Tarek on Why Flopping While Flipping is The Way to Win

David:
This is the BiggerPockets Podcast show 653.

Tarek:
The only difference between a successful real estate investor and an unsuccessful real estate investor is the successful one kept going when they wanted to quit, okay? I wanted to quit so many times. I remember thinking, “There’s no way in hell this is going to work.” You’re telling me I can pick up a phone, call strangers, and they’re going to sell me their house under market. I’m like, “There’s no way this is going to work,” but I did it anyway.

David:
What’s going on, everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast here today with my co-host, Rob “Roberto” Abasolo, as well as a fire guest. Rob and I will be interviewing Tarek El Moussa of Flip or Flop. If you watch TV, if you have a spouse or partner that watches TV, you’ve likely come across Tarek’s show, where he is filmed in the process of flipping houses and walking through the different hurdles, challenges, and obstacles that come.

David:
In today’s show, Rob and I get behind the scenes as to what it’s like to flip houses on TV, how Tarek is able to continue to find new deals even while filming a TV show, and a whole bunch of hilarious and insightful stories of things that went wrong in his deals and what he learned about them. Rob, what were some of your favorite parts of today’s show?

Rob:
I just want to say you seem extra chipper today, and I think it’s because you won the bet at the end. I was going to be throwing you for the intro today, and I was like, “This is it. This is my time to step up and give the intro on the BiggerPockets platform.” But we had a very fun bet at the end where we play a little game called Real or Reality TV, where we guess if facts about Tarek are true or not. So, definitely stay tuned to that. I think that was a fun part, man. We had a pretty good laugh on that one.

David:
That was a lot of fun. Make sure you listen all the way to the end because we do play a game where Tarek tells us if we are guessing if what happened was real or if it was reality. So, without any further ado, we’re going to bring in Tarek in a second, but first, let’s get to today’s quick tip will be embrace failure. It’s okay. It’s going to happen. In the show, Tarek talks about how if you’re not losing money on flips, at least if you’re doing this at volume and you have significant resources, you’re not doing enough flips and you’re actually leaving a lot of money on the table. So, don’t be afraid of failure, instead renegotiate your relationship with it.

David:
And if you’d like to reduce and mitigate your risk, check out the BiggerPockets Forums, where you can ask people questions about issues that you’ve run into, corners that you’ve painted yourself into, or advice that you need to make your flip go better. All right. Without any further ado, let’s bring in Tarek. Tarek El Moussa, welcome to the BiggerPockets Real Estate Podcast. How are you today?

Tarek:
I’m doing fantastic. How are you doing?

David:
I’m doing great. I understand you met my former co-host and best friend, Brandon Turner, out in Hawaii. Is that true?

Tarek:
That is absolutely true and I must say he is one of the best guys I’ve ever met in my life. I’m sure you could say the same.

David:
Yeah. I mean, you hear him on the show and he is very likable and he is very charismatic, but he’s one of those few human beings that is even better in person. It’s hard to have anything bad to say about that guy.

Tarek:
Yeah, it was so random. So, I was just going to Maui with my family and randomly, I followed him on Instagram because I love everything he does and he’s such an amazing entrepreneur. So, I sent him a message. I’m like, “Hey, man. I’m in Hawaii. We should get together,” and he’s like, “Sure.” And the only time our schedules lined up was at 7:00 AM on a Monday morning before leaving for our flight. So, him and his wife came down. Me and Heather had breakfast with them. I couldn’t say more nice things about the two of them.

David:
That’s awesome, man. So, for those of our listeners that live under a rock or maybe they’re hearing this podcast for the first time or maybe they just found out about real estate and don’t know who you are, can you give us a little background into what your business looks like, how your TV show works, and a little bit about you?

Tarek:
Sure. I got into the real estate industry at 20 years old. And before that, I was delivering pizza and selling kitchen knives. First six months in the business of real estate, I made $0, nothing. I was a kid and I was like, “Man, I was about to quit the business.” Long story short, there was a free event coming into town from this real estate trainer named Mike Ferry. Most people in real estate know Mike Ferry. I went to this free event. At the end of this thing, I thought, “Man, I can do anything.” This guy, the way he was able to speak to the audience, he could convince you that anything is possible. So, he convinced me that anything was possible. I signed up for coaching and my life changed.

Tarek:
Within 90 days of signing up from coaching, I went from living in my mom’s garage. My parents got divorced. She rented out my bedroom and followed exactly what my coach told me. And literally, overnight, 21 years old, started making 40,000 bucks a month. Within a few months, I bought my first million dollar house and thought I was king of the world, smartest guy alive, blah, blah, blah. The ego was so big and something interesting happened. It was the year 2007. So, 2007 taught me that everything I thought I knew, I actually didn’t know. So, I had to sell my houses. I had to sell my cars. I had to sell everything I owned. I never quit real estate man and I kept selling. I kept selling and I did the short sale transaction.

Tarek:
There was a first lean, a second lean, an HOA lean, an IRS lean. I mean, this thing was a nightmare and this was the Wild West back then guys, because there was no systems in place. There was no technology. You called the bank for a short sale. There’s a 10% chance anyone cares. There’s a 5% chance someone’s going to call you back. Long story short, I worked it for about a year. At the end of the day, I got a check for about 7,000 bucks. I sold it to an investor, painted the house, hired a gardener, flipped it a week later, made $127,000. And that was the moment I realized I was on the wrong side of the equation. I was like, “Man, I got to be a real estate investor.” So, I had one big problem. I had no money. So, of course, I went to everybody I knew and you know what they said?

Tarek:
They said, “No.” They said I was too young. It’s too risky. I don’t know what I’m doing. They gave me every reason why they wouldn’t give me money. And every time someone told me it wouldn’t work, I was like, “Man, I can’t wait to prove you wrong.” So, what I found was I was asking everybody in my sphere, everybody in my circle. And then I decided I’m going to ask some people with money. So, I approached the one person I knew at the time who had money. I showed him the business plan and he’s like, “Yeah, you find a deal. I’ll flip houses with you.” And the deal was pretty simple. He put up the capital. I found the deal, did all the work, sold the house. We split profits 50/50. That was 12 years ago today. And to this day, we’re still business partners.

Tarek:
So, we did our first flip. It was a condo in Santa Ana, California. Man, I did everything wrong. See, I had zero construction knowledge. I had zero construction background, but I was hungry. I was young and hungry. So, I was the project manager. I was the contractor. I was the investor. I was the real estate agent. I electrocuted myself on that project. I had this brand new vanity light. My ex-wife, she’s like, “Oh, let’s see what it would look like up on the wall.” So, I take this metal light and I put it up to the wires hanging out of the wall. I didn’t know what live wires were. Next thing I know, I’m shaking. There’s sparks going everywhere. And that’s where I learned before you put metal near power, you got to make sure the power’s off.

Tarek:
Another thing I did is I acid washed the shower walls, but I made the mistake of not putting shoes on. I took my sandals off. So, then I burned my feet with acid. I mean, you name it, I did it. But the one thing I did right was I showed up every single day and I learned as I went. I got that first condo done, start to finish, construction, listing, closing escrow in under 60 days all by myself. I made a check for $34,000. And I remember, man, it felt like $34 million. And I was like, “There’s no way I’m ever going back.” And then I learned something really important at the end of that first deal. I finished the transaction, but you want to know what I didn’t have? I didn’t have any more flips and I didn’t have any more flips because I was doing demo. I was painting walls. I was replacing flooring.

