BiggerPockets Money Podcast - 464: How HGTV’s Heather Rae and Tarek El Moussa Flipped Over 1,000 Houses

Episode Date: November 1, 2023

HGTV’s Heather and Tarek El Moussa have built an empire that any entrepreneur would be jealous of. They’ve collectively flipped over a thousand homes, started syndications with tens of millions of dollars invested, have a TV show that rakes in money for them to flip more houses, AND they do it all while raising a family. And while they’ve created the life they’ve always dreamed of, some unintended side effects have recently emerged that make things less-than-glamorous. We’ll touch on the recent “drama” in today’s episode, but before we do, Heather and Tarek break down precisely what they did to build the business they own today. And if you’ve ever thought of flipping houses before, Tarek gives invaluable advice on finding deals, hiring (and firing) contractors, why he’s spending more money than EVER before on renovations, and how you too can build a multi-million dollar house flipping business.  But that’s not all. After a recent slew of negative press, Tarek finally breaks the silence on a recent deal gone wrong and gives the story none of the news outlets would share on how he’s handling a barrage of tenant complaints, online harassment, and even death threats.  In This Episode We Cover How the El Moussas flipped over one THOUSAND homes across California Finding house flipping deals and how to see the “potential” in a hideous home Wholesaling real estate and why Tarek was forced to stop flipping  Why Tarek sees “rough times” ahead and how YOU must pivot if you invest  On-air “drama,” how much of it is real and raw, and the effects it has on Heather and Tarek Tarek’s recent deal gone wrong and how he’s doing everything he can to make it right And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Join BiggerPockets for FREE Scott's Instagram Grab Scott’s Book, “Set for Life” Listen to All Your Favorite BiggerPockets Podcasts in One Place Apply to Be a Guest on The Money Show Podcast Talent Search! Money Moment Hear Tarek on the “BiggerPockets Real Estate” Podcast Flipping Houses: How to Get Started and Everything You Should Know Click here to check the full show notes: https://www.biggerpockets.com/blog/money-464   Interested in learning more about today's sponsors or becoming a BiggerPockets partner yourself? Email us: [e-mail] Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to the Bigger Pock's Money podcast where I interview Tariq and Heather El Mousa from the flipping El Mousas. You may have heard of this fantastic HGTV show. Hello, hello, hello. My name is Scott Trench and I am solo today. We're bringing you a very special bonus episode of the Bigger Pockets Money podcast. It's for those of you who didn't attend BPCon, and we had an amazing fireside chat with Tariq and Heather, and we decided to record the rehearsal of this chat and bring it to you here on the show. We're going to cover everything from how Tariq and...

and Heather started, how their businesses function, being HDTV and Netflix stars, and the advice they would give investors today. And what I really appreciated the most about getting a chance to talk with Targ and Heather is not just their, obviously, you know, superstardom and the incredible businesses they've built in the media space. But the really large scale business operation that's going on across wholesaling, fix and flip, rentals, and now syndications in the real estate space and the sophisticated machine they've built. So a big privilege to talk to them today. All right. I am here to make financial independence less scary, less just for somebody else, to introduce you to every money story because we truly believe financial freedom is attainable

for everyone, no matter when or where you're starting. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or understand the realities and the nuts and bolts of a large-scale real estate business. brought to you by super famous HDTV stars. We'll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams. All right. Next up, we have the money moment.

Today's money moment is more of a bigger pockets plug. Want to feel inspired and learn from the best? Join us next year at BPCon and Cancun. That's right, you heard me. We're taking our conference to Cancun. It'll be out of this world, I mean out of this country. Join me and some of the best investors around like Henry Washington, David Green, and Dave Meyer next year at our conference. This year at 2023 was amazing. We ended up renting out Universal

Studios as the end note. And besides the partying and the awesome great times, we also had at a tremendous, we had like 80 speakers, over 50 sessions. We had 75 different sponsors ranging from all different types of professionals like agents, lenders, property managers, insurance, brokers, tax professionals, and more to software solutions like property management software, accounting software, off-market deal finding software. to syndicators, to anything you can think of. It was super valuable, and I just had a great time. Hope to see you there next year at Cancun, where we rented out an all-inclusive resort for several days. Looking forward to it. Tax season is one of the only times all year when most people

actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal is, It's just to look backward. It's to actually make progress. Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future planning together in one dashboard on your phone or your laptop.

Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place. So every decision, actually moves the needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year.

That's 50% off at Monarch.com code pockets. I love Matt, said no one ever. Nobody starts a business thinking, you know what would make this more fun? Calculating quarterly estimated taxes? But somehow, every small business owner ends up doing it. Your dreams of creating, selling, and growing, get replaced by late nights chasing receipts,

juggling invoices, and wondering if that bad sushi lunch with Scott counts as a write-off. Change all that with Found. Found is a business banking platform built to take the pain out of managing money. It automatically tracks expenses, organizes invoices, and even preps you for tax season without you doing the heavy lifting. You can set aside money for business goals, control spending with virtual cards, and find tax write-offs you didn't even know existed.

