How HGTV’s Heather Rae and Tarek El Moussa Flipped Over 1,000 Houses

Scott:Welcome to the BiggerPockets Cash podcast, the place I interview Tarek and Heather El Moussa from The Flipping El Moussas. You could have heard of this implausible HGTV present.Whats up, whats up, whats up, my identify is Scott Trench and I’m solo in the present day. We’re bringing you a really particular bonus episode of the BiggerPockets Cash podcast. It’s for these of you who didn’t attend BP Con and we had a tremendous fireplace chat with Tarek and Heather, and we determined to file the rehearsal of this chat and convey it to you right here on the present. We’re going to cowl every part from how Tarek and Heather began, how their companies perform, being HGTV and Netflix stars, and the recommendation they’d give traders in the present day. And what I actually appreciated essentially the most about getting an opportunity to speak with Tarek and Heather is not only, they’re clearly superstardom and the unimaginable companies they’ve constructed within the media area, however the actually massive scale enterprise operation that’s happening throughout wholesaling, repair and flip, leases, and now syndications in the actual property area and the delicate machine they’ve constructed. So a giant privilege to speak to them in the present day.All proper, I’m right here to make monetary independence much less scary, much less only for anyone else. To introduce you to each cash story as a result of we actually consider monetary freedom is attainable for everybody, regardless of when or the place you’re beginning. Whether or not you need to retire early and journey the world, go on to make large time investments in property like actual property, begin your personal enterprise or perceive the realities and the nuts and bolts of a giant scale actual property enterprise delivered to you by tremendous well-known HDTV stars, we’ll show you how to attain your monetary targets and get cash out of the best way so you may launch your self in direction of your desires.All proper, subsequent up we’ve the cash second. In the present day’s cash second is extra of a BiggerPockets plug. Need to really feel impressed and be taught from the very best? Be a part of us subsequent yr at BP Con in Cancun. That’s proper, you heard me. We’re taking our convention to Cancun. It’ll be out of this world. I imply out of this nation. Be a part of me and a number of the greatest traders round like Henry Washington, David Inexperienced, and Dave Meyer subsequent yr at our convention.This yr at 2023 was wonderful. We ended up renting out Common Studios as the top notice. And moreover the partying and the superior nice occasions, we additionally had at an incredible, we had like 80 audio system over 50 periods, we had 75 completely different sponsors starting from all various kinds of professionals, like brokers, lenders, property managers, insurance coverage brokers, tax professionals, and extra to software program options like property administration, software program, accounting software program, off-market deal discovering software program to syndicators to something you may consider. It was tremendous priceless and I simply had a good time. Hope to see you there subsequent yr at Cancun, the place we’ve rented out an all-inclusive resort for a number of days. Wanting ahead to it.Tarek and Heather, welcome to the BiggerPockets Cash podcast. I’m so excited to speak with you in the present day. Thanks a lot for becoming a member of us.

Tarek:Yeah, we’re excited to be right here, Scott. How are you doing in the present day?

Scott:I’m doing nice. I get an opportunity to speak to you positive folks. Effectively, let’s simply leap proper into your enterprise. Might you inform us about your empire and what you do and your roles in that enterprise?

Tarek:Began off as an actual property agent, 19, 20 years previous. Weathered the good recession after discovering success at a younger age and noticed a chance out there 2010. I did a brief sale deal at a primary lien, second lien, third lien, IRS lien, HOA lien, all these liens. I ended up closing it after 11 months. I obtained a test for 7,000. The man that purchased it, painted the home, employed a painter, employed a gardener, and offered it a pair weeks later, made 130,000. And that was the precise second that I spotted I used to be on the improper facet of the actual property equation. So I began flipping homes in 2010 on a whim. Went to all people I knew to lift cash from them. And all people mentioned I used to be loopy. I used to be too younger, I used to be too speculative. And at last I discovered somebody dumb sufficient to present me cash.

Scott:And what market did you begin in? What market was this?

Tarek:In Southern California. And through my very first flip, and that is what folks don’t know, throughout my very first flip, I obtained the concept to flip homes on TV. So I documented the method of the very first flip, after which I obtained the pilot for the collection, then I obtained a contract. The contract said I needed to flip 13 homes in 10 months, however I didn’t know how one can flip homes and I didn’t have any cash. So on the time I wasn’t certain what to do. I referred to as my lawyer, I mentioned, “What’s the worst that may occur?” He mentioned, “Effectively, they might sue you.” And I mentioned, “They might take it. Every part’s financed, anyway.” So I signed the contract, burned the boats, and discovered how one can flip homes whereas filming a TV present.And since then that was 2010. In the present day I’ve flipped virtually a thousand homes. A majority of the enterprise that we’re flipping, we’re doing is in Southern California, orange County, LA County, Riverside and San Bernardino County, and that we even have out-of-State Investments, personal 200 leases throughout the nation, North Carolina, Oklahoma, Georgia. After which on high of that, I’ve homeschool training, educate folks how one can purchase repair and flip homes, construct rental portfolios. I’m so enthusiastic about my new firm, TEM Capital, in addition to Heather’s new firm, HEM capital, which is actual property syndication. So collectively we’re shopping for multifamily actual property, self storage, and we’re additionally creating. On high of the actual property workforce I’ve with the company, we’ve about 1400 actual property brokers working with me. And we’ve a manufacturing firm and we’ve a house line. And what else we obtained honey?