Tarek:
And then I realized opportunity cost. I can make $34,000 flipping the house. Why am I painting walls and why am I doing trash out? So, after my very first project, I decided I want to do more house, more houses, but hire people to do the work. Here’s where the tricky thing comes in, my TV career. So, right when I bought that very first flip, I went to a real estate convention in Las Vegas. It was thrown by a gentleman named Mike Ferry. There was about 5,000 people in this room. It’s called the Superstar Retreat. I was the guy that used to sit in the back. It’s Vegas. I was out late. I wasn’t feeling so good in the mornings. And my friend is the vice president of Berkshire Hathaway Office. His manager and his manager’s wife were in the very front row of this thing and they had to leave.

Tarek:
So, he invited me and my ex-wife to go sit in the front row. You guys know how these events are. The front row is for the VIP people. That’s for the guys and the gals that make a lot of money. That’s for the players, the ballers. So, we didn’t really belong, but we were dressed sharp. We sat in the front row. At the break, everybody else in the front row, they were wondering, “Well, who are these two young kids? We’ve never seen them before.” We looked good. We were dressed sharp. We played the part. So, I ended up talking to this guy at the break and he was telling me how he had a local TV show. He would go to the grocery stores in Palm Springs, California, and people would recognize him. And I was like, “That’s interesting.”

Tarek:
I heard him talking on stage. He had made $800,000 that year. And I said, “I mean, it’s cool being recognized and all, but what does that do?” And he goes, “Well, they recognize me. Then they trust me and then they work with me.” I was like, “Man, that is so smart.” So light bulb went off and I’m like, “Man, I got to get on TV. This guy is smart.” So, I think the day or two days after, I went home and I was thinking about what this guy told me. I was like, “Man, I got to get on TV. I got to get on TV.” And I told my ex-wife, it was like 10:00 at night. She’s like, “Are you coming to bed?” I was like, “No.” I was like, “We got to get on TV.” She was like, “What are we going to get on TV for?”

Tarek:
She started laughing at me. I looked at her and I was like, “You know what? We just bought our very first flip. What if we flip houses on TV?” She shook her head at me, laughed and walked upstairs and went to bed. I stayed in front of my computer. I literally Googled Hollywood production companies and then they came up. I went to the first one. They had a button that said casting. I sent an email. This is who I am. This is what I do. I want to flip houses on TV. I woke up the next day and they said, “Send me a home video.” So that condo I did in Santa Ana, where we paid 115, I actually documented the process and sent it to the production company. They loved it. They’re like, “We want to come out and do a two-day professional shoot.”

Tarek:
So now this is my first time dealing with TV. Never in my life had I even thought about TV. They come out. We shoot for two days, real director, real cameras, everything. We made a sizzle video. A sizzle video is a three- to five-minute video of what the show could be. So, then they take that sizzle video and they send it out to all the networks. Guess what? Nobody wanted it. Nobody wanted it. And I was like, “Man, that sucks,” but that’s life. So, I just kept going. Ten months later, I’m on the golf course. I get a call from the production company. They’re like, “You’re not going to believe this, but HETV wants to do a pilot of a house flipping show.” I couldn’t believe it. I was getting a pilot for a TV show.

Tarek:
So, I shot the pilot in summer of 2011 and it got done. It went to the network and everybody’s telling me the odds of a pilot getting picked up are very slim. And if we do get picked up or we do get an answer, it’s not going to be for a long time, because everything in TV is slow. I think it was maybe two, three weeks later, I get a call. I get an email and I have a contract to flip 13 houses on global TV in 10 months. As you can imagine, you’d be thinking I’d be celebrating, right guys?

David:
Well, I’m thinking, “How am I going to find that many houses to flip that are good deals?”

Tarek:
Two problems. One, I don’t know how to flip houses. Problem number two, I have no money. Okay. So, I called my lawyer at the time. Funny story with my lawyer was my first lawyer. He was a referral. I sent him the contract. I said, “Can you review this?” He wrote back, “Yeah, no problem. I need a $2,500 retainer.” And at the time, I didn’t have $2,500. So, I wrote back to my lawyer. I was like, “Can you do a payment plan?” He’s like, “Yeah, LOL. Yeah, I’ll do a payment plan. No problem.” To this day, he’s still my lawyer and one of my best friends in the world. So, I asked him, I was like, “Man. So, what if I signed this thing and I can’t flip these houses?” And he goes, “Well, I mean, they could sue you.”

Tarek:
I looked around in my apartment at the time. I looked back at him and I said, “You know what? They can have it. If I don’t pull it off, they can have all of it. It’s all financed anyway. So, they could take it.” So, what I did is this. I learned how to flip houses season one of that show, I created a proven track record where I got other investors to start giving me money. And then that first investor that did that first deal with me saw that I was serious. He really went all in with me and he said, “I will be your capital partner. You go find those houses.” So, my first year on TV, I really didn’t sleep, because I needed to find houses and I was buying some of them at the auction. The reason I had to buy them at the auction is because we needed to start filming now as you can imagine, right?

Tarek:
But then when you’re buying at the auction, I couldn’t buy an occupied house, because what if it takes me six months to evict them? How do I start filming a show if I have tenants in the house? So, what I did is I would work all day until 8:00, 8:30 at night, my normal real estate stuff. I’d get home about 9:00, eat a quick dinner, and then I would do prep work. And almost every night from 10:00 PM until about 3:00, 4:00 AM, I would drive all throughout Southern California overnight. And I would drive by all the addresses that were going to the auction the next morning.

Tarek:
The reason I drove by the addresses is because I wanted to see if anyone lived at the houses. I looked for overgrown grass. I looked for newspapers by the front door. I looked for lights on. I looked for cars in the driveways. So, it was 3:00 in the morning, I’m driving by houses. If I didn’t think anyone lived there, I would say, “Okay, I can bid on that house.” So then of course I work all night. I pick four houses I could bid on, right? I go to the auction. My max bid is $300,000 on a house. Next thing I know, the investor next to me bids $310,000, this guy bids $330,000. Next thing I know, they’re bidding $400,000. My max bid’s $300,000. How am I ever going to get a house? How do I get a house? My numbers were way off, but I never quit.

Tarek:
I showed up every single day until one day I bid on the house. For some reason, nobody else bid against me and I got the house. I flipped it and I made a profit. So, here’s what I learned at the auction. If I showed up every single day and I worked like a crazy man every single day, I was going to get lucky, nothing more than getting lucky. For one reason or another, people just didn’t realize to bid on that specific house and I would get a house. Then that’s what would happen. I’d get outbid, outbid, outbid, outbid. And then every now and then, I’d get a house. That’s how I started getting houses for the show. And then I started prospecting listing agents to buy their short sales. And then I created systems and then I would door knock. So, I did everything humanly possible.

Tarek:
And because I signed that contract, I put myself in a position where I couldn’t fail, because if I failed, I’d lose everything. So, I did 10 years of work in one year and that’s why my business went like this. The rest is history, man. I’ve done 10 seasons of Flip or Flop. I have my new show, working on season three right now, Flipping 101, where I’m mentoring rookie flippers. We just announced our new show called The Flipping El Moussa with me and my wife, Heather El Moussa.

