Be willing to make sacrifices. “If you always do what you always did, you’ll always get what you always got.” — Henry Ford. A lot of people come to real estate because they are seeking financial and time freedom. They are looking for a way to secure their financial future and seek the lifestyle that they’ve always wanted. But, if it’s that easy, everyone would be doing it, right? Well, I never said it was easy. But, is it worthwhile? Absolutely. As with many worthwhile efforts, sacrifices must be made. What are you willing to sacrifice in order to achieve your goals? Here are the top three things I feel you must be willing to give up (temporarily!) while pursuing wealth through real estate:
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 Anne Laurenzi.
Anne Laurenzi is a real estate investor and owner of Take Flight Home Buyers in Northwest Florida and author of the Roller Coaster Real Estate blog. She lives in Milton, FL with her husband and business partner, Mike Laurenzi.
Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?
Thank you for the invitation! I got interested in real estate after my husband, Mike, started investing about three years ago. The purchase of his first fixer-upper contributed to my obsession with all of the flipping shows on HGTV. There is just something so fun about taking an old house, stripping it to the bones, and letting your creativity make it into something wonderful. When Mike started this venture, I was working as a science teacher and thought investing was a great way for us to create a more secure retirement. There is only so much savings that can take place on a teacher’s salary, after all. The fact that teaching became much more complicated due to the COVID-19 pandemic also helped give me the push I needed to get started. It is really scary giving up a career that I was so confident and comfortable with for something that was completely new. But, it was the right call for us.
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?
Haha yes! There is an amusing one that immediately comes to mind: I once wooed a homeowner with a beauty product. 😀
A very charismatic, lovely homeowner called us about selling her home. After a couple of lengthy phone calls, we found that we really connected with her and were looking forward to meeting her in person. While conducting a walk through of her house, she mentioned that she had a difficult time finding her favorite wax facial hair remover in the local stores (it’s funny where conversations go sometimes!). I noted her comment, found it on Amazon, and had it sent to her a few days later. She was so appreciative! I think the lesson here is how powerful building rapport and trust is in business. That, and really listening to others! I loved how she felt comfortable enough with us to share something that would probably embarrass most people. Sometimes going above and beyond really pays off and, even if we don’t get the deal, I helped an awesome lady feel her best. After all, one of the keys to success in real estate is about building relationships!
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?
There are a lot of variations of this quote, but I heard it when I first began my teaching career: “Students may not remember everything you taught them, but they will always remember how you made them feel.” I always keep this sentiment at the forefront of my mind when dealing with, well, anyone! I have found it to often be true in my life and I imagine many others do, too.
Are you working on any exciting new projects now? How do you think that will help people?
Yes! Well, it’s not exactly a new project, but one that has been a long time in the making. Mike purchased the perfect house — our first investment property — a few years ago that needed a full rehab. After using it as a “hobby house” to learn how to do renovations, we recently hired a general contractor to complete the project and are getting it ready to be marketed as a military or student rental. There are a couple of military bases and colleges here in Northwest Florida and our plan is to rent it by the room and include utilities, lawn care, and more flexible lease options. This will not only maximize the rental income, but allow for affordable and convenient housing for military members and students in our area.
What do you think makes your company stand out? Can you share a story?
Credibility in a very competitive real estate market such as ours is critical. I feel that my previous career as a teacher and my husband’s current career as a helicopter pilot both lend to our trustworthiness and tends to put people at ease. That, and the fact that we are local. Not knocking it, but virtual real estate investing has become popular in recent years. While many of these companies are legit, I feel that most homeowners prefer working with a local investor versus someone they haven’t met and that may live across the country. After all, a house is often one of the biggest investments people make and deciding with whom to do business is an important decision. Even though she had already received a great cash offer on her house from a national home buying chain, one seller contacted us after visiting our website and seeing that we were real, local people. The fact that she was able to learn about us online and then meet us face-to-face made a huge difference to her and got us the deal!
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?
