Make Your Money On The Buy And Not The Sale — As the price you pay for a property decreases your probability of selling the property for a profit increases. Therefore, you need to be buying properties as cheaply as possible. Paying too little for a property is never the problem. So, pay as little as possible. Much of the money you make on the home is made during the acquisition of the property. Pass on properties selling at too high of a price.
Shows like Flip or Flop and Fixer Upper with Chip and Joanna Gaines have really glamorized the creativity and enjoyment that comes with buying a rundown home, fixing it, and then selling it for a profit. Some amateurs have ventured into this industry and have made a lucrative career out of it. But others, particularly when a market is stagnant, have lost their shirts. As a part of my series about the ‘5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties’, I had the pleasure of interviewing Chuck Vander Stelt.
Chuck Vander Stelt is Chicagoland area real estate agent and founder of Quadwalls.com, a real estate website dedicated to helping homebuyers and sellers save money and make better decisions when buying and selling homes. Chuck’s has experience helping rehab-to-sell clients start and maintain a profitable business. Chuck has helped numerous investors successfully navigate buying, rehabbing, and selling homes for a profit.
Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?
As cliché as it sounds, my story is that of the classic disruptor. I decided to get involved in the real estate industry after hiring a real estate agent to sell my home. I followed advice on how to find a good real estate agent including interviewing multiple agents. I watched as the agent I hired did a terrible job selling my home, and I overpaid for the service. As an experienced salesperson I decided there needs to be a better and more affordable way for people to sell their homes. Nearly four years later I have been involved in over 200 transactions and continue to build out a website to help people svae money and make better real estate decisions.
Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take away you took out of that story?
I picked out a house for a family who saw it in-person for the first time just 25 minutes before closing. A family was leaving active military service in Colorado and moving to Indiana. The buyers found me online and asked me to help. I got to work finding a home to meet their needs. Five weeks later mom, dad, four kids, and two dogs drove from Colorado to Indiana and met me at the home. I was terrified if they would like it. In the end, they were ecstatic and said the home was perfect. The lesson is if you stay focused on your client’s needs and goals you will land where you are supposed to land and find success.
Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?
If you want to tell someone to go to Hell, go home and sleep on it. If in the morning you still want to tell that person to go to Hell, do it. People’s emotions can get carried away when dealing with just about anything. Take the higher road and remain calm. I once was having a lot of trouble getting a hold of a loan officer for a critical and time sensitive piece of information for a VIP client of mine, so I called his boss. The loan officer’s boss cursed a blue streak, and the loan officer did the same thing an hour later. It really frustrated me as they were the one’s falling behind. I slept on it and by the next day had let it go. After all, I got the information I wanted, my client was happy, and the deal closed on time.
Are you working on any exciting new projects now? How do you think that will help people?
I am currently working on adding an instant listing, self-serve feature to my website. Essentially, home sellers will able to order up a listing of their home and fill in much of the information themselves. This will help home sellers including rehab-to-sell clients to more easily and quickly have their homes listed for sale and on the market. Additionally, this should reduce our costs giving us another opportunity to lower the fee charged to clients.
What do you think makes your company stand out? Can you share a story?
My company’s content strategy is focused on answering real estate consumers’ questions. This remains true for rehab-to-sell clients, too. I recently had a large spike in rehab-to-sell clients who do not live within 50 miles of where I work. These customers are learning from the deep-dive content and sales statistics I have been providing at a hyper-local level. Recently, a new rehab-to-sell client who has had fantastic success in the west and south Chicago suburbs contacted me about getting started in the Northwest Indiana region. Additionally, my real estate commission fee model is attracting home sellers who are hoping to save money when they seller their home. I am now regularly being contacted by prospective home sellers for more information about my fees.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?
My answer to this is a lot less personal than most people would probably say, but it’s the truth. I wish I would have met the web developers I use even sooner. They are the most brilliant group of people with whom I have ever worked. At the end of the day, you have to find people who want you to win and support your dream. When your small and in the early stages of your business you need must have committed, supportive people and vendors around you.