Rob:
So, a little known fact here. I actually, I shot a sizzle for HDTV and probably not even supposed to say that. They were very hush-hush about it, didn’t get picked up, all good. This all happened while the BiggerPockets thing was coming to light. And I was really excited about this opportunity because what really scared me about the TV world was the concept was around my tiny house village that I was building out in Tennessee. We were going to be shooting these 14-hour days, which I’m sure you’re really familiar with.

Rob:
But the question I kept asking myself and asking the producer is, “How in the world am I going to be able to do production and maintain the actual workflow of not flipping, but completely constructing these tiny houses and tree houses and everything like that?” So, I’m really interested to know, did the actual workflow of flipping a house changed pretty dramatically once the cameras were on?

Tarek:
That’s actually a great question. The biggest hurdle for me was, “How am I able to film a TV show all day, but also prospect for sellers, negotiate deals, walk properties, hire contractors, and get them sold?” So, TV actually did something very special for me. The first year almost killed me, but because it almost killed me, I was working 18-, 20-hour days, it forced me to become an entrepreneur. Meaning it forced me to learn how to delegate. So, I knew I can’t be in 10 places at one time. So, I need to start finding people to replace what I was doing. So, it taught me to scale. It taught me to be a leader. It taught me to be a CEO. Because I’m on camera, I still needed all the work to get done.

Tarek:
So, I had to hire salespeople. I had to hire managers. I had to hire marketing and I had to build a company. So, I went from being a guy that was flipping houses to a guy that was building a real estate investment company to manage those projects while I was creating a TV show. The first couple years, I mean, I was very, very hands on, because I had no choice, but now obviously, I’m more focused on the TV side of things. And in place of me, I have many employees and many systems that are just running.

Rob:
One thing I really felt nervous about stepping into that possible role was that I was expected to be the expert in every single facet of that project. I had to know the engineering, the soil reports, the construction details, the nitty gritty for actually attaching a treehouse or at least they wanted me to appear that way, but I was really learning all of this as I was going. I’m interested also, was there a little bit of pressure on your end to feel like an expert or to rapidly get to expert status while you were doing the show?

Tarek:
To be honest, that’s what they wanted and that’s not what they got. Thank God they didn’t because Flip or Flop probably wouldn’t have been the show it was. I mean, it’s the most watched house flipping show in history. And I told them, I was like, “I’m not an expert. I am literally learning as we go.” That’s the excitement of the show. I am not an expert. I am showing I am chasing the American dream and that’s the show we need to build. So, at first, they wanted me to be an expert and I was honest and I said, “I am not an expert. So, let’s just see what happens.”

Tarek:
So, they worked with me and I think we created something really special. And nowadays, I would consider myself an expert at most things. But if it comes down to the details of construction, I am not an expert. I know nothing about construction. That’s not something I want to learn. I’m more interested in being a real estate investor.

David:
I love what you’re saying here, because I got started investing in real estate as a police officer. I was working full time as a cop and I’m buying rental properties. They were in other states because you don’t really find cash flowing properties in California. I would flip an occasional house, but that really wasn’t my bread and butter. And I had the same problem. How do I do all the work of an investor who wants to do their due diligence the right way while taking calls for service, driving the car around really fast, chasing after people, writing reports? So, it forces you to actually hone in on the systems that you’re creating, cutting out the fluff, making sure you focus on the most important things. And I think it ultimately made me a better investor.

David:
It’s why I ended up writing the book Long Distance Real Estate Investing, because I detailed the systems of an investment property as opposed to Brandon. We talked about earlier, he was flipping houses in his own backyard. So, he would get sucked into, “Let me just go change the door lock. Let me just go learn how to fix a toilet.” It’s always like, “Oh, I’ll just go do the flooring myself. It’ll be easier, faster. I’ll save money.” He got stuck in the cycle where he wasn’t growing versus me. I’m notorious for I don’t know how to change the door lock. I tried one time to do it. It took up seven hours of my day with four Home Depot trips. I’m like, “Never again.” I could have paid a handyman four times what they wanted and still save money.

David:
Can you elaborate a little bit about if you really believe this is the better way to learn how to invest in real estate investing?

Tarek:
Honestly, man, like I said, I learned on that very first flip. I would go to Home Depot probably 10 times a day, because I would forget this or I would forget that. And if you got to drive back and forth, you got to find parking.

David:
How much time did we spend just driving a freaking Home Depot, man? I get mad just remembering.

Tarek:
If I spend the same amount of time looking for houses than I did going through a Home Depot, I probably would’ve put a lot more houses a lot faster. So, for me, I’m not good with construction. So, this is how I look at it. Okay. If I can hire someone to do it and it makes sense and I’m still profitable, I’m going to hire that person, because what is the most valuable thing when it comes to real estate investing, right? What is the most valuable, more valuable than anything else? It’s being able to source deals.

Tarek:
So, I learned very on after my very first transaction if I become an expert at finding deals, the rest is going to fall into place. I can hire contractors. I can hire real estate agents. I can hire landscapers. I can hire escrow companies. I can hire people, but I couldn’t hire someone to go out there and hunt for deals the way I was willing to do it. which made me very valuable. So, I’m never going to go do $20 an hour work when I could be doing $5,000 an hour work. That’s the lesson I learned really early on. I really learned it because of TV and TV forced me to delegate.

Rob:
Is there a moment where you realized that? Because it’s obviously very easy for us in retrospect, we’re like, “No, our time is valuable. We’re going to hire it out.” But did you ever find yourself in the middle of a trade or doing anything where you’re like, “You know what? I’m done. I will never mud a wall again”?

Tarek:
Yeah. Yeah. So, this is funny. So, on my very first transaction, you got to remember, my very first flip. This was after the 2007 crash where I sold my S500 BRABUS, my BMW convertible, my Escalade, all my toys. So, now, I’m driving a Honda Civic, right? So, I would drive all over town to Sears outlets. And I’m trying to slam range hoods into the back of the car. It won’t fit. And I’m like, “Man, I can’t put the supplies from Home Depot in my Honda.” So, I called my business partner. I said, “Man, we got to get a truck,” and he’s like, “We’re not getting a truck.” I’m like, “What do you mean? I need to go pick up all this stuff.” He’s like, “Go hire someone to pick that up.” I’m like, “Well, no, no, we’re going to save 50 bucks if I do it.”

Tarek:
That’s where he talked about opportunity cost and time. That was the first time I had learned that. He’s like, “Well, why are you going to go buy a truck so you can go to Sears to pick something up, to go take it to a house when we can hire someone?” My mindset was I’m saving 50 bucks. What he taught me was well, we could be losing thousands because I’m not actually working on what I’m good at.

Rob:
I was actually in a very similar situation. When I first bought my home, I was doing a lot of the remodeling myself and I decided to hire someone to help me remove a load bearing wall in my house. That wall was a 17-foot span. So, I needed to buy a 20-foot… I want to say it was a 6 by 10 or something. And the guy was like, “Well, if you want me to buy it, it’s going to be another 50 bucks. I have to go pick it up and everything.” I was so cheap and I said, “I got it.” And my wife and I drove a Subaru Forester, which is a very tiny SUV. And I was like, “Hey, we got this. We’ve done crazy things. I’ve really packed in stuff into cars a lot.” So, I go to Home Depot and I realized, “Well, this thing weighs 600 pounds first of all.”