Heather:Effectively, we’ve a number of extra issues beginning that we can’t discuss but, however the latest is our residence line referred to as Residence by Them. In order that was extra a ardour challenge that Tarek and I we’re speaking about for years we needed to create, and now it’s a full on enterprise. And we simply launched two new merchandise yesterday and we’re launching extra arising. So actually enjoyable.

Scott:So we’ve all of those enterprise, this sprawling enterprise conglomerate. What are your roles day after day, every of you on this empire?

Tarek:[inaudible 00:05:43]. And that’s the problem as an entrepreneur. On the finish of the day, what are we? We’re manufacturers, proper? And we constructed our manufacturers via the facility of tv by being in a whole bunch of tens of millions of homes around the globe. So our important focus is all the time model oriented. However outdoors of that, true to my coronary heart, I’m an entrepreneur. See, I wasn’t a star that obtained into actual property. I used to be somebody that was in actual property and noticed a chance to construct a model to get extra actual property. So in my coronary heart, I’m an entrepreneur, so I’m nonetheless lively CEO within the firms. I’m nonetheless concerned within the day-to-day. And each single day I’m all the time desperately on the lookout for the very best assist on the market. So we’re all the time hiring, we’re all the time on the lookout for wonderful folks to hitch the workforce.

Heather:I began in luxurious actual property and I’m on a present referred to as Promoting Sundown, which grew to become a world hit in each nation. And we had been already a established actual property workplace. And the chance got here to us to movie a TV present, they usually interviewed all of the brokers within the workplace they usually selected who they needed for the present. And I take into consideration season three is when it actually blew up. And that was a part of the explanation. It’s a tremendous present. The actual property brokers within the workplace are very attention-grabbing, stunning girls, luxurious houses in West Hollywood, Beverly Hills, California. After which Covid really helped the present blow up as a result of everybody was residence. They had been on the lookout for an escape. And so season three about what? 2020, 2021 was when it actually blew up. After which Tarek and I’ve a present collectively referred to as The Flipping El Moussas, the place you see me flip homes for the primary time on TV.

Tarek:It’s enjoyable.

Heather:So I had by no means flipped a home earlier than. So episode one, you watch me flip my first residence with the skilled who’s been doing this for years, and now we’re filming season two. And also you see the progress I’ve made with my flip.

Tarek:Yeah, she really simply began her twentieth flip. A yr in the past she flipped her first ever home with me. And in the present day, 20 homes later. It’s unimaginable to observe how a lot she’s realized, how a lot she’s grown, and the quantity of data that she’s obtained.

Heather:At first, coming from a luxurious actual property standpoint, I didn’t notice the enterprise of flipping. And I got here into it eager to do all these luxurious issues to those houses we had been flipping and I need to do that, I need to try this. And now my thoughts has shifted a lot from luxurious to the return on funding and essentially the most revenue on the finish and the way we will save and the way we will take advantage of. So actually in a brief period of time, I’ve realized a lot priceless classes for flipping.

Scott:What’s the sort of core enterprise mannequin? What’s your bread and butter on this enterprise?

Tarek:I imply, the bread and voter for us is often Southern California, and we’re usually getting homes between 500,000 and about 1.5 million. That’s sort of our bread and butter. Will we go decrease? Sure. Will we go larger? Sure. However we choose to remain between 500,000 and 1.5 million.

Scott:Okay. And the way a lot are you placing right into a typical flip, after which what are you promoting it for on the finish?

Tarek:Yeah, so it relies upon. So that you’ll take a 3 bed room, two rest room, say 1200 sq. foot home to go in there and do a very nice flip, full transform, new AC, home windows, ground. I imply every part In the present day you’re taking a look at about I’d say 130, 140,000. I do know in California we’re most likely paying greater than persons are paying in different markets, however I realized early on to not do the work myself. And I do know I can get monetary savings by doing the work myself, however that’s going to stop me from doing different homes. And the homes make the cash not the work, proper? In order that’s one factor.After which what we’re doing greater tasks, like we’re doing a home proper now. The town of [inaudible 00:09:21], we’re spending 240,000. It’s a 2100 sq. foot home. And that is fairly cool as a result of the market is in mayhem. We began the challenge about six, seven weeks in the past. The excessive comps on the time was at 1,150,000, 1,175,000. And I reran the comps this morning. We now have two new ones. One is at 1.3, one is at 1.318. So we simply added six figures to our backside line. So I’m very enthusiastic about that. So we’re really headed to the home this afternoon to see what we might add to it to verify we get that quantity.

