On the show today we have… Justin Stiles of Seattle Home Buyers and House of Stiles!
Show notes for Justin Stiles of Seattle Home Buyers and House of Stiles
The Vantastic Life is…
– is in Enumclaw, WA!
Joe is on day 4 of a 5 day fast.
Justin is a guy that we love! He’s super funny, and just a great person to hangout with. He’s an awesome dude!
He’s a coach in my VIP coaching program, and we love him and think that by the end of the podcast you’re going to love him too.
Justin what’s your background and how did you get into real estate?
I grew up in Federal Way and have an older brother and family, and my dad coached us in sports. My dad was a marine so there was some strict policies at times. I learned a lot of lessons from my older brother, and have been very lucky.
What did you do before real estate?
I played football at Western WA, then went to LA and did some acting, directing, waiting tables.
Back then in LA I got to be super cynical and judge mental. It’s such a cut throat environment down there. And my brother had just had a daughter and wanted to be in her life.
My parent had a house on Vashon Island so I started remodeling that, and didn’t have a care in the world.
Then I met Ashley and moved back to LA, then when the job crisis hit, we moved back up to Seattle.
My dad always told me to get a “normal” job, but acting didn’t translate into regular jobs.
When we were first married we lost 6 jobs. It was just a bad time for the job market.
I was selling mechanical insulation, which is as exciting as it sounds.
It was at a time that cranes were coming down.
Then became a licensed insurance broker.
At that time I had a buddy that was buying foreclosures, and I kept watching, and told my dad it would be fun.
My parents had a handful of rental properties, and had just sold a business that gave him a few hundred thousand that he could invest.
Then I got fired from the insurance company and told me day… let’s do it!
We got started with Vestus, and we were living with my parent at that time.
I would wake up at 4 or 5am and go look at the houses. My dad never attended the auctions because he had a full time job.
There were a bunch of auctions at that time, and they were all really different.
Our first house we bought they had occupy Seattle going on. They told us not to go to the Seattle one.
The house we were looking at we didn’t get, but another one came up. So I texted the auction guy saying we wanted to buy the house.
Then we got a call saying how we want to buy the house, and they called to say who they wanted the name of the house under.
We continued to drive to the house, and it was gorgeous! Needed a little yard work, but it was nice.
The previous owners where living there and they invited us in. They just wanted two extra days before moving out.
Our budget for the house was $1500, and we made about $55k on it. We were hooked and it was the easiest money we’d ever made!
Did you mom list it?
No, she’s thought about getting back into it.
We should have your mom on the podcast to talk about how it was back then.
Then what happened?
We bought another one at auction, and only made $7k. We wanted the house too bad. It would have been a great rental property.
I overshot the valuation. The wrong ARV.
And there was a lot of stuff that we did that we didn’t have to do.
I broke into the house and the smell was so bad that I was puking outside after 3-4 mins. So we replaced all the carpets, and painted.
We paid 12% and 3 points with Vestus.
We haven’t used Vestus since we stopped doing the auction.
The company was paying me to be a general contractor.
You had to pay to get your contractors license back then. You paid $2k, and you didn’t even need to know what a hammer was.
This was something that the government decided was a good idea.
It’s easier to get your contractors license than getting your hair dressers license.
So what happened with #2?
I find that new investors want to get a house so bad that they buy a deal with no comps. And they think they can just fix it up.
You need to slow down and think about it for a second.
The other thing I see (with even advanced investors) is the over improvements because they can’t stop themselves. And think it’s nicer, and they are going to get a higher price.
It’s interesting, as a broker I had a listing that I couldn’t sell. The perception of the seller and buyers were different. The buyers said they didn’t want a project, but we thought it was beautiful.
So right. Two years ago you could just pull out the carpet and sell it. Buyers right now are picky and they was stuff done.
We did a project recently that was gorgeous, and so many people loved it, and we didn’t sell it.
I think buyers don’t was to compete.
The feedback was, why didn’t they replace the furnace…
Because do you feel the heat on? The furnace works great.
We ended up making good money on it, but it was about $100k less than we thought.
Then there was a house across the street that wasn’t upgraded at all, and it sold for $200k above ours.
You hear that flipped homes are getting scrutinized harder.
We like to make our flips unique. When you walk in it doesn’t feel like a flipped home, it feels like a renovated home. And we have realtors tell us this all the time.
We had some comments from a broker that said, you didn’t use something that the masses would like. And we didn’t know what they were talking about.
I think the moral of the story is that we have lost the stability and predictability of our market at this time. You need to be cautious and buy right, and be networking, and telling stories. Telling each other what worked, and what didn’t.
Maybe we’ll start doing that.
Justin is the home with Melanie at our Eastside meetup every Thursday.
We should ask people what’s going on.
Let’s move on.
You’re a rehabbed, contractor, and broker. What’s your favorite part?
I’ve felt like every job that I’ve had, I was smarter than the boss. But with this, I’m the boss. The biggest thing for me is my schedule. I can play and coach my son. I want to make sure the kids have some good influences.
I also the beginnings and showing off the properties.
You should follow Justin on House of Stiles! You are blessed with that name!
How do you get your deals?
These days most are from bird dogs. We don’t do any auction anymore.
A lot of times people will email you addresses, but don’t tell me anything about it.
You have to find the right bird dogs that are good at giving you the right info.
It’s fun when you have a good bird dog.
