House Flipping: Colby Hager of Capstone Homebuyers On the 5 Things You Need To Know To Create A Successful Career Buying, Rehabbing, and Selling Properties

You have to embrace a problem-solving mindset. This comes into play in all aspects of the business of flipping houses. From solving the sellers’ problems, dealing with all of the issues that always come up during the rehabs, and solving problems throughout the selling process, you are constantly facing issues and challenges that have to be resolved. If you let all the problems magnify and become overblown, this business can become stressful and all of the fun and rewards that come with this business will become diminished. If you go into this business knowing that it’s a series of problems that need to be solved and none of them are life or death, you can start off with a better attitude about the decision-making process.

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 Colby Hager.

Colby Hager, owner of Capstone Homebuyers in San Antonio, TX has been a professional real estate investor since 2007. He has remodeled, bought and sold millions of dollars of real estate as well as worked with the City of San Antonio’s Office of Historic Preservation to keep remodels period appropriate. He also owns and manages a portfolio of residential rental property including single-family and multi-family housing

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

I got into the real estate industry initially because I wanted the freedom to work outside of a traditional office setting. I always thought that if I worked in real estate, I would have the freedom to go and come as I pleased. I think I may have over romanticized that aspect of my career.

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 you took out of that story?

Well in this business I have seen a lot of interesting, scary, crazy, and amusing things. I have been set up for a robbery because they thought I actually brought cash to buy houses, I’ve been inside some of the smelliest houses you could possibly imagine, I’ve seen animals living in houses that really shouldn’t be living in houses. To be honest though, out of all the wild stories I could tell, the place where I get the most lessons and most takeaways are situations where I’m able to help families out of tough situations. I have the privilege of being invited into people’s homes when honestly things aren’t going the best. Whatever the reasons are, that’s when they call me. Helping these people out is one of the things I’m most proud of and at the same time, I am able to learn to reflect on the blessings in my life. I am able to have a giant sense of gratitude for the small things in life and I’m so grateful and humbled by the opportunity I have to meet fantastic new people almost daily.

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?

One of my favorite quotes that I really try to apply to the business of rehabbing and selling houses is “How you view what you do is how you do what you do”. I think this is especially applicable in the rehabbing aspect. I always try to keep in mind that we are creating a home for another family. I try to envision that family living in the home. This perspective makes it easy to avoid cutting corners and making sure the quality of the remodel is up to the same standard that I would want for my own family.

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

Right now, one of the more exciting things we are working on is really exciting because of the people involved. On the surface, it is just a standard remodel. However, the backstory of the house is that the house was the central gathering place for this particular family. They had everything from holidays, BBQ’s, to weddings at this house. Decades of family memories in this house. The owner who was the brother of the lady we bought the house from eventually grew ill and the house fell into disrepair. They desperately wanted to see the house restored to reflect all the great memories they had in the house. We purchased the house and are doing that for them. When the house is finished, they plan on having one last family get together there before we sell the house to a new family. This is one example of how we are trying to make a difference in our community and in peoples lives with what we do.

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

I think one thing that makes our company stand out is that so much of our business comes from referrals. There can be a stigma associated with real estate investors. We can sometimes have a reputation of low-balling homeowners. This is why we are proud to have so many referral clients. We do our best to give fair offers followed up with great customer service. People really do love selling their house to us! On the selling side of the business, we have a reputation with realtors for putting out a great product. People are surprised with the quality of work that goes into these houses. One quick story about that is, we have a few realtors who want to be notified every time we have a house coming up for sale. They may not have clients for that specific house, but they tell us they can find the clients because our houses sell themselves. We are truly proud of this aspect of what we do.

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?

Absolutely! I started this business with literally zero experience flipping houses. None whatsoever. I knew I could do it and I knew I could find the right deal that would be profitable. I was able to convince a close friend who works in real estate named Brent Porter to lend me the money to buy and rehab our first house. I told him no matter what happens, I would do everything in my power to make it the best decision he’d ever made! I think he was more skeptical than he led me to believe but in the end, he took a chance on me. We actually did pretty good on that house and he was happy. He still invests and lends money to buy houses with our business to this very day.

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?

1. Persistence — When I had no experience in real estate, construction, or remodeling I had someone who I looked up to tell me that I couldn’t just become a house flipper. I understood where they were coming from but never gave up on what it was that I wanted to do.
2. Uncompromising — In this business, it can be easy to treat people unfairly, cut corners, and not always do the right thing. I truly believe in doing the best I can for everyone around me. I’m not saying I’m perfect, I’m not. I just always try to do the right thing by everyone I encounter in this business and I know this is a big contributing factor to any of the success I’ve had.
3. Flexible — You have to be flexible in this business. We started off rehabbing cookie cutter houses. They were really easy remodels and didn’t take a lot of time. Around 2010, we noticed that the historic neighborhoods were getting a lot of attention from buyers. There were lots of houses that needed to be remodeled in those areas. They were super old and needed tons of repairs. We were able to buy for less, put in a ton of work bringing the core components of the houses up to date and add in some current trends to the design and sell the houses quickly. We totally changed up our scope of work and how we operated from a rehab standpoint and took advantage of what we were seeing in the market.

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.

The three things that excite me most about the real estate industry are 1. The people. I love working with homeowners, contractors, and other realtors. I get to meet all different kinds of people with different backgrounds and it makes every day exciting and fresh. It helps grow me as a person as well. 2. New technology in real estate. With all of the potential for disruption in the real estate world through technology, I am excited to see new opportunities created. I truly believe that with every disruption there is a great amount of opportunity just waiting to be captured and I love anticipating and looking for that all the time. 3. Improving communities. In my world of remodeling houses, I get to see the improvement in the communities we work in over time. I see neighborhood transformations and renewals and it is exciting, rewarding, and fulfilling to be able to be a part of that.