Scott:That’s superior. Now, have you ever seen, within the final two years we noticed a pullback in exercise from flippers in a normal sense. Was that mirrored in your enterprise? And the way have issues advanced possibly because the final 18 months with the rising rate of interest setting? Are you seeing issues ramped again up, for instance?

Tarek:Yeah, no BS right here. Anybody that claims it hasn’t been a wrestle, they’re not telling the reality. So we purchased 91 homes first quarter of 2022, so 91 California homes. And the charges on the time had been two and a half, 3%. And whereas we had been fixing up all these homes, the charges went to 6 to 7%. So we burned via, I feel it was 10 or 11 million in anticipated revenue. And instantly when the charges doubled, I finished all shopping for, instantly moved to wholesaling as a result of I knew I used to be going to be incurring losses. So with a purpose to offset these losses, I wanted to have income. So I finished shopping for, completed all these homes. There have been some, I used to be dropping three, 4, or 500,000. However whereas I used to be fixing these homes up, we constructed the wholesale mannequin that was bringing in 3, 4, 500, 600,000 to offset these losses. So we weathered the storm. In the present day we’re thriving. It’s a mixture. We’re most likely wholesaling 75%, flipping 25% and doing wherever between 10 and 20 offers a month.

Scott:Superior. So let’s dive into every a part of this course of. What’s your mannequin for locating these offers, both to wholesale or flip?

Tarek:Yeah, so the discovering, which I educate my college students on a regular basis, is a very powerful factor. You possibly can rent a designer, you may rent a contractor, you may rent an actual property, you may rent all people to do every part, nevertheless it’s going to be actually troublesome to rent somebody to go discover you that home. So discovering offers is essential. So after I constructed the enterprise, I had no cash, nothing. So the enterprise was constructed via outbound prospecting. So I might door knock, I might chilly name, I might community, I might textual content message, and I might hit the streets every single day. I had one objective in thoughts, 50 conversations a day. If I didn’t speak to 50 folks, I didn’t know, I wasn’t allowed to go residence. In order that’s how I discovered success quick, huge motion. In the present day, I’ve been on TV a very long time. I’ve constructed a model, so now I leveraged the model. So we’ve completed TV commercials, radio advertisements, podcasts, pay-per-click search, advertising, something you may presumably consider. However we’re positively a advertising primarily based firm.

Scott:Superior. Do you discover that there are larger margins on the decrease finish of the spectrum, these $500,000 properties or the upper finish, the 1.5 million properties? And I’m wondering, Heather, how your expertise promoting these luxurious excessive finish properties is impacting or influencing a part of the course going ahead right here?

Heather:Effectively, I introduced in a luxurious, I suppose, vibe to the homes. So-

Tarek:Yeah, we’ve stepped up the sport.

Heather:We’ve stepped up the sport, and I don’t have the time to exit and supply supplies, search for… However I convey my design eye to it. And we work with designers. So I’ve employed designers that I discovered to exit and discover supplies for much less of a value that also look very excessive finish. So I’ve introduced my high-end eye to the flips.

Tarek:So the design is at an entire different stage. You’ll see season two of our present, the homes are insane, they’re attractive.

Heather:And I feel Tarek and I are much more hands-on with design this yr, this season on all of our flips the place final yr we had been as effectively. However this season we’ve stepped it up much more and choosing out all of the supplies. However I realized so much personally from final season. And we had been flipping extra high-end houses and we had been flipping extra within the metropolis of Los Angeles. We’ve now shifted and we’re flipping extra in Orange County. Loads of the permits, that was the most important concern final season for us final yr. So we’re nonetheless ending a number of of the flips that we didn’t end in what it took about 10 months to 12 months.

Tarek:Yeah, 10 months to a yr. And to reply your query, when the costs are going up and it’s an appreciating market, I just like the costlier ones when the market just isn’t going up and it’s secure and even taking place I just like the lower cost ones as a result of they’re quicker to repair, quicker to promote much less threat.

Heather:So we’re engaged on a number of decrease finish houses proper now. Cheaper price.

Tarek:Decrease bucks.

Heather:Cheaper price wall. I imply, we obtained what, 430, however then we’re flipping in and promoting it for 800 and one thing. So I like these higher as effectively as a result of they’re smaller. We will get out and in quicker and hope the market doesn’t shift throughout that point.

Scott:Superior. So how are you financing these offers? Is it money from earlier flips or onerous cash? Some mixture?

Tarek:Yeah. So after I first began I had no cash, so I went out, met traders. The deal was I did every part, all of the work A to Z, they obtained a test and we break up earnings 50/50. After which as time went on, I began earning money. So now we leverage onerous cash loans. So on each flip we’re doing, we’re acquiring a tough cash mortgage, after which we’re additionally most occasions masking the development prices.

