JF1282: Flipping Crazy! 300+ Flips Total, 40 Active Flips, Lessons Learned Along the Way with Luke Weber
Luke has completed over 300 flips and has 40 flips currently going at this moment. From getting started in your own backyard, to expanding nationwide, Luke has flipping tips for every level flipper. From how to find deals, finding contractors, how to evaluate a deal, and more, if you’re a flipper or want to be bring pen and paper when you listen to this one! If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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Luke Weber Real Estate Background:
–Actively flipping across the country with 40+ active projects at a time at The Missing Pieces
–A former appraiser, flipped his first house in 2003, over 300 flips later
–Author of The Flipping Blueprint, which is full of tips, tricks and formulas used in his current business
-Luke and his family explore the world with the freedom created from RE investing
-Say hi to him at https://www.facebook.com/lue.web
-Based in Las Vegas, Nevada
-Best Ever Book: The Entrepreneur Roller Coaster
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast. We only talk about the best advice ever, we don’t get into any of that fluff. With us today, Luke Weber. How are you doing, Luke?
Luke Weber: Good, Joe. Thanks for having me.
Joe Fairless: Well, my pleasure, my friend. Nice to have you on the show. A little bit about Luke – he is actively flipping across the country with more than 40 active projects at this time. He is the author of the book “The Flipping Blueprint”, which is full of tips and tricks and formulas that he uses in his current business.
He’s a former appraiser, and he flipped his first house in 2003. He’s done over 300 flips since then. Based in Las Vegas. With that being said, Luke, do you wanna give the Best Ever listeners a little bit more about your background and your current focus?
Luke Weber: Sure. As you said, I’m a former real estate appraiser. I got my license in 2001, and that was kind of the start of my real estate journey. I bought my first flip in 2003. That was actually my first house, and I’ve flipped it and made over $80,000 profit on it, and that kind of set the fire for me.
Joe Fairless: Wow. Every deal has been that profitable and more since then, right?
Luke Weber: No, no… Of course not. [laughter] You take some bumps and bruises along the way until you really figure this business out. Just like anyone else that was investing in real estate when the market crashed, I got hurt. Luckily, I ran a very successful real estate appraisal business that kept me going through there, but then 2010 rolled around and I saw that “Hey, the market’s primed; I’ve gotta get back into flipping and buying rentals”, and I started doing about a flip every couple months.
By 2012 I was investing with a buddy of mine, and I said “Hey, let’s turn this into a real business.” We hung up our appraiser licenses and started our flipping empire, if you will. We have been growing that business since.
Joe Fairless: You started out focused in Las Vegas, right? Your backyard?
Luke Weber: Yeah, it’s a natural progression to flip where you are. It’s easier, and when we really took a look at making it into a business in 2012, we said “Okay, what else should we do?” and one of those ideas was “Let’s expand it into another market.” We’d already flipped next door, in Phoenix, and some stuff in California, but we wanted to really expand, so we looked all the way over to Florida. Then in 2013 and 2014 we did a bunch of flips out there, but then we brought it back home and said “You know what, we’re making the same margins, it’s more work… Let’s double down on Vegas and spend our time, our money, our energy here and get that perfected, and then we’ll grow out again as we see fit.”
Joe Fairless: Okay, and what did you learn that second go-around in Vegas that you applied to your business?
Luke Weber: There are a lot of deals out there. Investing remotely is cool, it’s sexy, it’s fun, but if you’re not making bigger profits for the bigger risk and work involved in it, not worth it. If you have a market that you’re in that has over 100,000 people in it, you’re gonna have deals there, and you just have to keep networking and growing and make yourself be known as the go-to guy.
Joe Fairless: So you’re advocating that if you have over 100,000 in your market, then you might as well set up shop within your market and focus on that, because you’ve got a home court advantage?
Luke Weber: That is exactly it. There’s something to be said when that problem happens on the houses, because problems do happen when you’re flipping houses. If you’re remote, everything takes longer and costs you a heck of a lot more money. If it’s in your backyard, you can take care of it instantly.
Joe Fairless: I read a bullet point that I have in your bio – and I don’t know if this is accurate or not, because sometimes things are copy and pasted in here in my notes that aren’t accurate… Fact-check me on this – it says “actively flipping across the country, with 40+ projects.” Can you elaborate on that?
Luke Weber: Yeah, so now that we’ve doubled down, tripled down in Vegas, we decided to expand back out. Although Vegas is my primary market and always will be, we have active projects in Reno, Phoenix and Houston right now.
