HGTV’s Heather and Tarek El Moussa have constructed an empire that any entrepreneur could be jealous of. They’ve collectively flipped over a thousand properties, began syndications with tens of tens of millions of {dollars} invested, have a TV present that rakes in cash for them to flip extra homes, AND they do all of it whereas elevating a household. And whereas they’ve created the life they’ve all the time dreamed of, some unintended unwanted effects have just lately emerged that make issues less-than-glamorous.
We’ll contact on the current “drama” in right this moment’s episode, however earlier than we do, Heather and Tarek break down exactly what they did to construct the enterprise they personal right this moment. And in case you’ve ever considered flipping homes earlier than, Tarek provides invaluable recommendation on discovering offers, hiring (and firing) contractors, why he’s spending extra money than EVER earlier than on renovations, and the way you can also construct a multi-million greenback home flipping enterprise.
However that’s not all. After a current slew of destructive press, Tarek lastly breaks the silence on a current deal gone mistaken and offers the story not one of the information shops would share on how he’s dealing with a barrage of tenant complaints, on-line harassment, and even loss of life threats.
Scott:
Welcome to the BiggerPockets Cash podcast, the place I interview Tarek and Heather El Moussa from The Flipping El Moussas. You will have heard of this incredible HGTV present.
Howdy, whats up, whats up, my title is Scott Trench and I’m solo right this moment. We’re bringing you a really particular bonus episode of the BiggerPockets Cash podcast. It’s for these of you who didn’t attend BP Con and we had a tremendous fireplace chat with Tarek and Heather, and we determined to report the rehearsal of this chat and convey it to you right here on the present. We’re going to cowl all the pieces from how Tarek and Heather began, how their companies operate, being HGTV and Netflix stars, and the recommendation they’d give buyers right this moment. And what I actually appreciated probably the most about getting an opportunity to speak with Tarek and Heather isn’t just, they’re clearly superstardom and the unimaginable companies they’ve constructed within the media area, however the actually massive scale enterprise operation that’s happening throughout wholesaling, repair and flip, leases, and now syndications in the actual property area and the subtle machine they’ve constructed. So a giant privilege to speak to them right this moment.
All proper, I’m right here to make monetary independence much less scary, much less only for someone else. To introduce you to each cash story as a result of we actually imagine monetary freedom is attainable for everybody, irrespective of when or the place you’re beginning. Whether or not you wish to retire early and journey the world, go on to make huge time investments in property like actual property, begin your personal enterprise or perceive the realities and the nuts and bolts of a big scale actual property enterprise delivered to you by tremendous well-known HDTV stars, we’ll make it easier to attain your monetary targets and get cash out of the way in which so you possibly can launch your self in direction of your goals.
All proper, subsequent up we now have the cash second. As we speak’s cash second is extra of a BiggerPockets plug. Need to really feel impressed and study from one of the best? Be a part of us subsequent 12 months at BP Con in Cancun. That’s proper, you heard me. We’re taking our convention to Cancun. It’ll be out of this world. I imply out of this nation. Be a part of me and among the greatest buyers round like Henry Washington, David Inexperienced, and Dave Meyer subsequent 12 months at our convention.
This 12 months at 2023 was wonderful. We ended up renting out Common Studios as the tip be aware. And moreover the partying and the superior nice instances, we additionally had at an amazing, we had like 80 audio system over 50 classes, we had 75 totally different sponsors starting from all several types of professionals, like brokers, lenders, property managers, insurance coverage brokers, tax professionals, and extra to software program options like property administration, software program, accounting software program, off-market deal discovering software program to syndicators to something you possibly can consider. It was tremendous invaluable and I simply had a good time. Hope to see you there subsequent 12 months at Cancun, the place we’ve rented out an all-inclusive resort for a number of days. Wanting ahead to it.
Tarek and Heather, welcome to the BiggerPockets Cash podcast. I’m so excited to speak with you right this moment. Thanks a lot for becoming a member of us.
Tarek:
Yeah, we’re excited to be right here, Scott. How are you doing right this moment?
Scott:
I’m doing nice. I get an opportunity to speak to you wonderful folks. Nicely, let’s simply bounce proper into your small business. May you inform us about your empire and what you do and your roles in that enterprise?
Tarek:
Began off as an actual property agent, 19, 20 years outdated. Weathered the good recession after discovering success at a younger age and noticed a possibility available in the market 2010. I did a brief sale deal at a primary lien, second lien, third lien, IRS lien, HOA lien, all these liens. I ended up closing it after 11 months. I acquired a verify for 7,000. The man that purchased it, painted the home, employed a painter, employed a gardener, and offered it a pair weeks later, made 130,000. And that was the precise second that I spotted I used to be on the mistaken facet of the actual property equation. So I began flipping homes in 2010 on a whim. Went to all people I knew to lift cash from them. And all people mentioned I used to be loopy. I used to be too younger, I used to be too speculative. And eventually I discovered somebody dumb sufficient to present me cash.
Scott:
And what market did you begin in? What market was this?