Rob:
So, we have to get three or four Home Depot guys to help us put it on the top of the truck. And we line it up, and basically, there’s five foot of lumber on each side of the truck hanging off. And I was like, “Well, that’s no big deal. I only live five minutes from here.” So, my wife was like, “Man, I can’t believe I’m part of this.” And I was like, “No, it’s okay. It’s going to be fine.” And as luck would have it, I lived right by The Forum. It used to be a basketball arena, but now, it’s a concert hall. Concert led out right at that moment.

Rob:
So, we are stuck in the middle of Los Angeles traffic for 30 minutes while I am trying not to maneuver my car too much one way or another, because the piece of lumber is going up and down. And I was just seeing all the lawsuits that were appearing in front of me. I was like, “Oh, this is it. This is how I lose everything.” And that was the day I told myself, “I will pay for delivery for the rest of my life.”

Tarek:
Yeah, that’s it. So, that’s where I learned about opportunity costs with that Civic being at Sears outlet, trying to stub a hood into the back and it wouldn’t fit. And then, like I said earlier, after my very first flip, I pulled it off. We made a profit. I worked my tail off, but guess what? At the end, I had no other houses, because instead of looking for houses, I was working on houses. So, the best place to spend your time, I don’t care what anyone says, it’s always going to be hunting. It’s always going to be looking for deals. Whether it’s houses, whether it’s apartment buildings, whether it’s strip malls, whether it’s self-storage, the most valuable thing any investor can do is source deals.

Rob:
Well, that’s a great tip and I know that you have a set of tips here for house flippers. I know you got five. So, is there a way you can just run us through some of those for someone aspiring to get into this business?

Tarek:
Yeah. I mean, I’ll go over a couple tips and then you guys just ask me any questions you’d like, but people ask me, “What’s the first thing you do?” I mean, the first thing you do, I mean, everybody knows this. This is the tagline for my company homeschool, where we teach people how to flip houses. The tagline is this. Before you invest in anything, you have to invest in yourself. So, before you go out there and get started, you got to get a mentor, join a program, read some books, jump on YouTube, start filling yourself with knowledge. You have to invest in yourself. So, that’s obviously something very, very important. Once you start feeling comfortable, then you got to get started. And for me, the first step is becoming an expert at finding deals, right?

Tarek:
If you don’t know how to find deals, you’re never going to be in business. So, finding deals is where I spent 95% of my time when I first got in this business, nothing else. I didn’t know anything about construction, nothing. I spent 95% of the time learning how to find deals. And then once I found the deal, I was like, “Okay, the next step after you find it, well, you got to fund it.” I had some business partners put in place where they had given me private money. If you find deals but if you don’t have funding, you can’t flip it. So, a lot of times you have to wholesale it. So, you find them first, then you got to fund them and then you have to fix them.

Tarek:
Here’s the thing. My first couple contractors, it was a nightmare. Everything went wrong. Nobody was working on the houses. Everything was behind schedule. I wanted to pull my hair out, but here’s an interesting story on the fixing part. So, I’m doing my very third flip and I’d been working on this thing for five months. It looked like it has been worked on for three weeks. There was a flip that had just been bought right around the corner. And there was this huge banner outside with the construction company’s name. And I was like, “Okay, here’s another flip.” I’m not kidding guys.

Tarek:
A few weeks later, I drove by that house, the house was done. The house was done. My house was still nothing happening and this house was done in a matter of weeks. So, guess what I did? I called that contractor. I called that contractor. Hey, I never say you got to be the smartest guy or smartest person. I always say you go find smart people and you copy what they do.

Rob:
That’s actually a very actionable thing, because I would say probably 70% of the people that I ever found for any of my construction projects in LA, I would follow dumpsters. If I see dumpsters in my neighborhood, that’s a really good sign for me because I can actually see the progress of a house. And if I like the work, I can go in and poach that roofer or that stucco person or that drywall person. It was really great. I mean, a lot of the people I still work with today are people that I actually saw working and working diligently. Yeah, that has really filled up my Rolodex ever since.

Tarek:
No, 100%. One of the things when I train people is you want to find a contractor. Wherever you live, jump on Zillow. Look at every single house for sale, every single home that’s sold them last six months. Scroll through them one by one, look for ones that look like a flip, and it might even say completely remodeled. Call the real estate agent. Try to make friends with the agent. Say, “Hey, why don’t you refer me to the contractor that did the flip on 123 Main Street. If they help me with my house, maybe I can give you the listing.”

Tarek:
So, I teach people not to just work with contractors. You want to work with contractors that do two things. One, they work with investors, and two, they do volume, right? So, I only want to work with experienced contractors for my flips. I’m not going to go hire the custom kitchen guy. I’m not going to go hire the custom pool guy. I want to work with people that work with investors.

Rob:
Why is that specifically? Why is that a designation you’re looking for in a contractor?

Tarek:
Because they’re experienced, they already know what to do. There’s no learning curve. If I work with a contractor that’s remodeled 800 flips, do I really need to tell him what to do? I mean, at that point, they should be pretty experienced, right? So, I look for people that have that experience. So, as nice and professional as the custom kitchen guy might be, their pricing is going to be nowhere near, because they don’t understand the difference. A flip is a vacant house. There’s no homeowner there in the way. There’s no moving furniture. There’s no covering things up. They’re not picking every little item apart. So, it’s a different type of contractor.

Rob:
Yeah. That’s what I was wondering. Does that type of contractor tend to understand that as an investor, they can’t necessarily mark up every aspect of that flip the way they would with just like a one-off homeowner?

Tarek:
100% because that’s their specialty. They understand in order to work with investors, speed and price is important. That’s why I said we got to find experienced contractors. I used to go to Home Depot, used to track garbage bins. I used to go to Home Depot in the mornings and watch what companies would come. What would their trucks look like? How would their employees act in public? How would they hold themselves professionally? I used to walk up to the pro desk. Hey, how’s it going?

Tarek:
Hey, I got a question. What contractors buy most materials here? Who do you think are the better contractors? It’s just asking questions. Like I said a minute ago, you don’t have to be the smartest. You don’t have to know everything. You just need to find people that do know everything and that’s how you find success or at least that’s how I find success. I work with people that are specialists in the fields that they’re in.

Rob:
That’s great.

Tarek:
So, I said, we got to invest in ourself. We got to be an expert at finding deals, spend the majority of the time there, fund it, different ways to get money, fix it. That’s the contractor. And then selling it, selling it, price it right, professional photography. If staging’s warranted, get it staged. But when it’s time to sell, I treat it as professional as possible. Two important things about selling the houses, one, price, but two, where a lot of people drop the ball on is photography. Spend 250 bucks, get professional photos, because those photos are going out to the entire world. That’s what those buyers are going to see.

