Flip/Off: Whose House Flip Can Pull In the Biggest Return? (Dainard vs. Washington)

Dave:

Welcome everyone to this very special episode of On the Market. James, Kathy, and Henry are here and we are super excited because we did it. We have made it through 200 episodes of On the Market. Woohoo. Can you guys believe this?

Kathy:

I can’t believe it. Where did the time go? I

Dave:

Feel like I’ve blacked out for the last two years. I truly don’t remember recording 200 episodes of this show and I’ve been on at least I think 195. I was

Kathy:

Going to say you’re on most of ’em, so

Dave:

I don’t know, but maybe that’s just one of those things where time flies when we’re having fun.

James:

I told my wife and she’s like, well, that just means you’re getting older and time’s flying that much.

Dave:

Hey,

Kathy:

She’s right.

James:

I was looking for a congratulations, but I just got called old instead.

Dave:

Well, we are going to take a little bit of a victory lap in a minute just to share our favorite episodes and moments from the show, but we do have a great, really cool, maybe one of the coolest ideas for a show we’ve ever had today. Have you guys seen the movie Face Off? Yeah. Nicholas Cage. John Travolta. It’s like mid nineties, something like that.

Henry:

Yeah, I’m a Nick Cage junkie.

Dave:

Oh, me too. What’s your favorite Nick Cage movie? Henry.

Henry:

Ooh, the Rock.

James:

Ooh, great movie.

Dave:

I knew we were friends for a reason. I feel like if there’s one movie I’ve seen more than any other movie in my whole life, it’s The Rock.

Henry:

It’s followed closely by air.

Dave:

Oh, another classic. Gone in 60 seconds. Come on. Okay,

Kathy:

You guys, I have to name drop just for a minute. Okay? Okay. I owned a talent agency in San Francisco and I went to the after party for The Rock and we got dance. What? I got to dance with Seany. I dunno. That’s cute. I did. You danced with

Dave:

James Bond. I dance. Oh my

Kathy:

God. I also sleep on his bed. I know, it’s weird. Wait. One of my best friends also dated him and when they broke up I said, you don’t want that bed, right? Because that would be weird. So I have it. I have James Juan’s bed.

Dave:

Oh my God. Wow.

Henry:

Of course you do. Kathy.

Dave:

I mean, I am considering canceling the rest of this show and just talking about this for the rest of the time because I am very eager to learn more about this, but maybe we’ll get back to this at the end of the show. We do have a really cool show today. What we’re going to do is unlike the movie Faceoff where they swap faces somehow we’re actually going to be having a flip off where we are going to have James and Henry who are both established successful house flippers, compete against once another on real live deals. So what we’re going to do is we’re going to hear about James’s deal, we’re going to hear about Henry’s deal, and then Kathy and I are going to bet on which ones we think are going to win. It’s a friendly bet, but I think we got to put some stakes on it, right? Winners take the losers out to dinner,

Kathy:

Literally steaks.

Dave:

Okay. Yeah. Stakes are stakes. Yeah.

Kathy:

We’re going to have to be a lot of money and we know what you guys spend on steak.

Dave:

That is motivation. That is some real money we could potentially win or lose. So everyone in stakes are stakes. Stakes

Henry:

Are stakes.

Dave:

Yep. All right, great. Well, we’re going to get into that in a minute, but I do want to ask you guys, before we get into that, do any of you have a favorite moment or favorite episode that you want to share about on the market? Henry, I’m going to pick on you first.

Henry:

Yeah, absolutely. My favorite episode of On the Market was when we talked about kind of the situation between home buyers and landlords. So I believe the episode was called Home Buyers are Getting Crushed, our Landlords the Cause, and we really got into some great conversation around our investors causing a problem for home buyers. And we also talked a lot about what people, real estate investors, contractors, and cities can do to help solve the problem of affordable housing and helping everyone be able to afford a home. And so I thought that was really, really a really good take on a real topic that affects everyone.

Dave:

Awesome. That was a great show and if you liked that show also let us know. We could do more shows like that if you think that was something of interest. I totally agree with you, Henry. James, what about you? Was it the time you jumped off the boat?