Joe Fairless: Okay. What systems or recommendations do you have for fix and flippers to implement if they were to scale? They’ve reached their tipping point in the market that they’re in and now they wanna scale out somewhere else, what would you tell them?
Luke Weber: You’ve really gotta do your research. One of the things that I do whenever I go into a new market, I go slow. For instance, we’re expanding into Houston now. Whenever there’s a natural disaster, there’s need for houses to be redeveloped, and we’ve looked at it in the past with Oklahoma City with the tornados, and Katrina, and in New Orleans and in a few other places, fires in the West, but whenever we get into it, we wanna go slow.
It might look like it’s a deal, but you really have to know your numbers, you wanna know your inventory levels, you wanna really know your contractors. I start slow because I don’t wanna expand to 5-10 flips going at a single time in a market, unless I know my contractors are good and can handle it. We were closing our first one in Houston in the last week, we’ve got another one coming up in a couple weeks here, and we’ve been trying out a couple different contractors, make sure the numbers pencil out, for real world, not just on paper… And then we’ll expand with that.
Joe Fairless: How did you meet your contractor? Do you have a general contractor who’s overseeing it locally that you already have a relationship with?
Luke Weber: Yes, that’s the way I like to do it. Right now I’ve got 42 active projects going. 23 or so are under construction, so we’re not subbing out the work ourselves; it just doesn’t work. We have general contractors, lead handymen, depending on the projects, that are the individuals that we go to. We meet them any way we can – networking, referrals, Craigslist ads… Just driving around and seeing a dumpster and leaving a card saying “Hey, I’ve got work if you want it.”
I was actually out in Houston and we already had a contractor out there. One of our prior contractors from Vegas moved out to Houston a few years ago, and that was an open opportunity for us, kind of a foot in the door into that market, if you will. But as I drove around the neighborhoods there, any flooded community – there’s signs in a third of the yards that are out there of a contractor that’s working. So I took a lot of pictures and grabbed a lot of cards while I was out there, and I’ve got 20+ contractors that I can get quotes from to figure out who my go-to guys are gonna be.
Joe Fairless: Now let’s talk more local level, because perhaps some Best Ever listeners who are fixing and flipping want to stay local… And I imagine most fix and flippers end up staying local, versus scaling out. I’m guessing you’re probably in the 5% of fix and flippers who scale as far out as you’re doing. So let’s bring this back home a little bit for most of the Best Ever listeners who are doing fix and flipping.
Your book, The Flipping Blueprint, has tips and tricks and formulas that you use in your current business, so what are some of those that you can share with fix and flippers who are focused on scaling their business locally?
Luke Weber: It’s really a rinse and repeat, and you just have to keep going out and networking. Number one, you never stop looking for properties, you never stop looking for money, you never stop looking for contractors, whether you’re doing it remotely or just doing one or two deals a year. A lot of fix and flippers out there aren’t full-time investors; they have a day job and they kind of do it on the side, and try to do three or four flips a year. But you should always be looking; never stop. That’s the number one thing.
Go out to the meetings, talk to people, let people know what you are doing, and that’s how you are going to build your overflowing inbox of deals that you get to just keep looking at until you find the one that’s gonna pencil out for you… Find more contractors that say “Yeah, I’m happy to give you a quote on your property.” Never stop looking for contractors, money or properties.
Joe Fairless: What is the best way that you have found properties, money and contractors? I’m sure each of those three are different. I’m guessing each of the three have a different way, so what’s the number one way you’ve found each of those three?
Luke Weber: For contractors, I really think driving around and finding — usually you’ll have the big dumpsters; you’ll look in the dumpster and you see there’s some drywall, maybe a toilet, some cabinets and some carpet in there… Then the house is probably getting a full remodel. Talk to that contractor. You get to immediately see their work that they’re doing; if the guys are sitting around smoking and drinking a beer, that’s probably not the contractor you want. But if it’s a clean job site, the quality of the work looks good… Not necessarily the materials, because the investor picks the materials, but the quality of work should be done right. That’s really what I think is the best way to find the contractor. Real-world, you get to see what they’re doing, and you get to decide “Do I want this person to potentially do deals for me?” And they’re out there.
Joe Fairless: Is there a way to do some research on the internet ahead of time, that way you’re not driving around hoping that you find some contractors on the job?