Rob:
Yeah. This is something I hammer quite a bit with a lot of people that I teach. They want to take cell phone photos. I mean, people will come to me and say, “Hey, Rob. My Airbnb’s not booking. I don’t understand why isn’t it booking or this flip isn’t selling. Why is it?” I’m like, “Well, let me see.” I’m like, “Well, you took your photos with an iPhone 3.” And a lot of people think, “Oh, well, it’s got 14 megapixels. It’s got the wide angle lens. Does that not work?” And I’m like, “No, you have to spend the money.” I mean, good photography, obviously, there’s a range, but we spend anywhere from $250 to… I’ve spent up to $1,000 on photos. Obviously, that’s not going to be all the time. But David and I had a luxury property that we bought in Scottsdale.

Rob:
I was like, “Let’s spend money on these photos because it’s a $3 million house.” I always say, “You don’t want to put hubcaps on a Ferrari, right?” You want to spend the money and make sure that you’re actually representing the property as accurately as possible. Have you ever been in a situation where you learned the hard way that bad photos didn’t necessarily net out in the most profitable transaction?

Tarek:
Fortunately, for me, no, because before I was a real estate investor, I was a real estate agent. So, I started as a real estate agent from 20 to 29 and I always knew the importance of marketing. So, that’s one thing I’ve always done is professional photos. Whether it’s $100,000 condo or a $20 million house, they’re getting professional photos, because those photos on $100,000 condo might bring you an extra 10,000 bucks, which could be an additional 10% return, right? Just as something simple as the photos.

Rob:
Yeah. So, I actually wanted to dive a little bit into the finding the deals, because this is something that is perhaps the first thing you want to learn how to do super, super well. What is an example of finding a deal? Is it just going to the MLS and looking on there or do you actually have super-secret secret sauce for finding a deal?

Tarek:
Yeah. I mean, for me, if you’re shopping on the MLS, you’re shopping in a retail marketplace. There are deals on the MLS, but man, it is difficult to get them. And if you get them, it’s not very often. So, it’s really hard to do multiple transactions. So, I learned early on, I don’t want to shop on the MLS. I want to work with off-market deals. I want to work with distrust sellers. I want to work with motivated sellers and that’s really where my focus was. So, there’s two ways to do it, right? One, if you have money, you can do marketing. Two, you don’t have money. You’re doing the work. So, if you’re someone that wants to get out there and do deals, you have no money.

Tarek:
Well, you got to be knocking on doors. You need to be making phone calls. You need to be sending text messages. You need to be going to 50 open houses a weekend, talk to every single real estate agent, ask them for deals, get their business card, create relationships, follow them on social media. Every single time, anyone you follow ever posts anything on social media, you comment. So, they remember that you commented and you’re always there. So, when that deal does come six months from now, that real estate agent’s going to remember, “Hey, Tarek, that guy, he’s looking for off-market deals.” I always compare it to fishing when I’m teaching people. You’re going to jump on a boat.

Tarek:
Do you want to throw one line off the back of the boat and sit there or do you want 30 lines surrounding the boat? What’s going to bring you more fish? It’s the 30 lines. So, the old school way, go out there, hit the street, find deals. And if you have money for marketing, there’s different things I do within my company, Tarek Buys Houses. We do digital marketing. We have TV commercials running. We have radio ads and we’re just always out there. We spend quite a bit of money on that.

David:
All right. That is awesome as far as how important a contractor is and the importance of photos. I’ll second that. I’d say in today’s day and age, people don’t realize there’s no realtors or sellers that have a secret list of buyers that no one else knows about. That’s the way real estate worked 40 years ago. I’ll put it in a newspaper. I’ll put it in a magazine. Everyone sees everything now, Zillow, Realtor, truly all of it. It’s like online dating. You have to have a picture that someone’s like, “I want to see that house.”

David:
Most of the houses I’ve been buying are literally I see ugly pictures. They’re dark. Sometimes agents load them in sideways. It’s just terrible and I know no one’s looking at that house. Those are the ones that I actually like to go after. So, that’s a very good tip. What other tips do you have as far as what house flippers should be aware of that you learned the hard way?

Tarek:
Oh, be aware of this really, really hard, the only difference between a successful real estate investor and an unsuccessful real estate investor is the successful one kept going when they wanted to quit, okay? I wanted to quit so many times. I remember thinking, “There’s no way in hell this is going to work.” You’re telling me I can pick up a phone, call strangers, and they’re going to sell me their house under market. I’m like, “There’s no way this is going to work,” but I did it anyways. And guess what happened? It worked. The problem is most people, they get frustrated. Most people, they get defeated. Most people, they can’t endure the pain, because as you two know, you’ve been through it. Is it painful?

David:
Mm-hmm.

Tarek:
Is it frustrating?

David:
Mm-hmm.

Tarek:
It, is right? That’s where you just got to dig deep, believe in yourself, believe in what you’re doing and keep your eye on the ball. And if you believe and you keep taking action, you keep working every single day. Eventually, it all starts to click.

Rob:
I’d like to think I’m at the point of my journey where I have the laugh sigh. When something goes wrong and my partner’s like, “Bro, you are not going to believe,” I go, “Yeah, I believe it.” That’s my answer to everything is I’m like, “Of course, of course.” I at least am now like, “Okay,” because I’ve tried to remove myself from the actual day to day and more do the investor thing like you’re talking about where it’s not how, but who’s going to address this. It’s a lot easier to move on from a situation if I can really just as quickly as I can realize, “I’m not the one that’s actually going to be fixing this roof caving in. I just have to get in contact with the contractor that’s going to do it.”

Tarek:
Exactly. And while they’re doing that roof, you know what you’re going to do? You’re going to go find another house to flip.

David:
All right. So, Tarek, what about knowing a market? How important is it for the investor to know the market that they’re in and what lessons have you learned regarding not knowing a market you’re trying to flip or buy in?

Tarek:
It’s very important to know the market. So, I buy houses at this point in my career all over the country. I mean, you don’t have to spend five years studying it. Spend a couple days, right? How’s the population growth? How is the real estate market doing? How is that local economy? What is the absorption rate? How many homes are for sale? How many homes are pending? So, you don’t have to spend years. Literally, you can just spend a day or two researching that market. And then once you understand what’s happening in that market, then you can make the decision to jump in the market. An example of this, if I want to go a market somewhere in this country and I’m like, “Okay, I want to buy houses here.”

Tarek:
If I look that people are leaving, the economy’s struggling, and for every 20 homes for sale, only one home is selling, that’s a bad sign. That means our supply is really high, our demand is really low. I’m not going to go buy in that market. Now, if I go to a market where population growth is growing, there’s no inventory, demand is strong. Maybe there’s one home for sale and five homes in escrow. What does that mean? That means there’s no supply and there’s a whole ton of demand. So, that’s the market I would go into. So, that’s how I determine the markets. I do a little bit of research on the local economy and I check the absorption rate. I check the supply and demand curve.

Tarek:
So, my partner and I, we bought this house. It was years ago. We bought it in Texas. Long story short, it was in some type of a plain flood zone, something we don’t have in California. Anyways, I thought we got a good deal, listed this thing, didn’t sell. And back then, we wouldn’t lose money on houses. So, it wasn’t something I was used to. I wouldn’t want to lose money on a house. Now, it’s okay. I understand if I make money on nine, I lose on one. I average 10, I made money, right? But back then, I didn’t.