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.

The three things that concern me about the real estate industry especially as it relates to buying and selling houses for a living are 1. The current available inventory of housing. With our tightened inventory there is a strain on buyers which is creating an unsustainable environment for both buyers and sellers. I worry about buyers that get caught in this whirlwind as well as investors who likewise are overpaying for investments. 2. I honestly believe that real estate as an investment vehicle is not well understood and underutilized by the majority of people. Real estate is a fantastic wealth-building vehicle and is one of the few investments that you can actually borrow money to acquire. I wish more people would take advantage of real estate in this way. 3. Lastly, my concern is for the people who work in the world of real estate who are stuck in their ways. I think we are on the cusp of a transformation in the way real estate is bought and sold that will affect the way houses are bought and sold. Those people who are unwilling or unable to adapt quickly could find themselves on the outside looking in.

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

I believe one of the keys to creating and maintaining a really great work culture is to have fun with what you are doing. Once you understand and recognize that this business is just a series of problems that have to be solved, you can reduce the amount of stress related to the issues that always crop up. Learning to make quick decisions and move on without second-guessing will help evolve having a viewpoint of frustration to a viewpoint of simple question and answer. Get to that point with the challenges and the focus can shift to the really fun aspects of this business which is where the reward is.

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. You have to be passionate about the people. Buying, rehabbing, and selling houses for a living puts you in a position where many people are putting their trust in you to do your job the right way. When you are buying a property, the seller is trusting you to solve their real estate problems. Most of the houses you purchase come with baggage for the sellers. They are inherited, need lots of repairs, have bad tenants and the list goes on. These sellers are trusting you to make things better for them. You have to be passionate about finding the right solution for these people. During the rehab, I believe you have to care for your contractors and subcontractors. This will create long-lasting relationships and quality workmanship. Again, you have to be passionate about the people who work for you because you can’t do this job without them. Last but not least, to have a long career flipping houses, you have to be passionate about the people who are going to live in the house you are rehabbing. There are countless opportunities to cut corners when remodeling houses. When you care about the people who are buying your product, you don’t cut those corners and you stay committed to delivering a great product to your end buyers.

2. You have to embrace a problem-solving mindset. This comes into play in all aspects of the business of flipping houses. From solving the sellers’ problems, dealing with all of the issues that always come up during the rehabs, and solving problems throughout the selling process, you are constantly facing issues and challenges that have to be resolved. If you let all the problems magnify and become overblown, this business can become stressful and all of the fun and rewards that come with this business will become diminished. If you go into this business knowing that it’s a series of problems that need to be solved and none of them are life or death, you can start off with a better attitude about the decision-making process.

3. You have to stick to your numbers. It’s easy to get emotional about a house, a seller, and sometimes even a buyer. You may feel like you need to buy your next investment so it’s ok to raise your offer amount, maybe you feel like you won’t get the deal if you don’t beat someone else’s offer. Maybe you are emotionally invested in the design of a remodel which is causing you to overspend. The answer to all of these issues is to stick to your numbers. When you are checking comparable sales, for example, you may be tempted to use a house you really shouldn’t use. Just stick to your numbers. This leads me to my next key to having a successful career buying, rehabbing, and selling houses.

4. Don’t get emotionally invested in your rehab. This is important because we tend to want to remodel the house the way we would want our house to be or with the best finish out possible. One mistake I see frequently is over-improved houses. Investors need to use the sales from the neighborhood around them to guide them with their remodel. For example, if every house that has sold in your neighborhood has old windows, you probably don’t need to replace the windows. On the flip side, if every house has granite counters, you can’t use Formica and expect to command the same type of price and days on market.

5. Lastly, take the time to build your team. Too many people bypass this step but it’s important if you want to maintain long-term success. I’m not saying you need to go and hire staff. What I am saying, is that you should start to cultivate relationships with realtors, title companies, contractors and sub-contractors, and material suppliers and vendors. You never know when you will need to call in a favor from a title company to get a deal done or when you will need some special treatment from a vendor to get materials in on time or a contractor to work through the weekend to hit your timeline to get a job complete. You can make these things happen when you have a pre-existing relationship in place with your team.

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

There are two mistakes that are most common to see with house flippers just starting out. The first is paying too much for a property. This one may seem pretty obvious but beginning investors seem to struggle with this fundamental aspect of the business. There are many reasons why this happens but it is primarily because new investors get over-excited about a deal and will bend the rules to make it happen. The second common mistake most people make as they first enter this business is over-improving their flip. It’s easy to get swept up in making this house the nicest it can be and it’s easy to pay too much for lighting, appliances, and hardware, etc… I have coached other investors through this process and it seems like until you make this mistake a few times and watch your bottom line get smaller and smaller, it doesn’t seem to click. Unfortunately, these mistakes can prevent someone from moving from their first flip or two into a long-term career.

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

The best way to avoid the most common mistakes is to listen to advice from people who have done it successfully several times. Keeping your emotions in check and sticking to your numbers is also a best practice that will help newer investors navigate some of these pitfalls.

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. :-)

If I could inspire a movement, it would be by inspiring people to have an abundance of self confidence that would conquer the fear that plagues people from trying something new. People should learn how easy it is to invest in real estate even on a part-time basis. The barrier to entry is actually lower than most people believe. There is an abundance of educational resources available to anyone who has the desire to look for them. So many people would benefit from adding this investment into their portfolios it can seriously be life-changing! Most people are just too intimidated to even start investing in real estate but they shouldn’t be. That would be the movement! It would be fantastic!

How can our readers further follow your work online?

The best way to follow my work is through the Capstone Homebuyers blog or our Capstone Homebuyers Facebook page to see the houses we are working on and before and after pictures. We love to hear feedback on our projects!

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