeat the past. Fortunately my initial projects did very well, but absolutely have had stinkers. The key is to learn and move forward. You can't change your past you can only learn from it
The key is to learn from your mistakes and not to continue to repeat the past. Fortunately my initial projects did very well, but absolutely have had stinkers. The key is to learn and move forward. You can't change your past you can only learn from it
Thanks for your reply Chris. I am surely moving forward, although hesitant, the next deal has to be a win.
Kay, losing money on a flip stings, no doubt about it, but the fact that you are still standing and looking at the next deal shows you already have the mindset of a real investor. Most people quit after a setback like that. The key is to treat this as very expensive tuition because the lessons you learned on this deal will protect your capital going forward in ways a class or book never could. If you take what you know now about fees, timing, and risk and apply it to your next project, you put yourself in position to not just recover but to build a stronger foundation. Sticking it out when it hurts the most is often what separates those who make it long term from those who never do.
Losing money on an investment is tough. I've been there myself, thinking an opportunity looked promising only to see it turn south, so I understand how you feel.
It takes a lot of courage to open up about something like this, and that vulnerability is actually a strength. You've already taken a huge step by acknowledging the problem, which will be a great asset in any future deals. The knowledge you've gained from this experience will help you avoid similar pitfalls down the road.
Keep it strong and reach out if I can help you in anything. I am local in DFW.
First and foremost thank you for posting this.. takes a lot to post on an open forum about a loss especially when you have very new to the industry. Thank you for doing that and keep it up!
1. Take this as a learning lesson! The market the last three years has been a tough one, not only in our industry (sales, flipping, wholesaling etc.) but all. I was just networking with some other people in completely different businesses and careers and they sold me basically the last three years has been very tough. 2. Stick to the game, you have learned a ton in this short time, and keep going! This gives you more info to do a big deal and make a ton more money on it! 3. Not sure if you have one, but bring in a partner/mentor to the deal make them a equity partner and do a bigger deal with them knowing they have more experience and could make sure it is a solid deal to close and win. 4. Pick on market, do not jump around from FL to TX to other places. Or even jumping around from city to city is tough too since Dallas is different than Austin and so on. Stick to a place you know. For example, I buy rentals in a city I grew up in till I was in my early 20s. That helps me know the area really well when a deal comes up I know about it and know the area really well! 5. When vetting the deals, make sure you know the numbers and review the numbers with other local professionals; contractors you are going to use, get them to actually see the deal and realtors/investors to really vet the deal making sure they are seeing what you are seeing.
Thanks Peter. I have heard that a few times about sticking to 1 market; therefore I will not be expanding outside of the Tx., FL area and surely not expanding from DFW to Austin etc..
I haven't partnered with anyone as I'm still networking and learning; hopefully soon. I've definitely come across some deals I've not been able to tackle as it was a bigger deal in general.
Moving forward in the DFW area I'll need to find an investor friendly relator who "gets it," and can be trusted boots on the ground there to help vet a deal. I already have some good contacts for GCs (from conversations), however that's to be proven once we start the actual SOW/project.
I did well (got lucky with timing) on my first 3 SFH home purchases (2015-2021).
My 4th I lost 60k on a flip in 2022 when I overpaid (MLS FOMO purchase), over-rehabbed, and panic sold. Ouch, I almost got out of REI.
Since then, Ive decided to play the LOOONG game (20+ year rentals paid off by tenants, not flipping). I've bought 3 SFR, all very light cosmetic fix ups, all in at 20-25% below ARV. They rent at cashflow zero after 25% downpayment.
I have learned:
1) don't overpay: I shoot for all in 75% ARV on light renos. I've made probably 100 offers since losing 60k on that flip. 3 have been accepted. I don't care if they don't like my offer, they can say no, I bet they haven't lost 60k before, it hurts.
2) don’t over rehab: contractors and materials cost lots these days
3) buy light cosmetic rehabs. I especially want the previous owners to have recently paid for my roof, HVAC, electrical etc, plumbing.
4) the current market is mega-rough, and IMO getting rougher. Honestly, I think I’m gonna sit the next 2-4 years out and wait for my market to start appreciating again.
5) play the long game/flipping sounds super difficult right now: I’m only buying in good B locations. I panic sold and lost 60k because I bought in the hood.
