How This Real Estate Agent Made $52K on His First House Flip

Gerardo Hernandez (00:00)
However, when I was finished with that project, I was gonna keep it as my rental portfolio, but I needed that proof of concept. So I decided to list it and it went under contract in two weeks. And in my very first flip, I made fifty-two thousand dollars and that’s what caught me.

That’s what was like, okay, this is I need to switch from being a traditional transactional agent to mainly focusing on this because here in Arizona the average commission is about ten thousand dollars. So that would have been five clients I would have had to get versus doing that one flip.

Freddie Steen (02:06)
everyone. Welcome to the Investor Fuel Podcast brought to you by Real Estate Pros. You know who I am. I’m your host, Freddie. And today I’m joined by someone I’ve been looking forward to chatting with. Gerardo has been making serious moves with his company Dos Amigos, as well as

His flipping coaching company, The Flip Side. It’s a dynamic company that is built by an agent for an agent to make agents make that transition from just being transactional to being having a stake in the game and being investors. Gerardo, I’m glad to have you here. I think our listeners are really going to take something away from how you’ve been approaching being an active real estate investor yourself to being an operator to now coaching those.

Who have been in the game on how to level up and go from just being a transactional agent to actually being an operator like yourself? Let’s dive in. Gerardo, for people who may not be familiar with your world, give us the short version. What’s your main focus these days? I heard you’re hanging out in Colorado, but what other markets are you operating in?

Gerardo Hernandez (03:16)
Yeah, thank you. First off, Freddie, thank you for having me here on the podcast. I’m very grateful. The markets I’m really focused on are Arizona specifically. We’re running five to seven fix and flips a quarter. When I first started about four years ago, I was just doing fix and flips by myself. Today I now have a team, I have a crew of four guys, I have a project manager, and in that whole learning experience it taught me that I needed to transition from being a normal real estate agent to actually being an investor myself, which is what I started to do myself. And then I started to notice the lack of agents that are truly doing this, which is why now I launched a coaching program to do the exact same thing.

Freddie Steen (03:57)
Gerardo, why did you name your flipping company Dos Amigos? And who is the other amigo?

Gerardo Hernandez (04:01)
Yeah, good question. It’s actually my best friend. His name is Zach. He is my project manager. So he actually was a general contractor project manager and he got laid off about three years ago. And I was running into a problem where I could only do about maybe seven to eight flips max a year running the projects by myself, going to get materials, managing the crews and all that good stuff.

And then when I would finish that, I’d still have to come home and do all the computer work. So when he got laid off, I said, Hey, let’s try a flip and let’s see how it works. And it worked out great. He is a truly hands-on guy. He loves being out in the field. He loves going to get the materials, love managing the contractors and the crew. And I love doing the behind the scenes work as far as finding the deal, the design.

Making sure we’re on track with the numbers. And that’s my other amigo. So we came together and now he’s my business partner and my project manager.

Freddie Steen (05:04)
How many active flips is Dos Amigos managing simultaneously in the Arizona market right now?

Gerardo Hernandez (05:10)
At the moment we’re currently working on four and we have three on the market.

Freddie Steen (05:15)
And what specific roles do you and your business partners split within Dos Amigos to stay efficient?

Gerardo Hernandez (05:21)
Yeah, good question. So he handles absolutely everything, day-to-day operations. So he is grabbing the material, making sure the workers show up to work, making sure that the workers are on timeline and track for our project. He also, when he’s out there, he’ll handle any slight handyman items that need to be taken care of. But on the other side for me,

I do exactly what agents should be doing, which is knowing your numbers and finding deals. So I make sure that when a deal is brought to me that it’s actually in the actually a deal, I run all my numbers, make sure that the rehab is correct, make sure that the ARV is correct. And then I also handle design. My buddy, God bless him, he is not good at design, but he is great at executing my idea of the design.

So I tend to do the design part. I make sure we’re on track as far as budgets go because when you’re running five to seven projects, it kind of gets confusing as far as how much we’re spending per project, but also how much we’re paying out in payroll. what other subcontractors that we have to bring, I make sure all those guys are paid and we’re on track in budget. That’s my job.

Freddie Steen (06:35)
What was the exact moment you decided to stop just selling houses and start flipping them?