It saves time, money, and probably a few years of life expectancy. Found has over 30,000 five-star reviews from owners who say, Sound makes everything easier, expenses, income, profits, taxes, invoices even. So reclaim your time and your sanity. Open a found account for free at found.com. That's f-o-u-und-d.com. Found is a financial technology company, not a bank. Banking services are provided by lead bank, member FDIC.

Don't put this one off. Join thousands of small business owners who have streamlined their finances with Found. Audible has been a core part of my routine for more than a decade. I started listening years ago to make better use of drive time and workouts, and it stuck. At this point, I've logged over 229 audio book completions on Audible alone, and I still regularly re-listen to the highest impact titles. Lately, I've been listening to Bigger Leen or Stronger for Fitness, the anxious generation for parenting perspective, and several Arthur Brooks' audiobooks that have been excellent for mental well-being. What makes Audible so powerful as its breadth. Beyond audiobooks,

you also get Audible Originals, podcasts, and a massive back catalog across business, health, parenting, and more, all accessible in one app. If you're looking to turn everyday moments into real progress, Audible has been indispensable for me over over 10 years. Kickstart your well-being journey with your first audiobook free when you sign up for a free 30-day trial at audible.com slash BPMoney. Tarek and Heather, welcome to the Bigger Pockets Money podcast. I'm so excited to talk with you today. Thanks so much for joining us.

Yeah, we're excited to be here, Scott. How are you doing today? I am doing great. I get a chance to talk to you, fine people. Well, let's just jump right into your business. Like, could you tell us about your empire and what you do and your roles in that business? Sort of as a relative agent, you know, 19, 20 years old. whether the great recession after finding success at a young age

and saw an opportunity in the market 2010. I did a short sale deal at a first lien, second lien, third lien, IRS lien, H-O-A, lien, all these liens. I ended up closing it after 11 months. I got to check for $7,000. The guy that bought it, painted the house, hired a gardener, cut the lawn, hired a, or painted the house hired a painter, cut the lawn, hire a gardener, and sold it a couple weeks later made $130,000. And that was the exact moment that I realized I was on the wrong side of the

state equation. So I started flipping houses in 2010 on a whim, whichever what I knew to raise money from them. And everybody said, I was crazy. I was too young, was too speculative. And finally I found someone dumb enough to give me money. And what market did you start in? What market was this? In Southern California. And during my very first flip, and this is what people don't know, during my very first flip, I got the idea to flip houses on TV. So I documented the process of the very first flip. And then I got the pilot for the series. Then I got a contract. The contract stated I had to flip 13 houses in 10 months, but I didn't know how to flip houses and I didn't have any money. So at the time, I wasn't sure what to do. I called my lawyer. I said,

what's the worst I can happen? He said, well, they can sue you. And I said they could take it. Everything's financed anyway. So I signed the contract, burned the boats and figured out how to flip houses while filming a TV show. And since then, that was 2010. Today, I flipped almost a thousand houses. The majority of the business that we're flipping, we're doing as in Southern California, Orange County, L.A. County, Riverside, and that said we're at Adino County. And that we also have out-of-state investments, own 200 rentals across the country, North Carolina, Oklahoma, Georgia. And then on top of that, I have homeschool education, teach people how to buy fix and flip houses, build rental portfolios. I'm so excited about my new company, TEM Capital, as well as Heather's new company, H.E.M. Capital, which is real estate syndication. Together, we're buying multifamily real estate, self-storage, and we're also developing.

On top of, you know, the real estate team I have with the agency, we have about 1,400 real estate agents working with me. And we have a production company, and we have a home line, and what else we got on it? Well, we have a few more things starting that we cannot talk about yet, but the newest is our home line called Home By Them. So that was more a passion project that Targ and I, you know, we're talking about for years. we wanted to create. And now it is a full-on business. And we just launched two new products yesterday and we're launching more coming up. So really fun. So we have all of these business,

this sprawling business conglomerate. What are your roles day-to-day, each of you, in this empire? Mayons. And that's the challenge as an entrepreneur. You know, at the end of the day, like, what are we? We are brands, right? And we built our brands to the power of television by being in hundreds of millions of houses around the world. So our main focus is always brand oriented. But outside of that, true of my heart, I'm an entrepreneur. See, I wasn't like a celebrity that got into real estate. I was someone that was in real estate and saw an opportunity to build a brand to get more

real estate. So in my heart, I'm an entrepreneur. So I'm still active CEO in the companies. I'm still involved in the day to day. And every single day, I'm always desperately looking for the absolute best help out there. So we're always hiring. We're always looking for amazing people to join the team. I started in luxury real estate.