OP- Hope this helps. You sound committed and resilient, but like @Chris Seveney said, learn and move on. Best of luck.
I did well (got lucky with timing) on my first 3 SFH home purchases (2015-2021).
My 4th I lost 60k on a flip in 2022 when I overpaid (MLS FOMO purchase), over-rehabbed, and panic sold. Ouch, I almost got out of REI.
Since then, Ive decided to play the LOOONG game (20+ year rentals paid off by tenants, not flipping). I've bought 3 SFR, all very light cosmetic fix ups, all in at 20-25% below ARV. They rent at cashflow zero after 25% downpayment.
I have learned:
1) don't overpay: I shoot for all in 75% ARV on light renos. I've made probably 100 offers since losing 60k on that flip. 3 have been accepted. I don't care if they don't like my offer, they can say no, I bet they haven't lost 60k before, it hurts.
2) don’t over rehab: contractors and materials cost lots these days
3) buy light cosmetic rehabs. I especially want the previous owners to have recently paid for my roof, HVAC, electrical etc, plumbing.
4) the current market is mega-rough, and IMO getting rougher. Honestly, I think I’m gonna sit the next 2-4 years out and wait for my market to start appreciating again.
5) play the long game/flipping sounds super difficult right now: I’m only buying in good B locations. I panic sold and lost 60k because I bought in the hood.
OP- Hope this helps. You sound committed and resilient, but like @Chris Seveney said, learn and move on. Best of luck.
Hei David, I kind of relate to your story, im also panic like you but still hanging around with my property ready to lose $40K as of now, still no buyers for my fix n flip property, I'm also on hard money lending , bleeding like hell, not sure i could still bleed more, or take more loss and get out, my prop is in northrichland hills , TX, near fortworth. I feel for you , just thought of sharing this
I really appreciate you sharing this so openly — many people in real estate don’t talk about the hard lessons, and it takes courage to do so. You’ve already gained valuable experience that will serve you moving forward. One approach that can be helpful is starting with the end in mind: working backwards from a realistic worst-case sale price, then carefully layering in renovation, holding costs, contingencies, and the return you need. That gives you the maximum price you can pay for a property, and if the numbers don’t work, the best decision is often to walk away. It’s tough in the moment, but it keeps the math on your side. Profit is really earned at purchase, not at sale.
You’re clearly resilient, and I believe your next deal will reflect everything you’ve learned along the way.
I really appreciate you sharing this so openly — many people in real estate don’t talk about the hard lessons, and it takes courage to do so. You’ve already gained valuable experience that will serve you moving forward. One approach that can be helpful is starting with the end in mind: working backwards from a realistic worst-case sale price, then carefully layering in renovation, holding costs, contingencies, and the return you need. That gives you the maximum price you can pay for a property, and if the numbers don’t work, the best decision is often to walk away. It’s tough in the moment, but it keeps the math on your side. Profit is really earned at purchase, not at sale.
You’re clearly resilient, and I believe your next deal will reflect everything you’ve learned along the way.
Hi! Thanks for weighing in. That's what I've been looking at is what's the lowest ARV that I can do in order to recoup. I surely have to be careful with my renovations; it added up quickly
Thanks for replying and sharing David. $60K loss I'm sure hurt like hell! Timing seems to be everything as I've seen how that hurt my deal that just cleared my books.
I've been thinking of the long term with buying and holding. However, I need to recoup some cash first and then hold. I've been wondering if there's a way to do both at the same time; hasn't seemed possible yet.
@Kay Sam Losing money is tough. Go back and look what you could have done differently. Everyone is different and has different expertise, but the thought of trying to flip mobile homes is scary for me for a lot of different reasons. I've never looked to much at it or hear much about anyone doing this, but seems super risky to me.
I believe it. The margins I typically see are pretty thin. You have to work super fast and all your numbers have to work right with no surprises. I do see some decent deals now and then, but they are fewer and further in between than even just a few years ago.
Yes- mobile homes definitely were risky and it was only a place to start. I've definitely been running numbers more tightly and the margins aren't great!
What if you lose another $27K or more on your next flip?
I'm not saying you should stop, but you've only been doing this for 1.5 years. That's a blip in the grand scheme of things. I know flippers who do 40 houses per year and they lose money on at least a couple per year. Maybe you just got unlucky, but maybe you learned some good lessons that will make the next one better and the next one after that better too.