Tarek:
In Southern California. And through my very first flip, and that is what folks don’t know, throughout my very first flip, I acquired the concept to flip homes on TV. So I documented the method of the very first flip, after which I acquired the pilot for the collection, then I acquired a contract. The contract acknowledged I needed to flip 13 homes in 10 months, however I didn’t know easy methods to flip homes and I didn’t have any cash. So on the time I wasn’t positive what to do. I known as my lawyer, I mentioned, “What’s the worst that may occur?” He mentioned, “Nicely, they may sue you.” And I mentioned, “They may take it. Every part’s financed, anyway.” So I signed the contract, burned the boats, and found out easy methods to flip homes whereas filming a TV present.
And since then that was 2010. As we speak I’ve flipped nearly a thousand homes. A majority of the enterprise that we’re flipping, we’re doing is in Southern California, orange County, LA County, Riverside and San Bernardino County, and that we even have out-of-State Investments, personal 200 leases throughout the nation, North Carolina, Oklahoma, Georgia. After which on high of that, I’ve homeschool training, educate folks easy methods to purchase repair and flip homes, construct rental portfolios. I’m so enthusiastic about my new firm, TEM Capital, in addition to Heather’s new firm, HEM capital, which is actual property syndication. So collectively we’re shopping for multifamily actual property, self storage, and we’re additionally creating. On high of the actual property group I’ve with the company, we now have about 1400 actual property brokers working with me. And we now have a manufacturing firm and we now have a house line. And what else we acquired honey?
Heather:
Nicely, we now have a couple of extra issues beginning that we can’t discuss but, however the latest is our house line known as Dwelling by Them. In order that was extra a ardour mission that Tarek and I we’re speaking about for years we needed to create, and now it’s a full on enterprise. And we simply launched two new merchandise yesterday and we’re launching extra arising. So actually enjoyable.
Scott:
So we now have all of those enterprise, this sprawling enterprise conglomerate. What are your roles everyday, every of you on this empire?
Tarek:
[inaudible 00:05:43]. And that’s the problem as an entrepreneur. On the finish of the day, what are we? We’re manufacturers, proper? And we constructed our manufacturers by the facility of tv by being in a whole bunch of tens of millions of homes world wide. So our most important focus is all the time model oriented. However outdoors of that, true to my coronary heart, I’m an entrepreneur. See, I wasn’t a celeb that acquired into actual property. I used to be somebody that was in actual property and noticed a possibility to construct a model to get extra actual property. So in my coronary heart, I’m an entrepreneur, so I’m nonetheless lively CEO within the corporations. I’m nonetheless concerned within the day-to-day. And each single day I’m all the time desperately searching for the best possible assist on the market. So we’re all the time hiring, we’re all the time searching for wonderful folks to hitch the group.
Heather:
I began in luxurious actual property and I’m on a present known as Promoting Sundown, which turned a world hit in each nation. And we had been already a established actual property workplace. And the chance got here to us to movie a TV present, they usually interviewed all of the brokers within the workplace they usually selected who they needed for the present. And I take into consideration season three is when it actually blew up. And that was a part of the rationale. It’s a tremendous present. The actual property brokers within the workplace are very attention-grabbing, lovely girls, luxurious properties in West Hollywood, Beverly Hills, California. After which Covid truly helped the present blow up as a result of everybody was house. They had been searching for an escape. And so season three about what? 2020, 2021 was when it actually blew up. After which Tarek and I’ve a present collectively known as The Flipping El Moussas, the place you see me flip homes for the primary time on TV.
Tarek:
It’s enjoyable.
Heather:
So I had by no means flipped a home earlier than. So episode one, you watch me flip my first house with the skilled who’s been doing this for years, and now we’re filming season two. And also you see the progress I’ve made with my flip.
Tarek:
Yeah, she truly simply began her twentieth flip. A 12 months in the past she flipped her first ever home with me. And right this moment, 20 homes later. It’s unimaginable to observe how a lot she’s realized, how a lot she’s grown, and the quantity of information that she’s obtained.
Heather:
To start with, coming from a luxurious actual property standpoint, I didn’t notice the enterprise of flipping. And I got here into it eager to do all these luxurious issues to those properties we had been flipping and I wish to do that, I wish to try this. And now my thoughts has shifted a lot from luxurious to the return on funding and probably the most revenue on the finish and the way we are able to save and the way we are able to take advantage of. So actually in a brief period of time, I’ve realized a lot invaluable classes for flipping.
Scott:
What’s the sort of core enterprise mannequin? What’s your bread and butter on this enterprise?
Tarek:
I imply, the bread and voter for us is often Southern California, and we’re usually getting homes between 500,000 and about 1.5 million. That’s sort of our bread and butter. Will we go decrease? Sure. Will we go increased? Sure. However we favor to remain between 500,000 and 1.5 million.
Scott:
Okay. And the way a lot are you placing right into a typical flip, after which what are you promoting it for on the finish?
