BiggerPockets Real Estate Podcast

858: Real Estate Gone Wrong: The House Flip That Fell Over (-$380K) w/James Dainard

Dec 15, 2023

James Dainard, a veteran house flipper, recounts a grave mistake that cost him up to three-quarters of a million dollars. He shares the biggest mistake flippers can make, dealing with a house falling over, forecasting permit times, and the importance of emergency reserves in home renovation. Learn from his experience and avoid costly errors in real estate investing.

20:15

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Episode guests

James Dainard

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Quick takeaways

Timing, managing debt costs, and structuring deals to limit exposure to unforeseen delays are crucial in real estate investing to avoid significant losses.

Closing deals only when permits are issued or construction can start immediately helps minimize debt costs and reduce the impact of market fluctuations, while building a cash reserve aids in absorbing potential losses and maintaining momentum in real estate ventures.

Deep dives

Deal gone wrong: Learning from a $380,000 loss

In this podcast episode, real estate investor James Dainard shares the story of a deal he calls 'Humpty Dumpty' where he experienced a significant loss of $380,000. The deal was a single-family fix and flip property in a great area of Seattle. However, the project suffered delays due to permit issues and a lengthy waiting period before construction could start. As they began the renovation, structural problems were discovered, causing the house to shift dramatically. They had to rush to stabilize the property and incurred additional costs. Eventually, the market took a downturn, affecting their selling price. Overall, the deal taught James the importance of considering timing, managing debt costs, and structuring deals to limit exposure to unforeseen delays.

Introduction

3min

Challenges with Permits and a House Falling Over: A Renovation Gone Wrong

3min

Setback in House Renovation and Sponsored Ads for Financing Options

5min

Lessons Learned from a House Flipping Project

11min

Conclusion and Real Estate Deals during the Holiday Season

2min

One real estate investing mistake cost house flipper James Dainard $380,000. This mistake was so bad that, in the long run, it may have cost him up to three-quarters of a million dollars. So what was the grave mistake a multi-decade veteran house flipper made that would bankrupt the average real estate investor? Stick around to find out unless you want your house to literally start falling off a cliff (like James’ did).

James has been doing real estate deals in Seattle for two decades. He’s flipped hundreds of houses, but even the experts get it wrong sometimes. Piggybacking from our last episode, James will walk through one of the worst house flips he’s EVER done, the mistakes he could have easily avoided, and why you never, EVER close on a flip until you have permits in place.

Want to hear last week’s episode about the live in flip that cost a new mom over $300,000? Click here to listen to the episode!

In This Episode We Cover:

The biggest mistake house flippers can make when investing in 2024 and beyond

What to do when your house flip suddenly stops making financial sense

Foundation issues and how to correct a house that’s literally starting to slide

Forecasting permit times and how not doing so can cost you over $100,000

Why you always, ALWAYS need to have emergency reserves on hand when doing a home renovation or house flip

And So Much More!

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