We took the advice of experienced real estate professionals everywhere and tapped into our local resources. Perhaps the most influential one is our local real estate investing group the Professional Investors Guild run by Matt Robinson, founder. Through the mentorship provided in this group, our business got off to a great start and we learned a lot about the basics of real estate investing. We also gained insight about our local market and began networking right away with other real estate professionals in our area. Being able to learn from successful local investors that are doing what we want to do has been invaluable in getting us started. If you are new to investing, I highly recommend seeking out a similar organization in your area.
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?
Intrinsic motivation: It’s easy to get caught up in a new and exciting venture, only to have that momentum start to fizzle after the real work begins. There are some days when you just struggle to do what you have to do and everything feels like a chore. Those are the days when you have to dig deep, remember your “why,” and get up and get going. Everyday you have a choice to hold yourself accountable and take action or fall back into old habits that weren’t serving you. When you are running your own business, your fate is in your hands!
Resilience: When a deal falls through or someone says they are not interested in a not-so-nice way, you must learn to say “next please!” To be successful in business, you can’t take things personally and allow it to hold you back from moving forward to find the next deal. Every business owner has setbacks. It’s what you do after the setback that determines your success or failure.
Flexibility: Learning to ride the ebbs and flows of business is really important. As we discuss in our Roller Coaster Real Estate blog, there are definitely ups and downs in real estate and being prepared to handle them makes the journey easier. If your marketing isn’t getting results, change it! If you need a system that will help your business run more smoothly, find it! If a project is not going as you planned, make a new plan! When running your own business, YOU are in charge. That can be simultaneously overwhelming and empowering. Remaining flexible and being able to adapt to new challenges and circumstances is an important quality for a successful business owner.
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.
Financial security: Real estate has been proven to be one of the safest methods of investing. That’s because you are acquiring a tangible asset in exchange for your hard-earned dollars. And unlike most other purchases, real estate tends to increase in value over the long term. Real estate investing gives you the ability to escape the rat race and pursue financial freedom — and it doesn’t require any formal education to learn the skills needed to be successful! Leaving the security of a W-2 job can be scary. As a teacher, I worked many, many hours for little pay and didn’t have a lot to look forward to in terms of a comfortable retirement. Now, I can potentially earn the equivalent of an entire year’s salary with one well-executed deal and invest in properties that will give me a return for years to come.
Helping others: What I loved most about teaching was the opportunity to do good for my community by making a difference in the lives of my students. Through real estate, I still have the opportunity to positively impact my community. Many of the homeowners that contact us are being weighed down by a heavy real estate burden. Being able to provide them with an easy way to sell their property and get the cash they need is very rewarding. Seeing how genuinely relieved and thankful they are that we were able to turn a negative, stressful situation into something positive is a great feeling. It’s also motivation to go out and find the next person to help.
Options: There are multiple ways to generate wealth in real estate. Ultimately, I think the goal for many investors is to create passive income through a rental portfolio. This is not an option right out of the gate for the majority of people, so while building that portfolio, significant income can be generated through flipping houses, wholesaling, and even getting your real estate license and working as a realtor. These options also correspond with what level of risk you are willing to take. For example, flipping a house carries greater inherent risk since funding a rehab requires a significant amount of money up front whereas wholesaling is virtually risk-free since you are simply the middle person that is assigning the purchase agreement to another investor in exchange for a fee. Buy and hold investments (rentals) are somewhere in between, with much of the risk mitigated by an insurance policy and a trusted property manager. There really is something for everyone who wants to get started in real estate investing.
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.