Tarek:
Yeah, so it relies upon. So that you’ll take a 3 bed room, two lavatory, say 1200 sq. foot home to go in there and do a very nice flip, full transform, new AC, home windows, ground. I imply all the pieces As we speak you’re taking a look at about I’d say 130, 140,000. I do know in California we’re in all probability paying greater than persons are paying in different markets, however I realized early on to not do the work myself. And I do know I can get monetary savings by doing the work myself, however that’s going to forestall me from doing different homes. And the homes make the cash not the work, proper? In order that’s one factor.
After which what we’re doing larger initiatives, like we’re doing a home proper now. Town of [inaudible 00:09:21], we’re spending 240,000. It’s a 2100 sq. foot home. And that is fairly cool as a result of the market is in mayhem. We began the mission about six, seven weeks in the past. The excessive comps on the time was at 1,150,000, 1,175,000. And I reran the comps this morning. We have now two new ones. One is at 1.3, one is at 1.318. So we simply added six figures to our backside line. So I’m very enthusiastic about that. So we’re truly headed to the home this afternoon to see what we might add to it to ensure we get that quantity.
Scott:
That’s superior. Now, have you ever seen, within the final two years we noticed a pullback in exercise from flippers in a common sense. Was that mirrored in your small business? And the way have issues advanced perhaps because the final 18 months with the rising rate of interest setting? Are you seeing issues ramped again up, for instance?
Tarek:
Yeah, no BS right here. Anybody that claims it hasn’t been a battle, they’re not telling the reality. So we purchased 91 homes first quarter of 2022, so 91 California homes. And the charges on the time had been two and a half, 3%. And whereas we had been fixing up all these homes, the charges went to 6 to 7%. So we burned by, I believe it was 10 or 11 million in anticipated revenue. And instantly when the charges doubled, I ended all shopping for, instantly moved to wholesaling as a result of I knew I used to be going to be incurring losses. So to be able to offset these losses, I wanted to have income. So I ended shopping for, completed all these homes. There have been some, I used to be dropping three, 4, or 500,000. However whereas I used to be fixing these homes up, we constructed the wholesale mannequin that was bringing in 3, 4, 500, 600,000 to offset these losses. So we weathered the storm. As we speak we’re thriving. It’s a mixture. We’re in all probability wholesaling 75%, flipping 25% and doing anyplace between 10 and 20 offers a month.
Scott:
Superior. So let’s dive into every a part of this course of. What’s your mannequin for locating these offers, both to wholesale or flip?
Tarek:
Yeah, so the discovering, which I educate my college students on a regular basis, is a very powerful factor. You possibly can rent a designer, you possibly can rent a contractor, you possibly can rent an actual property, you possibly can rent all people to do all the pieces, but it surely’s going to be actually troublesome to rent somebody to go discover you that home. So discovering offers is essential. So after I constructed the enterprise, I had no cash, nothing. So the enterprise was constructed by outbound prospecting. So I might door knock, I might chilly name, I might community, I might textual content message, and I might hit the streets on daily basis. I had one purpose in thoughts, 50 conversations a day. If I didn’t speak to 50 folks, I didn’t know, I wasn’t allowed to go house. In order that’s how I discovered success quick, large motion. As we speak, I’ve been on TV a very long time. I’ve constructed a model, so now I leveraged the model. So we’ve completed TV commercials, radio advertisements, podcasts, pay-per-click search, advertising, something you possibly can probably consider. However we’re undoubtedly a advertising based mostly firm.
Scott:
Superior. Do you discover that there are increased margins on the decrease finish of the spectrum, these $500,000 properties or the upper finish, the 1.5 million properties? And I’m wondering, Heather, how your expertise promoting these luxurious excessive finish properties is impacting or influencing a part of the path going ahead right here?
Heather:
Nicely, I introduced in a luxurious, I assume, vibe to the homes. So-
Tarek:
Yeah, we’ve stepped up the sport.
Heather:
We’ve stepped up the sport, and I don’t have the time to exit and supply supplies, search for… However I carry my design eye to it. And we work with designers. So I’ve employed designers that I discovered to exit and discover supplies for much less of a value that also look very excessive finish. So I’ve introduced my high-end eye to the flips.
Tarek:
So the design is at a complete different degree. You’ll see season two of our present, the homes are insane, they’re beautiful.
Heather:
And I believe Tarek and I are much more hands-on with design this 12 months, this season on all of our flips the place final 12 months we had been as effectively. However this season we’ve stepped it up much more and choosing out all of the supplies. However I realized so much personally from final season. And we had been flipping extra high-end properties and we had been flipping extra within the metropolis of Los Angeles. We’ve now shifted and we’re flipping extra in Orange County. A number of the permits, that was the most important difficulty final season for us final 12 months. So we’re nonetheless ending a couple of of the flips that we didn’t end in what it took about 10 months to 12 months.
Tarek:
Yeah, 10 months to a 12 months. And to reply your query, when the costs are going up and it’s an appreciating market, I just like the dearer ones when the market will not be going up and it’s secure and even happening I just like the lower cost ones as a result of they’re sooner to repair, sooner to promote much less danger.
Heather:
So we’re engaged on plenty of decrease finish properties proper now. Cheaper price.
Tarek:
Decrease bucks.
