Find Your ‘Why’. Before you get into flipping homes, you have to have a really good reason for wanting to do it. Many people are drawn to real estate because they can make a lot of money. True. But why? Why do you want to make a lot of money, specifically flipping houses? The deeper and more meaningful your why, the more successful you will be. Determine your ‘why’, write it down, commit to it, re-read it regularly, and never lose sight of why you’re doing what you’re doing. Flipping houses isn’t for the faint of heart. Your why will get you through the harder times when you feel like giving up. I want to leave behind a legacy for those I love, and contribute to the betterment of humanity, just like my mom did for me and those she came into contact with. That’s my why.
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 Jennie Berger.
Jennie Berger spent eight years working as a TV casting producer on shows for HGTV, Food Network, Travel Channel, and Investigation Discovery. She co-founded Property People in 2019 to stop trading time for money and to be of greater service to the community, and humanity on the whole. Jennie has a deep passion for all things creative, and loves to travel, play beach volleyball, and cook exciting plant-based dishes that inspire others to lead a healthier lifestyle.
Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to the Real Estate industry?
My mom. She had a true servant’s heart. Though she grew up in what most people would consider a wealthy family, she didn’t feel entitled to anything. “There before the grace of God go I.” I can still hear her say, as we’d pass a homeless person on the street. “That could be ANY of us,” she told me. My mom graduated college with a degree in social work and spent 10 years working as a case manager for the homeless. Throughout the course of my childhood, she started a few businesses doing what brought her joy — selling homemade jams, opening a vintage clothing and ephemera store, and collecting eclectic jewelry and chachkas from flea markets across the country to auction on Ebay, before Ebay was popular. She was dynamic, versatile, and let her heart lead the way. As smart and successful as she was, her greatest operation — and what she considered the most lucrative — was being a mother. I was her life, and she made sure that I knew it. I will forever be grateful to her for that. When she passed away somewhat unexpectedly in 2018, I was unaware of the legacy my mom had built over the years. I grew up in a hundred-year-old brick 3-flat overlooking the Manhattan skyline. As soon as we moved in, my mom rented out the two floors above us and collected monthly rent checks for more than 20 years. She was a real estate investor all that time and I had no clue! Probably because she didn’t talk about it this way, you know? She wasn’t into real estate, like I am now, as a business. She simply wanted to live in a nice house, with a nice back yard, and a view of the water. It’s often said that we view our parents one way while they’re alive. And after they leave the Earth, we have a (hopefully) new-found appreciation for the things we didn’t notice while they were still here. That certainly was my case. After she passed away I was inspired to be more like her. I wanted to help people more. Do more for, and give to others more. I was also determined to get into real estate. Somehow. Some way. Despite the fact that I had zero knowledge or experience in the industry, I was going to carve a path. And just start walking.
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?
That would have to be the hoarder house. In our industry, it isn’t uncommon to buy homes that have been neglected and are in great disrepair. Have you seen the show ‘Hoarders’ on A&E? Picture that times 20. This house was 3 stories — plus a garage and oversized backyard — full of stuff, from floor to ceiling. It was so jam packed that we could hardly make our way through the house at our first showing. We literally had to turn sideways to walk from room to room. It was hard to see anything, let alone breathe, so it’s really amazing that we even put an offer in. My business partner, Gregory, has more than 20 years of experience in the construction industry and was confident, from the get-go, that the house had good bones. Our plan was to gut rehab it anyway, so we figured, what the heck? Turns out we got the house for $20,000 less than the highest offer because we agreed to waive inspection and take the house in as-is condition. This meant we were responsible for the clean-up. It took 16 truckloads and cost us $11,000 to clean the house out. The real interesting — and I guess saddest — part of the story is that the homeowners were still living there after we closed on the house. They lived there the entire week we cleaned it out. Of course, that was not supposed to happen. Chicago has tough rules and regulations with regards to squatting and evictions, so our hands were tied. They key takeaway here for me was, even in the most frustrating and exhausting times, to remember how important it is to lead with kindness. We are all human beings. This couple unfortunately lost their house to foreclosure and bankruptcy. By the time we took title there wasn’t much we could do to help them, other than allow them to sort through the items we cleaned out that week. And even though we legally owned everything, we let them take whatever they wanted and could fit in their moving truck.