This is a great question. I can easily answer the first part by sharing my concerns, but I will readily admit I do not have the knowledge or expertise in the workings of the broader economy to come up with anything close to solutions. It is much easier to identify problems than come up with solutions, right? Here are my top three concerns:
Dependence on other industries: It is very difficult for me as an individual to depend on others, especially when it comes to the quality of my work and financial security. In real estate, especially when flipping houses, you are dependent on not only the work ethic of the contractors you hire, but also the availability of building supplies, which can stretch across a number of industries. For example, we acquired a quadplex at the end of 2020 that has a lot of deferred maintenance that we are catching up on. We also have another rehab underway on a single-family home that we are making into a rental. It has been a very frustrating and time-consuming effort to find quality contractors for the work we need completed. Contractors in our area are in high demand due to a hurricane last fall and the number of new builds to accommodate the fast-growing population. An abundance of available work means they can be very selective in choosing which jobs to take on. So, if I receive a bid of 3,500 dollars to replace a wobbly staircase and a more desirable 20,000 dollars job comes along the next day, I wind up being ghosted and am, again, on the hunt for a contractor that can help. In addition, a natural disaster, such as a hurricane, can cause supply problems many months later across multiple industries. Difficulties in obtaining supplies cause delays and higher prices. Currently, the price of lumber is outrageous, which is causing us to have to reevaluate our timeline on some carpentry projects. Windows are also significantly more expensive and there are multiple month ordering delays in some cases. And, as is standard in the months post-hurricane, roofers are also difficult to schedule due to all the repairs needed. For our rental properties, these increased costs and delays can be financially taxing and difficult to manage — especially if a unit sits vacant until repairs are made. However, flipping a house is much more time-dependent and trying to operate under these circumstances can be catastrophic. The increased cost of building supplies can be accounted for when considering the purchase of a property to flip, however the supply issues are out of the control of the investor and accumulating holding costs while having to wait weeks or months for new windows or a roof can be the difference between making a profit or losing big money.
Changing mortgage and insurance requirements: In the same vein as my previous point, the insurance and banking industries also significantly impact real estate. The more stringent the insurance requirements or higher interest rates on conventional mortgages, the less people can qualify and the smaller your buyer pool. If you just spent the previous two months working on a rehab, the last thing you want to hear after working with a potential buyer for a couple of weeks is that the property failed inspection and the bank won’t approve the loan. Let’s take roofs, for example. In Florida, you can acquire a house with a roof that is in great shape — no leaks, no repairs needed. However, if you are flipping a house and fail to replace this perfectly sound roof and it happens to be around 15 years old or older, a buyer that is using a conventional mortgage will likely not be approved due to the age of the roof. An oversight like this can put a 15,000 dollars damper on your profit margin, which is significant for most average flips. Time is of the essence when flipping houses and the longer it takes to sell, the more holding costs eat into your profit. It is important to keep a pulse on insurance requirements so you don’t inadvertently shrink your buyer pool and slow the sale of your newly renovated house.
Overleveraging: Most investors leverage other people’s money (i.e. bank loans, seller financing) as they grow their rental portfolio. When you find a great deal, it’s easy to get caught up in the excitement of the purchase and make rash decisions that may come back to haunt you, especially if you are using other people’s money to finance the purchase. Take the time necessary to do your due diligence; know all of the expenses associated with the property and how they will affect your bottom line. Just because the rental income can generate enough cashflow to cover the mortgage payment each month is not enough to qualify the purchase as a “good deal.” Some of that income must also be put aside to cover property vacancies or if a tenant stops paying rent and needs to be evicted. Not to mention capital expenditures, such as when a tenant calls and says that their air conditioner is out and the unit needs an unexpected repair or (gulp!) replacement. A landlord that is not watching these numbers closely can easily become overextended and may be forced to sell their properties or even face foreclosure. Creating enough of a buffer to withstand unforeseen circumstances, like we have seen during the COVID-19 pandemic with eviction moratoriums, is critical.
What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?
I recently read that people don’t leave jobs, they leave managers. I can’t remember the source, but the message stuck with me because I have seen it in my own career experiences. Leaders set the tone for the business in which they lead. Inspiring individuals to do and be their best is a privilege and is, in my opinion, the limiting factor for growth and success of the company as a whole. Think about what an ideal work culture looks like and then strive to achieve that every. single. day. Take responsibility for the satisfaction and overall happiness of those in your charge. Listen to your teams, ask for their input, and consider their individual perspectives on all issues. And, really, if these things aren’t already taking place, ask why not? By creating an environment where the free exchange of ideas is the norm and where each team member feels valued and respected, increased productivity and profit will follow.