If it were easy and everyone made money on every deal, then there wouldn't be a need for BP. It's hard and it can be scary and you can lose money.
But you can also make tons of money and it can change your life and your family tree. That's defintiely not going to happen after 1.5 years though.
Flipping is the MOST risky way to start. I don't know any newbies who don't want to jump in to flips, everyone and their grandma wants to flip, but the risks are huge. So many other ways to slowly, steadliy make money with far less risk. You've only tried one.
What if you lose another $27K or more on your next flip?
I'm not saying you should stop, but you've only been doing this for 1.5 years. That's a blip in the grand scheme of things. I know flippers who do 40 houses per year and they lose money on at least a couple per year. Maybe you just got unlucky, but maybe you learned some good lessons that will make the next one better and the next one after that better too.
If it were easy and everyone made money on every deal, then there wouldn't be a need for BP. It's hard and it can be scary and you can lose money.
But you can also make tons of money and it can change your life and your family tree. That's defintiely not going to happen after 1.5 years though.
Flipping is the MOST risky way to start. I don't know any newbies who don't want to jump in to flips, everyone and their grandma wants to flip, but the risks are huge. So many other ways to slowly, steadliy make money with far less risk. You've only tried one.
I appreciate your reply. I definitely don't want to sit in the "what if," I lose another $27K. However, I understand your point regarding risks. I also agree with making the tons of money isn't going to happen in a short span of time.
My goal is to change the finances for my family tree and keep plucking away at things-smarter though. I'd love to invest in real estate by other avenues, such as LTR, however I wanted to stack a bit of cash before I do that. What other ways am I able to invest and bring the cash aside from LTR, STR and flipping with real estate?
I agree- flipping and real estate overall isn't easy and it's exactly why I'm here on BP.
What if you lose another $27K or more on your next flip?
I'm not saying you should stop, but you've only been doing this for 1.5 years. That's a blip in the grand scheme of things. I know flippers who do 40 houses per year and they lose money on at least a couple per year. Maybe you just got unlucky, but maybe you learned some good lessons that will make the next one better and the next one after that better too.
If it were easy and everyone made money on every deal, then there wouldn't be a need for BP. It's hard and it can be scary and you can lose money.
But you can also make tons of money and it can change your life and your family tree. That's defintiely not going to happen after 1.5 years though.
Flipping is the MOST risky way to start. I don't know any newbies who don't want to jump in to flips, everyone and their grandma wants to flip, but the risks are huge. So many other ways to slowly, steadliy make money with far less risk. You've only tried one.
I appreciate your reply. I definitely don't want to sit in the "what if," I lose another $27K. However, I understand your point regarding risks. I also agree with making the tons of money isn't going to happen in a short span of time.
My goal is to change the finances for my family tree and keep plucking away at things-smarter though. I'd love to invest in real estate by other avenues, such as LTR, however I wanted to stack a bit of cash before I do that. What other ways am I able to invest and bring the cash aside from LTR, STR and flipping with real estate?
I agree- flipping and real estate overall isn't easy and it's exactly why I'm here on BP.
Hey Kay- great attitude, it's not easy and I'm happy to see you here for some advice.
Honestly, it's not the most exciting way to do it, but house hacking is the lease risky method of investing, required the least amount of capital and has the best CoCROI. Early in anyone's investing career they should be house hacking, even if they are flipping, wholesaling or whatever else.
Hey Kay, I know the pain of losing money. I have lost around 85k twice; and both times were fairly early in my investing career. One time was with a partner that was a bad operator and the other time was with a contractor who essentially stole $85,000. Was it painful? Yes. Did I learn from it and move forward? Yes.
Here is what I have learned over 15 years from both profits and losses. And I start off by saying that this is in no way an advertisement for myself or for any services. I say that because my answer here will have some bias because I am a coach, but this post is not self-promotion. I self-promote plenty in other ways.
First, I have probably made more money with manufactured homes on land than any other asset class. So the asset class is not the problem. When you are investing in manufactured homes you need to keep a few things in mind.
1. What year is the home? It is very hard to get financing on a manufactured home pre June of 1976. So find out the year and I would generally not buy manufactured homes before that unless they are very inexpensive, it is a good rental market, the property is in decent shape, and I can create seller financing for it.