James:

That is always going to be, anytime I’m on the boat I can jump in the ocean. That is a win. But by far, because I’m such an NFL fanatic, it’s still the Devin nar, cliff br. Why NFL Players are buying Real estate podcast. That was like a highlight that I got to watched Cliff April hit people on the field for so many years and now he’s hitting real estate, and I was just glowing after that meeting and it was really good information. These guys, it wasn’t like they were just NFL players talking about investing. They had legit strategies, what they were doing, what they were trying to accomplish, and they’re very talented investors. They’re not just NFL players and it was by far my favorite episode. I need to bring on some more NFL talent though.

Dave:

Yeah, if you find them, we’ll have ’em on. What about you, Kathy?

Kathy:

I loved the shows that maybe weren’t as popular to our audience, which is funny, but the shows where we interviewed our listeners on the deals that they’re doing and then we all kind of coached them through it. I loved hearing you guys coach and hearing your expertise and just seeing these people change just within minutes and change their strategy to a more successful one. I loved it and I loved that we could be more connected to our audience, so any shows where we can connect more with what people want and what they want to learn, I just loved it.

Henry:

I agree. There was actual feedback from that show that one of my mentees ended up taking and then that caused him to get the deal at a better price and actually make money because of that episode. So I totally, that’s amazing, Kathy,

Dave:

That’s super cool. I love hearing that. Absolutely. I don’t have a favorite episode. I’m trying to think about it, but I think the funniest thing to me is we started this show and Kailyn and I sort of casted the show and none of us knew each other, which is kind of really funny that, and it’s just nice that we’ve all become real friends and get to hang out together and do the show together and it’s just worked out so well. So I’m very grateful for all of you and for Kaylin for doing this show and somehow BiggerPockets giving me a podcast host, which is very unlikely, but hopefully has worked out. We get a lot of great feedback. We’d love to hear from all of you what your favorite episode is as well. And if you haven’t already and if you’ve listened to the show, maybe you’ve listened to 200 of ’em and you still haven’t written us a review, now’s the time. Just go write us a review on either Spotify, apple or YouTube. We’d really appreciate it. And with that, we will get into our flip off right after this.

Dave:

Welcome back everyone. We are about to get into our flip off episode and hear about James’s deal, but we also have a little bonus for all of you if you want to follow along, see pictures of these houses, get the in detail numbers, the underwriting package that James and Henry have put together for each of you, you can get those for free. Just go to biggerpockets.com/resources and you can get all the background information to follow on with this episode because we will also probably be providing some updates about how each of these deals are going in the future. And so this is something you want to learn about. Check it out, biggerpockets.com/resources. Okay, James, by virtue of Kaylin’s coin flip, you are up first for this deal. Pitch us your flip.

James:

Alright, we found a great flip. We do all sorts of different types size projects from massive rebuilds development plays, and then there’s your quick flip turns, which are, in my opinion, if I could buy every house that looked like this one, I would do it because it’s a clean simple project. It turns really quickly. So what the property is, it’s a three bedroom, one and a half bath, almost 1400 square foot rambler with a two car garage in Kent, Washington, which is about 15 to 20 minutes outside of Seattle. It’s a suburb. It’s where a lot of blue collar workers work, great family area in general. But the reason I like this property so much is the math really hits and it works. We’re buying it for $380,000. We have an estimated rehab budget of a hundred thousand and we have solid comps at 625,000.

James:

So we have a great spread on this property, but the reason I like this deal even more isn’t just the map and sometimes it’s flippers. When you get there, you just know that the property’s worth a little bit more and this is one of ’em. It’s on a great street with fully renovated houses all around it, which is a little bit rare for Kent Washington. A lot of it is transitional where you have a mixture of homes, but anytime you can buy on a street that’s been fully turned, that is the buyer’s first impression. Soon as they turn on that block and even before they get to your house, they’re starting to like the property. It’s a 1400 square foot rambler, but it feels oversized. When I walked it, I thought it was 17 to 1800 square feet. The spaces are big, it’s very livable.