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?
“Practice doesn’t make perfect. Practice makes permanent.” The belief that, the more we do something, the more perfect at it we will become, is somewhat futile. First, how do you even define perfection? Second, we are human. And as human beings we are inherently rarely satisfied. Especially when it comes to evaluating ourselves and acknowledging our accomplishments. This means that even when we reach the goal of being ‘perfect’ at whatever it is we set out to do, there’s a strong likelihood that we will still want something else, something more. I was a serial dieter between the ages of 15–25. I flipped fanatically through fitness and fashion magazines, wanting to look like the models on those pages. I read up on the latest and greatest diets my favorite celebrities swore by and gave them a go. Name a diet plan and I was on it. I trained at the gym 5 days a week, counted all the calories, and waffled between fasting with diet pills and obsessive overeating. What followed these binges was a heap of guilt that, not surprisingly, led to more eating. But darn it I was on a quest to look like those girls in the magazines. To look…perfect. If I could just practice enough of the ‘right’ type of lifting, cardio, dieting — and straighten my curly hair and wear designer clothing — I, too, could be perfect. Just like them. You know what? It didn’t work. What happened was actually the opposite. I created patterns of daily behavior that resulted in guilt, shame, obsessive compulsiveness, and ultimately an unreachable goal. I was so good at practicing these unhealthy habits that they became part of my then-permanent way of life. I felt sad, frustrated, and hopeless. The moral of the story is — whatever you practice, over and over again, you will become proficient at. So make sure it’s healthy for the body, mind, and soul!
Are you working on any exciting new projects now? How do you think that will help people?
Over the last 20 years, my partner Greg has designed, renovated, and built hundreds of properties, ranging from custom single-family homes and apartment buildings, to commercial projects including restaurants, large warehouses, and self-storage facilities. Having dealt with homeowners and business people — and now being on the other side of the industry — he has done and seen pretty much everything. We’ve only been investing together for a short time, but let me tell you, I’ve seen enough to attest that contractors can be shady as you-know-what. As a business we try to operate from a place of kindness and integrity, doing the right thing when no one is watching. Unfortunately, not all contractors agree with this M.O. We are fortunate to be able to catch mistakes before they happen and put a general contractor in his/her place. Most people aren’t aware of what goes on behind the construction scenes, or how to communicate effectively with their contractors, and they trust easily without properly vetting. You learn the true character of the person you hired, however, after you’ve worked together. And the damage is often already done. We recently came up with an idea to start a video series called ‘Confessions of a General Contractor.’ The premise is to share informative, engaging & (hopefully) enlightening content from an insider’s perspective on what to expect when remodeling your home. Or doing any type of home project that would require hiring a contractor. If people can learn from our mistakes, and save time, money, frustration, and heartache, then we will have accomplished our mission.
What do you think makes your company stand out? Can you share a story?
People are the foundation of our business. We truly care about people, and they are the reason we exist. We strive to provide 6-star customer service by under-promising and overdelivering. It’s easy to lose sight of this when competition for properties gets tight. Or a homeowner isn’t being as amenable as we’d like. Or a supplier delivers the wrong color island for our kitchen and says it will take 2 weeks for the correct one to arrive. Or a city inspector fails us for something that is perfectly up to code. This one particular plumbing inspector made us rip out tile, drywall, and pipes, causing us to delay a closing on one of our properties for more than a month. We also had to shell out an additional $15,000 in materials and labor for repairs. If I’m being honest, what I really wanted to do was scream and tell him off, because we knew the work was done properly. Then I remembered 1. You don’t argue with inspectors (ha), and more importantly 2. All of these people, even the ones we disagree with and who give us a hard time, are human beings. They have a need that isn’t being fulfilled, and neither of us are communicating in such a way to let the other know how to rectify it.
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?