Luke Weber: You know what, each city is different… A lot of your bigger projects already have a general contractor doing maybe $50,000+ worth of work is gonna file a lien against the property (a contractor’s lien). So that’s one way, to do an online search. But also, if you see other properties that are being purchased… So if you have MLS access or your realtor is sending you deals and you can see the property and you’re like “Man, that’s gotta be a full gut, that’s gotta be a flip”, it’s not something that someone’s gonna move into it – just keep a list of those properties, and then pick Saturday afternoon, go for a nice drive, and go drive by 10, 15, 20 of those houses, and you might find contractors working at them a couple weeks after they’ve closed.
Joe Fairless: That’s a great tip, thank you for sharing. I haven’t heard of that before. That’s very valuable. What about money? The number one way you found money.
Luke Weber: I’m not a golfer…
Joe Fairless: Me neither.
Luke Weber: But I do like a tasty beverage every once in a while…
Joe Fairless: Me too.
Luke Weber: So I’ll be out at a bar or a networking event – and it doesn’t have to be real estate-related. It could be an entrepreneurial event, it could be just a City Council event… There’s events every day, in every city across the country, where you can go to them and you just talk to people and let them know what you’re doing. Doctors, and lawyers, and therapists – whatever; high income earners that are busy six, seven days a week, doing their day job – they don’t have the time to invest in their own real estate, but they’re savvy enough to know that there’s a lot of money to be made in real estate.
You say, “Yeah, I invest in real estate and I have private investors”, their ears will perk up. “Hey, I’ve got 300k sitting in an IRA that’s doing nothing for me. What can you do with that?” So you do a research on where high net worth individuals will be drunk and then you got hit them up for money?
Luke Weber: Exactly!
Joe Fairless: [laughs]
Luke Weber: Fish in a barrel. And it’s always a soft pitch; that’s really the best way to do it. You just let them know what you’re doing, and then they’re like “Oh, well I’d be interested in that.” You say, “Here’s my information. The next projects I get I’ll send you something over and you can take a look at it”, but you don’t need to follow up with them 6, 7, 8 times. You want them chasing you.
Joe Fairless: How do you get them to chase you?
Luke Weber: There’s a few different ways. Typically, when I’m talking to somebody I’ll let them know that all my current projects are funded by my other investors, but when I have another opportunity I’ll put it out at them. But I also let them know that they’re getting a first look at it… I’ll say “Hey, you know what? I’ll give you a 24-hour first look at it, otherwise I’m gonna put it with one of my other guys.” That lights the fire to “Oh man, I actually have to do this!” It’s time, right? So that’s one way to get them calling you back and saying, “Okay, yeah, I’ll take it.” Or “Hey, can I get a little more information on it?”
What I love doing is I will put them maybe in a group e-mail where if — they’re a new investor and I don’t think they’re ready to pull the trigger yet, so I’ll send out a group e-mail, and it might be just them and my investor that’s going to fund this deal, that I know is already lined up and ready to go, and then I’ll send them an e-mail the next day after my other guy is committed to it. It’s just an e-mail that says, “Hey, thank you for everyone’s responses. This deal has already been funded.”
Now they’ve missed out on an opportunity that somebody else jumped on, so it must have been a great opportunity. That way they’re gonna act faster… I actually will get phone calls or e-mails saying “Hey Luke, I didn’t act fast enough. I want the next one. I’ve got 200k ready to go, send me your next one.”
Joe Fairless: Just a very tactical question – when you send out that initial e-mail, is everyone else’s e-mail on that?
Luke Weber: Never.
Joe Fairless: Never, okay. So it’s BCC, right?
Luke Weber: Yeah, blind carbon copy everything.
Joe Fairless: That’s what I thought, but I just wanted to make sure. And thank you for those. When I do my little summary at the end, I’ve written down some very insightful things that you’ve said. Properties – the number one way you’re finding properties?
Luke Weber: Right now I actually am getting most of my properties from wholesalers. I’m still buying one or two a month off the MLS, but wholesalers are my number one go-to avenue for properties. I decided to not spend my money in doing 50,000 mailers a month to do my lead generation. I do some targeted mailings and some targeted Facebook ads, things like that, but I go out and personally network; I hold quarterly events to have people come and I feed them and give them drinks again…
Joe Fairless: [laughs] There’s a consistent theme here.
Luke Weber: Yeah. Well, you know what? If you’re gonna build a business for yourself, you might as well do it the way you like to do it and live your life…
Joe Fairless: Yup… And you’re in Vegas too, so it kind of falls in line with the theme too, right?
