How HGTV’s Heather Rae and Tarek El Moussa Flipped Over 1,000 Houses

Scott:
Welcome to the BiggerPockets Money podcast, where I interview Tarek and Heather El Moussa from The Flipping El Moussas. You may have heard of this fantastic HGTV show.
Hello, hello, hello, my name is Scott Trench and I’m solo today. We’re bringing you a very special bonus episode of the BiggerPockets Money podcast. It’s for those of you who didn’t attend BP Con and we had an amazing fireside chat with Tarek 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 Tarek and Heather started, how their businesses function, being HGTV 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 Tarek and Heather is not just, they’re obviously 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 BiggerPockets plug. Want to feel inspired and learn from the best? Join us next year at BP Con in 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’ve rented out an all-inclusive resort for several days. Looking forward to it.
Tarek and Heather, welcome to the BiggerPockets Money podcast. I’m so excited to talk with you today. Thanks so much for joining us.

Tarek:
Yeah, we’re excited to be here, Scott. How are you doing today?

Scott:
I am doing great. I get a chance to talk to you fine people. Well, let’s just jump right into your business. Could you tell us about your empire and what you do and your roles in that business?

Tarek:
Started off as a real estate agent, 19, 20 years old. Weathered 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, HOA lien, all these liens. I ended up closing it after 11 months. I got a check for 7,000. The guy that bought it, painted the house, hired a painter, hired 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 real estate equation. So I started flipping houses in 2010 on a whim. Went to everybody I knew to raise money from them. And everybody said I was crazy. I was too young, I was too speculative. And finally I found someone dumb enough to give me money.

Scott:
And what market did you start in? What market was this?

Tarek:
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 that can happen?” He said, “Well, they could 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’ve flipped almost a thousand houses. A majority of the business that we’re flipping, we’re doing is in Southern California, orange County, LA County, Riverside and San Bernardino 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, HEM capital, which is real estate syndication. So together we’re buying multifamily real estate, self storage, and we’re also developing. On top of the real estate team I have with the agency, we have about 1400 real estate agents working with me. And we have a production company and we have a home line. And what else we got honey?

Heather:
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 Tarek and I 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.

Scott:
So we have all of these business, this sprawling business conglomerate. What are your roles day to day, each of you in this empire?

Tarek:
[inaudible 00:05:43]. And that’s the challenge as an entrepreneur. At the end of the day, what are we? We are brands, right? And we built our brands through 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 to my heart, I’m an entrepreneur. See, I wasn’t 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.

Heather:
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 a 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 I think about season three is when it really blew up. And that was part of the reason. It’s an amazing show. The real estate agents in the office are very interesting, beautiful women, luxury homes 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 so season three about what? 2020, 2021 was when it really blew up. And then Tarek and I have a show together called The Flipping El Moussas, where you see me flip houses for the first time on TV.

Tarek:
It’s fun.

Heather:
So I had never flipped a house before. So episode one, you watch 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 flip.

Tarek:
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.

Heather:
In the beginning, coming from a luxury real estate standpoint, I didn’t realize the business of flipping. And I came into it wanting to do all these luxury things to these homes we were flipping and 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.

Scott:
What is the kind of core business model? What’s your bread and butter in this business?

Tarek:
I mean, the bread and voter for us is 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.

Scott:
Okay. And how much are you putting into a typical flip, and then what are you selling it for at the end?

Tarek:
Yeah, so it depends. So you’ll take a three bedroom, two bathroom, say 1200 square foot 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’s going to prevent me from doing other houses. And the houses make the money not the work, right? So that’s one thing.
And then what we’re doing bigger projects, like we’re doing a house right now. The city of [inaudible 00:09:21], 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 1,150,000, 1,175,000. And I reran 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. So 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.

Scott:
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 seeing things ramped back up, for example?