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. Don’t believe everything you see on tv! If you get lost in the rabbit hole of HGTV flipping shows, be aware that real life real estate investing is far more complicated. For starters, what you don’t see is all of the work involved with first finding and acquiring the properties. It is almost never as simple as having the highest bid at a real estate auction. To find off-market properties, those that are not listed on the Multiple Listing Service (MLS), it takes a lot of marketing, meetings with sellers, and turned down offers before a true deal is found.
Also, once a property of interest is found, the tv flipper picks up the phone and dials a contractor who is seemingly waiting by the phone. The contractor drops everything to meet the flipper and walk through a property, where they give an on-the-spot estimate for the cost of repairs. This is simply not reality for most investors and time is critical when making an offer. One of the skills a flipper needs to develop is estimating the cost of repairs on their own so they don’t miss the chance to make an offer on a great property.
Once the property has been acquired, now it’s time for the rehab to begin. On tv, the flipper has a dedicated team of contractors ready to get to work immediately. Again, for the vast majority of flippers — especially those just starting out — this is not reality. Yes, over time, experienced flippers will usually form a rehab team, or at least a list of contractors they regularly work with. This team is very important, but unless you have a major enterprise in place and are flipping multiple houses a month, you simply cannot support a team of contractors that are exclusive to your business. In between your flips, they will be taking other jobs as they come along and you are at the mercy of their schedule. For this reason, it’s advisable to have multiple contractors for each component of your project on your go-to list so that you have a better chance of getting your project completed in a timely manner. In our experience, establishing this list has been very (very) difficult and often an exercise in frustration. However, and this cannot be stressed enough, finding quality contractors is absolutely worth it. Once you assemble your go-to team, treat them like the gems they are because your business can’t survive without them!
Finally, during the rehabs taking place in tv land, they often discover a major repair issue, complete with dramatic music and an abrupt commercial break. And while this truly may be a very costly repair, the tv flipper still winds up with a profitable deal in the end. The truth of the matter is, an unexpected major repair can break a new flipper’s budget. An unexpected 20,000 dollars foundation or other structural repair can stop a rehab in its tracks while the flipper locates additional financing (and fast!) or makes a severe dent in the profit from the sale of the completed rehab. Additionally, this repair may require bringing on an engineer or other specialty contractor, which can cause major delays and, of course, added expense.
2. Know your numbers. “… and after it was rehabbed, I sold the house for 330,000 dollars!” Well … that’s great! Or is it? The only way to know if this was truly a successful flip is to know the purchase price, how much the rehab cost, and how much was spent on holding costs; your “all in” number. All of these numbers are important, but perhaps the most important one is the purchase price. The investor has the most control over this number and they must know what the maximum is they can offer on a property for the deal to remain profitable. It’s true that repair and holding costs will vary depending on the vendors and location, but there is not as much negotiating power with these costs as there is in the purchase price. Negotiation is a skill — and a critical one for an investor.
Side note: Keep your emotions in check when considering a property purchase. A lot of time and effort goes into finding a house that meets your requirements. Once you find it, you REALLY want to make the deal work. But, as painful as it is sometimes, you must focus on the reality of the numbers and be able to walk away if they just don’t work. Math is not everyone’s favorite subject, but it can save you a lot of heartache if you learn how to analyze the project and look at the deal objectively before making a poor investment and watch your life savings go down the drain.
3. Plan for the unexpected. “It’s going to cost 8,500 dollars to fix this structural issue?!” Ouch. Yeah, this is actually something we are going through with our quadplex right now. Before purchasing the property, we did a careful inspection and accounted for a number of items that needed repair. One area of concern is wood rot/possible termite damage on a wooden beam that runs along the ceiling in the carport, directly underneath one of the apartment units. Once we consulted with contractors, we learned that this beam is structural and will require an engineering plan to submit with the permit. Additionally, with skyrocketing lumber prices, this particular beam is going to cost us — big time.
