Unlock Real Estate Success: 7 Key Strategies for Fix & Flip Mastery

John Harcar (00:01.71)
OK, hey guys, welcome back to our show. I’m your host, John Harcar, and I’m here today with Kevin Close. And what we’re going to talk about is besides his experience in business and what got him into real estate, we’re going to talk about the importance of a like-minded community, especially for your business growth. Remember, guys, at Investor Fuel, we help real estate investors, service providers, I mean, all real estate entrepreneurs, 2 to 5X their business.

And we do it by sharing the tools and the resources to help you grow the business you want to grow to live the life you want to live. So Kevin, man, welcome to our show.

Kevin Close (00:38.72)
Thanks for having me.

John Harcar (00:40.6)
Yeah, I appreciate you coming on. look forward to talking about the like minded group, you know, with a mastermind that’s kind of exactly what we what we strive for. But before we talk about all that stuff, why don’t you give our audience a little background on you, your experience in business, what got you into real estate and what got you to today?

Kevin Close (00:58.749)
Sure, sure. Well, I’m down in Phoenix, Scottsdale, Arizona. I’ve been in construction my whole life. I was in my family’s construction company. I spent a lot of time working out in Hawaii and I’ve always had a passion for real estate. thought it was the… You know, I’m inspired by the Fix and Flip shows. I even watch those. They’re…

John Harcar (01:11.533)
Okay.

Kevin Close (01:26.981)
It’s intriguing to me. I like taking something that’s not so nice and making it really nice. That’s part of the thrill for me. yeah, so I’ve always been involved in it. Back in the 90s, I was funding some spec homes out here and working with a builder because I was working in Hawaii and he would build them and I would fund them and we’d split the net. But about six years ago, so I’d always been involved

involved in some way, but it was like a part-time thing. About six years ago, I had the opportunity to do it full-time. And so I left Hawaii and I moved back to Arizona and I tried to figure out how to do it full-time with the fix and flip. Finding properties under market value and doing value-add and everything. I had the construction part covered.

but I didn’t have the rest of it. I didn’t know where to get the properties. I didn’t know the level of rehab to do. I didn’t know how to comp the property properly. So I started looking for people who did know how and some group that I could have or some training I could latch onto and work with and run with, know, kind of get into that community because it is a community. Yeah. So.

John Harcar (02:45.016)
Right.

Kevin Close (02:48.243)
I looked around, tried some stuff, went to some guru stuff at the hotels and some wholesalers and wholesaling wasn’t for me. There’s a lot of the wholesalers out there. And I came across a group and I went to, they did a property tour at a fourplex by Arizona State University. And I went there and I seemed to like the group. I seemed to fit in well with them and I’m real shy person. It’s hard for me to interact socially with people.

setting like that. So, but they made me feel comfortable and so I decided to give them a try and I got involved with them and it turned out to be a good place for me to be. I started learning a lot of what I needed to know, the parts of the puzzle that I didn’t have and I started meeting people that were in the industry of what I wanted to do, which was to be an entrepreneur. You know, I knew my…

John Harcar (03:34.35)
Mm-hmm.

Kevin Close (03:43.813)
Social Security and my 401k wasn’t going to be enough for the lifestyle I wanted in retirement. So that was one of my drivers. I wanted financial freedom and I wanted to secure freedom for my daughters and my grandchildren and to live the lifestyle that I wanted to have in my retirement and still work. So that was my main driver. That’s my why. But I got involved with the group and

John Harcar (03:50.144)
Right.

John Harcar (04:04.779)
Awesome.

Kevin Close (04:12.939)
and I had left my job in Hawaii so I didn’t have any income. And don’t do that if you want to get a stay in your job. Stay in your job until the money you’re making from your real estate is paying more than your salary is right now. So I did it backwards, but that’s all right.

John Harcar (04:18.843)
Yeah, disclaimer!

John Harcar (04:31.886)
Hey, you got you found the right group though.