2. Does it come with the land or is it rented land? The short of it is you want to own the land with it.
3. Has it ever been moved? It is hard to get financing on a manufactured home that has been moved. Although I moved a double-wide manufactured home from a park that I bought for 25k and I moved it (for 5k) onto a piece of land I bought for 20k and had them put it back together for a few thousand dollars. Also, I had to put in a well for the unit next door that cost 40k so I was able to lower my basis for the well by splitting it between 2 properties. Our all-in was about $80,000 and we got a loan on it from a private money lender for about $50,000 that we paid 10% on and we sold it for around $195,000.
4. How is the subfloor. Sometimes the subfloor can be bad and you have to replace a lot of it and it can be expensive if you are tearing apart the majority of the inside of the manufactured home. Also, sometimes a city will stop you if you remove an outside walls to repair it and they will make you basically condemn it as uninhabitable. We had that happen once.
5. You may need to get tie-downs before you can sell it depending on the location and the type of loan.
Last month I partnered with a guy. He was the money guy and I was the operator. We got a manufactured home (1981) from a wholesaler, we cleaned it up and painted the outside and did a few fixes for a total cost of between 7k and 10k. We sold it within a few months and made 20k each. https://www.zillow.com/homedetails/2945-W-9th-Pl-Apache-Junc...
So I don't think it was the asset class. People usually lose money in real estate for just a few reasons, 1) they overestimate what it should be able to sell for, 2) they underestimate the repair costs, 3) there is something just down right undesirable about the house or area, and 4) they didn't pay attention enough to the market itself (which is where a lot of people are struggling right now).
I don't know your particular deal, but it may not have been a good deal. I don't know. But what I would suggest to you is connecting with someone, possibly someone in your area that is making money in the type of real estate that interests you. Then taking them out to lunch and present the deal you did to them and ask them for feedback in what went wrong and if they would have done the deal or done something different with the deal.
I would venture to say that right now the market is chewing up a lot of novice investors leaving room for the more savvy and experienced investors to make the money. So connect with more experienced investors improve your results.
Hey Kay, I know the pain of losing money. I have lost around 85k twice; and both times were fairly early in my investing career. One time was with a partner that was a bad operator and the other time was with a contractor who essentially stole $85,000. Was it painful? Yes. Did I learn from it and move forward? Yes.
Good luck to you.
Thanks for sharing! I would say I went wrong with #1-3 on over estimating the roi, under with the reno. and the area was horrible where I had my mobile homes. I am open to partnering with other investors or those more knowledgeable, it's that I'd prefer to be mentored and not pay for services. However, time is money which I understand that too.
Love your willingness and open-mindedness. My REI story is that I have worked multiple full-time jobs for over a decade to store up the capital to invest in REI. Most people don't wanna hear or do that, and think there's an easier way, but I feel this is the most common path. Especially going forward, as the REI returns appear to be lower in the near future than in the past 15 years.
Definitely look at house hacking, it’s a total no-brainer if you’re life situation allows for it. I love the super extreme guys who are young and not married, who buy a triplex, rent out all three units, and live in a $7k trailer in the driveway for a year. Slightly less extreme is the guy who buys a four bedroom house, rents out all four rooms (which covers his mortgage), and he sleeps in the den around the corner in the basement.
Now that’s desperation, and pair that with working twice as hard (making twice as much income) as the next guy, and I think you’re gonna be in a great place in about a decade!
Love your willingness and open-mindedness. My REI story is that I have worked multiple full-time jobs for over a decade to store up the capital to invest in REI. Most people don't wanna hear or do that, and think there's an easier way, but I feel this is the most common path. Especially going forward, as the REI returns appear to be lower in the near future than in the past 15 years.
Definitely look at house hacking, it’s a total no-brainer if you’re life situation allows for it. I love the super extreme guys who are young and not married, who buy a triplex, rent out all three units, and live in a $7k trailer in the driveway for a year. Slightly less extreme is the guy who buys a four bedroom house, rents out all four rooms (which covers his mortgage), and he sleeps in the den around the corner in the basement.
Now that’s desperation, and pair that with working twice as hard (making twice as much income) as the next guy, and I think you’re gonna be in a great place in about a decade!
I am one of the folks who thinks there's "got to be an easier way!" Nevertheless, truth is logically, I know it'll take a bit of time to get to where I need to be. The triplex and house hacking won't really work for my personal situation but hats off to those it works for.