Another item high on the priority list is to finish the exterior paint job that the previous landlord started. A lot of sanding and scraping has been done to remove the old paint from the wood siding, which has been sitting exposed to the Florida rain and humidity for months. Well, while we were still reeling from the cost of the structural issue, we found out that it is lead paint. This adds an entirely new layer of expenditure due to the precautions that are required for proper removal and disposal of lead paint. Double ouch.
Fortunately, we built a buffer into our repair budget for these types of unexpected surprises. We also purchased the property at a price to account for the expected repairs. These bits of planning made it much easier to recover from these unexpected costs. But, if this property had been purchased as a flip versus a cash flowing rental, this scenario could have cost us the majority, if not all of, our profit. Know anyone that likes to work for free? Us, neither! As I said earlier, being able to estimate repair costs is a skill that a flipper needs to develop. It does take practice and you will improve with experience, but until you are secure in your skills, give yourself a larger margin for error in your estimate.
Also, be aware that unexpected repair expenses aren’t the only thing that will affect your bottom line. Another major consideration is time — how long will it take before the rehab is started? How long for the rehab to be completed? After the rehab is completed, how long will it take for the house to sell? The longer you are in possession of the house you are rehabbing, the less profit you will make. If your contracting team isn’t in place and you can’t find anyone to even begin the project for four weeks, you will need to budget for more holding costs. And those unexpected repairs that are needed? Those not only extend the rehab time (and you better hope your contractors have the extra time available to see the job through!), but may also require supplies to be ordered and delivered, which can easily add weeks, if not months. Supply chains get disrupted. Delays happen. There are some things you just can’t control, however you CAN do your best to plan for them.
4. Always have multiple exit strategies. One of the great things about real estate is that there are multiple ways to make money. Before you purchase an investment property, know how you plan to profit from that property (your “exit strategy”). Will you keep the property as a long term rental? A short term rental (ex. Airbnb)? Rehab the property and sell (flip)? Sell your right to purchase the property to another investor for a fee (wholesaling)? Depending on your plan for the property, the numbers change. Just because it may not work out as a profitable flip, doesn’t mean it couldn’t be a great rental. If you are open to using different exit strategies, you can still make many deals work. Understanding how the numbers vary for each of these exit strategies is important in determining not only how much you will sell the property or contract for, but what the upper limit is that you can spend on the purchase in order to still make a profit. You are in business, after all, and ultimately making money is the goal. Right?
5. Be willing to make sacrifices. “If you always do what you always did, you’ll always get what you always got.” — Henry Ford. A lot of people come to real estate because they are seeking financial and time freedom. They are looking for a way to secure their financial future and seek the lifestyle that they’ve always wanted. But, if it’s that easy, everyone would be doing it, right? Well, I never said it was easy. But, is it worthwhile? Absolutely. As with many worthwhile efforts, sacrifices must be made. What are you willing to sacrifice in order to achieve your goals? Here are the top three things I feel you must be willing to give up (temporarily!) while pursuing wealth through real estate:
Time. Most people that get started in real estate do so while they continue working a W-2 job. They also often have families to support and care for. Between work responsibilities and a personal life, the grind can be exhausting week in and week out. Sound familiar? So, to carve out even MORE time to get started in real estate takes discipline, determination, and a very strong “why.” Remembering the reasons why you got started will make those late nights watching real estate videos and weekends spent cleaning out trash from old houses a little easier. Next time you are on your lunch break, why not listen to a podcast for 30 minutes? No, you can’t make more time (if only!), but I bet you can creatively manage what time you do have a little better. I know I can!
Money. Depending on the route you take, having at least some money to begin marketing or use as a down payment on a house is absolutely helpful, but not essential. And make no mistake — business is not for the faint of heart! It can be uncomfortable seeing money going out at the beginning and not getting an immediate return. No matter the size of your budget, you should be prepared to sustain your efforts for at least 4–6 months as you grow your business before you assess the effectiveness of your marketing strategy. Most of us aren’t used to working for free, but it is something you have to be willing (and able) to do as you get started.