Luke Weber: Yeah. Our last three or four parties that we’ve thrown, we’ve actually had people from multiple states come to the event, people that maybe know me from Facebook and they’re like “Oh, you’re having a party? I’d love to meet you. I wanna have you sign the book” or whatever. I’m like, “Yeah, man. Come on over.” I don’t charge people $20 and then give them a sales pitch, like a lot of meetups do. I create a networking event for everybody to be at, and if I get one deal out of these – I meet a new wholesaler who’s gonna bring me a deal…
My last party cost me about $3,000. We had 50 people plus or minus there, food, drinks, we did a raffle giveaway, but I’ve gotten multiple deals form it already, so at the tune of probably 60k+ in profit.
Joe Fairless: And you had fun.
Luke Weber: Yeah, and it adds value to people to, because as you can tell already, I’m not really holding stuff back, I’m sharing a lot of information…
Joe Fairless: Oh yeah.
Luke Weber: And in the book I do it, too… So if people have a question, I like to have an answer for them.
Joe Fairless: Yeah. I’ve interviewed a lot of fix and flippers and I’ve had really good conversations with them. You’ve provided new stuff that I hadn’t come across before on each of these three, and a different way of looking at it. Regardless of if — hopefully, I’m sure the Best Ever listeners have picked up on this… Regardless of it we’re fix and flippers or not – which I am not – I can still (and you, Best Ever listeners) pick up on some of these tips and apply them to our own business and type of investing that we do. That’s what I love about this.
Luke Weber: Yeah. A lot of these principles carry over for rentals. I’ve bought and sold rental portfolios, I’ve bought apartment buildings, a lot of different private investing and things, but the principles really hold true, whether you’re doing a rental or a flip; you should know what your inventory levels are, and what your numbers come out to. And there’s all different ways to find rentals or apartments, as you know, and a lot of it has to do with networking.
Joe Fairless: Yup, I completely agree. Relationships. That’s what it boils down to. What is your best real estate investing advice ever?
Luke Weber: You know, it really comes down to you have to know your market, both at a micro and macro scale, the big and small. For instance, in Las Vegas I know that I have 1.69 months of inventory right now of single-family houses. I mainly deal in single-family houses, and I wanna know if that number is going up or down, because you have to know – or you want to know – what your power is. If you’re renting out properties, you wanna know what the inventory levels are for that too, because can you ask for more rent? Can you get a higher demand? If there’s more inventory, do you have to acquiesce to the seller or the renter demands? Who has the power? That really stems from knowing the numbers.
Joe Fairless: Is 1.69 good or bad?
Luke Weber: That’s great, I love it.
Joe Fairless: What’s bad?
Luke Weber: Once you’re over four months, I consider that bad. Four months of inventory. Three to four months, I’m gonna be pretty cautious on that; I’m gonna look for a higher profit margin. Under three months is good, under two is great. With that 1.69 months that we have in Vegas, really, that’s total single-family, from a $50,000 house to a 20 million dollar house. So when you look at affordable, entry-level housing which most flips end up being – in Vegas that’s like sub-$300,000 – there’s less than a half month of inventory, and that means that people don’t have a lot to pick from. It is a seller’s market. I get to command what happens on my deals.
Joe Fairless: Are you ready for the Best Ever Lightning Round?
Luke Weber: Let’s do it.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: What’s the best ever book you’ve read?
Luke Weber: The Entrepreneur Roller Coaster is my go-to answer on these ones… By Darren Hardy. I love that book. It’s simple, it’s easy, but it’s lots of little quick tips, great little nuggets.
Joe Fairless: I will check that out, I hadn’t heard of that one before. I heard of Darren Hardy, but not the book. What’s the best ever deal you’ve done that wasn’t your first and wasn’t your last?
Luke Weber: I was gonna say my first one…
Joe Fairless: 90% of the people say their first deal, for XYZ reasons, or the deal that they just did. I think they say that because they haven’t actually seen all the nastiness that’s gonna come with it, that they’re eventually gonna come across. That’s why in 2018, when I remember, I’m excluding the first and last deal on this question.
Luke Weber: I like it. So the one that stands out for me is I did a ranch house here in Vegas, it was on about an acre. I think Vegas, the Western states [unintelligible [00:22:04].09] stacked on top of each other, and that’s what a lot of investors were going for. Instead, I just look at deals, whether it’s a manufactured home or a permit building. If I can make money, I’m gonna buy it. This one I bought for – I’ve gotta remember the numbers; it was probably about three or four years ago now… I bought it for (I think it was) $150,000, I put $40,000 into it, so it was a pretty extensive remodel, and I sold it for $320,000.
Joe Fairless: Wow.
