House Flipping: Charles Bulthuis of Reformation Asset Management On the 5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties

An Interview With Jason Hartman

Have a solid team. Once you’ve got your financing and all these other things are lined up, this is where you need that team that we’ve talked about earlier, because you cannot do this on your own. I’ve met people who claim to remodel homes all by myself and my response is “Yeah, but you’re not a licensed electrician, and you’re not a licensed plumber, and I know you didn’t pour this slab” Everybody has some kind of help, nobody does it by themselves. Don’t be fooled into thinking that you don’t need a team. So interview, get bids, go and just meet people and build some relationships. Get a team together, because at the end of the day that is how you’ll succeed, by having a successful plan, getting the people around you that can get it done, and then marching it through to success.

Shows like Flip or Flop and Fixer Upper with Chip and Joanna Gaines have really glamorized the creativity and enjoyment that comes with buying a rundown home, fixing it, and then selling it for a profit. Some amateurs have ventured into this industry and have made a lucrative career out of it. But others, particularly when a market is stagnant, have lost their shirts. As a part of my series about the ‘5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties’, I had the pleasure of interviewing Charles Bulthuis.

Charles Bulthuis is a CRE Broker and the Founder & President of Reformation Asset Management. A Veteran, Certified Residential Specialist, Accredited Buyers Representative, and Honorary CCIM, Charles has spent the past 29 years refining his innovative insights in the investment and wealth management industry.

Due to his unique skill set and proven results, Charles has been chosen by an overwhelming number of investment buyers and sellers over the last 5 years. With currently 500 doors under management and post project completions of multi-family, commercial and residential, RAM offers in-house Brokerage services, property management, maintenance and landscaping, as well as remodeling and new construction on staff. He has been featured in Top Agent Magazine, LA Wire, and on podcasts such as: Agency for Agents and Building Passive Income & Wealth (Through Real Estate).

To learn more about how to effectively use real-estate as an investment vehicle or to work with Charles directly, visit: reformationasset.com.

Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?

From very early on there was a sense of familiarity about real estate. While I didn’t grow up wealthy, I was fortunate enough to come into contact with people who were in the real estate world. When my parents divorced I remember my Mother saying, “Oh my God, if I still had the apartment building, or the bar, or the houses we wouldn’t be in these situations.” And I learned, “Okay, well wait a minute, if you’ve got these assets, then you don’t have these other problems.” So that was very influential.

Along the way there were others that influenced my opinion of real estate, such as my brother’s Godfather who would get an itch to build a house every five years and the landlord who gave my Mother the chance to live in the best neighborhood we ever lived in because he offered her a half-rent if she managed his other rental properties, which she did.

Later, when I joined the Army, I became an avid reader of Kiplinger’s Personal Finance, and while it didn’t touch on real-estate as much I was learning about the whole world of stock and bonds and commodities.

When I left the Army to attend college, I began thinking about my career path. At the time I wanted to focus on marketing and advertising, but as fate would have it the Army messed up my paperwork by checking the wrong box basically saying I wasn’t eligible for the GI bill.

My first thought was, “Oh my God, how am I going to find a job?” Then the very next thing I did was look through the newspaper at the want ads (like we used to do back then). I saw this ad that read: “Real estate brokers needed, will train.” And I thought, “Wait a minute, I don’t need a college degree to be a real estate broker?” So I called. Once I realized I could get into a field that dealt with all the things I found exciting and also represented security and opportunity without going to four years of college I was all for it.

So overall, there have been memorable moments in my life where I saw how real estate either solved problems, made people happy, or gave them an opportunity.

Can you share with our readers the most interesting or amusing story that occurred to you in your career so far? Can you share the lesson or take-away that you took out of that story?

During my first year in real estate, I tried to shadow the number one Broker in the office I was working in. I thought to myself, “Let me hear what this guy has to say.” I wanted to try and pick something up from this person. So I would always be asking him questions about what he thought and for a long time he just wouldn’t give me any attention as he was very busy. However, I persisted and started producing and he respected that and finally gave me some time.

