Have a podcast in 30 days

Without headaches or hassles

In this episode, you’ll discover:

  • Have kids? Here’s how to bond with them while they print money for you (even if they’re young) (1:15)
  • The “good, fast, or cheap triangle dilemma” that helps you avoid underestimating the costs of a new rehab project (7:02)
  • Why picking the cheapest HVAC installation will cost you more money and sanity than an expensive one (7:49)
  • How your brain betrays you and can cost you $20k (or more) in revenue from a rehab (and how to stop it) (8:51)

Hey! Want to do a deal? Need my help? No cash to make an offer? Send me a quick text at 440-389-3883 or shoot me an email at REbroker216@gmail.com and we’ll work together to get you the deal.

Read Full Transcript

Welcome to Cleveland Real Estate Investor. On this podcast, you'll hear about every aspect of the real estate investment business. You will talk to your rockstar investors about their businesses, how they built them, where they came from, and where they're going. Who am I? I'm Joe Lieber and I've made millions of dollars from the real estate investment business over the last 20 years. If you're ready to hear the good and bad from a guy who's learned this business from the school of hard knocks and get educated by some bad ass entrepreneurs, then put your helmet on, strap on your chin strap. Let's ride.

Yo, yo, what's up guys. Thanks for tuning in. So hop on here a little bit and talk to you today. It's been a few weeks since I've had a chance to record another show. So had something in my mind today and I want to talk to you about underestimating your rehab. This happens to me a lot. I feel like, but before we get started, I wanna give you a quick update. So I had told some of you guys on an earlier show about getting the kids involved to make money and let them help you in the business and figuring out, you know, what your, your young one can do to paint on their age. Of course, some of these kids are some of you know, our kids for you parents out there they're super sharp. Believe it or not plus you with the computer.

(01:35): You know, I'm not that good on the computer. You know, I can barely send an email as I like to say, but I see young kids, young teens who can make YouTube videos, they can cut video, edit video. They make these Tik TOK videos. I don't know some of this stuff is, but they're really, really good at it. And believe it or not, kids can help you in the business and actually drive revenue. So I'm going to tell you a story about that. So I had told you guys earlier that I had my kids stamping postcards and stamping, you know, different, the direct mail piece we were sending out over the summer, just kind of something fun. Then I want to get them involved in. So I got a phone call that their day from a direct mail campaign that we had sent out in June that my little boy sent out in June, and I pay him $20 if the phone rings.

(02:25): And then if I go see the customer or the potential customer, I give him $50. And if he hits the Motherload and I buy the house, I give him 500. So this lead that came in, started to escalate first, I had a real nice conversation and then I went and saw the customer. So he's up to 70 bucks and he's just a static. He's like dancing is so excited. And as I found out a couple days later after I saw the customer, I actually bought the house and it was a direct result of his efforts. So I have a little ten-year-old here who is actually driving real revenue because I can tell you, I probably wouldn't have done that. I wouldn't have hit that list, or I wouldn't have, you know, at that time in June, I was a little disengaged because of COVID didn't know what was going to happen.

(03:15): And I was only really sending a mail just to engage the kids. And this is a, it is a direct result because of him a hundred percent. I'm really amazed by it. And this is going to be a retail flip home in a suburb here. And it's going to net some big bucks, some real money. You know, I say I got a, I have a little boy playing a man's game here, cause this is serious. It is tight. And as constructive as the market is right now in Cleveland, Ohio, I mean, people go nuts for this deal. I mean, it will be a dog fight with investors. So I'm like this ten-year-old drove real results and it's really cool because anyone can do it. And I told him, you know, as you get older, there's different things you'll be able to do is your skillset gets better.

(03:53): You know, I could see him, you know, using the old man here to shoot video, using my ugly face and letting him market that out there in the big, worldwide web, through different social media platforms, whether it's pay-per-click or Facebook ads or all this fancy stuff these kids are talking about. And he could actually drive real revenue. I'm like, dude, as you get older, we can really have something cool together. Yeah. And that tech guy, what if you're a tech kid guy, man, whatever you evolve into how go out and see everybody. They love seeing the old man here, you know, with all the experience and wisdom and knowledge and you know, you can make real money boy playing a man's game. So what I told him, I was super proud, super proud of him to do that, but anyone can do it. It just really comes down to work.

(04:40): You know, you just have to fricking work. It's just what it's about. So when I share that story with you today and let's hop into the show. So underestimating the rehab, this is going to happen a lot. You know, everybody wants something done for nothing I've noticed, you know, it's like, Oh, that's too much. And sometimes it truly is too much, but go do it. So I'll tell you some stories about this. This is what I mean by it. If you went and did it yourself, you'd probably be like, Holy crap. That's a lot of work. So over the summer, you know, I spent the entire summer up at my summer home and up there, it's hard. It's a, not a heavily populated area. And it's hard to get contractors to come out and do work. Now I can't drive a nail straight, but there were things that needed to be done that I couldn't get anyone to do.