Kevin Close (04:34.607)
Yeah, yeah, I got a good group. was lucky, you I was selective and they seemed to be a good fit for me. So I got involved with them and they’d have masterminds and I would attend those. And then it was Alliance Phoenix. Yeah, they had a real estate education platform that was a prerequisite to being involved with them. They’re disbanded or they’ve kind of…

John Harcar (04:47.564)
What’s the name of the group if you don’t mind me asking? Okay, okay, cool.

Kevin Close (05:01.991)
changed now. That was about seven years ago. So I got involved there with them and we’d have a lot of calls and stuff and I was definitely gravitating more towards fix and flip than buy and hold because of the construction background and I knew I wanted rentals too but that’s kind of a different story.

John Harcar (05:05.107)
Okay, awesome.

John Harcar (05:20.419)
Yeah.

Kevin Close (05:31.053)
I attended and I ended up meeting a lady, Veronica Cardenas. She had a deal that was a probate deal and she had done some wholesaling and she was thinking about she wanted to fix and flip this property, but she could get the hard money, but she couldn’t get the private money that was the gap for the down payment and the renovation costs. so I saw it and I liked what I saw and I teamed up with her on the project.

And I funded the private money part of it. And I told her wanted to be an equity partner versus just making an interest rate. So we did it like that. We did a 40-60 split. She got the 60 part, and I got the 40 part, because she brought the deal. And we liked working together, and it went well. And so we continued working together. And then our other partner, Brian Rodriguez, got involved.

John Harcar (06:14.976)
cool.

Kevin Close (06:29.863)
Right after that we’ve kind of blossomed into a

John Harcar (06:34.86)
into a thruple.

Kevin Close (06:36.019)
Yeah, we’re up trouble now and we’re taking our fix and flipping and new builds to the next level. Yeah.

John Harcar (06:44.342)
I love it. Why was it, you know, obviously with the, you know, all the YouTube university and all the stuff online, why was it important for you to seek out a mentor, seek out a, you know, more guidance than just doing it on your own?

Kevin Close (07:00.712)
Well…

I could have, and I do watch BiggerPockets and YouTube, YouTube University and all that and pick up a lot from there. But I know I needed a community of investors who were doing the same thing that I was, like-minded people. I’ve liked the mastermind concept, you know, there’s more heads, more minds on a topic is going to give you a better answer than I am going to get by my mind on a topic. So I like that. I like the collaboration. I like the support.

If you have a question, can pick up the phone and you can call somebody who’s been there and done that instead of me going out and learning everything by trial and error. That’s an expensive way to learn anything. So I was counting a lot on their knowledge and the experience of the people in there that have done it before where I hadn’t done it before. So that meant a lot to me. Yeah.

John Harcar (07:44.61)
It is.

John Harcar (07:56.76)
Okay. So you had a family construction business. That’s really cool. So you kind of learned growing up. Was there any, at any time when you’re like, I am never getting into construction. I don’t ever want to do this.

Kevin Close (08:11.645)
Yeah, as soon as I started wanting to be an investor full time, I said, I’m never gonna have a construction company again. And here I have a construction company again.

John Harcar (08:20.084)
There you have it, construction company. What was… No, go ahead.

Kevin Close (08:23.859)
But my partners are a lot more, I said, if you handle the field, I don’t want to be out there every day. And it’s mainly our role is we have project managers and lots of vendors, subcontractors and workers, but at the level of the renovation that we’re doing and the ARV that we’re selling them for, it’s mainly about quality control. We’re just checking to make sure everything’s done right and to our standard.

John Harcar (08:38.67)
Mm-hmm.

John Harcar (08:47.308)
Yep. Yep.

John Harcar (08:52.152)
So when you started learning the stuff you needed from this Alliance group, how long did it take you to get your first deal? And what were some of the struggles you ran into in trying to do that whole acquisitions part that you were unfamiliar with?

Kevin Close (09:06.803)
It was. I didn’t know where to get them. It took about three months. And over the last seven years, deal acquisition has been part of the problem, but that’s getting easier as you build your network.

John Harcar (09:12.951)
Okay.