So I asked, “If you’re gonna give me one thing about real estate, what is the most important thing I need to learn?” and he said: financing. He told me that if you don’t understand financing, you don’t understand why you need financing, when to use financing, how to use financing, how the banks decide whether or not to give you financing, the different types of financing, the different types of loan products. His advice was to just learn everything I could possibly need to know about financing, because financing is what makes the deal happen or not happen.

That was really an Aha moment for me because at the time I didn’t have a lot of people lining up to pay cash, but I did have my VA loan, or somebody who wanted to use an FHA loan, or a person using 20% down. And I realized that everything is different and there seems to be a product for each one of us.

That’s really kind of the key, figuring out what product is right for what property and what product is right for what party. If you can do that, then you have two of the three components for a deal, you’ve got a buyer, you’ve got money, now you just need a property.

Do you have a favorite “life lesson quote”? Can you share a story or example of how that was relevant to you in your life?

My Grandmother wasn’t an exceptionally religious person, but she would always speak about the golden rule. As a little guy I wasn’t really sure what the golden rule was, but it sounded like it was the important one. When I was a little bit older, I got brave enough to ask her what the golden rule was and she explained that it is to do unto others, as you would have done to you or simply: treat them the way you want to be treated. And I really thought about that.

There’s also a book that’s entitled ‘All I Really Need To Know I Learned In Kindergarten’ and for me these two things kind of go hand in hand.

For me it all boils down to: keep it really basic, talk to people like they’re your friend or somebody you know. Always be honest with them and forthright. Give them the information that they’re asking for, treat them the way you’d like to be treated. When it comes to this business, it’s their money and their future and it’s important to give them the respect and courtesy they deserve in order to build trust while they gain perspective.

Are you working on any exciting new projects now? How do you think that will help people?

Well, the most exciting project I’m working on right now is not actually a singular “project”, but rather it’s the fact that four projects I’ve been getting ready are all happening at the same time. My current focus is addressing the challenge of properly and simultaneously completing each one of these projects within the prescribed time frame of 18 months to achieve the financial goals of my clients.

What’s exciting about these four projects is what they will allow me to do 18 months from now, which is being able to say that my company has the chops to go out and do stick-built projects that are on scale. The reason it’s exciting to me is because it’s a stepping stone, to put Reformation Asset Management in a position to look a bank in the eye and say, “I’m going to be the contractor on this stick-built project.” And why that’s of consequence to others or hopefully to others is because at that point, I want to be able to dive into a LIHTC project, which is a low income housing tax credit project. My goal is to take the savings at scale that I’ve learned from my company to help financially benefit my clients through lower costs, pass that on to building multi-family housing that’s low income housing, which will allow me to do it cheaper and at higher density and break the old mold — others are currently spending ridiculous amounts of money on public housing, but it doesn’t need to cost ridiculous amounts.

What do you think makes your company stand out? Can you share a story?

Apart from the fact I cover the walls with Star Wars and Marvel art? (laughing).

Joking aside, I truly want the company culture to reflect the values and the attitudes that I operate by to cultivate a healthy, fun, productive, equitable working environment where everyone gets to see the impact of the work they do in a very tangible way.

Finishing a task list at Reformation Asset Management for the day directly impacts our ability to help a landlord reach their retirement goals, or helping a person that was unable to find a home reach their housing goals, so we always operate from a space that honors that responsibility.

An excellent example of this is when recently on a Saturday I quietly decided to come into the office to complete some work and unbeknownst to me, half of my staff had already decided to come in on that Saturday, because we had deadlines and they were committed to making them on time. It was truly incredible. It was totally voluntary, but everyone is dedicated to respecting our clients and helping them reach their goals on schedule.

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

There are so many people that either gave me direction, advice, or support and each was instrumental along the way. However, the first company I joined, Century 21 Ratan comes to mind.

It sticks out to me because at the time Century 21 had commercials where everybody wore a gold jacket, up until then I had never owned a suit, the Army gave me a green suit, so I thought, “Okay, I’m going to join the real estate company with the golden jackets.”

However, aside from the gold jackets my Manager, a man by the name of Gary Gibson, was exceptionally influential in the beginning of my career. He had an incredible gift of breaking things down so I could understand them. In my first interview with him, he told me, “Real estate is hard. If anybody tells you differently, they’re lying. If you go and interview with another manager or broker, and they tell you that you need to have six months worth of money in the bank, run away, because they’re telling you, they’re not gonna teach you what you need to learn.” He promised me if I worked with him he would teach me how to get paid right away and so I did exactly what he said and worked hard and I did.