Heather:
Cheaper price wall. I imply, we acquired what, 430, however then we’re flipping in and promoting it for 800 and one thing. So I like these higher as effectively as a result of they’re smaller. We are able to get out and in sooner and hope the market doesn’t shift throughout that point.
Scott:
Superior. So how are you financing these offers? Is it money from earlier flips or onerous cash? Some mixture?
Tarek:
Yeah. So after I first began I had no cash, so I went out, met buyers. The deal was I did all the pieces, all of the work A to Z, they acquired a verify and we break up income 50/50. After which as time went on, I began being profitable. So now we leverage onerous cash loans. So on each flip we’re doing, we’re acquiring a tough cash mortgage, after which we’re additionally most instances masking the development prices.
Scott:
Superior. After which stroll me by your contractor community. I’ve watched a couple of episodes. It looks as if a few of these guys are long-term pals at this level, however how did you get began constructing that contractor community and the way do you retain crews going on a regular basis to maintain prices down right here?
Tarek:
Yeah. Nicely, I acquired my contractor community by getting burned by plenty of contractors. I imply, that’s the factor in life, you bought to eat generally, and that’s the reality. As an entrepreneur, you will get burned, you will get screwed over or persons are going to deceive you. However what makes a real entrepreneur will not be quitting. So the rationale I felt good contractors is as a result of I went by the battles they usually made my life a residing hell. They didn’t present up, they ripped me off, however I needed to transfer on from them and I saved trying, saved trying. And in case you’re all the time trying, finally you discover what you’re searching for.
Scott:
Superior. Any suggestions for people to chop that course of just a little shorter or to have the next likelihood win fee with an awesome contractor?
Tarek:
Right here’s some of the invaluable classes I’ve realized in my life. It’s not about what I do know. It’s not about what I can study. It’s not about who I can rent to study. It’s about who already is aware of the reply. So as a substitute of going to discover a contractor and giving them an opportunity or a possibility to work on a flip, no, go discover a contractor that’s been engaged on flips since 2010 that’s delivered 1800 homes that is aware of precisely easy methods to flip homes higher than you the investor.
Scott:
Now let’s discuss marriage and enterprise right here. You guys are enterprise companions and have a beautiful, great household dynamic right here. How do you steadiness that and work collectively seamlessly by these thriving companies?
Heather:
No, the principle factor is communication and actually having fun with our time collectively. And never each couple can work collectively, stay collectively, elevate youngsters collectively, be collectively all day. However I really feel like we now have a great machine going.
Tarek:
Yeah, I don’t find out about that opposites attracting. I’ve dated opposites in my youthful days and it was not enjoyable. So we’re very comparable. We each love actual property, we each love design, we each love leisure. We like the identical issues. So even once we’re not working, I do know this sounds sick, once we’re not working, we’re out on the weekends generally we’ll get up at 5 within the morning, can’t sleep, we’ll, go drive neighborhoods and search for homes. We simply, had been obsessive about actual property.
Heather:
And household is essential to us too. And having that steadiness. And we now have a brand new child, we now have an eight-month-old after which a 13-year-old and an 8-year-old. So it’s plenty of steadiness. We have now faculty, we now have sporting occasions, and we’re busy with the youngsters, so we actually attempt to make it a degree to show off our telephones at a sure time, spend time with our household. I attempt to take days off and be with the infant as a lot as potential whereas he’s so younger proper now. So if I can’t make it to one thing, Tarek will actually, he’ll deal with it for me. Like right this moment, I’m taking the time off to be with you guys after which even be with the infant. So he’s going to go stroll the foot for me.
Tarek:
And the reality is, it takes a military to run our lives. I imply, we’re torn in so many instructions. We have now two drivers, three assistants, and we now have all this stuff that help us personally so we are able to go on the market and have the time to work on all these companies. And that’s what most individuals don’t notice. Time is probably the most invaluable asset. You lose cash, you can also make a refund, you lose time, you possibly can’t make time again. So we actually delegate nearly each single factor in our life to the purpose the place folks inform us what to do and we present up and do it.
Scott:
Superior. So one of many huge components in your small business is each of your particular person manufacturers and the mixed model now that you’ve as a married couple right here and the way you leverage that in lots of areas to create synergies round your small business that helps you discover offers, you talked about. Clearly there’s in all probability a revenue part to being a part of the HTTV community with plenty of these alternatives. And there’s clearly your small business savvy right here. However lots of the folks listening to this will likely not have that non-public model behind them. Do you suppose it’s essential to have this degree of success? Or whether it is, how would you go about curating that model from scratch?
Tarek:
One of the best ways to get began or the easiest way to construct it’s to construct it by getting began.
Heather:
Simply get began.
Tarek:
Get began. Oh, I wish to put money into actual property. Oh, I wish to go on food plan. Oh, I wish to go to the health club. How lengthy have you ever been fascinated by it? Six months. Nicely, why don’t you simply get within the automobile proper now and drive to the health club, cease ready, take motion.