James:

Ramblers are one of the most highest demand properties that people want to live in. There’s no stairs. They get the space, it flows well. And in addition to the backyard is massive, which is exactly what we’re looking for. This is a family friendly area. This is where first time home buyers, starter families want to live and it’s got a great layout, three bedroom, one and a half bath, big yard on a great street. How we locked this deal down was it got listed and we fired in an offer in the first six hours of it being listed and we came in with a massive earnest money amount of nearly a hundred thousand dollars to get the seller’s attention. I

Dave:

Like how you whispered that. You’re like nearly a hundred thousand dollars. You’re putting this on a podcast, James. Everyone’s going to hear it.

James:

Don’t tell my secret sauce

Dave:

No private

James:

Because it’s key right now. You want to get seller’s attention, right? And so we came in six hours before anyone as people were still comping the property and a valuing it. We had a real offer in front of that seller waiting all contingencies, giving them all their timelines, putting up real earnest money and releasing it because I didn’t want to pay too much more for this property, so I wanted to get the seller’s attention. So that’s how we secured the deal. What we’re going to be doing to the property is the reason I like this so much. As a flipper, you don’t want to get delayed in your scope of work. And the more walls you have to move, the longer your project takes, the longer your project takes, typically the return goes down. So the great thing about this is we are doing a light for light change out.

James:

The roof’s already good, but we’re going to be doing updating the windows, updating the floor plan, opening just one little kitchen wall. We’re going to take a half bathroom, turn it into a primary three quarter bath to get the extra value out of the property. And then we’re doing a full cosmetic turn cabinets, countertops, flooring, millwork doors, interior exterior paint, and then a ton of landscaping in the back to really make it family friendly. And so the reason I like this, it’s a very light permit job. You get in and out really fast, there’s not many changes. And honestly, I can flip these houses in my sleep. We measure ’em out, we know what they are and anytime you can get a project like that, they just go quick and the quicker the deal goes, the higher the return. So let me break the math down real quick. For this project, we’re setting the loan up with Intrust funding. It’s a construction lender. The total project cost is three 80 plus a hundred thousand in the budget. That’s 480,000. They’re going to finance us 80% of the project cost, which is going to be an estimated cash to close. Sorry, I’ve lost my spreadsheet real quick.

Dave:

Oh my God, we’re bent against you now. Dude. Can’t even read a spreadsheet. You

Kathy:

Had me till now. Yeah,

Dave:

Real experienced operator over here. I lost it. Well, typically

James:

I don’t put 20% down. I can get a lot lower down, but if I’m bringing in other investors, I got to put more money in the deal. No, so the cash are required to close this deal for the duration of the project down. Payment interest carry everything is going to be about 125,000 after all costs, selling costs, debt costs and flipping it, buying it for three 80, putting a hundred in selling it for six and a quarter. That estimated net profit after all expenses is 64,000, which is a 50 to 53% cash on cash return inside of a five month period. So that’s nearly a hundred percent annualized return on a deal, which is a hitter.

Dave:

Let me just jump in there James, because I should have explained this earlier. We are doing this as a competition and we’re going to see who really wins. And we needed to choose a metric for how to evaluate these because James is in a more expensive market than Henry and so we’re not going to use the total profit. Instead we’re going to use the annualized cash on cash return, which is what James just said. So sorry to cut you off James, but basically you were saying your projection for our metric of note here, the one that we care about is about a hundred to 106%. Is that right? For your annualized cash on cash return?

James:

Yep, that is right. And we have a little bit of upside in the deal. We have comps that go up to six 50 and we’re keeping it at that six in a quarter range. So if we hit that six 50 number, which there is runway, and that’s what I like to do. I like to evaluate flips, be a little bit conservative, but look for that runway. That’s how you get that extra kicker in your deal. Can you creep it up? And we have a comp at 650,000, which actually isn’t that updated. It’s a little bit newer property, but it’s on a very similar street, has a very similar vibe. It’s an eighties built with a little bit better layout, but we’re going to be better conditioned. So we have a really good shot of hitting that six 50. If we hit six 50, we’re going to hit 110,000 in profit, which is going to be about 180 to 200% cash on cash return annualized. So the runway makes the deal work. So again, in and out five months make 50 to a hundred percent on your money on a cosmetic simple flip.

Dave:

Okay. Kathy, questions?

Kathy:

Yeah. What are some of the risks that could possibly delay the project?