I'm still working my FT job and doing this on the side. Thx for sharing David!
1. I failed to include interest during construction. Added it to my deal analysis format. $60k
2. Failed in my water. $150k. Had a water hydrant on property. Found out it was a private hydrant for the next door complex. Was same owner at one time. Added it in our deal analysis.
Build a checklist or deal analysis that will catch all of the big issues. If you miss landscaping for $2k it won’t kill you.
Don't just do fix flip. Look for unfair advantages. 1. Personal life, 2. Worst house in a great neighborhood., 3. ADU say a 3/1 into a 3/2., 4. LT capital gain tax rate., 5. $250k gain exclusion, etc.
1.5 years in, losing $27K, and feeling like you’re back at square one hits hard. The fact that you’re reflecting and planning your next move already puts you ahead of a lot of people.
One thing I’ve seen with flips, especially when self-taught, is that having a solid financing strategy upfront can save you thousands in surprises.
This includes DSCR or private lending options, proper contingency planning, and realistic rehab budgets.
Also, thinking of losses as tuition for building your real estate education helps keep perspective.
My advice is to take everything you’ve learned, plan your next flip meticulously, and consider running the numbers with a lender or advisor before committing capital.
That way, your next deal is set up to be a win, not just a recovery.
I would love to hear more about your Texas deal. What is your strategy this time to avoid the pitfalls from the Florida flip?
Doing a lot of reflection this week on real estate as a whole & my approach to fix & flips. This journey has been filled with various lessons to learn along with real time experience. I jumped into real estate 1.5 years ago & started flipping mobile homes- that was a bust for various reasons.Now I'm fixing & flipping SFHs & this deal I'm FINALLY getting to the closing table has brought me to my knees. In this 1.5 year, I've LOST $27K.....& that number hit very hard. This SFH flip was in FL. The next is Texas.
#1 this # is PERSPECTIVE & SUBJECTIVE! So to ME, that's a decent amount of cash. I've reframed my thought process to "okay losing 200-ish dollars when gambling is akin to having thousands & now losing $20K+." I know it takes money to make money... However- I HATE losing. The ending of this deal has me wondering, do I KEEP going? I could list all the lessons I've learned, all of the extra fees that I NOW know will need to be added in, etc. but I won't. I know real estate isn't for the faint of heart & my skin is definitely in the game. My capital, although decreased, I still have enough to do it again & do it as RIGHT as I possibly know how to do with these expensive lessons I've learned. I didn't have a guru, I am self-taught.
My conclusion is, I'll do 1 more flip to recoup my money & build from there. This next flip has to be a win- otherwise I'll stick to what my MA is actually in.
My question to the BP community is, when you've lost BIG how do you stay in the game & motivate yourself? I want to hear a few war stories.
TIA
My question is self serving, so please be aware :-)
Would you have benefitted from being trained first? Someone to take you "one on one" through the entire process? Several real estate agents on Bigger Pockets vehemently say that "training isn't necessary" forgetting they went through training. What are your thoughts?
Attn: Full disclosure, I am a trainer, so big deal. But, if it helps others avoid this kind of problem and the fallout it causes . . . There are various trainers out there besides myself.
Oh man I don't even know if you will see my reply with the amount of action this post has but losses hit harder when you’re bootstrapping your way in and learning by doing. I’ve taken my own hits, and what kept me going was realizing the loss wasn’t a sign to quit, but a sign to change my tactics. Once I shifted strategies, tightened my underwriting, and focused on deals that actually fit my strengths, things turned around.
Your experience isn’t unusual. Most investors who’ve been at it long enough have a “that deal almost broke me” story. The key is taking the expensive lessons and turning them into rules you never break again.
If you’ve still got the capital, the energy, and a smarter plan for the next one, you’re not gambling, you’re adjusting. And if that next flip isn’t the right fit, there are plenty of other paths in real estate where you can still win without the same level of risk.
I have lost money, once. Id say most of the time it comes to overpaying when purchasing the property. If you are competent at estimating rehab costs then the only problems should be surprises. Ive been able to keep those to a minimum. Estimate your rehab costs with a cushion and dont overpay, dont overpay, dont overpay. This will mean you will do less deals and have to wait for the right deal. Thats what I do, only a few a year at most. I pass up on a lot of deals. Good Luck!
