The 5 Pillars of Flipping: How Smart Investors Build the Right Real Estate Team

Ed Arriola (00:00)
So if you see it and it’s exposed, you have to fix it, whether it’s mold, know, termite damage or…

water damage, whatever it is, you own it. So most people, their mistake is to think that they’re gonna open up walls and not find skeletons in the closet, you know? And 99.9 % of the time, this is Massachusetts, where our houses are really old.

Dylan Silver (01:55)
Hey folks, welcome back to the show. Today we’re joined by Ed Arriola, real estate agent, general contractor and entrepreneur leading the Arriola Capital real estate team. With a strong background in construction, renovations and house flipping, Ed brings a hands-on operator perspective to every deal. He helps clients not just buy and sell, but actually transform properties and maximize value, focused on building long-term wealth through smart, strategic real estate decisions. Welcome to the show.

Ed Arriola (02:22)
Hey, thank you. Thank you for having me.

Dylan Silver (02:25)
Great to have you on here. We were talking in the green room really about all things Massachusetts and about a number of different topics. I’d like to start off at the top though about merging the general contractor world with being a real estate agent. How did those two things come about?

Ed Arriola (02:42)
Well, so I became a contractor many years ago and you know, construction is great. It’s a great source of income, but it’s really repetitive. ⁓ You know, you’re dealing with people all the time and you’re essentially people pleaser. And I kind of got tired of that and I said, I want to get into house flipping. And so I acquired a partner. I got into house flipping and then very quickly and found myself coaching my real estate agents on

sell my houses. So I said, you know, I’m not paying somebody 10,000 to $15,000 to have me tell them what to do. So I said, I’m going to get my real estate license. then so Keller Williams, I joined Keller Williams. ⁓ Keller Williams does a really good job of training people. But the part of the process is the three first deals that you do, you have to help in order for them to let you out into the world. ⁓ So that you don’t commit, you know,

Mistakes, don’t make mistakes and and I get in trouble They coach you through three transactions in which they tell you hey go out there find a client, you know and do transaction so I did three transactions with three ⁓ clients and got quickly liked it and I said wow, I think I like this more than flipping and so what happened was I I quickly realized I like coaching and I like helping people buy and sell houses

So I combine the construction knowledge, the flipping knowledge and into this one thing where I now just coach people on how to start from the beginning to the end, hold their hand because I have all the licenses, I have the network. So I let people use me and leverage me to be able to get into flipping. A lot of my clients are not your typical investor. They’re just people, regular people like you and I who wanna invest.

So I educate them and then I help them through the process of buying, fixing, and selling a house. And sometimes maybe even keeping it, right? Sometimes they want to do a refinance at the end and then keep it ⁓ and do like ⁓ short term real estate or long term real estate rentals. And so it’s kind of a variety of everything that I do, but it really, the construction really helped me be able to educate my client.

Dylan Silver (05:05)
What’s the biggest mistake that you see people making when they’re taking on a renovation project specifically?

Ed Arriola (06:00)
⁓ my god, so there’s so many but one of that comes off the top of my head is People think that they can get away with not pulling permits in Massachusetts and Massachusetts is where all the laws are made ⁓ so we are a really really strict state and So they come down to you know on your with a hammer ⁓ You have to make sure that you’re pulling

Permits and the reason is not only because you might get caught the reason is because then you’re giving the buyer leverage on the other side when you’re putting the house on the market let’s just say you’re doing a flip and ⁓ You do renovation you don’t pull part permits and then the attorneys are doing their due diligence on the other side of the deal the buyer’s attorney is Looking into okay. This is kitchen is brand new. This bathroom is brand brand new. Where are the permits? Did you pull permits? No, we didn’t. Okay. Well

now we want a 15 to $30,000 discount because we need to make this right. And then so you’re putting yourself in a really bad decision when you can, it takes probably a couple thousand dollars more to hire a contractor that will pull permits and do the things right.

Dylan Silver (07:08)
How long does the permit process take? if someone was a contractor themselves and wanted to go through the process of pulling permits, how long does that take?

Ed Arriola (07:18)
So it makes the project a little lengthier because in between this, there’s inspections in between. There’s about seven inspections, right? You have the framing, insulation, rough building, then you have rough and final inspections for electrical and plumbing. And then if there’s HVAC and all those things, all those other people also have inspections. So it slows down the process, but truly to pull a permit, it should take you about a week, a week and a half.