Kevin Close (09:23.035)
I mean, we buy now from the MLS, we buy from wholesalers, but not very often. We buy from word of mouth. I’ve had people call me with a house for sale and we ended up buying it for them. So yeah, just building out your network. After that happened, it was easier to find a deal. And then the biggest problem was funding. Yeah, it was typically.

John Harcar (09:45.558)
Are you using private money or you using hard money? What are you doing? Both. Which one do you prefer?

Kevin Close (09:49.776)
Both both yeah sometime

Well, what I’m used to is private money, hard money for the purchase and the renovation and private money to do the gap, which is the down payment and the carry costs. You know, you have to, you have to fund that even though if you go off into the weeds, we, our projects are so big that we do draws on the construction from the lender. So, you know, those can be substantial of 50 to a hundred thousand a draw, but while we’re waiting for that draw, we have to fund the gap.

John Harcar (10:03.083)
Okay.

Kevin Close (10:25.361)
But in between yeah, yeah, so we order windows for forty forty thousand dollars. We have to pay for at least fifty percent of that and And then the lender won’t pay us until we have them on site and installed on project. So there’s there’s more cost than just It’s a renovation and then then you got ten to fifteen thousand dollar monthly payments on the on the loans at the level that we’re at so it’s a you got to go fast and you got to be

John Harcar (10:25.666)
The gap part.

John Harcar (10:45.313)
Yeah.

Kevin Close (10:55.315)
You gotta have everything covered.

John Harcar (10:57.038)
Yeah, I think we were talking a little earlier before we got on, you mentioned the costs and stuff, right? It’s like, you talked about some of those hidden costs. like, are some of the things that, you know, let’s talk about this for a minute. What are some of the things that people don’t really look at? Maybe they under, or they failed to take note of those hidden things that can really kill the deal.

Kevin Close (11:23.389)
Yeah, well, time?

Time is one of them, because typically when you’re funding a fix and flip, unless you have a lot of money, you’re taking some kind of loan, and they’re usually short-term high-interest loans, like one-year term, and they can be anywhere from 10 to 14%. It’s pretty much typical what we’re seeing now. Plus, there can be origination points of one to three points, and some people don’t consider that. If you’re taking a million-dollar loan, one point is $10,000.

John Harcar (11:53.496)
Take your hand. Yeah. Yeah.

Kevin Close (11:55.941)
So yeah, they add up. So I see a lot of people don’t consider that they’re gonna have monthly payments on these loans. And you gotta have the money to cover that.

At the level, like I said, the level we’re at, the projects usually start around 10,000. But then when we’re getting into the project, the more money we draw from the renovation pool, the interest rates go up each month and then they can hit $20,000 at the end of the project. So you run a year at 20,000 bucks, it’s a quarter million dollars just in the interest payments. So it’s scary sometimes.

John Harcar (12:25.87)
Mmm.

John Harcar (12:33.272)
Right.

John Harcar (12:36.952)
Yeah, well, I know, I definitely agree with that. What other mistakes do you see people that are starting to do fix and flip? You know, let’s say they’ve been wholesaling for years and now they want to start, you they want to take one down, do a flip. What mistakes are you seeing people make?

Kevin Close (12:40.04)
Yeah.

Kevin Close (12:51.387)
I see a lot of them here in this market even. I’ve even bought them where they bought a property and they started to work on it and then they either didn’t pull permits and got red-tagged or they ran out of money. And I bought projects that…

that have been repossessed by the hard money lenders are foreclosed on and taken back and we buy them and it seems like they get to the point where they start demolition. We bought them with plans that were in with the city waiting to get permits and yeah, people run out of money. I don’t think they consider all the costs and the time.

John Harcar (13:29.774)
I’m about to say, mean, how could you, I mean, if you really…

Look at all the numbers, right? You really take into account all the numbers. mean, how could you run out of money without, without, without the things that just happened?

Kevin Close (13:42.707)
Exactly. mean…

Yeah, exactly. I don’t think people consider the time on the design and the permitting. I mean, we’re fast. Our design team and our, we can get it through permitting probably in three to four months, and that’s fast. I’ve seen people wait eight to 12 months for a permit, for design and permitting. Experience. We have the right design team now.