And I'm on a show called Selling Sunset, which became a global hit in every country. And we were already established real estate office. And the opportunity came to us to film a TV show. And they interviewed all the agents in the office. And they chose who they wanted for the show. And, you know, I think about season three is why it really blew up. was part of the reason it's an amazing show you know the real estate agents in the office are very interesting um beautiful women um luxury homes and in west hollywood beverly hills california and

then covid actually helped the show blow up because everyone was home they were looking for an escape and uh so season three about what 2020 2020 2020 2021 is when it really tulio and then targ and i have a show together called the flipping al muses where you see me flip houses for the first time time on TV. So I never flipped a house before. So episode one, you've watched me flip my first home with the expert who's been doing this for years. And now we're filming season two and you see the progress I've made with my flight. Yeah, she actually just started her 20th flip. A year ago, she flipped her first ever house with me. And today, 20 houses later, it's incredible to watch how much she's learned, how much she's grown and the amount of knowledge that she's obtained. Yeah, in the beginning,

coming from a luxury real estate standpoint, I really, you know, I didn't realize the business of flipping. And I came into wanting to do all these luxury things to these homes we were flipping. And, you know, I want to do this. I want to do that. And now my mind has shifted so much from luxury to the return on investment and the most profit at the end and how we can save and how we can make the most. So really in a short amount of time, I've learned so much valuable lessons for flipping. What is the kind of core business model? What's your bread and butter in this business? I mean, the bread of butter for us is, you know, typically Southern California, and we're typically getting houses between 500,000 and about 1.5 million. That's kind of our bread and butter.

Will we go lower? Yes. Will we go higher? Yes. But we prefer to stay between 500,000 and 1.5 million. Okay. And, you know, how much you're putting into a typical flip and then what are you selling it for at the end? Yeah, so it depends. So you'll take a three-bedroom, two-bathroom, say, you know, 1,200 square-throw house to go in there and do a really nice flip, full remodel, new AC, windows, floor, I mean, everything. Today you're looking at about, I'd say, 130, $140,000. I know in California, we're probably paying more than people are paying in other markets. But I learned early on not to do the work myself. And I know I can save money by doing the work myself, but that can prevent me from doing other houses. And the houses make the money not the work, right? So that's one thing. And then we're doing bigger projects. Like we're doing a house right now in the city of La Palo. We're spending 240,000. It's a 2100 square foot house.

And this is pretty cool because the market is in mayhem. We started the project about six, seven weeks ago. The high comps at the time was at $1.50,000,000,000, and I re-ran the comps this morning. We have two new ones. One is at 1.3. One is at 1.318. So we just added six figures to our bottom line.

I'm very excited about that. So we're actually headed to the house this afternoon to see what we could add to it to make sure we get that number. That's awesome. Now, have you seen in the last two years, we saw a pullback in activity from flippers in a general sense? Was that reflected in your business? And how have things evolved maybe since the last 18 months with the rising interest rate environment? Are you getting seeing things ramp back up, for example? Yeah, like no BS here. Anyone that says it hasn't been a struggle, they're not telling the truth. So, you know, we bought 91 houses first quarter of 2022. So at 91 California houses, and the rates at the time were 2 and a half 3%. And while we were fixing up all these houses, the rates went to 6 to 7%.

So we burned through, I think it was $10 or $11 million in expected profit. And immediately, when the rates doubled, I stopped all buying, immediately moved to wholesaling because I knew I was going to be incurring losses. So in order to offset those losses, I needed to have revenue. So I stopped buying, finished all those houses. There were some, I was losing three, four, or five hundred thousand. But while I was fixing those houses up, we built the wholesale model that was bringing in three, four, five, six hundred, six hundred, thousand to offset those losses. So we weathered the storm.

Today we are thriving. It's a mix. We're probably wholesaling 75 percent, flipping 25 percent, and doing anywhere between 10 and 20 deals a mark. Awesome. So what is your, like, let's dive into each part of this process. What is your model for finding these deals either to wholesale or flip? Yeah. So the finding, which, you know, I teach my students.

all the time is like the most important thing. You can hire a designer. You can hire a contractor. You can hire a real estate. You could hire everybody to do everything. But it's really difficult to hire someone to go find you that house, right? So finding deals is very important. So when I built the business, I had no money, nothing. So the business was built through outbound prospecting. So I would door knock, I would cold call, I would network, I would text message and I would hit the streets every day. I had one goal in mind, 50 conversations a day. If I didn't talk to 50 people, I did not. know, I wasn't allowed to go home. So that's how I found success fast. Massive action. Today, I've been on TV a long time. I've built a brand. So now I leverage the brand. So we've done TV

commercials, radio ads, podcasts, paper clicks, search marketing, anything you can possibly think of. But we're definitely a marketing-based company. Awesome. Do you find that there are higher margins at the lower end of the spectrum, those $500,000 properties or the, well, a higher end, the $1.5 million dollar properties. And I wonder, Heather, how your experience, you know, selling these, these luxury high-end properties is impacting or influencing part of the direction going forward here. Well, I brought in a luxury, I guess, vibe to the houses. So we've stepped up the game. We've stepped up the game. Yeah. And, you know, I don't have the time to go out and source materials, look for, you know, but I bring my design eye to it and we work with designers. So I've hired

designers that I found to go out and find materials. for less of a cost that still look very high end. So I brought my high end eye to the flips. Yeah, so like the design is at a whole other level. You'll see season two of our show, like the houses are insane. They're gorgeous. Yeah, and I think Targa and I are even more hands-on with design this year, like this season on all of our flips were last year we were as well,

but this season we've stuffed up even more and picking out all the materials. But, you know, I learned a lot personally from last season, and we were flipping more high-end homes. and we are flipping more in the city of Los Angeles. We've now shifted and we're flipping more in Orange County. A lot of the permits, that was the major issue last season for us last year. So we're still finishing a few of the flips that we didn't finish in what? It took about 10 months to 12 months.