You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?
Tenacity — To me tenacity is a combination of persistence, determination, and grit. It’s easy to give up, sit back, and let someone else do it because of a dislike for rejection, failure, and uncertainty. I remember when I would cold call for sale by owners (FSBOs) to list their home for sale with me. I had terrible results until I discovered how to give them something they valued. I went from 95% of people saying “not interested” to 65% of FSBOs taking the first step in my conversion funnel and staying on the phone with me so I could work them. One FSBO once said to me, “Keep doing what you are doing. I have had over 20 agents call me and not one of them has a pitch like that.” That FSBO signed up for the first step in the funnel.
Comfortable With Loneliness –Being comfortable being alone has helped me be successful. Entrepreneurship can be a lonely business. No one ever talks about this, but it is true. When starting a business, especially one with no employees, it might shock you how often you are alone. The time it takes to get everything done can cause you to miss out on social activities, too. There was a time when I ate frozen pizzas for dinner probably five or six nights a week. Standing in the freezer aisle at Target at about eight or nine at night was a ritual for me. I picked the pizza based on how the day went. A good day, something more premium. A bad day, something cheap. It’s lonely knowing your dinner plans for most nights are with a freezer aisle. I would go home, eat alone, and try to get another hour or two in on the laptop writing content. Being comfortable on my own and alone has been helpful to my success.
Untamed Curiosity– I read a lot. Long articles, short articles, newsletters, message boards, books. All kinds of things. Marketing, advertising, behavioral psychology, consumer behavior, competitor press releases or investor reports. And I watch plenty of things and talk to way too many people for way too long. I cannot shut it off. But it is amazing how being naturally curious and interested in learning bits of other things has helped with my success. Many things occurring in other industries can be applicable in your own industry. I refuse to be tethered, I guess.
Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.
I like the rapid evolution occurring in real estate technology. I predict soon some great technologies specifically designed to make selling a home easier will come online. Real estate technology has been too focused on just two areas. These are websites generating traffic in order to steer leads to real estate agents and I-buyer programs. Neither of these is that beneficial to consumers. I do believe some more “direct to consumer by way of your agent” tools will come online. That is the space which will have success, and I think some tech upstarts know this, too.
The evolution of home construction and community development is always exciting. I work in the Midwest which is overdue for a change in what new home builders are building. I look forward to developers and builders building new communities and neighborhoods. New home designs can really do a lot to stimulate local real estate markets. I believe there will be a lot of new home construction in the next five years.
I am excited by the options many consumers have in the current housing market. Home prices are up, and inventory is tight. However, this creates opportunity and motivation for current homeowners to sell. This will stimulate more homes to be built and overall get the market moving again. The prices will likely stay high so current owners have an ability to sell and make that trade-up to the next home.
Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.
New construction homes cost too much money. Many builders in many areas including the Midwest cannot profitably build a three-bedroom, two-bathroom, 1,700 square foot home with a two-car attached garage on a quarter-acre lot sold for under $240,000. This is just too expensive for many first-time homebuyers. Local and state governments where there are too few homes should be approaching builders directly and asking why they can do to help alleviate the costs of building a home. Providing long-term support and better cooperation for homebuilders would be a net win for many communities.
Too often it feels like state real estate commissions and real estate associations are more interested in protecting the professions and incomes of real estate agents than creating an environment which allows new options for consumers to be established and grow. I think some loosening of rules and regulations would be a good thing for the industry. I completely understand wanting to weed-out bad actors and negligent practices. I think the industry can be more self-regulated because consumers are more informed than ever. Basically, consumers have a better BS detector than they did years ago.