All the bird dogs are license brokers.
Don’t get me on my soapbox. What are they getting.
They also get to learn a lot from me.
What is your pitch and what do you provide? Julie Clark provides options.
There so many new investors with all of the guru’s. Every absentee owner gets the same letter from so many people.
It doesn’t work. You need to have a unique message.
My marketing now, I’m a broker with EXP, and with SeattleHomeBuyers.com (plug).
I will give you a cash price offer for your house and you can leave it as it is. And I will proved you with the cost of the repairs, and pay for those. And then list it.
A lot of people don’t realized how much it costs to list a house. It can cost $20k to list a house.
I have my whole crew of contractors, and know the quality. And my wife is a designer and she knows how to make it look good.
The other option is I can give you an idea of what you’d need to spend if you want to list it the traditional way.
Or we can do a lease option or subject to, which I love.
What about partnering with them?
Yeah, I haven’t done that yet. I’ve don’t some creative things, and you need the right person and situation.
And the super advantage that you have is the contractors and all the subs.
There are companies that are doing the rehab and getting paid back later.
This is not new news. And I curious what the next great thing is going to be.
I love hanging out with you because you are going to beat me. Because of your costs. You can do it for half of the price.
And anybody that’s trying to find a plumber or drywall guy, good luck!
As a GC you’ve been in the game for 10 year. What’s the hardest part for you?
Every sub blames the other sub. We spend $2k on Starbucks gift cards to make people happy.
The team that we have are like family for us.
Everyone says when you get started to find a good GC. We’ve fired 3 electricians this year. You have to find people that fit.
Because of my setup I can control where people are at.
It feels like a game of chess.
Plumbers and electricians are the hardest to find right now.
We should stop giving free college and give free trade school. You can make $80 right out of school.
You can make a lot of money.
My tile guys truck is cooler than my truck.
I saw my tile guy tear out a whole tile job because a line wasn’t straight.
What/who is the most expensive?
Last year it was drywall.
The electricians and plumbers are the hardest to get and the most expensive.
A plumbing rough in is up to $1200.
Wow, that used to be $600.
Let’s go over some costs if we can. Some big ticket stuff.
Rewiring a 2k sq ft house is $12k.
When you’re walking through a house you could test everything, but you don’t have that kind of time.
You want to make sure you’re planned for the worst.
You test the nob and tube and make sure it’s not hot.
Talking about a deal…
Can light is about $100 per can.
Roof for 2k sq foot tear off house…
Re plumbing 2k sq ft – $8-14k
Windows very. About $600.
Paint job. Painters are expensive for the normal person. $15-16k for inside. All doors, trim, sanding. Outside… $6-8k.
How are you building your rehab budget? By trade or room…
We do by trade. Not by room. Just a scope of work. And I use a 10-15% contingency.
How often do you blow your own budget?
A lot of the time. But I have that contingency.
When you are buying deals off wholesalers, you all need to be assessing the deal as if it went over by 15-20%.
Are you doing it for the experience or why are you doing it.
Even Justin, who’s super experienced, is going over a lot of the time.
Where do you buy things?
Cabinets we buy at ABS Cabinets.
We use our granite guy.
Appliances we buy from the lowest cost. We get refurbished for rentals sometimes. But you have to go up there an pick it out.
The big box stores have all of these big sales. You can match and bundle. The earlier you can do it the better.
Window and door buy at Chris a U Factor.
Flooring we do most at CFM, or floor and decor. Or lumber liquidators.
Are you doing any sizzle features these days?
Every room we want to have someone think it awesome and unique.
A flipped house looks like a flipped house. We want people to think it’s a rehab, where people care.
Is there anything where people are just getting started when you’re going to hire subs… that you’re looking for?
You get what you pay for. If you hire a plumber for $600, you’re going to have leaks. I have people that call me looking for work, and they’ve done a bad job.
I wouldn’t recommend trying to be a GC unless you’re going to do it on your own house. Checkout our podcast with Tony about GC’s that don’t know what they are doing.
It’s actually illegal to manage more than just the general contractor.
You guys should be talking with your friends and family and asking if they have contractors that they like, that have done a great job.
And don’t tell them you’re an investor. Because people think that investors are cheap asses.
You have to get permits these days. So don’t skimp on that.
People are asking for permits these days.
Justin is available if you want to hangout.
Permits… find a good architect that knows things inside and out. They can help you get an over the counter permits.
What do you have to wait for?
As long as it doesn’t span over 14 feet it can be over the counter.
There are little things that engineers know like that.
What’s the biggest pain in the ass to get a permit for?
Anything that’s not an over the counter permit.
What is the hardest to pass?
It’s usually pretty easy, as long as you don’t try to cover up anything. Just be a good person.
Communication is key!
Last question. Tell us about Justin Stiles fine art!
There was one year where I made my money as a fine artist.
They are so good! I want to buy one! Justin Stiles Fine Art on Facebook. Super good stuff!
We’ve gone long but we love Justin.
It feels like 15 mins.
Checkout our weekly masterminds every week.
Burien every Tuesday from 12-2pm at Angelo’s
Redmond every Thursday from 10am – 12pm at Family Pancake House
* This is the one Justin hosts.
Burlington 2nd Tuesday of every month – email us to get the into. At Bob’s Burgers and Brews hosted by Julia Philip.
Milton in Pierce county Larry and Marishka will be hosting.
No presentations, just building relationships.
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