Tarek:
Yeah, no BS here. Anyone that says it hasn’t been a struggle, they’re not telling the truth. So we bought 91 houses first quarter of 2022, so 91 California houses. And the rates at the time were two and a half, 3%. And while we were fixing up all these houses, the rates went to six 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 500,000. But while I was fixing those houses up, we built the wholesale model that was bringing in 3, 4, 500, 600,000 to offset those losses. So we weathered the storm. Today we are thriving. It’s a mix. We’re probably wholesaling 75%, flipping 25% and doing anywhere between 10 and 20 deals a month.

Scott:
Awesome. So let’s dive into each part of this process. What is your model for finding these deals, either to wholesale or flip?

Tarek:
Yeah, so the finding, which I teach my students all the time, is the most important thing. You can hire a designer, you can hire a contractor, you can hire a real estate, you can hire everybody to do everything, but it’s going to be really difficult to hire someone to go find you that house. 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 leveraged the brand. So we’ve done TV commercials, radio ads, podcasts, pay-per-click search, marketing, anything you can possibly think of. But we’re definitely a marketing based company.

Scott:
Awesome. Do you find that there are higher margins at the lower end of the spectrum, those $500,000 properties or the higher end, the 1.5 million properties? And I wonder, Heather, how your experience selling these luxury high end properties is impacting or influencing part of the direction going forward here?

Heather:
Well, I brought in a luxury, I guess, vibe to the houses. So-

Tarek:
Yeah, we’ve stepped up the game.

Heather:
We’ve stepped up the game, and I don’t have the time to go out and source materials, look for… 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’ve brought my high-end eye to the flips.

Tarek:
So the design is at a whole other level. You’ll see season two of our show, the houses are insane, they’re gorgeous.

Heather:
And I think Tarek and I are even more hands-on with design this year, this season on all of our flips where last year we were as well. But this season we’ve stepped it up even more and picking out all the materials. But I learned a lot personally from last season. And we were flipping more high-end homes and we were 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.

Tarek:
Yeah, 10 months to a year. 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.

Heather:
So we’re working on a lot of lower end homes right now. Lower price.

Tarek:
Lower bucks.

Heather:
Lower price wall. I mean, we got what, 430, but then we’re flipping in 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.

Scott:
Awesome. So how are you financing these deals? Is it cash from previous flips or hard money? Some combination?

Tarek:
Yeah. So when I first started I had no money, so I went out, met investors. The deal was I did everything, all the work A to Z, they got a check and we split profits 50/50. And then 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 then we’re also most times covering the construction costs.

Scott:
Awesome. And then walk me through your contractor network. 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?

Tarek:
Yeah. Well, I got my contractor network by getting burned by a lot of contractors. I mean, that’s the thing in life, you got to eat sometimes, and that’s the truth. As an entrepreneur, you are going to get burned, you are going to get screwed over or people are going to lie to you. But what makes a true entrepreneur is not quitting. So the reason I felt good contractors is because I went through the battles 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.

Scott:
Awesome. Any tips for folks to cut that process a little shorter or to have a higher probability win rate with a great contractor?

Tarek:
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 flips since 2010 that’s delivered 1800 houses that knows exactly how to flip houses better than you the investor.

Scott:
Now let’s talk about marriage and business here. You guys are business partners and have a wonderful, wonderful family dynamic here. How do you balance that and work together seamlessly through these thriving businesses?

Heather:
No, 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.

Tarek:
Yeah, I don’t know about that opposites attracting. I’ve dated opposites in my younger days and it was not fun. So we are very similar. We both love real estate, we both love design, we both love entertainment. We like the same things. So even when we’re not working, I know this sounds sick, when we’re not working, we’re out on the weekends sometimes we’ll wake up at five in the morning, can’t sleep, we’ll, go drive neighborhoods and look for houses. We just, were obsessed with real estate.

Heather:
And family is very important to us too. And having that balance. And we have a new baby, we have an eight-month-old and then a 13-year-old and an 8-year-old. So it is a lot of balance. We have school, we have sporting events, and 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, Tarek will really, 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.