James:

Great question. Flipping in general has a lot of risk and anytime you can make a 50 to 60% return in six months, there is inherent risk. So risk that can happen. You could get popped for longer permits for whatever reason. If we go in and try to add that three quarter bath and the city’s backed up and let’s say they can’t look at it for two months, which would be unusual, but it does happen, there could be a delay that can massively affect your annualized return if you’re adding two more months of interest in there. The other risk is we’re going to be finishing this project in about 12 weeks or so. That’s the tail end of the spring market we’re going to be going into and that’s when markets can start to adjust. So it is about the timing of your dispo. If we hit a month delay in permits, that could push us into a completion date of June July.

James:

Typically the market contracts a little bit during those times. So the dispo could, when you’re selling it could affect the price as well. And just like anything, there’s always risk in general flipping. Maybe we hire the wrong contractor, maybe we run out of materials, unexpected change orders, is there something that we’re not seeing? We did not do an inspection on this property, so there’s always a little bit more risk on that. But we have done a walkthrough, we’ve created a construction budget with buffers in there to kind of reduce the risk on the construction plan. So

Kathy:

What would you say would be worst case scenario than on that cash? On cash return if it goes an extra month or two and expenses come in higher as a result.

James:

So the worst case, let’s say it goes two extra months, that’s going to be roughly about $10,000 knocked off the profit at that point. And let’s say we creep by 10% on our budget, that’s going to put another $10,000 against the profit. So if we go 10% over budget and two months more on the whole cost, that’s going to knock $20,000 off the deal, which would knock our profit down to 44,000 and then all of a sudden our return is going to go to 35% in a seven months, which is going to take our annualized return to more around 50%. And so those two items which don’t seem like much, and that’s one thing you want to think about as flippers extra couple months and 10% over can dramatically affect your returns. So you really want to walk through, narrow these risk, but it would take it down to about a 30 to 35% in seven months, which is going to annualize out about 80%. So there is a big swing on that, but there’s a reduction of risk because you’re still making a great return. Anytime I can hit over 30% on a flip in a six month period, that’s a buy to me. So the worst case scenario to me is it’s still a buy. The best case scenario is we absolutely crush it.

Kathy:

Good answer.

Dave:

Alright James, well the deal sounds pretty interesting, but I’m curious about the operator. Have you ever flipped a house before?

James:

I’m getting some sponsors to coach me through the process, so I think we should be in good hands. I found a contractor down the street around the corner, he said he does good work. I feel like we’re ready for setting up for success.

Kathy:

It’s your brother, right? Your brother? Yeah. Gets out of rehab though.

Dave:

Alright, well obviously I’m joking, but James, why don’t you just share with everyone your experience and what sort of sets you apart as an operator.

James:

I think one thing we’ve been flipping for a really long time throughout all different markets and so I think one thing that has been great is we’ve seen upside and we see downsides and as an operator you want to always be looking at, you don’t want to get deal goggles, you don’t want to fall in love with the deals. We keep this very simple and it’s going, does it hit this minimum return or not? And we go through the same process on every deal. We pull the property, we walk it, we pull the fixed up comparables, we run a budget, it goes into a performa and it’s a yes or no on the deal. We don’t try to make ’em work, it works or it doesn’t work and we don’t have an emotional attachment. And so this property in here, whether I got it or not, it wasn’t going to make or break my day, but we had our core numbers that we’re going to stick to and not break those rules.

James:

The other thing that makes us good operators is we make a decision quickly. As soon as we see it, we’re going, that is a buy, we are moving on it. There is no room for error and we’re going to put our plan in place. And the quicker you make decision on flips, the more deals you can secure, the faster and smoother they go and the better returns you can make. You don’t want to stall up, you don’t want to delay, you want to just get your processes in play and get it moving forward. Because again, the faster you move on these things, the more return you click out.

Dave:

All right. Well Kathy, I feel satisfied. Do you have any last questions for James?

Kathy:

So if I were to invest, what would that look like? Do you take other people’s money for deals like this?