Gerardo Hernandez (06:40)
It was two well, yeah, about three years ago, three and a half years ago, when I when I first got my license, I was top agent for my first three years. So twelve home, thank you. So twelve homes my first year, second year I sold sixteen, and the third year I sold twenty-four. And then after that, interest rates started to rise, and that’s when it was a dead halt for me. I only knew so many people that could buy and sell.

So I was still doing all of the active things, staying on top of my sphere, doing the drip campaigns, and then I started getting a lot of time wasters. I’d go out and show people homes they’d decide they wanted a rent, or they’d go with a different agent, or they’d sign with the new builder and kind of kick me out of the transaction. So I, a buddy of mine that I went to real estate school with, he actually got his license and he knew right away he was starting to flip.

He knew that’s what he wanted to do. So I had reached out to him on Instagram just to see how he was doing. And at that time he was doing about ten flips. And I just thought that was insane. And he said, Hey, you should try it. Like you would do really good. I actually have a flip in Surprise, Arizona that I can’t take on because I just have too many at this time. So I went to go look at it and I would say it was about $30,000 worth of work. And he said that it would cost $60,000 worth of work.

We’re

Freddie Steen (08:53)
Mm.

Gerardo Hernandez (08:54)
way off on our numbers. But I thought, What’s the worst that could happen? It’s in the area where all my rentals are. So very worst case, I could just keep it as a rental if it doesn’t sell. So I take on that first flip. I do everything wrong. I mean, I decide to do all new plumbing, I do a new roof, I take four months for rehab. I do a lot of things wrong that now I wouldn’t have done, but it taught me a lot of lessons. However, when I was finished with that project, I was gonna keep it as my rental portfolio, but I needed that proof of concept. So I decided to list it and it went under contract in two weeks. And in my very first flip, I made fifty-two thousand dollars and that’s what caught me.

That’s what was like, okay, this is I need to switch from being a traditional transactional agent to mainly focusing on this because here in Arizona the average commission is about ten thousand dollars. So that would have been five clients I would have had to get versus doing that one flip. So today I tell agents just do four flips a year, one flip a quarter at twenty-five thousand dollars profit per flip. That’s a hundred thousand dollars.

Freddie Steen (10:05)
Gerardo, I love it. What caught my attention about you was the way you’ve been able to pivot, from being just an agent, being transactional, to this very moment that we landed on in the podcast today, which is going from an agent to an operator. And that’s not easy, especially in this climate. Gerardo, what’s been the key to keeping the machine of Dos Amigos with?

The Flip Side running smoothly. You’re coaching.

Gerardo Hernandez (10:33)
You know what? I would say learning to be adaptable. Just because I’ve had flips where thank God and of course knock on wood, we haven’t lost money on a flip, but there’s been a there’s been a flip where we’ve made eight thousand dollars. We did all that work to make eight thousand dollars, and me and my buddy, who is my business partner, we split all our profit on all of our deals. So we did all that work to make four thousand dollars, but

Out of all of our flips we keep learning. Even today, we’re learning every single flip, knowing what we should do, what we shouldn’t do, the mistakes that we made, the learning lessons that we made. So that way we could keep getting better on our next flip, but also more efficient. Now we can run these flips. We are doing these remodels in three to six weeks. And when we put them up on the market, of course, knock on wood, our longest project hasn’t sat.

From start, meaning from we purchased, from when we rehabbed it to actual sale price, we haven’t had a project sit longer than three and a half months.

Freddie Steen (11:33)
Congratulations on that, Gerardo.

Gerardo Hernandez (11:35)
Thank you. And like I said, we’re still learning today because then we go outside of our buy box and now we’re learning. I have two houses that are playing in the middle that aren’t our beginner phase and now they’re sitting a lot longer than our original projects. So I would just say staying adaptable and knowing that you’re gonna make mistakes along the journey, but that’s the whole point. Enjoy the journey and the good thing is

At least you’re your own client. So you don’t have anybody else to answer for but from yourself.

Freddie Steen (12:07)
Love it. Gerardo, how do you successfully manage and vetting construction contractors to prevent budget overruns?