Tarek:
And the truth is, it takes an army to run our lives. I mean, we’re torn in so many directions. 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. Time is the most valuable asset. You lose money, you can make money back, you lose time, you can’t make time back. So we really delegate almost every single thing in our life to the point where people tell us what to do and we show up and do it.

Scott:
Awesome. So one of the big elements in your business is both of your individual brands and the combined brand now that you have as a married couple here and how you leverage that in many areas to create synergies around your business that helps you find deals, you mentioned. Obviously there’s probably a profit component to being part of the HTTV network with a lot of these opportunities. And there’s obviously your business savvy here. But many of the people listening to this may not have that personal brand behind them. Do you think it’s necessary to have this level of success? Or if it is, how would you go about curating that brand from scratch?

Tarek:
The best way to get started or the best way to build it is to build it by getting started.

Heather:
Just get started.

Tarek:
Get started. Oh, I want to invest in real estate. Oh, I want to go on diet. Oh, I want to go to the gym. How long have you been thinking about it? Six months. Well, why don’t you just get in the car right now and drive to the gym, stop waiting, take action.

Heather:
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 oh, 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.

Tarek:
So if someone was starting at zero, create a brand logo, whatever you want to do, you don’t even 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 fixer upper properties 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.

Heather:
Yeah, be consistent and you can also watch what other people are out there doing and be studying that and just do some of the same videos as them and just be authentic to yourself.

Scott:
Yeah, I love that authenticity piece. 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.

Tarek:
Get started.

Scott:
All right, so we’ve talked about the empire here. Let’s dive into the new business that you’re pursuing here in the syndication space. What is the history behind that move? What have you done so far and where are you going with your syndication business?

Tarek:
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 pay this much in taxes?” And he says, “No.” I said, “What do you mean no? What do they do?” He goes, “They buy real estate.” I was like, “That’s what I 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 acquiring. I bought 200 houses, around 200 houses. And then over the years people would see me all the time walking the streets at the gym, whatever, like, Hey Tarek, we want to invest with you. We want to do deals with you. And I never needed investors to flip these houses. I just don’t need them. So I saw an opportunity to where, well, I’m going after commercial real estate if I have partners that can buy bigger and make even better deals. And that’s where the idea came from, I said, and I just try to help as many people as possible, invest their money with me, create wealth with me. And outside of creating wealth and learning about real estate, have a lot of fun. With our companies we have events and dinners and yacht parties. We’re going to Cabo Mexico next year with our investors. So that’s really how it got started.

Scott:
Awesome. And so what have you bought so far? Where are you buying it and what does it look like?

Tarek:
Sure. So we bought three apartment buildings in Arizona. We just closed on one in northwest Arkansas. Two months ago it was a 376 units.

Scott:
Florida.

Tarek:
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-

Scott:
Next week?

Tarek:
-announcing the… Yeah, next week, next week.

Heather:
Storage facility.

Tarek:
And then a storage facility in Arizona. It’s already done.

Scott:
What day are you closing on the Orlando property?

Tarek:
I’m not sure. 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 about to break ground on developing another one in Arizona, and it’s about a 200,000 square foot facility. And then another project we’re working on right now is a development project in North Hollywood, California. And that project is myself and my wife and a few other general partners.

Scott:
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?

Tarek:
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.

Scott:
What makes the best market in the country?

Tarek:
Man, 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 of years ago it was Arizona, it was Texas, North Carolina was on fire, Florida. But today, I’m still a 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 it should be a safe investment.

Scott:
Okay, awesome. And then what makes a great deal in this space? How do folks think about finding great value opportunities in this space? Is it the opportunity to assume these types of debt? Is it unique characteristics specific to each property or…?

Tarek:
Yeah, I would say it’s a case by case scenario. 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 seven, I’m feeling pretty good about that. Would I go into a deal today in surprise, Arizona that was a major fixer value add with major construction at the right price? Heck yeah, I would a hundred percent. So it really just depends on the deal itself. If I can go buy an apartment building for $10 million dollars today, put 10 million dollars into it and sell it for 40 or 50, yeah, I would do that deal.