Yeah, and to answer your question, when the prices are going up and it's an appreciating market, I like the more expensive ones. When the market is not going up and it's stable or even going down, I like the lower price ones because they're faster to fix, faster to sell, less risk. So we're working on a lot of lower-end homes right now, lower price. Lower price. Well, I mean, we got what, 430, but then we're flipping it and selling it for 800 and something. So I like those better as well because they are smaller. We can get in and out faster and hope the market does not shift during that time. Awesome. So how are you financing these deals? Is it cash from previous flips or, you know,

hard money, some combination? Yeah. So when I first started, I had no money. So I went out investors. The deal was I did everything, all the work A to Z. They got a check and we split profits 50-50. And that as time went on, I started making money. So now we leverage hard money loans. So on every flip we're doing, we're obtaining a hard money loan and they were also most times covering the construction costs. Awesome. And then walk me through your contractor network. You know, I've watched a few episodes. It seems like some of these guys are long-term friends at this point. But how did you get started building that contractor network?

And how do you keep crews going all the time to keep costs down here? Yeah, well, I dealt my contractor network by getting burned by a lot of contractors. I mean, that's the thing in life. Like, you got to eat shit sometimes. And that's the truth. As an entrepreneur, you are going to get burned. You are going to get screwed over. People are going to lie to you.

But what makes a true entrepreneur is not quitting, right? So the reason I found good contractors is because I went through the bad ones. And they made my life a living hell. They didn't show up. They ripped me off. But I had to move on from them. And I kept looking, kept looking. And if you're always looking, eventually you find what you're looking for.

Awesome. Any tips for folks to cut that process a little shorter or to have a higher probability win rate with a great contractor? Here's one of the most valuable lessons I've learned in my life. It's not about what I know. It's not about what I can learn. It's not about who I can hire to learn. It's about who already knows the answer. So instead of going to find a contractor and giving them a chance or an opportunity to work on a flip, no, go find a contractor that's been working on flip since 2010. That's delivered 1,800 houses that knows exactly how to flip houses better than you, the investor. Now, let's talk about marriage and business here. You know, you guys are our business partners and have a wonderful, wonderful family dynamic here. How do you balance that and, you know, work together seamlessly through these thriving businesses?

The main thing is communication and really enjoying our time together. And not every couple can work together, live together, raise children together, be together all day. But I feel like we have a good machine going. Yeah, I don't know about that opposites of track thing because I've dated opposites in my younger days and it was not fun. So like we are we have that we have we're like very similar. We both love real estate. We both love design. We most love entertainment.

Like we like the same things. So like even when we're not working, I know. this sounds sick. When we're not working, we're out like on the weekends. Like sometimes we'll wake up at 5 in the morning and can't sleep. We'll go drive neighborhoods and look for houses. Like we just, we're obsessed with real estate. And, you know, family is very important to us too and having that balance. And, you know, we have a new baby. We have an 8 month old. And then a 13 year old and an eight year old. So, you know, it is a lot of balance because we have school. We have sporting events. And, you know, we're busy with the kids. So we really try to make it a point to turn off our phones at a

certain time, spend time with our family. I try to take days off and be with the baby as much as possible while he's so young right now. So if I can't make it to something, Tarq will really, you know, he'll handle it for me. Like today, I'm taking the day off to be with you guys and then also be with the baby. So he's going to go walk the foot for me. Yeah. And like, into the truth is it takes an army to run our lives. I mean, we're toured in so many directions. You know, we have two drivers, three assistants. And we have all these things that support us personally. so we can go out there and have the time to work on all these businesses. And that's what most people don't realize.

It's time is the most valuable asset. You lose money. You can make money back. You lose time. You can't make time back. So, you know, we really delegate almost every single thing in our life to the point where people tell us what to do it. We show up and do it.

Awesome. So, you know, one of the big elements in your business is you're both of your individual brands and the combined brand now that you have as a married couple here and how you leverage that in any, areas to create synergies around your business, right? That helps you find deals, you mentioned. Obviously, there's probably a profit component to being part of the HGTV network with a lot of these opportunities. And, you know, there's obviously your business savvy here. But many of the people, you know, listening to this may not, you know, have that personal brand behind them.