Heather:
And you may construct a model whilst you’re doing that. I imply, if folks wish to construct a model and be extra profitable in that facet, you possibly can movie your self strolling your flips. You possibly can movie your self doing all of the initiatives, you possibly can movie your self doing something, and also you simply should get began on that too and never be nervous as a result of it could possibly be nerve wracking to do this. And oh, I’m not identified, I don’t have a model, however you possibly can construct a model. You don’t should be on TV to construct that model.
Tarek:
So if somebody was beginning at zero, create a model emblem, no matter you wish to do, you don’t even want a emblem, simply create some social media pages. If you wish to be an actual property investor all day, on daily basis you put up about actual property, you stroll fixer higher properties and also you’re simply all the time speaking about what you do. The primary six months you may get 5 followers, however by 12 months three, I’m fairly positive you’re going to have hundreds.
Heather:
Yeah, be constant and you can even watch what different persons are on the market doing and be learning that and simply do among the similar movies as them and simply be genuine to your self.
Scott:
Yeah, I like that authenticity piece. Simply assist one individual and assist them and have interaction with them. Present them what you’re doing, assist them study from you and comply with it after which do it once more, after which slowly scale it. Simply get began. Love that recommendation.
Tarek:
Get began.
Scott:
All proper, so we’ve talked concerning the empire right here. Let’s dive into the brand new enterprise that you simply’re pursuing right here within the syndication area. What’s the historical past behind that transfer? What have you ever completed to date and the place are you going along with your syndication enterprise?
Tarek:
All proper, so I’ll let you know the story about that. So I began flipping in 2010. By 2015 I used to be throwing stay occasions. I had my TV exhibits, enterprise was buzzing, I used to be doing unimaginable, met with my CPA and realized I owed some huge cash in taxes. I’m speaking some huge cash. And I take a look at him, I mentioned, “You’re telling me folks pay this a lot in taxes?” And he says, “No.” I mentioned, “What do you imply no? What do they do?” He goes, “They purchase actual property.” I used to be like, “That’s what I do.” He goes, “No, you purchase and promote actual property. They purchase actual property.” I’m like, “Nicely, what do you imply?” After which he began instructing me about depreciation. In order that was a giant sport changer for me.
Once I realized about depreciation, the sunshine bulb went off, my eyes went huge, and I knew I wanted to start out proudly owning. And that’s how I began buying. I purchased 200 homes, round 200 homes. After which through the years folks would see me on a regular basis strolling the streets on the health club, no matter, like, Hey Tarek, we wish to make investments with you. We wish to do offers with you. And I by no means wanted buyers to flip these homes. I simply don’t want them. So I noticed a possibility to the place, effectively, I’m going after industrial actual property if I’ve companions that may purchase larger and make even higher offers. And that’s the place the concept got here from, I mentioned, and I simply attempt to assist as many individuals as potential, make investments their cash with me, create wealth with me. And outdoors of making wealth and studying about actual property, have plenty of enjoyable. With our corporations we now have occasions and dinners and yacht events. We’re going to Cabo Mexico subsequent 12 months with our buyers. In order that’s actually the way it acquired began.
Scott:
Superior. And so what have you ever purchased to date? The place are you shopping for it and what does it seem like?
Tarek:
Certain. So we purchased three condo buildings in Arizona. We simply closed on one in northwest Arkansas. Two months in the past it was a 376 models.
Scott:
Florida.
Tarek:
I actually like that. I believe subsequent week we’re closing on one in Orlando, Florida. It’s a 215 unit. After which we’re-
Scott:
Subsequent week?
Tarek:
-announcing the… Yeah, subsequent week, subsequent week.
Heather:
Storage facility.
Tarek:
After which a storage facility in Arizona. It’s already completed.
Scott:
What day are you closing on the Orlando property?
Tarek:
I’m undecided. We’re assuming a HUD debt at 3.8% with 37 years left. So it’s an unimaginable assumable mortgage. However with HUD, issues are shifting sluggish, so they are saying subsequent week, however additionally they mentioned final week. So we’ll see how that goes. So then one other self storage facility, Arizona. After which we’re about to interrupt floor on creating one other one in Arizona, and it’s a couple of 200,000 sq. foot facility. After which one other mission we’re engaged on proper now’s a growth mission in North Hollywood, California. And that mission is myself and my spouse and some different common companions.
Scott:
Superior. So what’s the sort of thesis or enterprise mannequin that ties all these totally different investments collectively right here? Are you searching for sure kinds of properties in sure areas? Are you searching for simply nice offers opportunistically across the nation? How are you sort of pursuing the syndication enterprise?
Tarek:
Yeah, so one, I’m trying in one of the best markets throughout the nation, in order that’s one. Two, I’ll purchase in any market if it’s a house run deal.
Scott:
What makes one of the best market within the nation?
Tarek:
Man, that modifications on a regular basis. The very best markets across the nation. It simply relies on the chance. As we speak it’s just a little bit bizarre, however a few years in the past it was Arizona, it was Texas, North Carolina was on fireplace, Florida. However right this moment, I’m nonetheless a giant believer in these areas, however I’m not going into Orlando making an attempt to do a price add mission. For me, I really feel extra comfy shopping for a Class A with low assumable debt that regardless it needs to be a protected funding.