Scott:Superior. After which stroll me via your contractor community. I’ve watched a number of episodes. It looks as if a few of these guys are long-term buddies at this level, however how did you get began constructing that contractor community and the way do you retain crews going on a regular basis to maintain prices down right here?

Tarek:Yeah. Effectively, I obtained my contractor community by getting burned by a number of contractors. I imply, that’s the factor in life, you bought to eat generally, and that’s the reality. As an entrepreneur, you’re going to get burned, you’re going to get screwed over or persons are going to deceive you. However what makes a real entrepreneur just isn’t quitting. So the explanation I felt good contractors is as a result of I went via the battles they usually made my life a residing hell. They didn’t present up, they ripped me off, however I needed to transfer on from them and I saved wanting, saved wanting. And should you’re all the time wanting, ultimately you discover what you’re on the lookout for.

Scott:Superior. Any ideas for folk to chop that course of a bit shorter or to have the next chance win price with a terrific contractor?

Tarek:Right here’s one of the vital priceless classes I’ve realized in my life. It’s not about what I do know. It’s not about what I can be taught. It’s not about who I can rent to be taught. It’s about who already is aware of the reply. So as an alternative of going to discover a contractor and giving them an opportunity or a chance to work on a flip, no, go discover a contractor that’s been engaged on flips since 2010 that’s delivered 1800 homes that is aware of precisely how one can flip homes higher than you the investor.

Scott:Now let’s discuss marriage and enterprise right here. You guys are enterprise companions and have a beautiful, great household dynamic right here. How do you steadiness that and work collectively seamlessly via these thriving companies?

Heather:No, the principle factor is communication and actually having fun with our time collectively. And never each couple can work collectively, dwell collectively, elevate kids collectively, be collectively all day. However I really feel like we’ve machine going.

Tarek:Yeah, I don’t find out about that opposites attracting. I’ve dated opposites in my youthful days and it was not enjoyable. So we’re very comparable. We each love actual property, we each love design, we each love leisure. We like the identical issues. So even after we’re not working, I do know this sounds sick, after we’re not working, we’re out on the weekends generally we’ll get up at 5 within the morning, can’t sleep, we’ll, go drive neighborhoods and search for homes. We simply, had been obsessive about actual property.

Heather:And household is essential to us too. And having that steadiness. And we’ve a brand new child, we’ve an eight-month-old after which a 13-year-old and an 8-year-old. So it’s a number of steadiness. We now have faculty, we’ve sporting occasions, and we’re busy with the youngsters, so we actually attempt to make it a degree to show off our telephones at a sure time, spend time with our household. I attempt to take days off and be with the infant as a lot as attainable whereas he’s so younger proper now. So if I can’t make it to one thing, Tarek will actually, he’ll deal with it for me. Like in the present day, I’m taking the time off to be with you guys after which even be with the infant. So he’s going to go stroll the foot for me.

Tarek:And the reality is, it takes a military to run our lives. I imply, we’re torn in so many instructions. We now have two drivers, three assistants, and we’ve all this stuff that help us personally so we will go on the market and have the time to work on all these companies. And that’s what most individuals don’t notice. Time is essentially the most priceless asset. You lose cash, you can also make a reimbursement, you lose time, you may’t make time again. So we actually delegate virtually each single factor in our life to the purpose the place folks inform us what to do and we present up and do it.

Scott:Superior. So one of many large parts in your enterprise is each of your particular person manufacturers and the mixed model now that you’ve got as a married couple right here and the way you leverage that in lots of areas to create synergies round your enterprise that helps you discover offers, you talked about. Clearly there’s most likely a revenue part to being a part of the HTTV community with a number of these alternatives. And there’s clearly your enterprise savvy right here. However most of the folks listening to this may increasingly not have that private model behind them. Do you assume it’s essential to have this stage of success? Or whether it is, how would you go about curating that model from scratch?

Tarek:One of the best ways to get began or one of the best ways to construct it’s to construct it by getting began.

Heather:Simply get began.

Tarek:Get began. Oh, I need to put money into actual property. Oh, I need to go on food regimen. Oh, I need to go to the gymnasium. How lengthy have you ever been excited about it? Six months. Effectively, why don’t you simply get within the automobile proper now and drive to the gymnasium, cease ready, take motion.

Heather:And you’ll construct a model when you’re doing that. I imply, if folks need to construct a model and be extra profitable in that side, you may movie your self strolling your flips. You possibly can movie your self doing all of the tasks, you may movie your self doing something, and also you simply must get began on that too and never be nervous as a result of it might be nerve wracking to do this. And oh, I’m not identified, I don’t have a model, however you may construct a model. You don’t must be on TV to construct that model.

Tarek:So if somebody was beginning at zero, create a model brand, no matter you need to do, you don’t even want a brand, simply create some social media pages. If you wish to be an actual property investor all day, every single day you put up about actual property, you stroll fixer higher properties and also you’re simply all the time speaking about what you do. The primary six months you may get 5 followers, however by yr three, I’m fairly certain you’re going to have 1000’s.