Do you think it's necessary to have this level of success or what, you know, or if it is, how would you go about curating that brand from scratch. The best way to get started or the best way to build it is to build it by getting started. Just get started. Get started. Like, oh, I want to invest in real estate. Oh, I want to go and die. Oh, I want to go to the gym.

How long have you been thinking about it? Six months ago. Why don't you just get to car right now and drive to the gym? Like, stop waiting. Take action. And you can build a brand while you're doing that. I mean, if people want to build a brand and be more successful in that aspect, you can film yourself walking your flips. You can film yourself doing all the projects. You can film yourself

doing anything. And you just have to get started on that too and not be nervous because it could be nerve-wracking to do that. And I don't, I'm not known. I don't have a brand, but you can build a brand. You don't have to be on TV to build that brand. So like if someone was starting at zero, create a brand, a logo, whatever you want to do. You don't need a logo. Just create some social media pages. If you want to be a real estate investor all day, every day, you post about real estate, you walk, fix her upper properties. You, you, And you're just always talking about what you do. The first six months, you might get five followers.

But by year three, I'm pretty sure you're going to have thousands. Yeah, be consistent. And you can also watch what other people are out there doing and be studying that and just, you know, do some of the same videos as them and just be authentic to yourself. Yeah, I love that authenticity piece. It's all, you know, just help one person and help them and engage with them, show them what you're doing, help them learn from you and follow it. And then do it again and then slowly scale it.

Just get started. Love that advice. Did it start? Tax season is one of the only times all year when most people actually look at their full financial picture, including income, spending, savings, investments, the whole thing. And if you're like most folks, it can be a little eye-opening. That's why I like Monarch. It helps you see exactly where your money is going, and more importantly, where your tax refund can make the biggest impact. Because the goal isn't just to look backward, it's to actually make progress.

Simplify your finances with Monarch. Monarch is the all-in-one personal finance tool designed to make your life easier. It brings your entire financial life, including budgeting, accounts and investments, net worth, and future. your planning together in one dashboard on your phone or your laptop. Feel aware and in control of your finances this tax season and get 50% off your Monarch subscription with the code Pockets. What I personally like is that Monarch keeps you focused on achieving, not just tracking. You can see your budgets, debt payoff, savings goals, and net worth all in one place.

So every decision actually moves an needle. Achieve your financial goals for good with Monarch, the all-in-one tool that makes money management simple. Use the code pockets at Monarch.com for half off your first year. That's 50% off at Monarch.com code. pockets. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast? Easy. Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored jobs

helps you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored posts. The best part? No monthly subscriptions or long term contracts. You only pay for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of this show will get a $75 sponsored job credit to get your job's more visibility at Indeed.com slash bigger pockets. Just go to Indeed.com slash bigger pockets right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash bigger pockets.

Terms and conditions apply. Hiring, indeed, is all you need. When you want more, start your business with Northwest Registered Agent and get access to thousands of free guides, tools, and legal forms to help you launch and protect your business all in one place. Build your complete business identity with Northwest today. Northwest Registered Agent has been helping small business owners and entrepreneurs launch and grow businesses for nearly 30 years. They're the largest registered agent and LLC service in the U.S. with over 1,500 corporate guides, who are real people who know your local laws and can help you and your business every step of the way. Northwest makes life easy for business owners.

They don't just help you form your business. They give you the free tools you need after you form it, like operating agreements, meeting minutes, and thousands of how-to guides that explain the complicated ins and outs of running a business. And with Northwest, privacy is automatic. They never sell your data and all services are handled in-house because privacy by default is their pledge to all customers. Visit Northwest Registeredagent.com and start building something amazing. Get more with Northwest Registered agent at Northwest Registeredagent.com slash money free.

All right. So we've talked about, you know, the empire here. Let's go, let's dive into the new business that you're pursuing here in the syndication space. What's, what is the history behind that move? What have you done so far? And where are you going with your syndication business? All right.

So I'll tell you the story about that. So I started flipping in 2010. By 2015, I was throwing live events. I had my TV shows. Business was humming. I was doing incredible, met with my CPA, and realized I owed a lot of money in taxes. I'm talking, a lot of money. And I look at him, I said, you're telling me people may pay this much in taxes?

And he says, no. I was like, what do you mean? No, what do they do? He goes, they buy real estate. I was like, that's what I can do. He goes, no, you buy and sell real estate. They buy real estate. I'm like, well, what do you mean?

And then he started teaching me about depreciation. So that was a big game changer for me. When I learned about depreciation, the light bulb went off. My eyes went big. And I knew I needed to start owning. And that's how I started applying. I got about 200 houses, around 200 houses. And then over the years, people would see me all the time, you know, walking the streets at the gym, whatever. Like, HR, we want to invest with you. We want to do deals with you. And I never, I never needed investors to flip these houses because I just, I just don't need them. So I saw an opportunity to wear well. I'm going after commercial real estate. If, if, if, I never needed investors to flip these houses, because I just, I just don't need them. Um, so I saw an opportunity to wear well. I'm going after a commercial real estate. If, if, if, if I'm, if I I have partners, I can buy bigger and make even better deals. And that's where the idea came from. I said, you know, and I'm just trying to help as many people as possible, invest their money with me, create wealth with me. And outside of, you know, creating wealth and learning about real estate, have a lot of fun. You know, with our companies, we have events and dinners and yacht parties. We're going to Calvo, Mexico next year with our investors. So that's really how it got started.