Tarek:
So, instead of just ripping off the Band-Aid, selling this house in Texas and losing 20 grand, I put it on the market. I took it off the market. I did more remodeling, came back to it, and then tried to sell it again. And then I got it staged, blah, blah. Long story short, I kept trying to make it possible to get the price I wanted. But in the end, I ended up selling at an $80,000 loss. And if I would’ve just ripped off the Band-Aid at the beginning, it would’ve been a $20,000 loss.

Rob:
Wow. So, even at your level, I mean, you’re flipping a lot of homes. Do you still factor this in? If you’re buying 10, 1 is going to lose money. Is it a numbers game for you or is your strategy like I’m not losing money at any cost because I’ve got the systems developed? I’m curious for someone as experienced for you, how does that play out overall?

Tarek:
That is just one of the best questions you could have asked me. So, here was my biggest mistake in my house flipping career from 2010 to 2019. I wasn’t losing enough money on flips. Let me explain what that means. I was passing on way too many deals. The market was going up. So, in my mind, if I wasn’t for sure going to make a good profit, I was passing on the deals. Literally, 90% of those deals I passed on, if I would’ve just bought them and fixed them up and flipped them, I would’ve made a ton of money. I was too picky on the houses I wanted to flip. So, now, I tell myself, “If I’m not losing money on a small percentage of houses, that means I’m not buying enough houses, which means I’m not taking enough risk.”

Rob:
That’s really cool. I don’t think a lot of people are honest about that. I think everyone, I’m not going to fail at any cost, right? And I think that the big swings is where the profits come in, right? And so, every so often, you got to take an L, but if you take enough big swings and you’re successful, I got to imagine it’s a net positive.

Tarek:
Yeah. Yeah. Here’s the thing though. When you go into a deal, I know when it’s going to be a home run. When I lose on a deal going into that deal, I already know there’s a chance I’m going to lose money on this deal. It’s not like I have a deal where I’m like, “I’m going to make 300,000,” and then I lose money. That doesn’t happen. So, when I do lose money on deals, going into that deal, I know it’s a riskier deal and I have to make the choice. Do I want to take the gamble or not?

David:
Yeah. And I think that’s good for people to hear because it’s easy to tell people, “Never lose money on a deal ever.” I would also say, I want to get your opinion on this, there’s probably a point in someone’s career where that is good advice. You got your first $80,000 saved up and it’s all the money you have to your name. You can’t lose, especially in the beginning, but I’ll often tell people, some people make the mistake of playing conservative their whole life. You said that’s what you were doing. You’re just being too careful. I tend to be that way too.

David:
Other people make the mistake of just going and buying five houses before they bought their first one and trying to flip five at one time. So, I’ll often say you got to start slow. It should be really boring. Once you start to anticipate what could go wrong or you get that feeling like you just had, “Yeah. I might lose money on this house. I can tell,” that’s the point where it makes sense to ramp up your business. Do you agree that that’s the right point in the model where it makes sense to go bigger and possibly lose money to make more in the end?

Tarek:
100,000,000%. At the beginning, we are only buying good deals. Let me say that again. When you first get started, you never want to go into a deal where you might lose money, right? You need to be so confident in your first deals, but as you grow your brand, as you flip more houses, the only way to scale is by taking more risk. But the question is, how do you offset that risk? Well, pretty simple, to offset your risk, you got to make sure you have a bunch of profitable flips that you know are home runs. That’s where that 1 in 10 comes in. Listen. If I crush 9 houses and I lose 50 grand on one house, do I care? No, because you take the total profit, divide it by 10, you get the per profit average, still really good.

Rob:
Yeah. I would imagine you only care if the first flip is the loss and you’re like, “Dang it.”

Tarek:
No, let’s just say I’m new to house flipping and I lose on my first flip. Now, that’s going to be a big problem. You don’t want to start taking risk until you build up your nest egg.

David:
I look at it like a pyramid. You want your foundation of that period, the majority deals you’re doing to be boring, base hit, not a huge upside, not a huge downside. They’re just solid moves. For the buy and hold space, this would just be single family rentals in good areas where they’re going to slowly appreciate over time. And then once you’ve got a big base, you can start buying more, a little riskier. It has a higher upside, but it also could have a higher downside, but it’s in proportion to how many safe ones you have. Then at the top of the period, you got stuff like Rob and I bought, that $3.5 million property in Scottsdale. That’s like a crown jewel, but that thing might be a year or two before it’s profited.

David:
We don’t know exactly how this is going to work out, but it doesn’t matter because we have enough other cash flowing assets that it’s not going to break us. And over the long term, it’ll be a great deal. So, I think that that’s really good advice that you’re sharing with people and it’s something that you hear in other sales areas too. They tell real estate agents, “If you’re not getting turned down, you’re not trying to take enough listings.”

David:
You shouldn’t be getting every single listing that you go for. If every buyer you work with, you’re putting them into contract, you’re not working with enough buyers. There is a point where every great athlete doesn’t score on every single shot. They’re going to miss sometimes too, right? If you only shoot when you know you’re going to make it, you’re going to score two points every three games, then you’re not going to be in the league that long.

Tarek:
Yup, 100%. This all comes down to experience.

David:
So, one thing I know that you’re known for would be the actual design that you’re putting into the house. I know on the TV show, it would be worked out where your partner is the one who’s choosing the designs and you’re working on the numbers. But what advice do you have when it comes to people figuring out the area they’re in and making sure that the materials that they’re choosing are in vogue for that area?

Tarek:
Sure. I was just going to say this once. We are real estate investors. We are not designers. Do not spend all of your time designing houses, because at the beginning, that’s what I did and it takes too much time. So, here’s what I like to do. Houses are different all around the country, right? So, if I’m flipping a house in North Carolina, what I do is I will run a mile circle around that house. I will look for the closest, highest price comp. And then, however that house is designed, that’s typically the same style I’m going to do my house, because someone else already proved that that design brings the highest price in that neighborhood.

Tarek:
For example, if I’m in LA, I’m not going to do a design I’m going to do here at the beach. I’m going to go look at the comparables in LA. So, what do similar properties that are selling at the highest price look like? That’s the question you ask yourself. So, if I got a three bedroom, two bathroom, 1,200 square foot house, I’m going to look for the highest sold three bedroom, two bath, 1,200 square foot house and make my design similar to that and maybe even a little bit better.

Rob:
Man, this is a hard one for me, because I am wanting to step into this a little bit more and I am such a design oriented guy. Is there ever a moment that you’ve told yourself, “I want to be the design pioneer of this zip code and be that comp,” or is it just never really worth it to be the trailblazer in that capacity?

Tarek:
Well, I’ll give you an example of that. If I’m doing a flip in LA that all the homes in the area have a modern remodel, I’m definitely not going to do a traditional home, right? Because in LA, people don’t want a traditional home. They want a modern remodel. So, what I do is we do our own spin or our own twist on a modern remodel. So, when I say we choose a design style, our house doesn’t look like that house, but it’s the same theme, right? It could be modern, it could be transitional, it could be traditional. So, I still get involved in the designing of it with the theme, but I don’t copy the exact look, but I copy the theme if that makes sense.