Depending on town if you’re in Boston, it will take you about a month They the losses that they have about 30 days to award a permit ⁓ That being said the it the the fact that you know most people don’t want to pull permits it’s usually because they’re either trying to finish the project quickly or because they’re not trying to hire they’re trying to save money because they’re trying to not hire an electrician and or plumber and they’re trying to do the work themselves usually that

Dylan Silver (08:12)
Right.

Ed Arriola (08:13)
that’s more expensive because when you get caught, you get fines and then they make you redo everything again the right way.

Dylan Silver (08:21)
What part of a rehab or a flip do people consistently underestimate when they’re figuring out their ⁓ scope of work and their rehab budget specifically?

Ed Arriola (08:34)
Well, so what happens a lot, and then this is one of the things that I coach my people with, know, when people are tight with money on a project, I always tell them, you you don’t know what you don’t know, right? The walls are up, the architect and the engineer can tell you, this might be this, this might be that, but essentially when you open those walls, whatever is back there, you own it.

So if you see it and it’s exposed, you have to fix it, whether it’s mold, know, termite damage or…

water damage, whatever it is, you own it. So most people, their mistake is to think that they’re gonna open up walls and not find skeletons in the closet, you know? And 99.9 % of the time, this is Massachusetts, where our houses are really old.

it’s a newer house, but most of our houses here are really old. You will, you’re bound to find something.

Dylan Silver (09:26)
Now, how do you decide what’s necessary to upgrade and it may not be necessary in some cases, but what’s worth it to upgrade?

Ed Arriola (09:36)
Well, so I look at it and this is where my expertise are. I look at it from two points of view, right? I look at it from the construction point of view and then I look at it from the resellers and real estate agent point of view. And I do know that kitchens and bathrooms are a no-brainer and they’re non-negotiable, right? Most people are always blown away by the kitchens and the bathrooms because those are the areas to hang out the most in. So those must be done.

if you’re doing a renovation or a flip, those have to be done and they have to be done nicely. ⁓ And then we go after, you know, what needs to be updated and what is functionally needs, you know, something that needs to be done because it’s a need, right? So if, say, your garage door is rotted, it’s something that you’re using all the time, so it needs to be swapped out, right? And if the plumbing,

you know, needs to be updated. You have to do it because it’s something that’s going to come up on inspection. So one of the things that I look at is, is it going to come up an inspection? Yes. Okay. Let’s fix it. You know, and that’s how we decide. That’s how we factor things in is we go by what’s, what’s ⁓ needed for inspection, what we want the house to look like and what we think is necessary, like it’s in the bathrooms. And then we spend the rest of the money on.

All right, do we need to update flooring? Do we need to paint these rooms? So we kind of go from large to small.

Dylan Silver (11:46)
Yeah, and people of course are gonna highlight the kitchens and the bathrooms, but like you mentioned, there’s some other things that people can do depending on exactly their exit, right? Another thing that comes to mind here as well is I’ve heard a lot of flippers use these terms. Hey, I’m gonna get this to a rental grade versus I’m gonna get this to a flip grade, right? So it does depend on what their exit is or what their client’s exit is going to look like. Now, when we talk about…

working with homeowners, right? How can more agents get their clients to think like investors? I know that’s something that you’re particularly passionate about.

Ed Arriola (12:22)
Yeah, I think is educating them, right? ⁓ The conversation that I usually have with my clients, they usually buy their first home ⁓ or they sell their house. And the conversation is where are you putting your money, right? Are you investing? Where are you coming up with the money for your retirement? Because we all know that’s gone in the next few years, right? So we have to make sure we’re financially educated. So a lot of people…

invest their money on the stock market or on crypto or whatever. I personally think that real estate is the most tangible thing that you can have. One of the most, you know, I put it up there with gold and silver, right? God’s money. So what I tell people is that, hey, are you looking to invest? And then I’ll educate them on what, why is so great to have, you know, real estate? Why is real estate such a good investment? Right. And, and

And then I have that conversation. think coming from as an agent, coming from an educational standpoint and ⁓ providing value to your client will allow them to ⁓ to think of you as that person, as that guide. Right. And so it creates this this dynamic where you are the first thing they think about when they want to invest.