John Harcar (14:03.054)
Mmm.

John Harcar (14:06.604)
wow. Why do you think you get them so much quicker?

Kevin Close (14:14.163)
And we do so much work with them. They’re so busy that they’ll prioritize us over somebody who comes in with just one project. We have like team members that are assigned to us. And they’ll go fast and they’re good with the city. Not just letting it go in there and sit on somebody’s desk for a month and nobody’s checking up on it. So you really have to…

John Harcar (14:22.722)
Got it.

John Harcar (14:36.11)
Mm-hmm.

Kevin Close (14:41.671)
kind of push people. mean, get on the phone and say, hey, where’s my permit? What’s going on? Yeah. And while those, while you’re waiting for the permit, we won’t do anything without a building permit anymore. Very, very few flips or lipstick flips anymore. And we do a lot of value add where we’re actually down the house and rebuilding it. But yeah, it’s all about permitting and design is one of the biggest.

John Harcar (14:45.954)
Yeah, be proactive.

Kevin Close (15:08.901)
It’s going to hit people if they don’t, if they’re not fast. That’s Austin Dunn right.

John Harcar (15:13.216)
Right, got it. What kind of trends are you seeing in the fix and flip world now?

Kevin Close (15:20.891)
As far as finishes? Well, what we’re seeing is properties are starting to sit on the market. We see people don’t really want a renovated house. They want a new house in premium locations that we target. So that’s necessitated us to actually take them down.

John Harcar (15:22.696)
As far as anything, right? mean, if, you know…

John Harcar (15:40.578)
Mm-hmm.

Kevin Close (15:46.321)
to the slab sometimes or sometimes we even take the slab out. So yeah, they want a new house. They don’t want a renovated house. We can get so much more for a new house that it’s it to us to take them down. You have to.

John Harcar (15:59.896)
Yeah.

Kevin Close (16:04.335)
when you do a fix and flip now or a scrape or a new build, whatever you want to call it, you have to beat everybody else that’s on the market. Your product has to be so much better than what’s out there because people aren’t buying right now. They’re kind of waiting. So it has to be something that’s just going to tip the scales and they have to pull the trigger because people are not in a hurry. It’s definitely shifted to a buyer’s market versus a seller’s market.

were low on inventory here before but now that’s kind of picked up. Yeah the interest rates didn’t help anybody. Typically the houses we do now people aren’t getting loans for them because they’re too expensive so we’re dealing with a cash buyer and they want they want everything perfect and it’s got to be.

John Harcar (16:37.666)
That’s creeping up, yeah.

John Harcar (16:52.045)
Yeah.

Kevin Close (16:55.795)
top quality so we spend a lot of time on top quality amenities you know four thousand dollar cappuccino machines twenty twenty foot sliders that open all the way up completely redoing the landscaping yeah everything it’s got to be yeah it’s got to be kind of pre-primo you have to be every single person that has a house in your price range you have to be better

John Harcar (17:07.726)
That’s awesome.

John Harcar (17:12.674)
The extra extra touch. Yeah, put in the extra touch in.

John Harcar (17:22.414)
What do you think in all these years of being a business in a real estate and flipping? What do you credit the key your keys to success?

Kevin Close (17:32.563)
I’d say integrity and loyalty and stubbornness, perseverance. We’ve got stubbornness. We don’t quit. Yeah, yeah. We stand behind everything that we do from our construction to the loans that we take.

John Harcar (17:41.134)
stubbornness.

I love it. I love it.

Kevin Close (17:55.299)
everybody’s been paid back with their interests. If we have to extend, we communicate very well with our lenders, our private money, and our hard money. So communication is really key. Yeah, just being a stand-up person, Yeah, exactly. Yeah, that’s it.

John Harcar (18:04.472)
Good.

John Harcar (18:14.338)
Yep, how we all should be anyways. So what does your team look like right now? mean, is it just you? Do you have a whole team built out? What does it look like?