Rob:
It does. And in today’s market, the other thing that I see happening a lot is there seems… I’m not going to call it greed. There just are a lot of people out there that know the market, and thus, they aren’t necessarily always pricing the homes reasonably. And they’re like, “I just want to make a big fat profit, whether or not it appraises and I’m not going to take any contingencies.” What are your thoughts around that sentiment and that attitude in the market right now?

Tarek:
Well, they’re going to get caught. I mean, if they’re so fixed in their ways and they’re not willing to be flexible, that’s where you run into trouble. You got to follow the market. If the market says you got to drop your price, you drop your price. If the market says you should take an offer, you should take an offer, because all the signs are telling you what to do. And if you go against the signs, typically, you’re going to end up in trouble.

Rob:
Has there ever been a moment for you where something like this went wrong? I know you talked about if you had ripped off the Band-Aid. Was there any other moment where you were like, “Dang it, I probably got a little ahead of myself on the price here”?

Tarek:
It does happen, but I’m good at one thing. I’m good at just cutting my losses in life and moving on. So, if I have a deal and it’s sitting on the market, it’s not selling, I don’t cry about it. I don’t complain about it. I reduce the price. I reduce the price. I sell it. I get it off the books. I make a little less money. I go find another deal to replace that lost income.

Rob:
Which is a win, right? So even if you got to break even sometimes, hey, you get your time back and you can get it into the next house.

Tarek:
Absolutely, something interesting right now. My company, I think, we have 70 flips going right now. On a couple of them, we’re losing some money, $30,000, $40,000. It’s okay, because we bought them a few months ago. The interest rates have doubled and that’s fine. So, how do I get over the fact that on some of these houses, I’m losing $30,000 to $40,000? Well, houses I’m locking up right now, some of them are showing a profit of $200,000, $300,000, $400,000. So, do I care if I lost $30,000 on this house but I bought another house that made $300,000? No, not so much. As long as I don’t stop, right? I’m always hunting for deals regardless of the market.

David:
All right. That is fantastic advice, especially the last part about knowing the market. I’m seeing this right now. In today’s market, we’re seeing a shift. People, like me, like you, that are experiencing this, we pivot fast. Like you said, you listen to the market, you go with the current, you don’t try to fight the current. And the people I see getting hurt are the ones that are just stubbornly holding out, especially in the luxury space where those price points are very sensitive to interest rate hikes. And they’re like, “No, no, no. My neighbor sold their house for $4 million. I’m not selling for $3.5.” You’re like, “Yeah, that was at a 2.5 interest rate. You’re looking at a 7.5 interest rate.”

David:
Man, that undertold will just suck you in and beat you up if you don’t adapt quick. So, I really appreciate you sharing that information, especially from someone respected in the game as you are, Tarek. I’ll sum up your points here. The first one we have is know your market. What is selling there? What is going on there? What is the inventory as far as the supply-demand curve, like you mentioned? Are you one of 20 houses for sale and there’s 2 pending or are there 20 pending houses and there’s only 2 other active homes that are for sale? That is not talked about enough in our space, but as an investor and agent myself, that is the first thing I look at every single time someone comes to me about selling their house. Then we have make sure you pay the right price.

David:
So, make sure you know, going into it, what your numbers are going to be. And if you’re doing that well, you should know there is a chance I could lose money, but you know if that’s a risk that you’re willing to take or not. Next would be the contractor is one of the most important aspects in flipping. Look for an experienced contractor that knows the market, that knows flipping, that knows working with investors, that you can say, “Hey, tell me what you think we should do,” versus they’re looking for you to be the one to call the shots. Number four was design with the area in mind. Don’t be the person doing a house completely different than every other home that’s selling.

David:
And then number five was don’t be greedy. Sometimes it’s easy to go after the numbers that you want when the market has shifted on you and the market is going to win 100 times out of 100. You’re not going to beat the market. So, all right. We’re going to move on to the next segment of our show. This is a new game we’re going to be playing called Real or Reality, where Rob and I will have to guess facts about you, Tarek, and you will tell us who is right. The first guess, the statement is Tarek’s wife has a tattoo saying, “Yes, sir, Mr. El Moussa.” Rob, what say you?

Rob:
Oh, is this real or reality TV? I think I’m going to go reality TV.

David:
All right. I’m going to go with real because I don’t see how someone could have come up with something this crazy and specific if it wasn’t real. That’s a genius.

Rob:
I went through that too. I was like, “I don’t know. This is too specific.”

Tarek:
It’s as real as the tattoo on her a*s.

Rob:
Oh, really? That’s awesome. Okay.

David:
All right. David jumps out to a quick one, nothing lead. It’s all right, Rob. Hang in there. I feel like you get better as we go.

Rob:
Do we want to set wager on this, by the way? Do you want to bet on who wins this at the end?

David:
Yeah. Whoever wins gets to do the intro for the show. How about that?

Rob:
All right. That’s nice low stakes. I was going to say whoever loses has to watch Morbius but yours is way better.

David:
Rob and I have a standing joke about how many things in the world are better to do with your time than watching the movie Morbius that we were disappointed by. All right. Next statement, my biggest flip was for $1 million. Real or reality, Rob?

Rob:
I think I’m going to go real on that one.

David:
Are we saying the profit was $1 million or are we saying the price point? It can’t be the price point.

Rob:
I think the profit, yeah, because I’m sure he sold a lot of million dollar plus home.

David:
Yeah. All right. I’m going to go with reality. I don’t think that’s true. I think he’s done more.

Rob:
Dang. Wow. Way to have faith, Dave.

Tarek:
So, what do you got, real or reality?

Rob:
I think it’s for real.

David:
It’s real. Yeah.

Tarek:
It’s for real. I’ve done seven figures on Flip or Flop.

Rob:
Now, the tables have turned or I guess they’ve turned halfway. We’re even now.

Tarek:
I have one right now. We should be closing in a couple weeks. I think it’s at about $1.15.

David:
So, I was guessing that. I thought it must be more than $1 million. I think the question was, have I got to $1 million? So, yeah, I misunderstood that, but still, we’ll give that to Rob, because I think he needs it. I’ll give you-

Rob:
I do need it.

David:
… a pity point. All right. Next one’s getting juicy here. Tarek’s wife’s show, she’s on Selling Sunset has better TV ratings than his does.

Tarek:
I’d just be real here. I’m not a beautiful woman selling $30 million houses. So, I would say that’s probably real.

David:
I was going to guess real. What were you going to guess, Rob?

Rob:
I think I was going to guess reality simply because the rating system is different. And so, just from a technicality standpoint, there are no TV ratings for her show.

Tarek:
Yeah. Well, I do know this. So, her show Selling Sunset is number two in the world for Netflix behind Stranger Things.

David:
Wow.

Tarek:
So, if that doesn’t tell you how big her show is, I don’t know what does.

David:
I have an idea how big it is just because I’m a real estate agent. So, I hear about this constantly. That’s a very, very big show.

Rob:
I have an idea as well because my wife watches it and I am always watching it with her by proxy. She’s very fascinated by it. Also, she told me, this is probably the awkward time to bring this up, but she said, congratulations. She’s like, “Can you tell I said congrats on the baby?” I was like, “I’ll work it in organically.”

Tarek:
Yeah, yeah, we’re having a baby. We just found out about six, seven weeks ago. We announced it a couple days. This weekend’s the gender reveal. We’re going to find out if it’s a boy or girl. So, I’m excited.