Real estate runs a pretty high risk of becoming monopolized by a few major internet-based entities. This has been the case with so many industries. However, this can risk is easily extinguished if real estate agents and real estate brokerages knew how to more effectively utilize the internet and websites to locally grow their brand. More real estate agents and brokerage companies should work hard to better understand how to build out their digital footprint to attract customers. Online really is the great equalizer. Still, somehow in the 2020s many smaller firms still do not understand how to have an effective digital footprint.
What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?
Real estate leaders should only be working with real estate agents who share similar goals and vision as the team leader or company. Nearly all real estate agents are independent contractors. Therefore, team leaders or brokerage companies are very limited in what they can ask of their agents. So, in order to meet your goals, you need to find people with similar goals who will on their own accord and freewill do what you want them to do. Real estate leaders who try to defy this advice have done nothing but lit the fuse of disappointment, and it is a matter of time before leadership gets disenchanted with the agent or vice versa. Real estate leaders and brokerages should be more selective about who they bring on to a team or add to a brokerage.
Ok, wonderful. Here is the main question of our interview. Can you please share with our readers your “5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties”? If you can, please give a story or an example for each?
1. Make Your Money On The Buy And Not The Sale
As the price you pay for a property decreases your probability of selling the property for a profit increases. Therefore, you need to be buying properties as cheaply as possible. Paying too little for a property is never the problem. So, pay as little as possible. Much of the money you make on the home is made during the acquisition of the property. Pass on properties selling at too high of a price.
I helped a person find, rehab, and sell his first rehab-to-sell property. It was only $26,000. Everything was shot, but I had seen much worse homes. Livable homes with a similar size and features in this city were selling for a low of about $110,000. At $26,000 my client’s worst-case scenario was to make a small profit. Instead, he ended up making a big one. The best method to increase your chances of profitably rehabbing and selling a home is to buy the property at an incredibly low price.
2. Add Float To Your Time And Rehab Cost Budgets
Inexperienced people entering the rehab-to-sell space frequently underestimate the total cost of and time needed to rehab a home. Therefore, I encourage newer participants to add 35% to both their rehab cost budget and the time it will take to complete the project. I call this added margin float. Other might refer to it as a cushion. As my rehab-to-sell clients gain experience this margin can usually be reduced to between 10% and 20%.
I once had a client who had bought a home to rehab-to-sell. The roof was a 50/50 whether a buyer would want it replaced. I had him add in the cost of the roof replacement in the case it needed to be done. The home was rehabbed, listed, and a buyer was found. Upon the buyer completing the inspection, the roof was determined to be in bad shape. The seller had this budgeted in, so it was not the end of the world, or his profit. The roof was replaced, the home was sold, and my seller still made a good profit on the property. Adding a margin of error for unexpected events or incorrectly estimating your time and costs greatly increases your potential to start operating a profitable rehab-to-sell business immediately.
3. Start At The Shallow End Of The Pool
Early on I encourage rehab-to-sell clients to find and buy homes only needing surface level updates. This is a home which is usually livable, but it has not seen any updates in the last 30 to 50 years. These homes are out there. These are easier to find when there is less buyers than active sellers. However, these make for a great start into the rehab-to-sell business. The after-rehab value of these homes is likely to be a lower percentage compared to homes needing a full rehab. But these projects are more manageable since they often require less work and time to complete.
In early 2021 I had a client completing his first rehab-to-sell. It was garden level condo which had not seen any updates since it was built in 1981. The client paid $109,000 to acquire the property. The job list included the full remodel of two small bathrooms, the kitchen, new interior paint job, and installed new matching floors across all 1,300 square feet of floor space. This rehab cost $16,000 with contractors doing most of the work. My client sold for $160,000. After ordinary transaction costs my seller was left with a $28,000 profit. Not too bad for a light flip with no surprises and just managing the project.