I mentioned her in an earlier question, and please forgive me for sounding redundant, but that’s my mother. She let me dress myself from a very young age. Even when I didn’t match. And I often didn’t match. She allowed me to style my own hair (that includes cutting my bangs at age 6 and teasing my hair as a teenager), urged me to draw on blank paper (and outside the lines of coloring books), and always, always, encouraged me to follow my heart. As a result I grew up with this philosophy: First figure out what you love most, then find a way to do it and make a lot of money at it. It might be the unpopular way of going about life, and some parents may frown upon my mother’s somewhat liberal and laissez-faire attitude, but it has served me well. I liken this to living our Dharma — discovering that which we are really passionate about, and talented at, and finding a way to use it in a way that serves and benefits others. After she passed away I inherited an investment portfolio as well as a strong relationship with a bank that enabled access to a generous line of credit. There are ways to invest in real estate without using your own money, however it’s definitely easier if you have something to start with, at least for your first property. I’m forever in her debt, in more ways than one, and couldn’t have done any of this without her.
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?
I’d say being assertive, accountable, and following my heart have served me the best. One value my mom instilled heavily in me was that it’s ok to make mistakes as long as we take responsibility for — and own up to — them. When I was 7 I stole a pack of gum from the supermarket. My mother only bought sugarless gum and I was dying for that juicy, sugary, watermelon bubble yum. She found out after we left the store, marched us back inside, and made me give the gum back to the cashier and apologize. It was embarrassing and humiliating and truly made me not want to steal again! My father is the type of person to ask for exactly what he wants and doesn’t shy away from confrontation and the word ‘no.’ I love that about him and try to live the same way. ‘No’ is just a starting point for negotiations. If we can communicate what we want and why it makes sense — clearly, assertively, and humbly — chances are we will receive it. I’ve changed my career dreams at least 10 times, and that’s because I chose to follow my heart. They say we come to conclusions based on logic but ultimately make decisions based on emotion. True that! I moved across the country, twice, for love. Though those relationships didn’t work out in the long run, I was able to freely work through my life process and ultimately discover my true calling professionally, which is what I’m doing now with Property People.
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.
#1: Everyone needs a place to live. That makes our business recession and life-proof. Aside from the 2008 bust, real estate will continue to be a relatively safe place to invest. Minor downturns in the market will eventually turn around so be patient and remember — unlike stocks, bonds, and mutual funds — you’ve got a tangible asset securing your investment.
#2: Real estate is a people business. And we love people! We interact with so many different types of people — whether it’s a buyer putting in an offer in on our newest rehab. A vendor that supplies our tile and flooring. Or a homeowner looking to get out of a sticky situation. Every day we have the opportunity to learn something new, build new rapport, and nurture existing relationships that can help our business grow and expand, and ultimately, be of service to others.
#3: There are so many ways to be involved in real estate. Depending on your risk tolerance, you can become a licensed agent to sell or lease properties, work in property management, actively rehab and flip houses, invest in rental properties for passive income and cash flow, be a private money lender, or become a decorator, designer, or general contractor.
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.
1. Contractors that lack ability and integrity. We have more than 20 years of experience in construction and dealing with contractors, and despite heavy vetting, even we have been blindsided. We hired a GC for our first two flips and it turned out he was hardly ever on site. He also decided to take multiple days off — where noone from his crew was working on our properties — and not tell us. Nor did he answer the phone to explain why. One of our challenges in Chicago is it’s incredibly easy to become a licensed general contractor. There should be stronger education, vetting, and oversight requirements.
2. The trend towards more online transactions through large home buying platforms like iBuyer, Homelight, Zillow, etc. They tend to pay more for houses than we would. I don’t think this is a sustainable business model because their margins are often slim, and they still have to manage the rehab effectively, from a cost and quality standpoint. I don’t see a way out of this, honestly, as the world has been leaning more and more into technology, especially since the pandemic. I would recommend buyers who are house shopping still use a licensed agent. Sure, you can find a plethora of homes for sale online yourself. But working with an agent costs the buyer nothing and can provide a level of service and customization that a third-party website can’t hold a candle to.