James:

That is a great question. So we do a variety of different partnerships, but how we’re setting up this one is we are going to be doing a cash in equity position. So that means there’s $125,000 that is needed for the project. An investor can put in 62,500 that would get you 50% equity ownership. Now by doing that, we still are going to have to charge our operational fees. We have to pay for our staff. So you are going to get a return if you put in 62 5, that’s half your deal, you half the equity. We are going to have to charge because we’re giving away equity for our operations, we’re going to charge a 5% overrun auto construction. We charge an acquisition fee of 1% and then we have a disposition fee of 1% so we can cover our staff and make sure that your project is going smooth because nothing is worse than an understaffed project. People who are not managing is how they go into Lost Woods. It’s happening to me right now in Newport Beach. I’ve been traveling around too much. I haven’t been on my job site. This site’s not moving forward. So it’s not just fees, it’s to pay to make sure that your money’s protected.

Kathy:

Great, love

Dave:

It. Now that we’ve heard about James’s deal, we’re going to hear about Henry’s right after this break. Welcome back to the 200th episode of On the Market Podcast. Alright, well now that we’ve heard about James’s deal, let’s move over to Henry’s deal. You’ve been awfully quiet over there. Well Henry, do you want to throw any shade on James’s deal before we go over to you?

Henry:

Oh, plenty of that to come. Plenty of that to come.

Dave:

Okay.

Henry:

Tis the bonus of going second. I get to hear all about your deal and then tell you how mine is so much better.

Dave:

Get spicy

Henry:

Here. So I believe he is right. I do think the mark of a good investor is to see a good deal. Know when you see it and go ahead and jumped on it. I went ahead and jumped on mine, so I already purchased mine because I move quick. So I own the house already and we are buying a three bedroom, two bath, single family home out here in northwest Arkansas. It is 1300 square feet and it is a split floor plan. It is already typical open concept. So similar to James’s project, this is going to be a like for like swap. We are not moving walls, we are keeping everything in the same location, but we are touching all of the surfaces. So we are going to come back, brand new cabinets, brand new kitchen, brand new countertops, brand new floors throughout the entire place.

Henry:

We are also going to modernize the space completely. Also similar to James’s project, it is probably the only house on the street that has not been turned around yet. And so it is a beautiful neighborhood. There’s a lot of beautiful homes. This is the one home who hasn’t had a turn yet and so I believe the desirability is going to be there for people. What I love about this property though isn’t any of these things. It is what we are buying it for and what options that gives us in terms of monetizing this property. So this house we paid $97,000 for and it needs a 65 to $75,000 renovation. I love how James says it’s just a quick turn at a hundred k renovation. That’s a whole house in my neck of the woods. So we are doing a 65 to $75,000 renovation. That budget already includes a $15,000 contingency fund.

Henry:

And so we’ve got some risk mitigation built into our rehab budget. So if you take 97, add the 60, add the 75,000, we’re going to be all in at 172,000. The plan is to sell this property for $280,000. That is a conservative a RV. There is the potential to sell it for more, but I always like to underwrite these things extremely conservative. So $280,000 a RV. If you subtract the holding costs of about 15,000 and that holding cost, what that makes up is about a $2,500 a month payment for six months. I don’t think we’re going to need to hold it for six months, but again, being extremely conservative, if you subtract the holding costs, subtract the closing costs, subtract the real estate commissions, we stand to make a net profit of about $70,000. And so I don’t know if you guys are super great at math, but $70,000 on an Arkansas flip probably Trump 50 to $60,000 on a flip in the Pacific Northwest where you had to pay a whole lot more to get into that deal.

Dave:

If I’m getting you right, Henry, you’re you’re total all in cost. Here is what? Are you paying cash? Are you financing it?

Henry:

Yep, so we’re financing it. We are putting about 20% down. So a 19.4, call it 19.5 K down. So total money out of pocket is 20 k, but total project cost is 172.

Dave:

And James, you did yours on total out of pocket.

James:

Mine was total cash out of pocket. So 1 25 covers interest, payments, down payment, everything out the

Henry:

Door. So you put all your holding costs in the total cash out of pocket.

James:

Yeah, I did my overall cash investment on the deal.

Henry:

I’ll restate that. So let me add mine. So I’m 55 out of pocket.

Dave:

And Henry, what’s your timeline for renovation here?

