![]() On a normal flip, which takes only a few months to renovate and sell, this is not a problem. The expense is counted in the carrying costs of a flip budget. To run this project, Tarek has taken out a hard money loan, which is a short-term loan from a private investor with interest rates usually much higher than those of a traditional loan funded by a bank or mortgage company. Remember the second “F” of flipping, the “fund it” part? Well, it turns out they made some bad calls here, too. Carrying costs can kill a profit This beautiful renovation took longer than expected. Tarek knows that a good negotiator never accepts the first bid, no matter how great it might seem. “No,” objects Tarek, later explaining, “Honey, when the contractor gives you a number, whether it’s good or bad, you never say it’s good.” So when Jeff, the contractor, tells Tarek and Heather Rae that he can do everything they want for about $315,000, Heather Rae says enthusiastically, “That’s great!” With all the fixes that need to be made to redesign this house so it will attract a $3 million buyer, Tarek estimates the renovation will cost about $400,000. Ouch! Don’t tip your hand to the contractor Tarek El Moussa explains a strategic mistake. ![]() The El Moussas thought they were buying a four-bedroom, 2,162-square-foot home, but the final, accurate listing posted after they’re finished with their renovations shows it to be a three-bedroom, 1,969-square-foot home. An official review of the floor plan shows it should be considered nothing more than “crawl space.” “I think these are the two bedrooms,” guesses Tarek. And sure enough, he’s right: The listing has counted them as bedrooms, when in reality, one of them shouldn’t even be included in the square footage of the home. “What the heck is this?” asks Heather Rae about these strange little rooms. Tarek and Heather Rae realize buying the house sight unseen is going to be a big problem when they walk into the second level and find two bizarrely laid out closets, one with a tiny staircase to nowhere. Compare agents Weird closet was listed as a bedroom. Enter your address and answer a few questions to get started. ![]() A ‘bedroom’ is not always a true bedroomįind out what selling options are available for your home. But to Tarek’s credit, the listing does mention miraculous views, and Tarek was fairly sure those vistas will make this home practically priceless. “It’s already a risky business, but when you’re going into a project with no knowledge, that’s where you can get into big trouble,” he sees. The seller won’t allow it, the tenant won’t allow it. “But there are some scenarios where you just can’t go into the house. “Over the years, I’ve bought hundreds and hundreds and hundreds of houses, and the majority of them we have seen,” Tarek explains. This begs the question: Why did they pay so much for this house in the first place? Surely they were aware of its numerous problems and how much it would take to rectify them, right? Apparently not, since they’d taken a gamble and bought the house sight unseen. No mansplaining required! Buying a house sight unseen is a risk Silver Lake flipĪs Tarek and Heather Rae tour the house for what appears to be the first time, they realize the flaws are myriad and will cost hundreds of thousands of dollars to fix. “Find it, fund it, fix it, flip it,” she says smugly. Yet Heather Rae has already done her homework and chirps out the “four F’s” that Tarek has been teaching other novice flippers on his old show, “ Flipping 101 With Tarek El Moussa.” ![]() That’s where Tarek tells his new wife, “I’m going to teach you the most important lesson right now.” The hopeful couple start out on a positive note: in bed. Learn the four F’s of flipping Heather Rae El Moussa recites the four steps in flipping. Here’s what we learned as we cringe-watched our way through Tarek and Heather Rae’s first flip. Along the way, they (and we) learn a lot that will (hopefully) make future flips smoother sailing. ![]() Oh, the optimism of newlyweds, even if they are both purported to be real estate experts! We found the listing for this house once it was finished, and let’s just say things didn’t go as planned.īut to their credit, this new show does not sugarcoat things and gives an unflinching look at how this maiden investment unfolds. They’re hoping to fix it up and sell it for around $3,100,000, netting about a $400,000 profit. Tarek’s company, Tarek Sells Houses, has paid an eye-watering $2.15 million for the home. It’s a four-bedroom, three-bath midcentury modern house in Silver Lake, an increasingly hip suburb of Los Angeles. ![]()
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