The Rise & Fall of My House Flipping Company
Updated: Jan 20
Do I double down and fix the problem? Or do I cut slingload and go lean again?
That was the question I wrote to myself in my journal on May 22, 2022 when I realized my flipping business was running out of cash.
As I paced the living room on that Sunday afternoon, talking over the situation with my wife, there was only one real solution…it was time to wind things down.
It had been nearly 2 years since purchasing my first flip, turning flipping from supplemental income for rentals into a business that at one point employed 7 employees.
By building a business from the ground up, and subsequently shutting it down, I gained more than just a couple new grey hairs.
I learned tons of invaluable lessons about real estate, leadership, management, starting a business, running a business, and most importantly about myself.
I could never boil those lessons down to one blog post, so this is the first in a series of posts.
Each one will drill down into a specific lesson I learned, tell the story and experiences surrounding that lesson, and hopefully allow you to learn a fraction of what I have and avoid some of my mistakes!
So what's the first lesson?
You better have a damn good why!
When I first got into real estate I never wanted to flip a house. I was new and naive and didn’t know any better at the time, but it’s important to note I didn’t come into this dreaming of building a house flipping company.
I'll rewind a moment for those of you who missed my real estate origin story.
As a W2 employee I dove in head first and picked up 8 properties (20 doors) within my first 10 months. All but the first were with partners who brought most of the cash to the table, and with fire and intensity I stacked doors and cash flow on the road to my financial freedom.
As a result, my foray into flipping was very strategic and intentional as a way to generate capital.
In my partnerships I did all the work for a fraction of the cash flow. It was the right thing to do in that phase of my journey, but that shit sucked 😁
I decided I needed to generate chunks of cash that I could put into my own deals, and flipping was a natural next step.
That was my why starting out. I was pursuing financial freedom through cash flowing real estate, and flips were a catalyst to buy more properties.
The best part of it is...it worked!
My cash flow was less than my expenses, but the profit from flips would fill the gap in my income for months at a time.
So on October 30, 2020 I quit! Goodbye W2, hello full-time flipping!
What went wrong??
Two things. Well, a lot of things went wrong ultimately but let's focus on the two main ones 😁
First of all, my entrepreneurial and competitive side took over.
The entrepreneurial side of me that’s been around since I was a child always saw himself as a business owner, and flipping seemed to provide the perfect opportunity for that.
Economies of scale really benefit flipping, so I figured I could drastically expand the business and eventually create the systems and structure that removed myself from the business.
I'm competitive and want to be the best, so I envisioned an opportunity to create passive income not just from rentals, but also from a flipping business that wasn’t reliant on me.
Sounds great in theory. But in reality, I was creating a huge workload for myself doing something I didn't actually give a shit about.
That meant that $$$ was the purpose of my business, and that rarely works.
Second, up until October 30, 2020 my purpose was built around leaving my job. I hadn't thought beyond that, which meant that the day I gained my freedom was the day I lost my purpose.
Shit.
As a result I turned my purpose into building the flipping business (that I didn’t want lol). And since the purpose of my business was effectively just money, my entire purpose in life effectively shifted from freedom to money.
Turns out money is a shitty motivator…a deeper why is much more important.
(Now I have to add that as I was quitting my job we found out we were having a baby, so there was a greater purpose in providing for my family. But that's a different story)
The irony of that terrible money motivation is that if I’d just stuck with my initial plan (flip a couple houses, put profits into rentals), I would've been in a much better position.
If I'd clarified my why and my purpose, that dreary (and panicked) Sunday with my wife in May 2022 would have been much brighter.
But then I wouldn't have these stories to share with you 🙂
So what?
If you're looking to quit your job, is freedom your purpose like it was for me?
You're not alone. We're like a dog chasing a car...wtf do we do once we get it??
I would encourage you to start diving into your why. What's the purpose of what you're building? What's important to you? Where are you going long term?
By starting work on that early on, you'll create a burning desire to move towards your purpose that will make your financial freedom a byproduct.
It's a milestone on your journey as opposed to the destination.
I've learned this lesson the hard way, and that's why I've integrated purpose as a cornerstone of the work I do with my coaching clients.
And if you want help with it, reach out to me! Contact me on the website or send an email to patrick@investdgp.com
Turns out helping you is where I've found my purpose 🙂
If you enjoyed this, subscribe to get notified of future posts! And if you learned something, share it with someone who could benefit from it!
You can also find previous articles and additional resources throughout the site!