(05:29): And I had no choice, but to figure out how to do them, I'll give you some examples. Like my wife wanted a couple new light fixtures and I had never had a light fixture before, but I sat down, I focused, I opened up YouTube, looked at the wires and made sure I didn't screw anything up. I called a friend that I had a little more knowledge than I do about electricity. And I actually wired these light fixtures as a big for me. I put up a light fixture and believe me, I felt like I built Trump tower or something, you know, but it was cool. And the dishwasher, my buddies up there, his dishwasher went out and we were trying to troubleshoot it. And we said, well, let's just replace the dishwasher hose. It seems like it's a no brainer for most of you. But for me, it's a big deal.

(06:17): I was doing some real man work and him and I, neither one of us know anything about a handyman construction, carpentry. We did it ourselves and it was work. It took time. We noticed we hung some TVs on the wall. We had to find studs and hang TVs. And these things can be done. But they, sometimes they take more time than you think it never goes. Like you think it's going to go. And every wants had done for nothing. We would joke around and say, we literally worked on a TV Mount for four hours to get it hung. And we're like, what does that pay? You know, somebody wants it done for 50 or 75 bucks. He's like, can you believe that though? Like I know it's him and I took four hours, but it's probably $200 job. It should be at least right. We were there for four hours, two guys.

(07:01): But here's the rule of thumb. Okay. There's good. Fast and cheap. You'll never get all three. You can only have two out of the three can have good. Can they have cheap, but you can have fast or you can have fast and good just can't have cheap. So that's just how it works. That's how I've always seen it. You'll never get all three and you have to be able to settle for that. So if you're estimating a rehab and you're, you're wanting painting done, you've got to kind of pick your poison. Which one do you want? What are things that can be a little more, not as good, but there'll be done cheap and fast. And what are things that have to be done? Good. But they'll just might take a little more time or what are the things you're willing to pay more for?

(07:52): Like, here's an example, H vac I want good. I want them to be good. And I want them to be fast because I need people to have heat or I need to get these furnaces. So contractors can work or things like that. I don't want cheap because it's too much liability with it. I'm too. I get too nervous if they don't do something right. And there's carbon monoxide or something like that, that I can't have. So I'm willing to sacrifice cheap for the other things for good, really? I don't want any liability issues. Can they be a little more sloppier if they're painting a basement for me? Yeah. I really don't care. Just give it to me cheap. Right? So I'm picking and choosing as I go through here and I'm nursing, the rehab is something that's going to happen all the time. It really just is you think you're always going to get these Brock bottom prices on stuff, but you're not.

(08:46): So just try to be reasonable, relax, build it into your budget. I always say it's better to be higher than lower. So you don't set crazy expectations in your head. You get in your own head with a half of the stuff. You know, I was listening to a book called driven by Manny Koshin and he should check this guy out. If you like cars, especially I thought I was a car nut, this dude's a car nut. He's got like four Bugatti's and three rolls Royces. And he's always on Instagram and stuff. And he's a real estate guy. Really cool. Really Go-Giver. And I just finished this book, but he was telling a story about 2005, 2006, when he was doing very, very well in real estate. And he bought us first rolls Royce and people were coming up to him saying, Hey man, you know, get me involved.

(09:35): I want to get involved. I want to get involved. Don't be so greedy. They would tell him. And he's like, . You know, maybe I should, you know, expand my business and take on partners and stuff like that. So many did, he did do this and he would buy a house or a piece of commercial real estate with someone and he'd set the expectation. You'd be like two, we're going to really good on this, man. We're going to flip it. We're gonna make a hundred grand it's good money to anybody. Right. And then what would happened is, you know, there will be some issues that came up that were unexpected. Maybe the contractor prices came in a little higher than they thought, or it didn't sell for quite as much. And they would make 80 grand instead of a hundred, which is still crazy money, especially for his investor partners or they're completely passive.

(10:19): Right. And they will call and they would let them have it. They him out. Say, you said, I'd make a hundred grand. He's like, Hey look, we didn't make a hundred. We missed the Mark by a little pit. Well, we still did really, really good. You made like 40% of your money in six months do like, what's the problem? And he was saying that you just he'd set the expectation wrong. Right. He was trying to be cool and just be like, this is what I think we're going to make. And then when they fell short of that, Mark, his investors are getting off. So I think I see this happen. Even with investors, they get in their heads, something's worth something and it's not, and they are expectations, fall short and they wind up just getting upset and they make themselves crazy. So why do that to yourself? Don't underestimate things. Try to be as real as possible, really take into consideration. What's you're bidding, what's going on and help add 20 or 30% to it. Just so when it comes in lower, you'll feel better about it. A lot of this game as a mindset, it really is. This is just some of the food for thought some of the wisdom I want to share with you today. And some of these trials and tribulations that I've been through over the years. So that's it guys. Thank you for tuning in, have a great day.

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