Heather:Yeah, be constant and you can even watch what different persons are on the market doing and be finding out that and simply do a number of the identical movies as them and simply be genuine to your self.

Scott:Yeah, I really like that authenticity piece. Simply assist one particular person and assist them and interact with them. Present them what you’re doing, assist them be taught from you and comply with it after which do it once more, after which slowly scale it. Simply get began. Love that recommendation.

Tarek:Get began.

Scott:All proper, so we’ve talked in regards to the empire right here. Let’s dive into the brand new enterprise that you simply’re pursuing right here within the syndication area. What’s the historical past behind that transfer? What have you ever completed thus far and the place are you going together with your syndication enterprise?

Tarek:All proper, so I’ll let you know the story about that. So I began flipping in 2010. By 2015 I used to be throwing dwell occasions. I had my TV exhibits, enterprise was buzzing, I used to be doing unimaginable, met with my CPA and realized I owed some huge cash in taxes. I’m speaking some huge cash. And I have a look at him, I mentioned, “You’re telling me folks pay this a lot in taxes?” And he says, “No.” I mentioned, “What do you imply no? What do they do?” He goes, “They purchase actual property.” I used to be like, “That’s what I do.” He goes, “No, you purchase and promote actual property. They purchase actual property.” I’m like, “Effectively, what do you imply?” After which he began instructing me about depreciation. In order that was a giant recreation changer for me.Once I realized about depreciation, the sunshine bulb went off, my eyes went large, and I knew I wanted to begin proudly owning. And that’s how I began buying. I purchased 200 homes, round 200 homes. After which over time folks would see me on a regular basis strolling the streets on the gymnasium, no matter, like, Hey Tarek, we need to make investments with you. We need to do offers with you. And I by no means wanted traders to flip these homes. I simply don’t want them. So I noticed a chance to the place, effectively, I’m going after business actual property if I’ve companions that may purchase greater and make even higher offers. And that’s the place the concept got here from, I mentioned, and I simply attempt to assist as many individuals as attainable, make investments their cash with me, create wealth with me. And outdoors of making wealth and studying about actual property, have a number of enjoyable. With our firms we’ve occasions and dinners and yacht events. We’re going to Cabo Mexico subsequent yr with our traders. In order that’s actually the way it obtained began.

Scott:Superior. And so what have you ever purchased thus far? The place are you shopping for it and what does it seem like?

Tarek:Certain. So we purchased three house buildings in Arizona. We simply closed on one in northwest Arkansas. Two months in the past it was a 376 models.

Scott:Florida.

Tarek:I actually like that. I feel subsequent week we’re closing on one in Orlando, Florida. It’s a 215 unit. After which we’re-

Scott:Subsequent week?

Tarek:-announcing the… Yeah, subsequent week, subsequent week.

Heather:Storage facility.

Tarek:After which a storage facility in Arizona. It’s already completed.

Scott:What day are you closing on the Orlando property?

Tarek:I’m unsure. We’re assuming a HUD debt at 3.8% with 37 years left. So it’s an unimaginable assumable mortgage. However with HUD, issues are transferring sluggish, so they are saying subsequent week, however additionally they mentioned final week. So we’ll see how that goes. So then one other self storage facility, Arizona. After which we’re about to interrupt floor on creating one other one in Arizona, and it’s a few 200,000 sq. foot facility. After which one other challenge we’re engaged on proper now could be a improvement challenge in North Hollywood, California. And that challenge is myself and my spouse and some different normal companions.

Scott:Superior. So what’s the sort of thesis or enterprise mannequin that ties all these completely different investments collectively right here? Are you on the lookout for sure varieties of properties in sure areas? Are you on the lookout for simply nice offers opportunistically across the nation? How are you sort of pursuing the syndication enterprise?

Tarek:Yeah, so one, I’m wanting in the very best markets throughout the nation, in order that’s one. Two, I’ll purchase in any market if it’s a house run deal.

Scott:What makes the very best market within the nation?

Tarek:Man, that adjustments on a regular basis. The most effective markets across the nation. It simply depends upon the chance. In the present day it’s a bit bit bizarre, however a few years in the past it was Arizona, it was Texas, North Carolina was on hearth, Florida. However in the present day, I’m nonetheless a giant believer in these areas, however I’m not going into Orlando making an attempt to do a worth add challenge. For me, I really feel extra snug shopping for a Class A with low assumable debt that regardless it needs to be a secure funding.

Scott:Okay, superior. After which what makes a terrific deal on this area? How do people take into consideration discovering nice worth alternatives on this area? Is it the chance to imagine all these debt? Is it distinctive traits particular to every property or…?