Gerardo Hernandez (12:15)
That is an amazing question. So when I first got into flipping, I didn’t have a crew and I didn’t have a project manager. So I was hiring a lot of subcontractors that would come and do, a painter, the floor guy, the framing guy, the drywall guy. And that started to get tiring because I had to manage them, but then also their prices were very different. It would be pretty much the same house and all of a sudden

It was a thousand dollars more or two thousand dollars more. So, what I decided to do when I brought in my project manager, he was managing those subcontractors. But remember, he got laid off by a general contractor. Well, some of those workers got laid off as well. So immediately we took two of those workers and brought them into our operation. And today now we have four guys that work for us full-time who are pretty much our full-time employees.

And the only thing that we have to subcontract out now is the roof and HVAC. Everything else we handle in-house. So now I don’t have to run into that problem.

Freddie Steen (13:17)
Now every operator I know has a moment when things got real. Maybe a deal that went sideways or a time they had to pivot fast. You mind sharing one of those moments for you?

Gerardo Hernandez (13:28)
Yeah, I would say I would say very recently, when we have a twenty thousand dollar a month payroll bill on top of five projects that we have to pay three thousand dollars a month in mortgage costs and we’re paying for a rehab. That’s a lot of money out. So my overcoming method of handling all this, because again, that’s over fifty thousand dollars that I have to fork out before I bring in any money. And my light bulb moment there was I need to get better lending. And that’s when I reached out to different lending companies. And now today I flip homes without using any of my money.

Freddie Steen (14:09)
So what is your strict criteria for analyzing a property before you agree to buy it?

Gerardo Hernandez (14:58)
Yeah. I would say our strict criteria is it has to be in our buy box. So I tell every agent, everybody has a certain buy box whether they know it or not. For example, if you live on the east side of town, you wouldn’t want to take a flip on the west side of town because you’d have to drive an hour just to see and check up on your project. So I have very basic criteria and mine is nineteen ninety and newer, it has to be on the west side of town.

Once it’s all finished up, we don’t want it to be worth more than 450,000. And it cannot be in any 55 and older communities. And I’ll briefly touch on each of those. Why does it need to be 1990 and newer? Well, that’s because the main things that we have to worry about is the roof going bad or the AC going bad. The plumbing, electrical, all that good stuff is pretty much newer.

We’re not dealing with nineteen fifties plumbing or nineteen forties electrical, so we could kind of go in there and just do a cosmetic rehab. Why is it West Valley? Because we live in the West Side. So it’s easier to check up on the projects. Why is it no more than $450? Because Arizona’s median price is $450,000. So we want to stay in that first-time buyer home pool. And then lastly, why is it not $55 and older? Because if we buy a home that’s fifty-five and older only.

Well, now we just shrinked our buyer pool. We want to have the buyer pool be as large as possible.

Freddie Steen (16:20)
Buy box. I mean, that’s the kind of stuff people don’t talk about enough. And honestly, Gerardo, it’s what separates the folks who just dabble from the ones like you who stay in the game long term and meld this operator mindset, this transactional agent mindset with coaching. Let me ask you this what are you most focused on solving or scaling next? What’s the next real goal for Gerardo?

Gerardo Hernandez (16:45)
Yeah. I think that’s a loaded question. I think as entrepreneurs we always strive to for more and more and more. But what I’ve really seen is I noticed a lot of agents that they’re brand new and they get told to go join a team and then when they actually find some of their leads from their sphere, they have to split their commission with these teams since they’re brand new agent and don’t really know what’s going on, or tired real estate agents.

They have been in the game for 15, 20 years, but they’re still out. I had an agent call me yesterday. They showed my house. That was their 35th showing for these clients. They were going to show them over 50 houses. And if you think of that from an agent’s perspective, you’re showing 50 houses and you still haven’t got a dollar from them. You only get paid when you actually close a transaction. So I would say the biggest thing that I am focused on now is continuing to run my flipping business to build me more and more credibility. But my goal is to do exactly this. Join as many podcasts as possible to tell tired and new real estate agents there’s a different way out there that can act I mean we all got our real estate license for two things financial freedom and time freedom. But if you’re doing it the old school way, I know for a fact from experience you don’t have those. But if you do this flipping method and learn how to become an investor. Again, four flips a year at twenty-five thousand dollars per flip, that’s a six figure part-time job. And that’s what my main goal is, to teach real estate agents that there is another way than just the traditional way.