He really taught me how to kind of see things behind the curtain so to speak and it really changed my trajectory.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

Honesty, loyalty, and perseverance.

Honesty, because you have to be able to give people your facts, your opinions, and then be able to stand by them, so they can’t be false. If they’re false , then nobody’s gonna be able to follow you down the road you’re trying to lead them down.

The saying, “ No man has an island” is the best way to look at it. You can’t get from here to there on your own. A team mentality, and a team building philosophy is going to benefit you because you can’t do it on your own. As a leader you learn very quickly that you need to be able to pass things on to someone else you can trust. And so that loyalty is going to help inspire other people to work for and with you. The ability to build a team is going to allow you to get further than an individual would. And then perseverance is the ability to say, “Some days it just rains.” and you still get up and get it done.

Where I really learned about leadership was in the Army. In the Army you have rank and the person above you could tell you what to do. In that world, the stakes are generally much higher. Sometimes you’re facing something like a machine gun nest, and as a leader you tell someone to go run at it and get rid of it. Needless to say, that’s got some pretty serious consequences if it goes sideways. And so I learned the way you make somebody run at the proverbial (or real) machine gun nest is by highlighting where each team member excels. Basically saying out how if that if it’s not you to take care of this, then who? Letting them know this task is for them, it’s what they’re good at, and why they were brought aboard and ultimately letting them know now is the time to shine the way that they were meant to shine.

So simply offering support, training, and then offering them congratulations and appreciation with a job is well done.

Ok. Thank you for all that. Let’s now jump to the main core of our interview. Can you share 3 things that most excite you about the Real Estate industry? If you can please share a story or example.

Housing provides stability to families and a stable home environment is a cornerstone to a productive society.

I truly believe that if things are good at home it’s easier to make other positive movements in the world. It excites me to help provide people with a solid home base. As I’ve called it in the past, a personal Fortress of Solitude.

I enjoy the fact that we’re building stuff. I like to see the evolution of how one day there’s a house that probably at one time served a family well but has seen better days and then before you know it boom! You come back and you see it’s a whole new beginning for someone. Real estate can create a whole new beginning every time.

The third thing is there are very few paths, unless you want to study software design and coding, that make it possible to be a successful entrepreneur in this world. Unless you are dealing with the tangible, you know, you’ve built a widget or you’re in real estate to me, that’s the way it is

Can you share 3 things that most concern you about the industry? If you had the ability to implement 3 ways to reform or improve the industry, what would you suggest? Please share stories or examples if possible.

I think one of the biggest threats is probably homogenization. I see that there’s always a trend in real estate to consolidate and to try to change the process of how a broker interacts with a client. There’s a lot of, “We’ll do it for you cheaper and faster” rhetoric, but then you see four other people saying the same exact thing about their company. And that’s the homogenization I’m referring to. It’s like, they take a very limited offering of services and they say, we’ll deliver this slice of knowledge to you for this fee. And then everybody learns that slice of knowledge. We’re like taking away the ability to teach; there’s a lot out there, there’s a lot you can do in real estate. It’s not just about the commission. You know, if you actually hire somebody that wants to charge you more, if they know more and if they’re better pay them more, right.

I think the solution is not to homogenize by breaking everything down into real estate’s practitioners based on their commission amount,but instead niche them down. Create a niche for yourself and then make sure that whatever your niche is, you are the best person at it that you can be.

What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?

Training. The more you teach the people around you and the more confident they are in their knowledge, the less mistakes they’re going to make and the stronger presence they’re going to give the public about your company’s abilities and knowledge. This also helps add to the perception of your company’s standards being higher than that of the competition. If you can teach the people that work for you everything, you know, which is hopefully a lot, then they’ll stay with you because you’ve ideally got a lot to teach. Don’t be afraid of teaching them everything, you know out of fear that someone may jump ship. Because to put it in Star Wars terms, for every Anakin Skywalker, you’re going to have a whole lot of Obi Wan’s and that’s a whole different parade.