Awesome. So what have you bought so far? Where are you buying it? And what does it look like? Sure. So we bought three apartment buildings in Arizona. We just closed all one in Northwest Arkansas, like two months ago. It was a 376 units. I really like that. I think next week we're closing on one in Orlando, Florida. It's a 215 unit. And then we're announcing the, yeah, next week, next week. Yeah. And then a storage facility in Arizona. It's already done. What day are you losing on the Orlando property? I'm not, I'm not sure. It's been, it's, we're assuming a HUD debt at 3.8% with 37 years left. So it's an incredible, assumable loan. But with HUD, things are moving slow. So they say next week, but they also said last week, so we'll see how that goes.

So then another self-storage facility, Arizona. And then we're, we're about to break around on developing another one in Arizona. It's about a 200,000 square foot facility. And then another project we're working out right now is a development project in North Hollywood, California. And that project is myself and my wife and a few other general partners. Awesome. So what's the kind of thesis or business model that ties all these different investments together here? Are you looking for certain types of properties in certain locations? Are you looking for just great deals opportunistically around the country? How are you kind of

pursuing the syndication business? Yeah. So one, I'm looking in the best markets across the country. So that's one. Two, I'll buy in any market if it's a home run deal. What's the best market? What makes a best market in the country? Man, I mean, that changes all the time. The best markets around the country, it just depends on the opportunity. Today, it's a little bit weird, but a couple years ago, it was Arizona, it was Texas. It was, you know, North Carolina was off fire, Florida, right? But today, I'm still big believer in these areas. But I'm not going into Orlando trying to do a value-add project. for me, I feel more comfortable buying a class A with low assumable debt that regardless, you know,

it should be a safe investment. Okay, awesome. And then what makes a great deal in this space? How do folks think about, you know, finding great value opportunities in this space? Is it an opportunity to assume these types of debt? Is it unique characteristics specific to each property? Yeah. I mean, I would say it's a case-by-case scenario.

Like each property is different in so many ways. on some properties, if I'm able to assume debt on a newer construction property at 3.49% like I got in Northwest Arkansas. When the market debt's at 7, I'm feeling pretty good about that. Would I go into a deal today in Surprise, Arizona that was a major fixer value ad with major construction at the right price? Heck, yeah, I would. 100%.

$10 million today, put $10 million into it and sell it for $40 or $50? Yeah, I would do that deal. So are you planning to bring some of the flipping expertise that you guys have developed into the syndication model from a value-ed perspective? Absolutely. One of our big goals is really, really creating really cool designs for tenants, not by spending a fortune on material, but really thinking about the look and feel that they're going to want in a home they live in. Awesome. And are a lot of these apartment complexes, do they have the layout that you need? They just need that vision and touch. And that's what you're finding, especially may perhaps in the California and Arizona properties. Yeah, the value add ones, they need facelifts for sure. The newer Class A, the Summobile debt ones we're doing, those are in great shape. Heather, let's transition and talk a little bit about the filming TV celebrity business that you got.

You know, you're both businessmen, but you're also a businessman, right? Who said that? Somebody said that. Oh, the business. Jay Z. That's right. Yeah, there you go. I'm a businessman, but I'm also a businessman.

That's right. Yes, you guys are a business man. We are walking businesses and we're business people. So let's talk about that part of it. And what is the business behind the scenes here of being celebrities? Like, what, how do things work? How do you think about the relationship with HGTV? when you're buying a property, is there an angle for it?

Oh, this would look great on TV as well combined with that. And how do you manage that? Heather, I know you're particularly strong in this area. You both are strong. You know, the dirtier, nastier houses, they transform into gorgeous homes on TV. So I always tell Tar, I get the nasty ones, get the dirty ones, because that's new for me as well. It's fun for me to walk through the nastiest, stinkiest, as dirty as homes. It's disgusting.

but it's fun to see that transform on TV. And I think the audience really loves that because we're taking something that's so foul, so ugly, so disgusting, and we're turning it into a beautiful place for a family to move into and fall in love with. So we're definitely thinking about that when we're looking at properties.

Also, ones we can get in and out of faster because we are filming a TV show and it takes time to flip a house. So, you know, if we film for over, you know, we can't film for over a year on one project. So unfortunately, we got into doing that last season. We had to finish up two homes later on, and you'll be seeing those come out earlier in 2024. But what else?

Yeah, I mean, it's a whole business behind it. I mean, yeah, we're both normal people that got on TV. Like, I was a real estate agent that, you know, it's not like I did anything special to get on TV. I was part of a real estate office on Sunset Boulevard. We were a real office and, you know, we happened to get on TV show and become a worldwide global TV show. So there was nothing special that I did to get on the show. There was. There was some special.