3. Wholesalers. A great wholesaler is worth their weight in gold. A wholesaler’s job is to find a heavily discounted property, put it under contract, and then assign the contract to another investor. The investor then closes on the deal directly with the seller, and the wholesaler gets paid a fee for his/her work. One common challenge I see with wholesalers is they don’t have enough knowledge, especially on repair costs and the scope of work. Most of them haven’t worked a day in construction, nor have they actively engaged in any type of rehab or renovation project. In Illinois, you must be a licensed real estate agent to legally wholesale more than 1 property per year. But that doesn’t mean a wholesaler works actively as a real estate agent. So oftentimes they don’t have an accurate estimate of the after repair market value (ARV) of the property either. A newer wholesaler sent me a property a few weeks ago — asking price was 515k. He based his repair estimates on a similar house he’d seen a few days prior at around 150k. His ARV was 1.2 million. Sounds like an amazing deal, huh? This is not uncommon. It’s also not realistic. And here’s where it gets really sticky. The wholesaler has put the house under contract, promising the seller that the deal will close in X amount of days for X price. If that wholesaler cannot find an investor to assign the property to, they will have to either A. purchase the property themselves or B. back out of the contract. What do you think happens most of the time? They back out of the contract, leaving the seller high and dry. Wholesaling boils down to one word currently — integrity. Legally, just as licensed real estate agents have to, wholesalers should be required to disclose to sellers that they are working in this capacity and what their intentions are.
What advice would you give to other real estate leaders to help their teams to thrive and to create a really fantastic work culture?
My top recommendation to create a positive and inspirational work culture is what I refer to as the 3 Cs.
-Commit: To each other, to the process, and to the growth and development of not only the business but ourselves as individuals. We are forever students of life.
-Communicate: This is the lifeline of any business. There’s no such thing as overcommunication. Have a clear vision on exactly what you want your business to be, and make sure to convey it clearly to everyone who works there. Close loops on phone calls, text messages, and emails. Try not to assume everyone understands or is on the same page as you. Put it in writing. Ask questions. Be curious. When in doubt, break it down to the lowest common denominator. Listen. Listen. Listen.
-Collaborate: Your employees work for you. But they are team members and an integral part of your company. Find ways to let them know how valuable they are to you and to the success and growth of your business. Some simple suggestions are to have regular lunches outside of the office, a quarterly team building activity, or perhaps ask for their feedback on something you know interests them — even if it’s not technically part of their job duty. When people feel valued, they feel like they belong. And when they feel like they belong, they stick around longer.
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: Find Your ‘Why’. Before you get into flipping homes, you have to have a really good reason for wanting to do it. Many people are drawn to real estate because they can make a lot of money. True. But why? Why do you want to make a lot of money, specifically flipping houses? The deeper and more meaningful your why, the more successful you will be. Determine your ‘why’, write it down, commit to it, re-read it regularly, and never lose sight of why you’re doing what you’re doing. Flipping houses isn’t for the faint of heart. Your why will get you through the harder times when you feel like giving up. I want to leave behind a legacy for those I love, and contribute to the betterment of humanity, just like my mom did for me and those she came into contact with. That’s my why.
#2: Start By Educating Yourself On The Type Of Property You Want To Take On…And Then Dive In. Analysis paralysis is real. There comes a point when you have read all the books, studied, networked on the forums, asked every question you can possibly think of, and put all your paperwork and spreadsheets in place. It’s time to take the plunge! Buy one property and make it close to where you live. The last thing you want is to run around town — or on the highway for miles and miles and hours each day — to get to the jobsite. You’re going to be actively involved in this flip, and going back and forth between home and the site multiple times a day. Having a project close to home will make your life a whole lot easier. For active rehabs we stick to 4 zip codes, all within 3–5 miles of one another. Working on the same type of properties — single family home new builds or gut rehabs, for example — also streamlines our process from start to finish. By sticking to similar properties in similar neighborhoods, over and over again, we can estimate repairs and determine market values in a matter of 15 minutes.
#3: Vet Your Contractors. If you’re a general contractor, fantastic. If not, and you’re hiring one for your flip, do your due diligence. I cannot stress this enough. Contractors can be incredibly shady. Make sure they are licensed (if applicable) and absolutely insured. Check online reviews. Ask for references from people they have done work for and contact them. Finally, go see their current projects. This last step may be the most inconvenient, but it will provide the most value. When you visit a project they are working on actively, you will be able to vet their quality of work and see how their crews interact with one another. Caveat: We visited a full gut rehab led by a GC we were considering hiring. The house looked good and the contractor and his family seemed like good people. Unfortunately, this was one of the situations where we got blindsided. Turns out the GC knew very little about carpentry and construction on the whole. He also didn’t stick to his promised timeline. Bottom line: Do your due diligence but remember, sometimes isht happens and you have to deal with it, learn from it, and do it better and differently the next time around.