Luke Weber: Nobody else was going after these properties, and I think it’s not the best ever because of the fact that it made six figures, because I’ve had multiples of those, but it’s the best ever because it confirms that I can make money on all different types of inventory. I’m not just saying “I want a house built after 1990 that’s [unintelligible [00:22:55].15] 3-bed 2-bath and has a 2-car garage, because I know that will sell. Everything’s gonna sell if you list it at the right price… But you have to buy it at the right price. I think that’s probably why I’m saying that’s my answer for this one.
Joe Fairless: What’s a mistake you’ve made on a transaction?
Luke Weber: Back before the market crashed, I was investing then, but I wasn’t following the market close enough. I was paying attention, as an appraiser, but I really didn’t know how to react to it, and I think that was probably one of the biggest things, and something that I’ve definitely learned and hold true since I got back into investing in 2010, and here on out – know your market and react to it.
Joe Fairless: Are you taking your money from the flips and buying some long-term holds?
Luke Weber: Yes and no. ’10, ’11, ’12 I bought a lot of rentals; last year we sold a lot of those, because they weren’t high-quality rentals that you want for a long-term portfolio. We cashed out a lot of our rentals, so that we could fuel our flips, because right now the cap rates aren’t anywhere near where we want them, so it’s not something that sexy for us. But if something does come up, we will definitely still look at it and buy it… But right now, we’re getting ready for whenever that next crash does happen, or that next down-tick does happen. We’re pretty liquid on our flips. They go about 120 days total, from when we buy it to when we sell it, so we can react fast, cash out, have a big chunk of cash, so that we can get some of those large-scale 100-unit plus apartments, or just high-quality single-family houses at their cheap prices when that crash does happen.
Joe Fairless: What’s the best ever way you like to give back?
Luke Weber: I’ve got two answers for this, because one is business-related… I started doing this at my meetups, where we used to just give out door prizes. And I thought “You know what? There’s some really good charities here in town that need help”, and we went with one called SafeNest, that is a battered women and displaced children kind of place. It does have something to do with housing, so it kind of fits for us. Because we actually see a lot of that; there’s definitely a human element to what we do, and any money that we raise in the raffle at our events, we match it 100%. That’s an awesome thing, to go — and I don’t talk a lot about this because I don’t do it to say “Hey, I did this”, I do it to help. It’s awesome to be able to just give them that check and say “Here you go, help people that need it.”
My second answer to that is I coach my son’s soccer team. Giving back to children some way, teaching them how to work as a team and grow together I think is great, and real estate investing allows me to do this, where I see other dads that might make one game a season, because they’re too busy working; they’re working an 8-to-7 job six days a week. I’m happy that I can provide that weekly stability for some of these kids, and it’s a pretty awesome feeling.
Joe Fairless: How can the Best Ever listeners get in touch with you, Luke?
Luke Weber: Facebook. I’m on Facebook for business. You don’t see a lot of my family on there, because I do it with purpose. If you wanna find me, find me on Facebook – Luke Weber. I know you’ll have all the links…
Joe Fairless: Yup.
Luke Weber: …and get into the Flipping Group page, too. I’m happy to answer your questions there.
Joe Fairless: Go get that book. I will put the link in the show notes page to the Facebook account. And Luke, thank you so much for being on the show. This really was helpful for anyone in any type of real estate. The tips that you have — initially, I asked about for fix and flippers; what you gave is for fix and flippers, but also for others, it turns out.
Number one way to find contractors is go drive around, find the job sites of contractors – you can do some research beforehand, so you’re not just driving around aimlessly. Then reach out to them, assuming that their job site is clean and the quality of their work is good.
The number one way to find money is you get rich people drunk — I’m kidding… Kind of. I’m kind of kidding. You go to networking events and you implement three things. One is scarcity, two is exclusivity, and three is fear of missing one. One is scarcity, the “All my projects are funded” (because they are, at that point). Two is exclusivity, “…but I’ll give you a first look at it”, so that they feel special. Three is fear of missing out; once it is booked up, then you send the follow-up e-mail, “Thanks for everyone’s responses, it’s booked. Better luck next time.” Of course, not in those words… And that is the fear of missing out.
Then with the number one way you find properties is through wholesalers, through relationships… And you have fun, you enjoy yourself. You create these events where you invite people. I love how you went into the cost of executing an event (about $3,000) – food, drinks, raffle etc., giveaway to charities, and the profits from that are more than 20 times. That’s an incredible ROI.
Thanks for being on the show, I’m really grateful you’ve spent some time with us. I hope you have a best ever day, and we’ll talk to you soon.
Luke Weber: Thanks, Joe.