Tarek:Yeah, I might say it’s a case by case situation. Every property is completely different in so some ways. On some properties, if I’m in a position to assume debt on a more recent building property at 3.49%, like I obtained in northwest Arkansas when the market debt’s at seven, I’m feeling fairly good about that. Would I’m going right into a deal in the present day in shock, Arizona that was a significant fixer worth add with main building on the proper worth? Heck yeah, I might 100%. So it actually simply depends upon the deal itself. If I can go purchase an house constructing for $10 million {dollars} in the present day, put 10 million {dollars} into it and promote it for 40 or 50, yeah, I might try this deal.

Scott:So are you planning to convey a number of the flipping experience that you simply guys have developed into the syndication mannequin from a worth add perspective?

Tarek:Completely. Certainly one of our large targets is actually, actually buying and selling actually cool designs for tenants, not by spending a fortune on materials, however actually excited about the feel and appear that they’re going to need in a house they dwell in.

Scott:Superior. And are a number of these house complexes, have they got the format that you simply want? They simply want that imaginative and prescient and contact and that’s what you’re discovering, particularly [inaudible 00:25:22] within the California and Arizona properties?

Tarek:Yeah, the worth add ones they want facelifts for certain. The newer class A, the assumable debt ones we’re doing, these are in nice form.

Scott:Heather, let’s transition and speak a bit bit in regards to the filming TV celeb enterprise that you simply guys… You might be each businessmen, however you’re additionally a enterprise man who mentioned that? Someone mentioned that.

Tarek:The enterprise. Jay-Z.

Scott:Jay-Z. That’s proper. Yeah, there you go.

Tarek:I’m a businessman, however I’m additionally a enterprise man.

Scott:That’s proper, sure. You guys are the enterprise man.

Tarek:We’re strolling companies and we’re enterprise folks.

Scott:So let’s discuss that a part of it and what’s the enterprise behind the scenes right here of being celebrities? How do issues work? How do you consider the connection with HGTV while you’re shopping for a property? Is there an angle for it? Oh, this might look nice on TV as effectively, mixed with that, and the way do you handle that? And Heather, I do know you’re significantly robust on this space, you each are robust, however…

Heather:The dirtier nastier homes, they remodel into attractive houses on TV. So I all the time inform Tarek I get the nasty ones, get the soiled ones as a result of that’s new for me as effectively. It’s enjoyable for me to stroll via the nastiest, stinkiest, dirtiest houses. It’s disgusting, nevertheless it’s enjoyable to see that remodel on TV. And I feel the viewers actually loves that as a result of we’re taking one thing that’s so foul, so ugly, so disgusting, and we’re turning it into a wonderful place for a household to maneuver into and fall in love with. So we’re positively excited about that after we’re taking a look at properties.Additionally, ones we will get out and in of quicker, as a result of we’re filming a TV present and it takes time to flip a home. So we will’t movie for over a yr on one challenge. So sadly we obtained into doing that final season. We needed to end up two houses in a while. And also you’ll be seeing these come out earlier in 2024. However what else?

Tarek:Yeah, I imply it’s an entire enterprise behind it.

Heather:I imply, yeah, we’re each regular those who obtained on TV. I used to be an actual property agent that it’s not like I did something particular to get on TV. I used to be a part of an actual property workplace on Sundown Boulevard. We had been an actual workplace and we occurred to get on a TV present and change into a worldwide world TV present. So there was nothing particular that I did to get on the present besides-

Tarek:Yeah, there was. There was one thing particular, many particular belongings you did.

Heather:Effectively, I imply, I feel not everybody will be on TV and do what we do.

Tarek:Yeah however right here’s what folks in a position to notice, being on TV it’s not like you may similar to, oh, go to work. No, you’re on TV. It’s important to be energetic, you need to be on to be witty Once we’re there, we’re working. It’s important to be 100% current. It’s important to be 100% there.

Heather:However I’m saying it’s not like I went out and I didn’t attempt to get myself a TV present due to who we had been and our personalities. Sure, the TV present does effectively. Not everybody can simply be on a present and be as profitable as we’re.

Scott:Yeah, look, I really like the humility right here. There’s luck after which there’s the way you play the hand that you simply’re dealt. And possibly there was a bit little bit of luck in getting the primary probability there and you then’ve performed the hand that you simply’ve been dealt phenomenally effectively, you’re a celebrity, you’ve obtained tens of millions of followers and there’s one thing that you simply’re doing together with that nice begin that obtained you going with that’s actually entertaining folks, that actually resonates with folks. And that’s what I need to discover out. What’s that secret that you need to sustaining that reputation in the best way that you simply relate to folks in your private model?