#4: Create A Rock Solid Scope Of Work. Unforeseen incidences will arise, even with the most experienced flippers and contractors. Try to avoid work change orders by taking time before you swing a single hammer to nail down exactly what you want this house to look like in the end. Write down your plan, line by line, room by room. Use online pictures as references. Have weblinks readily available to products you like for electrical and plumbing fixtures. The more you can show your team what you want — the clearer you are with what you intend to do to this house — the better your contractor will be able to manifest it in the way that you’ve envisioned. We have tons of spreadsheets that are shared on Google Drive so all of our team members can access them at any time. We update them regularly and they evolve as the project evolves. The scope of work (SOW) shouldn’t change much from beginning to middle to end, however. Having a job summary and schedule with budget and allowances, as well as a tab for materials, can help keep your SOW — and you — in check.
#5: Don’t Overpay For A Property. In hot markets it’s very tempting and all too easy to get into a bidding war with 15 other investors. You make your money on the buy. Use a simple formula to figure out your MAO (maximum allowable offer). You can find these formulas online and every investor will have their own method. Here is what we use: [ARV (after repair value) x 75%] — Repairs = MAO. Then once you’ve made your offer, let go. Avoid becoming emotionally attached to any property you put an offer in on. Real estate isn’t going anywhere. There will always be another deal. We had the opportunity to buy a property right before the agent listed it on the MLS. We offered 225k, the seller countered at 250k. They would have sold it right then and there to us. We believed 250k was too much. They listed the property, had 11 offers, and sold it for 275k. I’m not saying we’re right and the other investors were wrong. Our numbers just didn’t work at 250, much less 275. Investors get excited at the prospect of doing a deal, and can’t see the forest through the trees enough to realize it’s not a deal at all.
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? From your experience, what can be done to avoid those errors?
People pay too much on the purchase. We make our money on the buy. It’s easy to get emotionally attached to a house after making an offer. In order to prevent this we stick to a simple formula that dictates the maximum amount we can offer for any property. We try to keep our numbers conservative — lower on the after repair value (ie market value) and higher on the repair budget. If the house happens to sell for more, great! If not, we have a big enough buffer built in that we will make money either way.
Over-renovating is another mistake — spending too much on the rehab or customizing the house too much. I’ve seen this with some well-known designers who get into house flipping. They have incredible design sense, but they’re used to working with homeowners who want very specific things. When we flip a house, we have to renovate in such a way that it appeals to the maximum amount of buyers in any given demographic. That means getting creative in certain areas but, for the most part, sticking to the status quo. To keep ourselves in check, we look at what sold recently in our price range in close by neighborhoods and renovate similarly.
People put too much trust in their contractors. You really have to work with a contractor multiple times and establish a strong relationship with them before turning over the reins. Micromanaging isn’t fun. And the reason we hire a general contractor in the first place is so that we don’t have to. Unless your contractor comes highly recommended by word of mouth, from someone you know well and respect, keep the leash short. When rehabbing a house we create a payment schedule with milestones. This includes certain tasks that need to be accomplished by a target date. Then payment is rendered for those tasks. Rewarding your contractors along the way keeps them inspired, motivated, and honest.
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. :-)
I attended a truly fantastic middle and high school. We were surrounded by people of all races, religions, and ethnic backgrounds. Being a more liberal arts high school, we had the opportunity to take part in language and writing courses, as well as dance, music, and theater. I received what I would consider a well-rounded education. In addition to traditional subjects like math, science, and history, being exposed to different cultures and ways of life was incredibly enriching, and it helped me understand and appreciate the world from a broader perspective. That being said, I didn’t know what a Roth IRA was until I turned 26. I worked part time at a restaurant and had a checking account where I deposited all my leftover savings. Besides my mom having brokerage accounts and telling me about certain stocks that she liked, I was never taught formally how to invest so that my money could work for me. This is all too common. Many students are told to work hard, study hard, get good grades, get into a good college, obtain a degree, secure a high paying job, work even harder and longer hours, climb the corporate ladder, save money, and then retire when they’re 62 so they can start collecting Social Security. If I could inspire a movement, it would be to revolutionize the school systems all over the United States. I’d make time management, social & communication skills, and investing for long term wealth mandatory subjects from an early age.
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Thank you for your time, and your excellent insights! We wish you continued success.
Thank you so much for this wonderful opportunity!