4. Interior Features That Sell
Rehab-to-sell clients should be buying and rehabbing homes with features which solve the most problems for the largest audience segment. Now, let’s unpack this statement a little. Families love a decent laundry room and mud room or large entry area. Families love split bedroom layouts where the kids’ bedrooms are separated from the parents’ bedroom. Fenced yards attract people with a dog. Garages are great especially in cold weather climates. Rehab-to-sell clients who buy homes with the right features and invest in improving those features will sell their homes more quickly and for more money. Location is a feature an often-overlooked feature, too. Buy homes with an attractive location and describe this in your marketing remarks. Buyers buy snap up and pay high prices for homes which solve their problems.
The home I have sold which had the most showings in the first four days had an amazing location. I started the marketing remarks by writing this about the location: “People talk about location. SMH. How about this? You could walk to Target. You could walk to Tomato Bar. Book store? Pet supplies? Lab tests? Starbucks Venti caramel, white mocha, extra ice Frappuccino, 2 shots poured over the top, whipped cream? Boom — Within walking distance! (3 Starbucks, actually).”
5. Set Your Performance Targets And Do Not Deviate From Those
Before buying any property rehab-to-sell clients should first decide what makes a project a success for them. Knowing your financial performance targets and understanding all the costs associated with a rehab-to-sell project will help you determine whether you should purchase a property.
Acquisition expenses include the purchase price, transaction costs, and lender costs if applicable. Rehab costs include materials, labor, permits, insurance, utilities, and property taxes. Lastly, there are transaction costs when selling the home including the title work, real estate agent fees, property tax credits, and possibly seller concessions to the buyer. But, what about your financial performance targets.
You buy a home for $100,000 and it takes $50,000 to rehabilitate the property. The home can now sell for $200,000 but will cost $10,000 in selling transaction fees. So, the pre-tax profit is $40,000. Is that enough to make it worth your time to start the project?
What are the most common mistakes you have seen other people make when they try their own hand at house flipping? Can you share any stories?
1. Low Quality Work
Flipped homes with low quality, sloppy work do not sell at their highest price potential. Rehab-to-sell clients who slow down to do more detailed work will get buyers to pay more and do realize a higher return on their investment. Hire skilled contractors and give attention to detail when completing your projects.
2. Ignoring Curb Appeal
Too often home flippers ignore a home’s exterior. This is a mistake which negatively affects the amount of interest the home receives from the buyer audience. Put some time and money into improving the exterior appearance of the home. Sprucing up the yard, porches, front doors, and garage doors can go a long way in attracting more buyers. The more buyers you can attract to the property will increase your probability of capturing buyers willing to pay a higher price for the property.
3. Over Pricing The Home
Inexperienced flippers frequently overprice their finished rehab-to-sell properties. For whatever reason they try to claw out a higher price from the buyer audience. This will not usually work. Avoid the need to ask for an unreasonable purchase price by completing the right due diligence when acquiring the property and using realistic time and cost budgets when assessing whether a property is worth rehabbing.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. 😊
Plastic is dumb. The other day I wanted a muffin, so I stopped at a convenience store and bought one. I know the store chain well. They make their own bakery items. The muffin was in a plastic dome. For $1.19 I bought this muffin made in a bakery less than 30 miles from where I bought it. The muffin was stored in that dome for two or three days at the most because that’s how long the store chain keeps its muffins. I bought the muffin, ate the muffin, and tossed the dome in the garbage. And now it will go in a landfill for decades. All to store one muffin for a 30-mile trip and two days of storage on a shelf.
We use this process of chemical bonding to create this nearly indestructible, non-biodegradable material and have used it to package everything. It makes no sense to me. I would like to see more people get involved in finding ways to package goods in an eco-friendlier material.
How can our readers further follow your work online?
Readers can catch up with me by visiting my website Quadwalls.com. I do post lots of content about general real estate topics which are applicable regardless of where you live. I like to answer people’s “how to…,” “what is…” questions. There are many blogs posts which will help you consumers better understand the ins and outs of buying or selling a home.
Thank you for your time, and your excellent insights! We wish you continued success.