Heather:I feel you mentioned it relatability and I’m very current on social media and Instagram particularly. And I make a number of my funds doing model offers with large manufacturers and firms on the market, licensing offers. So I’m actually genuine with who I select to work with as effectively. I’ve been introduced a bunch of various alternatives and I don’t simply take one thing as a result of I’m going to earn a living off of that, so I’ll cross on issues as a result of it’s not genuine to who I’m. I’m plant-based I really like clear merchandise, non-toxic merchandise. So I actually attempt to work with manufacturers which are on level to what I consider in. And never everybody does that. And I feel that that’s a giant downside on the market and it’s so saturated at this level.So we additionally speak to our followers and we like to listen to from them and what do they need? What do they need to hear from us? And Tarek does a very good job at that as effectively. And he’s very personable with folks and I feel that makes a giant distinction as effectively. And we cope with a number of negativity as effectively, which isn’t enjoyable. And I feel being a model and being a star, you cope with that. And it may be robust. I imply on me particularly. And I simply select to not learn sure issues. I select to interact with folks which are constructive and we actually attempt to encompass ourself with positivity and never let unfavourable folks in our lives and reduce that out as a lot as attainable. Particularly having an toddler and a brand new child. I’ve actually tried to guard our vitality and I feel a number of my time is invested on the infant and our marriage and our household life, and we don’t have time to cope with the negativity, nevertheless it’s all the time going to return.

Tarek:Yeah, it’s all the time, it’s-

Heather:By no means going to go away. It’s all the time going to be there. Not everybody’s going to like you.

Scott:We’ve talked about eradicating negativity right here, however a part of what makes the TV so nice is, I’m not going to make use of the phrase negativity, is the drama that goes on.

Heather:Drama.

Scott:So how a lot of that… How a lot ought to we take all that as actual and what’s simply nice TV?

Heather:Are you speaking about promoting Sundown or our present?

Scott:Sure.

Tarek:What present? What present are we speaking about?

Scott:I’ll begin with Promoting Sundown after which transfer to The Flipping El Moussas.

Heather:I imply, you get a bunch of profitable girls collectively and there’s going to be drama. You begin out with nothing after which issues simply occur and are available up. So the drama will be very poisonous. I imply there was a number of occasions I’d come residence and I might cry to my husband and that’s not enjoyable. And you need to discover ways to work via that. After which you need to watch your self on TV, undergo it once more.

Tarek:However right here’s what folks don’t notice. They don’t notice in actual life that dialog most likely by no means would’ve occurred. However as a result of it’s a present, the producers say, okay, you guys have to go discuss this proper now. So think about two folks upset with one another as an alternative of giving it a pair days and no go discuss, effectively, after all you’re going to get drama. And that’s what makes the present so profitable.

Heather:You’re employed collectively, there’s drama, there’s issues that come up that you simply weren’t anticipating. And that’s the toughest factor is you’re in it, you’re filming, there’s drama, and also you come residence. It’s our actual life. We’re nonetheless actual folks. It’s not only for TV. After which it comes out on TV and you need to relive it once more after which undergo the haters and the followers which are critiquing you and hating on you. After which, oh, you mentioned that in a scene. After which-

Tarek:It’s all modifying although. They’ll make any scene look any means they need via modifying.

Heather:So it won’t have been as unhealthy.

Tarek:That’s why I really like HGTV.

Heather:Yeah. And it’s a distinct platform like filming for Flipping El Moussas I get to movie with my husband, it’s a really constructive setting. The drama is with the houses, the dramas with the development, the dramas with the permits and issues going improper. It’s not a private drama between me and my husband that I’ve to go residence and we nonetheless must undergo it. It’s very completely different from Promoting Sundown the place it was private and that is extra in regards to the residence. So it’s a really extra constructive setting.

Scott:Does that dynamic that you simply simply described, does it ever make you sort of want I might simply fade out and fade out of the highlight and dwell a quiet personal life? Or do you simply adore it being within the highlight?

Heather:I personally adore it. I imply, I feel I used to be born to be on TV. There was a degree in my life I used to be like, what am I good at after I was youthful, and I feel I’m actually good at being on TV. I actually completely take pleasure in it. I got here from a modeling world, so I used to be modeling and doing TV from the age of 20 years previous. So it was a pure for me to then be on a actuality present coming from that modeling world. And so for me, I personally love being on digital camera. I really like modeling. I adore it. I completely adore it. Him, not a lot.

Tarek:No, I adore it. I adore it.

Heather:He does it.

Tarek:Find it irresistible. Okay.

Heather:No, you don’t like being on TV.

Tarek:I’m a bit completely different. Like I mentioned, I’m an entrepreneur at coronary heart and I really like enterprise. I really like being on the market working. I like constructing. However because the years went on, as a result of I’ve been on TV a very long time now, and I struggled with this for a few years. I imply, there have been occasions after I mentioned, okay, possibly’s, time to get off TV. However I’ve come to the purpose the place I’ve realized I’ve been on TV so lengthy and I’ve constructed a sufficiently big platform that I even have the flexibility to assist a complete era of individuals. That means I might educate folks about actual property, I can educate folks about tax arbitrage, I might educate about… I can take all of the information that I’ve gained within the final 20 years. And due to TV, I’ve this platform which actually provides me the flexibility to assist folks. So due to that, I like TV.