Rob:
Nice. Congrats.

David:
Congrats on that. Next statement here, Rob, real or reality, Tarek’s mom helps him with his flips.

Rob:
I think we’ll go real just because I want it to be. That’s very sweet.

David:
Yeah. I’m going to go real as well, because you mentioned I think in the beginning that your mom helped you with getting started or at least I have that idea in my head. Are we close?

Tarek:
That would be reality.

Rob:
No.

Tarek:
Here’s what my mom has helped me with. She helped me with a few things like removing an oil stain from a driveway once. So, maybe it is real. She helped me remove an oil stain from a driveway once. And then when I was first flipping out, I did use her as a private money lender and I paid her as an investor. So, I never took money from her, but I showed her a way to increase her income. And by the way, I never stopped investing her money and we’ve paid off her houses, which is exciting.

Rob:
That’s awesome, man. Yeah. Well, I guess we’re even on that because we both pick the same thing, right?

Tarek:
Yeah.

David:
All right. Next statement, Tarek has literally flipped over a house while flipping houses.

Rob:
Okay. Mechanics here. I got to imagine they’re transporting the house and then it fell off the truck or the crane came undone. I think we’ll go reality on that. Yeah. I think we’ll go reality on that.

David:
I want to say real. My brain tells me that there’s no way this could happen so reality. And then the flip thing, that’s a perfect thing to make up because of flipping, but there’s something in my brain that I might have saw in episode where they advertise on the commercial a sideways house or something. And so, I could completely be pulling this out of my butt, but I’m going to go with real just to switch from Rob. So, we don’t end up in a tie.

Tarek:
Okay. I might be a little confused on the question because flipped over a house. What was the question again?

David:
Well, it says, “I literally flipped a house over while flipping houses.”

Tarek:
Real and reality if we’re talking about the same thing. I did buy a house, it was on last year’s season. The foundation was messed up. I hired a company to fix the foundation. So, what they did is they stabilized the foundation, but in the process of stabilizing the foundation, they literally bent the house in half. So, the whole house was Boeing. So, I think it’s real and reality. I think both win.

David:
That’s good. I wonder if that’s what I was thinking in my mind. That could have been it, because of course, they do like the cliff hanger thing, what’s going to happen. They probably make your face look like, “Oh, the house is going to split in half.” That’s a pretty interesting thing to get into the show. All right. Next statement, Tarek was so poor that he had to buy $5 footlongs and make two meals out of it for two years in a row.

Rob:
I’m sorry. I don’t mean to laugh at that if that is true.

David:
Rob makes a habit out of laughing at other people’s poverty. Don’t feel bad.

Rob:
Well, shut up. All right. I think I’m going to go reality on that. It’s a good story, if not.

David:
All right, I’m going to shoot with real, because Tarek looks like he eats very healthy so I can see the Eat Fresh Refresh thing going on. He also mentioned that he got started at a very young age when he wasn’t doing super well. And I can tell as driven as you were, Tarek, if you were out there constantly hustling, looking for stuff, it probably wouldn’t surprise me because I used to do the very same thing. I was like, “All right, how can I spend $10 a day on food and make that stretch as far as possible?” So, I’m going to shoot with real.

Tarek:
It is 100% real. I’d get the $5 footlongs. I would turn that into two $2.50 meals. I would always eat the first one in the Subway and then I would get a water cup. I’d fill it up with 80% water and I would only steal about 20% of the lemonade just to get a little bit of a flavor.

Rob:
Little taste, right.

David:
That’s funny. Just grab as many lemons as you could put on there.

Rob:
Can I have 10 lemons and 2 sugar packets, please? I’m going to make my own lemonade.

Tarek:
I used to try to sell them on making one footlong sandwich, but making half of it turkey, half of it roast beef, but then they wouldn’t give the deal.

Rob:
Well, that’s why I was laughing at the premise that you have. You’re the hall of fame of Subway. They know you, they know your story, that you’ve got your photos on the window when you walk in because you’re like the star client.

Tarek:
Yeah, they should know me. I mean, I literally lived off of Subway. It’s all I could afford.

David:
Awesome. All right. That is a very funny story. I think I ended up winning by one point barely. All right, Tarek, this has been fantastic. We have held you hostage for long enough. We need to let you get back out there to flipping and flopping. For the people who heard the show that loved it, that want to know more about you, where can they find out more about you?

Tarek:
I’m pretty active on social media. On Instagram, it’s @therealtarekelmoussa and that shows everything about my life, everything about my shows, all the different companies we’re working on. Most excited thing I’m working on right now is my new company. I just announced, TEM Capital. Listen, like I said earlier, I’m an expert at finding deals. That’s what I’ve become a specialist in and I spent years doing that to find houses.

Tarek:
And now, I take that same skillset and now I partner with operators around the country that show us the best deals in the marketplace. So, if anyone’s looking to partner with me on some real estate, we have some great opportunities. Right now, I’m working on a self-storage in Surprise, Arizona. I am so in love with the deal. To get more information and partnering with me on real estate deals, you can go to temcapital.co.

David:
All right. Thank you for that. This has been a fantastic interview. Thank you very much for your time, Tarek. We’re going to let you get out of here. Hopefully, we get to do this again.

Tarek:
You got it. That was a lot of fun guys. Thank you.

Rob:
Awesome, man. Talk soon.

David:
All right. And that was our interview with Tarek El Moussa. Rob, what did you think?

Rob:
Man, that was really, really, really, really fun. My wife is thrilled that I mentioned her in this and then I told her, he said hi. She’s like, “Wait, for real?” I was like, “Yeah, it’s for real. Dreams come true, babe.” So, that’s it. Her bucket list is over. What about you, man?

David:
Yeah. Tarek is everyone’s wife’s favorite, isn’t he? I don’t have a wife, so I don’t have to worry about that element myself, but I thought we could probably do five more episodes with him. He’s got so much knowledge about real estate, entrepreneurship, the right attitude to make it happen. I love how he harped on don’t do everything yourself, right? Just focus on getting the next deal and work on leveraging stuff out from there. I think that’s a great business plan no matter what your business is.

Rob:
Yeah, for sure, man. Well, we got to have him on. Let’s have him back on to talk about the TV stuff, because I think there’s so much there to unpack too as someone who has a small peak behind the curtain, but obviously not to his level.

David:
Clearly, you’re referring to me with my House Hunters episode and my CNN appearances. Yeah.

Rob:
Oh, yeah, that’s right. That’s in the intro of your YouTube videos. Speaking of, where can people find you online, man?

David:
Check me out at @DavidGreene24 on social media, and on YouTube, I’m David Greene Real Estate. I’ve been making content there. How about you, Rob?

Rob:
You can find me on YouTube, @Robuilt, R-O-B-U-I-L-T. On Instagram, @Robuilt, and watch out for scammers. You’ll find five or six different accounts that mimic mine, but Robuilt is very clean and simple.

David:
All right. Any last words before we get out of here?

Rob:
No.

David:
Well, you did a great job today, by the way. I thought this was one of your better performances.

Rob:
Thank you. Man, I just needed to hear that today.

David:
All right. This is David Greene for Rob the one and only Abasolo signing out.