Well, I mean, not, I think not everyone can be on TV into what we do. But here's what people will realize. Like, being on TV, it's all like you can just like, oh, go to work. Like, no, you're on. You have to be energetic. You have to be on. You have to be witty. Like, when we're there, we are working.

Like, you have to be 100. 100% present. You have to be 100% there. But I'm saying it's not like I went out and like I didn't try to get myself a TV show, you know, because of who we were and our personalities. Yes, the TV show does well. Not everyone can just be on a show and be as successful as we are. Yeah, look, look, I love the humility here, right? There's luck and then there's how you play the hand that you're dealt. And maybe there's a little bit of luck in getting the first chance there. And then you've played the hand that you've been dealt phenomenally well. You're incredible.

You're a superstar. You've got million. of followers. And I was, I want like, there's something that you're doing in, in conjunction with that great start that got you going with that, that is really entertaining people that really resonates with people. And that's what I want to find out. Like, what, what is that secret that you have to sustaining that popularity in the way that you relate to people in your, in your personal brand? I think you said it, relatability. And, you know, I'm very present on social media, on Instagram especially. And, you know, I make a lot of my finances doing brand deals with big brands and companies out there, licensing deals. So, you know, I'm really authentic with

who I choose to work with as well. Like, I've been brought a bunch of different opportunities and I don't just take something because I'm going to be finance, I'm going to make money off of that. So I will pass on things because it's not authentic to who I am. I'm plant-based. I love clean products, non-toxic products. So I really try to work with brands that are on point to what I believe in. And not everyone does that. And I think that that's a big problem out there. And it's so saturated at this point. So, you know, we also talk to our fans and we like to hear from them and what do they want? What do they want to hear from us? And Tart does a really good job at that as well. And it's very personable with people. And I think that makes a big difference as well. And there's been,

you know, we deal with a lot of negativity as well, which is not fun. And I think being a brand and being, you know, a celebrity, you deal with that. And it can be tough. I mean, on me especially. And I just choose not to read certain things. I choose to engage with people that are positive. And we really try to surround ourselves with positivity and not let negative people in our lives and cut that out as much as possible, especially having an infant and a new baby. I've really tried to protect our energy. And And I think a lot of my time is invested on the baby and our marriage and our family life. And we don't have time to deal with the negativity. But it's always going to come.

Yeah, it's never going to go away. It's always going to be there. Not everyone's going to love you. We've talked about removing negativity here. But part of what makes the TV so great is, I'm not going to use the word negativity, is the drama that goes on. So how much of that is, how much should we, you know, take off? all that as real and what is what's just great thing you're talking about selling sunset yes we'll show what

you'll i'll start with selling sunset and then move to uh the flipping el muses i mean you get a group of successful women together and there's going to be drama you know you start out with nothing and then things just happen and come up so the drama can be very toxic i mean it's there was a lot of times i'd come home and i would cry to my husband and you know and that's not fun and you have to learn how to work through that and then you have to watch yourself on TV, go through it again. Yeah, but these will do what I'll realize. Like, they don't realize, like, in real life, that conversation probably never would have happened, but because it's the show, the producers say, okay, you guys need to go talk about

this right now. So imagine two people upset with each other instead of like giving it a couple days and no, no, go talk about, well, of course, you're going to get drama. And that's what makes the show so successful. Yeah, you work together. There's drama. There's, you know, things that come up that you weren't expecting. And, like, that's the hardest thing is you're in it.

you're filming. There's drama and you come home. It's still, we're so real life. It's our real people. It's not just for TV. And then it comes out on TV and you have to relive it again and then go through the haters and the fans that are critiquing you and hating on you. And then, you know, oh, you said that in a scene. And then, um, it's all editing though. They can make any scene look any way they want through editing. Yeah. So it could be by not a bad. But that's why. That's why I love HD TV. Yeah. I mean, and it's a different platform like filming for flipping. being on Musa as I get to sell him with my husband, the very positive environment, the drama is with the home. The drama is with the construction. The drama is with the permits. And, you know,

things going wrong, it's not a personal drama between me and my husband that I have to go home and we still have to go through it. It's very different from selling sunset where it was, like, personal and this is more about the home. So it's a very more positive environment. Does that ever, does that dynamic that you just described, does it ever make you a kind of wish, you know, I could just fade out and fade out of the spotlight and live a quiet private life, or do you just love it being in the spotlight? I personally love it. I mean, I think I was born to be on TV. There was a point of my life. I was like, what am I good at? Like, what can I, you know, when I was younger? And I think I'm really good at being on TV. I really thoroughly enjoy it.

I came from a modeling world. So I was modeling and doing TV from the age of 20 years old. So it was natural for me to then be on a reality show coming from that modeling world. And so for me, I personally love being on camera. I love modeling. Like I love it. I thoroughly love it. Him not so much. Oh, I love it.