Henry:

Again, I’m being super conservative with the timeframe, so I am budgeting 60 days to complete the renovation. Another 60 days on market. So that’s 60 days of listed to getting it under contract and then another 60 days from under contract to close. So we’ve got a six month timeframe built in there. I don’t expect it’s going to take that full amount of time, but I always want to underwrite conservatively.

Dave:

So just so we can compare things here, if we look at Henry’s estimate here, his projected annualized cash on cash return is about 155 to 160%. So if you remember James was a measly a hundred to 106%. So if we’re just going based on projections alone, Henry’s got an advantage so far, but we haven’t dug in on the specific questions and details of this deal. So Kathy, any questions for Henry?

Kathy:

Well, I had the privilege of seeing some of the photos of Henry’s property. It’s a nail biter, it’s an ugly house. The same question. What are the risks that could potentially delay progress?

Henry:

Fantastic question. Yes, there are risks with this one. The reason we were able to get this at such a great deal is because the previous owner had a pipe burst in the house which caused a lot of flooding. That water has been sitting, which has caused some mold and mildew and some is probably a loose term there. And so part of the budget is going to go to mold remediation, removing all the old drywall, putting new drywall back in its place. And so whenever you have something like mold remediation, it has to be done correctly by a professional and a, that can be costly, which we have added into the rehab estimate already. But B, it can also be timely because you have to have them in there beforehand to test, you have to get it remediated, you have to get them back in there to test. All of those things are going to have to be on their timetable and schedule. We don’t control those things. And so yes, that can cause a delay, but all of the other problems are problems that we can control because our contractors can handle those.

Kathy:

So in the past, what kind of delays were you facing? I mean are we talking a couple of months? Are we talking six months? I mean what does that look

Henry:

Like? No, actually we’ve already got a mold remediation company on deck ready to get in there as soon as we are done. And so we’ll actually the timetable is actually a whole lot quicker than we would’ve hoped. I do have an ace up my sleeve because my acquisitions manager’s brother owns the mold remediation company.

Kathy:

Oh sweet. You diva. Slow down, right? I

Dave:

Like that.

James:

Anytime a house is growing the risk grows too. Henry though, the way it goes

Henry:

Speaking like that of growing, I also have another ASCE up my sleeve and that is the purchase of this house included the empty house lot next door. The owner owned both and I structured the pricing to include the lot next door for free. And so that gives me a couple of options. Option number one is I can sell the house lot to a different buyer or the buyer who ends up buying this house for an additional $15,000 that will go net profit to the bottom line. So that would increase the cash on cash return. Dave, we’ll let you tell them how much that would increase it. If we added 15,000 to the bottom line, I

Dave:

Think that would give us to even right 70 in profit for 70 in, no no, 85 in profit for 55 in expense. Lemme do some math, keep talking.

Henry:

Option two, I can use the lot as a down payment on a new construction loan and build a entire new house that I can either rent or sell for a profit. And option three, this house also has a completely unfinished basement that is the same square footage of the house, which I can turn into finished square footage. Now that would add additional money to the rehab budget but the return would exponentially higher. Full transparency, I don’t plan on doing that, but it is an option if I need to kick James in the butt.

Dave:

And Henry, would you have to divide the lots and could you do that in six months?

Henry:

The lots were already divided. I actually had to have two purchase contracts when I did this and I just used one loan to cover both.

Dave:

Interesting. Okay,

Kathy:

I have just one question. This is actually to James. James, would you trade your deal?

James:

Absolutely not.

Henry:

I might.

James:

It’s all about the underwriting. If I can pick up and I’m a hyper competitive person. If I can pick up a month on my dispo, I’m looking at Henry’s and I’m looking at mine and I know I can turn mine quick. He’s got a little bit of green hair on it. More hair can slow you down, which will press out your deal. And if I could pick up a month and hit my runway comp, I’m going to be smoking this return. So I feel pretty comfortable where it is. And also I don’t know how to fix houses in Arkansas. That is Henry’s domain domain. I’d be buying it and I’d be like, okay, what’s next? I do like the lots. Okay, question on these lots though. Are they developable or they look a little loppy?

Henry:

Yes, I’ve already had a PERC test done on the lot. It is a buildable lot.