Dylan Silver (13:45)
No question. And I think people have to be that trusted resource, whether they’re going to be the ultimate person who will be guiding them in their investment journey or whether they’re just going to be the bridge. I’ve said this on an earlier show. I think sometimes agents just say, hey, I’m going to wipe my hands of anything related to investing, but they’re missing out on a lot of business. Even if they were to co-list.

with someone else who may be more of like an investor friendly agent. I think that that’s a way where a lot of people can get started, at least on that on ramp to working with investors. I’m pivoting a bit here though, you know, would you rather have ⁓ a deal that has excellent execution ⁓ or would you rather have a deal that’s acquired at the perfect price?

Ed Arriola (14:32)
So it depends, are we talking about me or are talking for a client?

Dylan Silver (14:36)
That’s a good question. Let’s start with you.

Ed Arriola (14:39)
So for me, rather, so one of my rules is when I buy a flip is I have to make my money on the purchase. You always make your money on the purchase. if it’s, I quickly look up what it’s worth and I want at least 20 % in my pocket, meaning I’m gonna offer 20 % less. And there’s been a lot of situations where that happened. ⁓ You know, that changes slightly and that’s fine, but that’s the type of deal that I look for. ⁓ For my client,

I would definitely see what their needs are first, right? If they’re a flipping client, same thing, right? If they’re a homeowner who are gonna live in this property, yeah, equity is great, but sometimes, you know, having the right transaction is better than having them get equity right off the rip because they need that house, because they really want that house, right?

⁓ So again, the dynamic changes depending on what the needs are. My needs is I want to make a lot of money. Their needs may be they really want the house. They love the house. They fell in love with it. They need it because they may have somebody in their family that wants to be in the in-law or whatever it is that I have to solve as ⁓ agent for them. ⁓ That’s obviously what I look at first before I try to accomplish that for them.

Dylan Silver (16:13)
Yeah.

Yeah.

And hardly anyone likes surprises, but especially when you’re dealing with clients, you want to make sure that it can be as smooth as possible. A bonus question here for you, I think a lot of people, when they talk about investing really anywhere in the US, sometimes people tend to gloss over parts of the East Coast and parts of Massachusetts. You know, as someone who is an investor out there, you’ve got a…

book of business that spans, you know, flipping to working with residential buyers, working with investors. For folks who want to get started investing in Massachusetts, what’s the first step that they should take?

Ed Arriola (17:18)
have the money, right? I mean, it’s really easy to find lenders, private money. ⁓ so even if you have bad credit or whatever, if you had a bad pass, ⁓ it doesn’t matter. Like finding the, the acquisition money is fine. Usually you have to build a little capital for the initial draw, for construction and for the deposits and closing fees. Right. ⁓ let’s just say you have that.

If you have that, you have to build yourself a team and I call it the five pillars of real estate that you need and those are gonna be your real estate agent, your contractor, your accountant, then you’re gonna need a really good attorney and you’re definitely gonna need a good lender, right? So those five people you have to get to know, build relationship with because those are the people you’re gonna lean on when you want knowledge on.

these different things right like if you’re not a contractor you’re gonna need a contractor to guide you because you don’t have enough time to learn those careers you want a really good real estate agent that knows real estate that knows how flipping that knows investing you want a good accountant that knows numbers and know they know the tax code when it comes to real estate because tax code is really broad so you want somebody who focuses on that you want a good attorney that’s savvy in real estate and will protect you very well and you want a lender

who will be flexible with you and you can build a relationship with that will allow you to maybe have a little flexibility here and there and borrowing more or not whenever you need, right? If you have those four or five different pillars, ⁓ those five people and they’re good friends with you and you’ve created a good relationship, ⁓ then you’re ready to start investing in real estate.

Dylan Silver (19:10)
We are coming up on time here at any new projects that you’re working on and then as well, what’s the best way for folks to reach out to your team?

Ed Arriola (19:18)
Okay, so I’m currently working on a program where I’m gonna be helping people and teaching people how to buy in auctions. And so this new thing’s coming out where a lot of people are going on foreclosure. And unfortunately, that’s also good for the investor. ⁓ What happens is a lot of people buy the properties and they wanna flip them. What I’m telling teaching people how to do is,

buy the property on an auction. ⁓ If you have to do an eviction, do an eviction and then put it right back on the market and put it up for a little more and flip. That’s a flip, but it’s not a rehab, right? So I’m teaching people how to do that efficiently. And yeah, I mean, if you want to get ahold of me, I’m on Instagram, Facebook, LinkedIn, I’m all on all the other social media platforms.

just go on Google, type at @ArriolaKellerWilliams and you’ll be able to find me.

Dylan Silver (20:21)
Ed, thank you so much for your time today. Thanks for joining us.