Heather:That’s a very good level as effectively that I didn’t convey up a number of my following is girls. I actually attempt to faucet into my private journey that I’m talking to folks as a result of there’s one thing that I’m going via that folks don’t possibly communicate of or they don’t really feel snug talking of, or they don’t have the platform that I do, particularly going via being pregnant, postpartum. And I’m actually vocal about issues. So as a result of I’m touching, even when it’s one particular person, I’m serving to somebody on the market.

Scott:Wanting again, should you might, what’s one factor or what are a few belongings you would’ve modified now that the good thing about hindsight?

Tarek:I went via two cancers. Would I alter that? I don’t assume so, often because I realized so much from it. I’ve been broke. Would I alter that? Most likely not as a result of I realized, I’ve realized from every part I’ve gone via. If there was one factor I might change, the primary factor I might change can be going again and being simpler on myself, on my street to success. I used to be so stressed, so overwhelmed, so defeated, feeling like a failure, feeling like I’m not ok, feeling like I might do extra. However I by no means stopped working. So I ultimately discovered success, nevertheless it was a really troublesome course of to get via the psychological well being facets of failing again and again every single day for lengthy intervals of time.

Scott:And what about you, Heather?

Heather:I might say possibly after I obtained into actual property, actually realized the unhealthy, the great, the ugly, the deeper dive into actual property. I feel I had a mentor at first, which helped me so much as a result of I obtained an enormous deal. My first deal was $7 million deal, 7.1, and I couldn’t have completed that by myself. I didn’t know how one can do contracts, I didn’t know what to do. I didn’t know how one can stage the homes. I used to be model new and obtained this big deal. After which I obtained one other one proper after for 1.5 million. So it was like I didn’t know what I used to be doing, however I actually felt like I let him take over the deal an excessive amount of. And I didn’t be taught as a lot as I ought to have initially.And I feel I’ve heard that so much from different girls within the enterprise as effectively. We are inclined to sort of let different folks, you’re a wonderful woman, you’re doing actual property, you’re hardworking, however folks assume that you simply’re silly generally and which you could’t do the job so they’d take over. And I actually wished I might’ve pushed more durable. And I let a number of males intrude with a few of my success and a few of my offers the place I sort of stepped again and I wasn’t as… I didn’t get up for myself and I misplaced some huge cash at first due to that. And I allow them to take over and actually screw me on offers.

Tarek:And now she’s a shark.

Heather:And now I’m a shark. However I positively was not aggressive sufficient at first.

Scott:All proper. What’s the imaginative and prescient for the long run? The place are the El Moussas going to be in 5 years right here?

Tarek:Oh, 5 years. Effectively, I imply, effectively 5 years since nonetheless doing what we’re doing, almost definitely, extra investments, extra companies.

Heather:I might love to purchase extra properties personally, I’m simply getting began with that. So purchase extra properties by myself, with my husband, proceed the success of flipping El Moussas and develop Residence by Them even bigger.

Tarek:After which the companies, what we’re most enthusiastic about might be TEM capital and HEM capital as a result of these are the 2 autos that enable us to share our love for actual property and it permits us to assist others get within the recreation. So I might say these are the 2 most essential issues.

Scott:Superior. Effectively stay up for persevering with to comply with your journeys. Guys, thanks a lot for approaching the present in the present day and actually thrilling stuff that you simply’re as much as you.

Heather:Thanks.

Tarek:Superior, Scott. And we’ll see you in Florida.

Heather:Bye.

Scott:All proper. That was Tarek and Heather El Moussas. Effectively, look, I believed that essentially the most enjoyable factor about this specific episode was, look, you marvel, hey, these guys are HGTV Stars. How a lot of that is being arrange by HGTV or no matter with that, however no, these guys are actually refined traders. Tarek was joyful to share the realities of the flipping enterprise. I used to be additionally shocked to be taught in regards to the profitability of flipping homes in Southern California. I don’t know why that hadn’t occurred to me earlier than.Certain, there was a growth and bust part to this the place there was big earnings for a time period, after which he was fast to confess big losses for a time period. However now that unfold has returned and while you’re doing this type of luxurious flipping, you marvel if on common, over an extended time period, the common returns are very excessive, so long as you may face up to the storms there, which clearly their operation is massive sufficient and sufficient scale to make that work.So actually appreciated studying that. And I want all of them the success on the earth within the subsequent phases of their profession and hope that they proceed entertaining tons of individuals with actually prime quality flips and spreading the phrase and curiosity about actual property investing even additional.All proper, from this episode of the BiggerPockets Cash Podcast, I’m Scott Trench saying Money out Lady Scout. For those who loved in the present day’s episode, please give us a 5 star assessment on Spotify or Apple. And should you’re on the lookout for much more cash content material, be happy to go to our YouTube channel at youtube.com/biggerpocketsmoney.

Speaker 4:BiggerPockets cash was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, modifying by Exodus Media. Copywriting by Nate Weintraub. Lastly, a giant thanks to the BiggerPockets workforce for making this present attainable.