Comfort. In addition to the discomfort of reallocating your free time and spare cash to your real estate venture, you must also be willing to step out of your comfort zone when dealing with people. For many, this is not a big issue. Also for many, this IS a big issue! The extroverts among us typically have an easier time networking, knocking on doors, and making cold calls. For the more introverted, just the thought of knocking on someone’s door to see if they would like to sell their house is about as uncomfortable as it gets! I fall into the latter category, so I can relate. However, just because you may be hesitant, doesn’t mean you can’t become more comfortable with time and practice. At least for me, once I start, it is almost never as bad as I think it is going to be. So, don’t let your mind talk you out of doing what it takes to pursue your goals! Instead, be willing to expand your skill set when it comes to dealing with people. You have nothing to lose and everything to gain.
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?
There are two that immediately come to mind: improperly assessing a property’s After Repair Value (ARV) and under budgeting a rehab project. Since I already went into detail about being prepared for unexpected costs associated with a renovation, let’s discuss the importance of calculating the ARV.
After Repair Value (ARV). After a couple of months of marketing, you find a property that needs some upgrades and repairs and a seller that is motivated to sell. Great … now what? Well, this is where knowing your numbers comes in. As discussed earlier, an investor must become skilled in purchasing a property at a price that will generate a profit. To know what to offer for a property, they need to be proficient at figuring out what this property will be worth after the renovation is completed. This is known as the After Repair Value (ARV). Basically, the entire flipping process is centered around this number — from the purchase of the distressed property to the sale after renovation. But, how do you determine the sales price? This is where having a real estate agent as part of your team is very helpful. They are knowledgeable in your local market and they have access to the Multiple Listing Service (MLS), which allows them to see all the sales information for houses in a particular area. By understanding what comparable homes (“comps”) to the one you are selling have recently sold for, an appropriate sales price can be formulated. If you are just getting started and don’t have a realtor as part of your team yet, you can also use the information provided through public records and websites such as Zillow.com or Realtor.com to help give you a ballpark ARV. Overestimating the ARV can be a rather costly mistake. Based on this inflated number, you may wind up paying too much at the time of purchase or be stuck without a buyer once the house is listed. Overpriced houses can sit on the market for months, all the while increasing your holding costs. Ultimately, this situation usually results in the investor having to reduce the sales price, which further reduces the profit. So, take the time to start networking and find a great realtor to work with. And, it should go without saying, if you are going to ask them to use their valuable time to run comps for you, you should list your property with them when it’s time to sell.
From your experience, what can be done to avoid those errors?
Taking the time to educate yourself on the ins and outs of the real estate investing world is critical for those looking to get started. There are tons of books, podcasts, YouTube videos, forums, and local investment groups out there that provide you with everything you need to know to get started — and most of these resources are inexpensive or free! In addition, seeking out a mentor in your area that can help you learn to analyze deals, walk through a few potential investment properties, or even let you shadow them on one of their flips is invaluable.
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. 🙂
Since we are on the topic of housing, I would love to inspire more work to be done in the construction/real estate industry to help those in need. So much good can come from donations of land, supplies, elbow grease, and time. What if there was a location in each major city where construction waste from new builds and rehab projects can be donated to build tiny houses for the homeless? And it doesn’t only have to be limited to extra supplies or construction waste. Many usable items are often left behind in houses that are purchased as is. Outdated — but, functional! — appliances, carpeting that is still in good shape, and even furniture that just needs a good cleaning or maybe a little paint. If these materials could be put to good use Instead of ending up in a landfill, they could be life changing for those in need of a place to call home.
How can our readers further follow your work online?
Thank you for your time, and your excellent insights! We wish you continued success.
Thank you so much for the opportunity to share! I hope it’s helpful to someone out there that is ready to get started.