Kevin Close (18:27.407)
Well, I have two partners and we have KVBS development. That’s our holding company. That’s how we buy the properties and finance them with that. Then we have 3A’s construction, which does the work. And we also do retail renovations for investors and homeowners that want a new kitchen or a bathroom or a pool house or something. But it’s mainly

the three of us, owners, myself, Veronica Cardi and some Brian Rodriguez. And then it’s our team. We have project managers that work for us, several, and then we usually sub out most of our work. We don’t have a lot of infrastructure, like tools, trucks, we don’t do that. We’re more of a manager than a…

John Harcar (19:06.999)
Mm-hmm.

John Harcar (19:12.354)
Hands on.

Kevin Close (19:13.339)
Yeah, hands on, go out in the field and pound nails. I’m not going to do that anymore. I’m not doing that anymore. Too old.

John Harcar (19:15.95)
swing a hammer. And you guys are only in Arizona? Are you in the other markets?

Kevin Close (19:23.283)
Just Arizona. Yeah, the Phoenix, Maricopa County, Scottsdale, and we have some properties in Northern Arizona in the White Mountains. yeah, yeah, we’ve had some properties in Ohio and stuff and yeah, we got rid of them all. It just was… Yeah, it wasn’t for us. I mean, I know people who make it work, but it just wasn’t for us.

John Harcar (19:32.221)
cool.

John Harcar (19:38.946)
Yeah, long distance stuff is difficult.

John Harcar (19:46.304)
Now we didn’t have to, we didn’t touch on it too much here, but let’s talk about the importance of a like-minded group. I mean, how did that help you and affect you with your business?

Kevin Close (19:55.727)
Well, I knew it was something I needed and I went out and actively searched it out and part of joining that group was buying education. I didn’t care as I just look at it as access, know, the price of admission. So I got the education and it was helpful, but I was mainly wanted the community of investors, the like-minded investors, the relationships to learn from them, to

John Harcar (20:19.48)
the relationships.

Kevin Close (20:25.641)
actually find deals, you know, and just kind of breaking into an area that is kind of, it’s a little closed community, really. And I just wanted to break into it. And I knew I needed that to further what I wanted to do, which is entrepreneurial development, the fix and flip. So I leaned heavily into that and took advantage of it when I found it. Yeah.

John Harcar (20:41.998)
Mm-hmm.

John Harcar (20:53.218)
Yeah, I mean in the community is such a great place to find, know, partner on deals, opportunities that you wouldn’t find elsewhere, you know what I mean? So I definitely get it.

Kevin Close (20:58.401)
yeah.

Kevin Close (21:01.789)
When I’ve gotten all that, I’ve gotten private money lenders, I’ve found deals, I’ve gotten everything from that. I’ve gotten knowledge in areas like auctions that I didn’t know much about, but there’s people that were experts at it. Phone call away, it’s a very valuable tool for anybody that’s looking to get in. I imagine there’s different levels for more experienced people, but that’s what I needed to break in, for sure.

John Harcar (21:12.974)
Mm-hmm.

John Harcar (21:24.942)
For sure, for sure.

Well, I mean, Kevin, I appreciate you coming on here and sharing all this with us. If there’s folks out there listening, maybe they want to do a deal with you in Arizona. Maybe they just want to call and talk to you about fix and flipping. I don’t know. What’s the best way for folks to get a hold of you?

Kevin Close (21:44.163)
It will probably be through our website. It’s kbbsdevelopment.com. So kilo bravo bravo Sam development.com. And there’s a phone number on there. You can reach us or you can email us through there. And it’s got a lot of information about us and projects that we’ve been working on. And so it’s good background and best way to reach us.

John Harcar (22:08.46)
Very cool. Well, once again, man, thank you for coming on. Thank you for sharing all that. Guys, I hope you out there listening took some good notes. If you have anything or any questions for Kevin, please reach out. We’ll put all the information in the show notes. And I truly hope you guys had a good show. Kevin, thank you again.

Kevin Close (22:26.035)
Yeah, thank you, John. Thanks for having me. I appreciate it.

John Harcar (22:28.204)
No, you’re welcome. See you on the next one, guys. Cheers.