Scott:
Okay, superior. After which what makes an awesome deal on this area? How do of us take into consideration discovering nice worth alternatives on this area? Is it the chance to imagine a majority of these debt? Is it distinctive traits particular to every property or…?
Tarek:
Yeah, I might say it’s a case by case state of affairs. Every property is totally different in so some ways. On some properties, if I’m capable of assume debt on a more moderen building property at 3.49%, like I acquired in northwest Arkansas when the market debt’s at seven, I’m feeling fairly good about that. Would I’m going right into a deal right this moment in shock, Arizona that was a serious fixer worth add with main building on the proper worth? Heck yeah, I might 100%. So it actually simply relies on the deal itself. If I can go purchase an condo constructing for $10 million {dollars} right this moment, put 10 million {dollars} into it and promote it for 40 or 50, yeah, I might try this deal.
Scott:
So are you planning to carry among the flipping experience that you simply guys have developed into the syndication mannequin from a price add perspective?
Tarek:
Completely. One in every of our huge targets is absolutely, actually buying and selling actually cool designs for tenants, not by spending a fortune on materials, however actually fascinated by the appear and feel that they’re going to need in a house they stay in.
Scott:
Superior. And are plenty of these condo complexes, have they got the structure that you simply want? They only want that imaginative and prescient and contact and that’s what you’re discovering, particularly [inaudible 00:25:22] within the California and Arizona properties?
Tarek:
Yeah, the worth add ones they want facelifts for positive. The newer class A, the assumable debt ones we’re doing, these are in nice form.
Scott:
Heather, let’s transition and speak just a little bit concerning the filming TV movie star enterprise that you simply guys… You might be each businessmen, however you’re additionally a enterprise man who mentioned that? Any individual mentioned that.
Tarek:
The enterprise. Jay-Z.
Scott:
Jay-Z. That’s proper. Yeah, there you go.
Tarek:
I’m a businessman, however I’m additionally a enterprise man.
Scott:
That’s proper, sure. You guys are the enterprise man.
Tarek:
We’re strolling companies and we’re enterprise folks.
Scott:
So let’s discuss that a part of it and what’s the enterprise behind the scenes right here of being celebrities? How do issues work? How do you consider the connection with HGTV once you’re shopping for a property? Is there an angle for it? Oh, this could look nice on TV as effectively, mixed with that, and the way do you handle that? And Heather, I do know you’re significantly robust on this space, you each are robust, however…
Heather:
The dirtier nastier homes, they rework into beautiful properties on TV. So I all the time inform Tarek I get the nasty ones, get the soiled ones as a result of that’s new for me as effectively. It’s enjoyable for me to stroll by the nastiest, stinkiest, dirtiest properties. It’s disgusting, but it surely’s enjoyable to see that rework on TV. And I believe the viewers actually loves that as a result of we’re taking one thing that’s so foul, so ugly, so disgusting, and we’re turning it into a lovely place for a household to maneuver into and fall in love with. So we’re undoubtedly fascinated by that once we’re taking a look at properties.
Additionally, ones we are able to get out and in of sooner, as a result of we’re filming a TV present and it takes time to flip a home. So we are able to’t movie for over a 12 months on one mission. So sadly we acquired into doing that final season. We needed to end up two properties in a while. And also you’ll be seeing these come out earlier in 2024. However what else?
Tarek:
Yeah, I imply it’s a complete enterprise behind it.
Heather:
I imply, yeah, we’re each regular those who acquired on TV. I used to be an actual property agent that it’s not like I did something particular to get on TV. I used to be a part of an actual property workplace on Sundown Boulevard. We had been an actual workplace and we occurred to get on a TV present and grow to be a worldwide international TV present. So there was nothing particular that I did to get on the present besides-
Tarek:
Yeah, there was. There was one thing particular, many particular belongings you did.
Heather:
Nicely, I imply, I believe not everybody could be on TV and do what we do.
Tarek:
Yeah however right here’s what folks capable of notice, being on TV it’s not like you possibly can identical to, oh, go to work. No, you’re on TV. You must be energetic, it’s important to be on to be witty After we’re there, we’re working. You must be 100% current. You must be 100% there.
Heather:
However I’m saying it’s not like I went out and I didn’t attempt to get myself a TV present due to who we had been and our personalities. Sure, the TV present does effectively. Not everybody can simply be on a present and be as profitable as we’re.
Scott:
Yeah, look, I like the humility right here. There’s luck after which there’s the way you play the hand that you simply’re dealt. And perhaps there was just a little little bit of luck in getting the primary probability there and then you definately’ve performed the hand that you simply’ve been dealt phenomenally effectively, you’re a famous person, you’ve acquired tens of millions of followers and there’s one thing that you simply’re doing along side that nice begin that acquired you going with that’s actually entertaining folks, that basically resonates with folks. And that’s what I wish to discover out. What’s that secret that it’s important to sustaining that recognition in the way in which that you simply relate to folks in your private model?