Freddie Steen (18:22)
That’s big, especially when you’ve already got the methodology of the buy box with Dos Amigos in place. I mean, the next move can either compound things or create chaos, depending on how you play it. Gerardo, I know a lot of people listening are either earlier in their journey or looking to level up like you. And I think they benefit from this. When it comes to building relationships in growing your network, what’s made the biggest difference for you?

Gerardo Hernandez (18:52)
Asking. There’s so many people that they’re actually probably can be a mentor or they can learn from, but they just don’t ask. I am a guy that always asks because what’s the worst thing that they can tell you is no or maybe give you a different advice. But the best advice that I’ve heard was only take advice from someone that you want to be like. So I do that exactly. I have mentors in this real estate game.

When I first became a real estate agent and I was top agent, guess what? I didn’t go ask new agents on what they’re doing. I asked all the top agents. What are you doing? How can I be exactly like you? And I did just that. So then when I got into flipping or real estate investing, I did the same thing. I went and asked different investors, here’s my situation, here’s my money situation, here’s what I’m thinking. Do you think it’s a good idea? And believe it or not, a lot of those people will actually want to help you.

Because they have been exactly where you are and they want to help, but you just gotta ask.

Freddie Steen (19:51)
What’s the biggest mistake you see rookie investors making in today’s current real estate market?

Gerardo Hernandez (19:56)
Yes, this is huge. There’s two. There’s two really big ones. One is not knowing your buy box, like we talked about. They just get a deal just because they see that it’s a deal. But if it’s outside your neighborhood, or if it doesn’t really meet your numbers, or if it’s an older home that you think, it ends up going to be probably a loss. You just got that deal just to pull a trigger, which is okay because you’re gonna learn from it.

But at the end of the day, we’re in this thing to make money. So that would be one big mistake. I would say the second biggest mistake is not knowing your numbers. Just because you put twenty thousand dollars over budget for your rehab, that doesn’t mean that you can now sell your house for twenty thousand dollars more. The numbers are the numbers. If you ran the numbers where that house was worth $450,000.

Well, hey, when you go to list it, just because you were over rehab, you can’t list it now for $475. You still got to list it for $450 because that’s what buyers are going to pay for it.

Freddie Steen (20:54)
You structure your coaching as far as a flat fee, a monthly subscription, or kind of an equity deal split model?

Gerardo Hernandez (21:01)
Yeah, good question. I had I had a lot of people actually reach out to me that wanted to do the equity split model and I kind of liked that, but I didn’t like it because I tried it with one person and I still was doing all the work. So it didn’t really make sense for me. so now what I did was I have two options that I offer now. I have one option which is a self paced option. It’s a thousand dollar course.

It’s a link in my bio on my Instagram and all my socials. It goes to my school account. They’ll have a seven module course that teaches them exactly how to flip, and then they’ll also be part of my flipping community. I hop on there about twice a month to answer like live QA’s, analyze deals, etc. And then for those people that want a little bit more serious coaching, I run a one on one coaching program. It’s five thousand dollars, and that’s an eight week course and that’s a two days a week. And you can meet with me in person. We’ll do via Zoom or if you happen to be in Arizona or fly to Arizona, I take you out to all of my projects showing you why I bought this, what we’re doing, why we’re doing what we’re doing. But I wanted options for both people. Both that are really serious, but others that are hey, I’m curious about this, but I don’t want to spend a five thousand price point and I can do this at my own pace. And those are the two

programs that I offer today.

Freddie Steen (22:22)
Yeah, you can’t fake that. I mean, you’re flying people are flying out, meeting with you, working elbow to elbow. Relationships are everything in this space. All right, before we wrap, if someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

Gerardo Hernandez (22:42)
Instagram, TikTok, YouTube, all of it is @FlipwithGerardo. Just reach out to me, my handle and I’ll get back to you.

Freddie Steen (22:52)
Perfect. Well, listen, Gerardo, I appreciate your time, your story, and your perspective. We need more people in this space that are doing it the right way. Thanks again for being here.

Gerardo Hernandez (23:03)
Thank you and thank you again for having me. I greatly appreciate it.

Freddie Steen (23:06)
It was my pleasure. And for those of you tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming from operators just like Gerardo who are out there building real businesses just like you. We’ll see you on the next episode.