I love it. No, you don't like being on TV. I'm a little different. You know, like I said, I'm an entrepreneur at heart. And like, I love business. I love be out there working. I like building. But as the years went on, because I've been on TV a long time now, and I struggled with this for many years.

I mean, there were times when I said, okay, maybe it's time to get off TV, you know. But I've come to the point where I've realized I've been on TV so long and I built a big enough platform that I actually have the ability to help an entire generation of people. Like meeting like, I could teach people about real estate. I can teach people about, you know, tax arbitrage. I can teach you about like I can take all the knowledge that I've gained in the last 20 years. because of TV, I have this platform, which really gives me the ability to help people. So because of that, I like TV. That's a really good point as well that I didn't bring up, you know, a lot of my following

is women. And I really try to tap into my personal journey that I'm speaking to people because there's something that I'm going through that people don't maybe speak of or they don't feel comfortable speaking over. They don't have the platform that I do, especially, you know, going through pregnancy, postpartum. And I'm really vocal about things. So because I'm touching, even if it's one person,

I'm helping someone out there. Looking back, if you could, what, what is one thing or what are a couple of things you would have changed now that you know the benefit of hindsight? I went through two cancers. Would I change that? I don't think so, actually, because I learned a lot from it. I've been broke. Would I change that?

Probably not, because I learned, like, I've learned from everything I'm gone through. If there was one thing I could change, the number one thing I would change would, would be going back and being easier on myself on my road to success. I was so stressed out, so overwhelmed, so defeated, feeling like a failure, feeling like I'm not good enough, feeling like I could do more, but I never stopped working. So I eventually found success, but it was a very difficult process to get through the mental health aspects of failing over and over every day for long periods of time. What about you, Heather?

I would say maybe when I got into real estate really learned the bad, the good, the ugly, like the deeper dive into real estate. I think, you know, I had a mentor in the beginning, which helped me a lot because, you know, I got a huge deal. My first deal was $7 million deal, $7.1. And I couldn't have done that on my own. I didn't know how to do contracts. I didn't know what to do.

I didn't know how to stage the houses. Like I was brand new and got this huge deal. And then I got another one right after for $1.5 million. So it was like I didn't know what I was doing. But I really felt like I let him take over the deal too much. And I didn't learn as much as I should have at the beginning. I think I've heard that a lot from other women in the business as well. We tend to kind of let other people, you know, you're a beautiful girl.

You're doing real estate. You're hardworking. But people think that you're stupid sometimes and that you can't do the job so they would take over. And I really wish I would have pushed harder. and I let a lot of men interfere with some of my success and some of my deals where I kind of stepped back

and I wasn't as, I did stand up for myself and I lost a lot of money in the beginning because of that and I let them take over and really screw me on deals. And now she's a shark. And now I'm a shark,

yeah, but I definitely was not aggressive enough in the beginning. All right, what's the vision for the future? Where are the old muses going to be in five years here? Oh, five years. Well, I mean, well, five years, you know,

And still doing what we're doing, most likely, you know, more investments, more businesses. I would love to buy more properties personally. Like, I'm just getting started with that. So buy more properties on my own with my husband, continued the success of flipping al-Mousas and grow home by them even larger. Yeah. And then, you know, the businesses, what we're most excited about is probably TEM Capital and HEM Capital because those are the two vehicles that allow us to share our love for real estate. And it allows. allows us to help others get in the game. So I would say those are the two most important things. Awesome. Well, look forward to continuing to follow your journeys, guys. Thank you so much for coming on

the show today. And really exciting stuff that you're up to. Thank you. Awesome, Scott. And we'll see you in Florida. Bye. All right. That was Tarek and Heather O'Moussa. Well, I, look, I thought that the most fun thing about this particular episode was, look, you wonder, hey, these guys are HDTV stars. How much of this is being set up by HGTV or whatever with that? No, these guys are really sophisticated investors. Tarek was happy to share the realities of the flipping business. I was also shocked to learn about the profitability of flipping houses in Southern California.

I don't know why that hadn't occurred to me before. Sure, there was a boom and bust component to this where there was huge profits for a period of time. And then he was quick to admit, huge losses for a period of time. But now that spread has returned. And when you're doing this kind of luxury flipping, you know, you wonder, on average, over a long period of time, the average returns are very high as long as you can withstand the storms there, which obviously their operation is large enough and at enough scale to make that work. So really appreciated learning that. And I wish them all the success in the

world in the next phases of their career and hope that they continue entertaining tons of people with really high quality flips and spreading the word and interest about real estate investing even further. All right. From this episode of the Bigger Pockets Money podcast, I am Scott Trench saying Cash Out Girl Scout. If you enjoyed today's episode, please give us a five-star review on Spotify or Apple. And if you're looking for even more money content, feel free to visit our YouTube channel at YouTube.com slash Bigger Pockets Money. Bigger Pockets Money was created by Mindy Jensen and Scott Trench, produced by Kailen Bennett, editing

by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the Bigger Pockets team for making this show possible.