Ok, wonderful. Here is the main question of our interview. Can you please share with our readers your “5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties”? If you can, please give a story or an example for each?

1. Financing. I touched on this earlier, but if you don’t understand financing, you don’t understand why you need financing, when to use financing, how to use financing, how the banks decide whether or not to give you financing, the different types of financing, the different types of loan products.
2. Understanding the economic cycle and how it impacts pricing. You can’t just buy real estate while real estate’s going up, because that means when real estate’s going down, you’re unemployed. So you have to learn how to buy a house today that’s probably going to lose value during the entire time you own it. So it’s important to know how you still make money on something like that.
3. Having a fair amount of knowledge about the construction process. This is important so that you’re not suffering from that feeling of walking into the auto mechanics bay and next thing you know, your mind turns off because you’re numb to the numbers they’re giving you. You need to know the numbers. If you don’t know the numbers, you’re not in the trades, that’s okay. Start asking for bids on your very first project. Don’t settle for one bid or two bids, get fiv. Figure out what it costs for real. Try to talk to people that you need in the trades so you can understand how much money you’re going to spend on a house or an apartment, or whatever you’re remodeling. Because what you pay for the property, how much financing you get, and how much that carry cost is for that financing, how much money you’re going to have to spend rehabbing that property — these are all factors that affect your bottom line.
4. Understand what the public wants. You buy something, you spend the right amount of money, fixing it up. Everybody walks in and says, “But it’s key lime!” And listen, I like key lime and I love visiting Tijuana, but at the end of the day, we don’t all live in the Caribbean. So buy some magazines, go on home tours, look and see what people that spend a lot of money on market research are saying. Get out there and get an understanding of what is on point now, what is on trend now? When you’re designing a flip, what you’re putting into the apartment building you’re rehabbing Isn’t just about price, it’s about convenience and flow, flow, plan, lighting, things like that. I’m not saying you need to be a contractor, or an interior designer, or an economist, but you do need to know a little bit about each one of those things in order to be good at this.
5. Have a solid team. Once you’ve got your financing and all these other things are lined up, this is where you need that team that we’ve talked about earlier, because you cannot do this on your own. I’ve met people who claim to remodel homes all by myself and my response is “Yeah, but you’re not a licensed electrician, and you’re not a licensed plumber, and I know you didn’t pour this slab” Everybody has some kind of help, nobody does it by themselves. Don’t be fooled into thinking that you don’t need a team. So interview, get bids, go and just meet people and build some relationships. Get a team together, because at the end of the day that is how you’ll succeed, by having a successful plan, getting the people around you that can get it done, and then marching it through to success.

What are the most common mistakes you have seen other people make when they try their own hand at house hacking or flipping? Can you share any stories?

They overspend. Almost everybody’s first attempt is the same and almost everybody does it.

One time I was working on a project where the owner and I went through 17 iterations of plans for a 625 square foot unit design. After so much back and forth we finally got together to discuss our differences in opinion for the designs. After talking for a while we ended up agreeing on almost everything. Very quickly after that we discovered that the contractor in the middle had their own opinion about the designs for these units based on what they had in their home! So when I say almost everyone does it, I really mean almost everyone.

From your experience, what can be done to avoid those errors?

There’s this saying, “Don’t throw a lot of you in the house.” It’s not your house, you’re not building it for you.

The purpose of going to the home fairs and the purpose of buying the magazines is so that you can see what’s on point for the marketing dollars that have been spent by the builders that do this for a living.

So deliver a product that’s in line with the market and the budget that you’re offering.

You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the greatest amount of people, what would that be? You never know what your idea can trigger. :-)

This may sound more like a wish, but if there was a way to teach every single person on this planet to be “colorblind” to the differences we tend to get hung up on I feel there’d be a whole lot less strangers in the world and a whole lot more good discussion happening. And once you’re talking to a friend you’re looking at solving problems in a whole different light.

How can our readers further follow your work online?

You can learn more about Reformation Asset Management at: www.reformationasset.com and I’d be happy to connect with you on LinkedIn at: www.linkedin.com/in/charles-bulthuis/

Thank you for your time, and your excellent insights! We wish you continued success.