Dave:

James is like damn it. Just trying to sell it as loppy. Okay, so I think we’ve asked all our questions. So we are going to now Kathy and I have to choose who we would invest with, which person we are betting on. So I think we need to cue our final Jeopardy music. And if you are listening to this episode within a day of it coming out, we’re going to be putting an audience poll on the BiggerPockets Instagram. So just go to at BiggerPockets on Instagram in the stories there will be a poll and you can bet on either James’ deal or Henry deal. Okay Kathy, I’m going to make you go first. Tell us who you’re going to bet on and then explain your reasoning.

Kathy:

Oh man, this is so hard. I mean these are both such pros and you’re going to make a lot of money on either deal. If I had to choose on the winner, who’s going to get the highest cash on cash return? It looks like it’s going to be Henry.

Dave:

Alright. Wow. Henry one vote for you. And are you just going based off his projections or is there anything else that you like there, Kathy?

Kathy:

I mean I don’t like this house. It’s a scary house to me, but it’s not scary to Henry. He’s very familiar and that’s why he’s getting these kinds of deals because people like me wouldn’t buy it, but he knows what to do with it and I just look at a nightmare. But when you look at those numbers and the different options and the lower amount of money at risk, it’s just cheaper. It’s just less money with a good return. I don’t know. It seems like in the end if he can get through this thing and because he is got connections, if he didn’t have those connections, this the sink could drag on and drag on and be a big nightmare. But he’s got those connections and experience. So I think he’s going to pull it off and I think that return is going to be close to that 150% that he said.

Dave:

Woo. Okay. Well I do like Henry’s deal also, I have to admit, but in the spirit of making this more interesting, I’m going to go with James’ Steel because one James’s flipped like 6,000 houses. And so I trust that him and how competitive I know he is is going to help that out. And two, sometimes Seattle, it’s just like there’s just stupid money there, right? It’s like if rates come down a little bit, James might be able to sell this thing for $200,000 more than he was expecting to because that’s just how this Seattle market works. And so because I want to make this more interesting and I wouldn’t want to make James buy the three of us dinner. Let’s do it James, you and me versus Kathy and Henry Stakes or stakes. Let’s go flip some houses.

James:

And Dave, I will. I think you made a smart decision. We have buyers lining out these houses out the door right now. We had 50 showings on one house two weeks ago. 50. Wow. We got the bodies in the market.

Dave:

Yes. I’m glad you didn’t tell Kathy that before. There

James:

Is more showings at our houses than some population in some Arkansas towns.

Dave:

So I think

James:

That the bodies are there.

Kathy:

So just to be clear, with the steak dinner, do I get to choose? Is it going to be in Alabama or is it going to be in California or Seattle?

Dave:

Well, I think it’s Arkansas. Oh yeah. I think the winners get to pick, right?

Kathy:

I meant Arkansas, but Alabama works too.

James:

We’re picking a five Dave. That’s what we’re eating. A five. Oh yeah,

Dave:

That’s what we’re going with. We’re going Wagyu a five at whatever fancy place in Seattle that’s going to cost more than the rehab budget of James’s entire play. Alright? And if you all want to vote again, you have to do it within, if you’re listening to this within the first day, you can do that in the BiggerPockets Instagram. We would love to know who you would be betting on either James or Henry. But I got to say, you guys, thank you for sharing this. You made it very hard. These both sound like fantastic deals and probably splitting hairs here between two really good, exciting deals. But I hope you all got some laughs out of this. Enjoyed the show, but also see how great deals are possible in these markets and how Henry and James are making those happen. Thank you all, Henry, Kathy and James for 200 excellent episodes. And to all the listeners out there, thank you all so much for joining us on this journey and all your support of On the Market over the years. The show is doing great and we are excited to make hundreds more of these episodes for you. And before we go, I do also just want to thank Kaylin Bennett, who is our producer and the rest of the BiggerPockets team for making this show happen each and every week. We owe them all our gratitude, so thank you all and we’ll see you for 200 more.

Dave:

On The Market was created by me, Dave Meyer and Kaylin Bennett. The show is produced by Kaylin Bennett, with editing by Exodus Media. Copywriting is by Calico content and we want to extend a big thank you to everyone at BiggerPockets for making this show possible.