Heather:
I believe you mentioned it relatability and I’m very current on social media and Instagram particularly. And I make plenty of my funds doing model offers with huge manufacturers and corporations on the market, licensing offers. So I’m actually genuine with who I select to work with as effectively. I’ve been introduced a bunch of various alternatives and I don’t simply take one thing as a result of I’m going to make cash off of that, so I’ll go on issues as a result of it’s not genuine to who I’m. I’m plant-based I like clear merchandise, non-toxic merchandise. So I actually attempt to work with manufacturers which can be on level to what I imagine in. And never everybody does that. And I believe that that’s a giant drawback on the market and it’s so saturated at this level.
So we additionally speak to our followers and we like to listen to from them and what do they need? What do they wish to hear from us? And Tarek does a extremely good job at that as effectively. And he’s very personable with folks and I believe that makes a giant distinction as effectively. And we cope with plenty of negativity as effectively, which isn’t enjoyable. And I believe being a model and being a celeb, you cope with that. And it may be robust. I imply on me particularly. And I simply select to not learn sure issues. I select to have interaction with folks which can be constructive and we actually attempt to encompass ourself with positivity and never let destructive folks in our lives and reduce that out as a lot as potential. Particularly having an toddler and a brand new child. I’ve actually tried to guard our vitality and I believe plenty of my time is invested on the infant and our marriage and our household life, and we don’t have time to cope with the negativity, but it surely’s all the time going to return.
Tarek:
Yeah, it’s all the time, it’s-
Heather:
By no means going to go away. It’s all the time going to be there. Not everybody’s going to like you.
Scott:
We’ve talked about eradicating negativity right here, however a part of what makes the TV so nice is, I’m not going to make use of the phrase negativity, is the drama that goes on.
Heather:
Drama.
Scott:
So how a lot of that… How a lot ought to we take all that as actual and what’s simply nice TV?
Heather:
Are you speaking about promoting Sundown or our present?
Scott:
Sure.
Tarek:
What present? What present are we speaking about?
Scott:
I’ll begin with Promoting Sundown after which transfer to The Flipping El Moussas.
Heather:
I imply, you get a gaggle of profitable girls collectively and there’s going to be drama. You begin out with nothing after which issues simply occur and are available up. So the drama could be very poisonous. I imply there was plenty of instances I’d come house and I might cry to my husband and that’s not enjoyable. And it’s important to discover ways to work by that. After which it’s important to watch your self on TV, undergo it once more.
Tarek:
However right here’s what folks don’t notice. They don’t notice in actual life that dialog in all probability by no means would’ve occurred. However as a result of it’s a present, the producers say, okay, you guys must go discuss this proper now. So think about two folks upset with one another as a substitute of giving it a pair days and no go discuss, effectively, after all you’re going to get drama. And that’s what makes the present so profitable.
Heather:
You’re employed collectively, there’s drama, there’s issues that come up that you simply weren’t anticipating. And that’s the toughest factor is you’re in it, you’re filming, there’s drama, and also you come house. It’s our actual life. We’re nonetheless actual folks. It’s not only for TV. After which it comes out on TV and it’s important to relive it once more after which undergo the haters and the followers which can be critiquing you and hating on you. After which, oh, you mentioned that in a scene. After which-
Tarek:
It’s all modifying although. They’ll make any scene look any means they need by modifying.
Heather:
So it won’t have been as unhealthy.
Tarek:
That’s why I like HGTV.
Heather:
Yeah. And it’s a distinct platform like filming for Flipping El Moussas I get to movie with my husband, it’s a really constructive setting. The drama is with the properties, the dramas with the development, the dramas with the permits and issues going mistaken. It’s not a private drama between me and my husband that I’ve to go house and we nonetheless should undergo it. It’s very totally different from Promoting Sundown the place it was private and that is extra concerning the house. So it’s a really extra constructive setting.
Scott:
Does that dynamic that you simply simply described, does it ever make you sort of want I might simply fade out and fade out of the highlight and stay a quiet personal life? Or do you simply like it being within the highlight?
Heather:
I personally like it. I imply, I believe I used to be born to be on TV. There was a degree in my life I used to be like, what am I good at after I was youthful, and I believe I’m actually good at being on TV. I actually completely get pleasure from it. I got here from a modeling world, so I used to be modeling and doing TV from the age of 20 years outdated. So it was a pure for me to then be on a actuality present coming from that modeling world. And so for me, I personally love being on digital camera. I like modeling. I like it. I completely like it. Him, not a lot.
Tarek:
No, I like it. I like it.
Heather:
He does it.
Tarek:
Like it. Okay.
Heather:
No, you don’t like being on TV.
Tarek:
I’m just a little totally different. Like I mentioned, I’m an entrepreneur at coronary heart and I like enterprise. I like being on the market working. I like constructing. However because the years went on, as a result of I’ve been on TV a very long time now, and I struggled with this for a few years. I imply, there have been instances after I mentioned, okay, perhaps’s, time to get off TV. However I’ve come to the purpose the place I’ve realized I’ve been on TV so lengthy and I’ve constructed a large enough platform that I even have the power to assist a complete era of individuals. Which means I might educate folks about actual property, I can educate folks about tax arbitrage, I might educate about… I can take all of the information that I’ve gained within the final 20 years. And due to TV, I’ve this platform which actually provides me the power to assist folks. So due to that, I like TV.
Heather:
That’s a extremely good level as effectively that I didn’t carry up plenty of my following is girls. I actually attempt to faucet into my private journey that I’m talking to folks as a result of there’s one thing that I’m going by that individuals don’t perhaps communicate of or they don’t really feel comfy talking of, or they don’t have the platform that I do, particularly going by being pregnant, postpartum. And I’m actually vocal about issues. So as a result of I’m touching, even when it’s one individual, I’m serving to somebody on the market.
Scott:
Wanting again, in case you might, what’s one factor or what are a few belongings you would’ve modified now that you already know the advantage of hindsight?
Tarek:
I went by two cancers. Would I modify that? I don’t suppose so, usually because I realized so much from it. I’ve been broke. Would I modify that? In all probability not as a result of I realized, I’ve realized from all the pieces I’ve gone by. If there was one factor I might change, the primary factor I might change could be going again and being simpler on myself, on my highway to success. I used to be so stressed, so overwhelmed, so defeated, feeling like a failure, feeling like I’m not adequate, feeling like I might do extra. However I by no means stopped working. So I finally discovered success, but it surely was a really troublesome course of to get by the psychological well being elements of failing again and again on daily basis for lengthy intervals of time.
Scott:
And what about you, Heather?
Heather:
I might say perhaps after I acquired into actual property, actually realized the unhealthy, the nice, the ugly, the deeper dive into actual property. I believe I had a mentor at first, which helped me so much as a result of I acquired an enormous deal. My first deal was $7 million deal, 7.1, and I couldn’t have completed that alone. I didn’t know easy methods to do contracts, I didn’t know what to do. I didn’t know easy methods to stage the homes. I used to be model new and acquired this enormous deal. After which I acquired one other one proper after for 1.5 million. So it was like I didn’t know what I used to be doing, however I actually felt like I let him take over the deal an excessive amount of. And I didn’t study as a lot as I ought to have initially.
And I believe I’ve heard that so much from different girls within the enterprise as effectively. We are likely to sort of let different folks, you’re a lovely lady, you’re doing actual property, you’re hardworking, however folks suppose that you simply’re silly generally and which you could’t do the job so they’d take over. And I actually wished I might’ve pushed more durable. And I let plenty of males intrude with a few of my success and a few of my offers the place I sort of stepped again and I wasn’t as… I didn’t get up for myself and I misplaced some huge cash at first due to that. And I allow them to take over and actually screw me on offers.
Tarek:
And now she’s a shark.
Heather:
And now I’m a shark. However I undoubtedly was not aggressive sufficient at first.
Scott:
All proper. What’s the imaginative and prescient for the longer term? The place are the El Moussas going to be in 5 years right here?
Tarek:
Oh, 5 years. Nicely, I imply, effectively 5 years since nonetheless doing what we’re doing, most definitely, extra investments, extra companies.
Heather:
I might love to purchase extra properties personally, I’m simply getting began with that. So purchase extra properties alone, with my husband, proceed the success of flipping El Moussas and develop Dwelling by Them even bigger.
Tarek:
After which the companies, what we’re most enthusiastic about might be TEM capital and HEM capital as a result of these are the 2 autos that enable us to share our love for actual property and it permits us to assist others get within the sport. So I might say these are the 2 most vital issues.
Scott:
Superior. Nicely stay up for persevering with to comply with your journeys. Guys, thanks a lot for approaching the present right this moment and actually thrilling stuff that you simply’re as much as you.
Heather:
Thanks.
Tarek:
Superior, Scott. And we’ll see you in Florida.
Heather:
Bye.
Scott:
All proper. That was Tarek and Heather El Moussas. Nicely, look, I assumed that probably the most enjoyable factor about this specific episode was, look, you marvel, hey, these guys are HGTV Stars. How a lot of that is being arrange by HGTV or no matter with that, however no, these guys are actually subtle buyers. Tarek was completely happy to share the realities of the flipping enterprise. I used to be additionally shocked to study concerning the profitability of flipping homes in Southern California. I don’t know why that hadn’t occurred to me earlier than.
Certain, there was a growth and bust part to this the place there was enormous income for a time period, after which he was fast to confess enormous losses for a time period. However now that unfold has returned and once you’re doing this type of luxurious flipping, you marvel if on common, over a protracted time period, the typical returns are very excessive, so long as you possibly can face up to the storms there, which clearly their operation is massive sufficient and sufficient scale to make that work.
So actually appreciated studying that. And I want all of them the success on the earth within the subsequent phases of their profession and hope that they proceed entertaining tons of individuals with actually prime quality flips and spreading the phrase and curiosity about actual property investing even additional.
All proper, from this episode of the BiggerPockets Cash Podcast, I’m Scott Trench saying Money out Lady Scout. In case you loved right this moment’s episode, please give us a 5 star evaluation on Spotify or Apple. And in case you’re searching for much more cash content material, be happy to go to our YouTube channel at youtube.com/biggerpocketsmoney.
Speaker 4:
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