Scott:
So are you planning to bring some of the flipping expertise that you guys have developed into the syndication model from a value add perspective?

Tarek:
Absolutely. One of our big goals is really, really trading 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.

Scott:
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 [inaudible 00:25:22] in the California and Arizona properties?

Tarek:
Yeah, the value add ones they need facelifts for sure. The newer class A, the assumable debt ones we’re doing, those are in great shape.

Scott:
Heather, let’s transition and talk a little bit about the filming TV celebrity business that you guys… You are both businessmen, but you’re also a business man who said that? Somebody said that.

Tarek:
The business. Jay-Z.

Scott:
Jay-Z. That’s right. Yeah, there you go.

Tarek:
I’m a businessman, but I’m also a business man.

Scott:
That’s right, yes. You guys are the business man.

Tarek:
We are walking businesses and we’re business people.

Scott:
So let’s talk about that part of it and what is the business behind the scenes here of being celebrities? 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? And Heather, I know you’re particularly strong in this area, you both are strong, but…

Heather:
The dirtier nastier houses, they transform into gorgeous homes on TV. So I always tell Tarek 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, dirtiest 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 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?

Tarek:
Yeah, I mean it’s a whole business behind it.

Heather:
I mean, yeah, we’re both normal people that got on TV. I was a real estate agent that 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 we happened to get on a TV show and become a worldwide global TV show. So there was nothing special that I did to get on the show besides-

Tarek:
Yeah, there was. There was something special, many special things you did.

Heather:
Well, I mean, I think not everyone can be on TV and do what we do.

Tarek:
Yeah but here’s what people able to realize, being on TV it’s not like you can just like, oh, go to work. No, you’re on TV. You have to be energetic, you have to be on to be witty When we’re there, we are working. You have to be 100% present. You have to be 100% there.

Heather:
But I’m saying it’s not like I went out and I didn’t try to get myself a TV show 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.

Scott:
Yeah, look, I love the humility here. There’s luck and then there’s how you play the hand that you’re dealt. And maybe there was 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 a superstar, you’ve got millions of followers and there’s something that you’re doing in conjunction with that great start that got you going with that is really entertaining people, that really resonates with people. And that’s what I want to find out. What is that secret that you have to sustaining that popularity in the way that you relate to people in your personal brand?

Heather:
I think you said it relatability and I’m very present on social media and Instagram especially. And I make a lot of my finances doing brand deals with big brands and companies out there, licensing deals. So I’m really authentic with who I choose to work with as well. I’ve been brought a bunch of different opportunities and I don’t just take something because 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 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 Tarek does a really good job at that as well. And he’s very personable with people and I think that makes a big difference as well. And we deal with a lot of negativity as well, which is not fun. And I think being a brand and being 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 ourself 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 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.

Tarek:
Yeah, it’s always, it’s-

Heather:
Never going to go away. It’s always going to be there. Not everyone’s going to love you.

Scott:
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.

Heather:
Drama.

Scott:
So how much of that… How much should we take all that as real and what’s just great TV?

Heather:
Are you talking about selling Sunset or our show?

Scott:
Yes.

Tarek:
What show? What show are we talking about?

Scott:
I’ll start with Selling Sunset and then move to The Flipping El Moussas.

Heather:
I mean, you get a group of successful women together and there’s going to be drama. You start out with nothing and then things just happen and come up. So the drama can be very toxic. I mean there was a lot of times I’d come home and I would cry to my husband 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.

Tarek:
But here’s what people don’t realize. They don’t realize in real life that conversation probably never would’ve happened. But because it’s a 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 giving it a couple days and no go talk about, well, of course you’re going to get drama. And that’s what makes the show so successful.

Heather:
You work together, there’s drama, there’s things that come up that you weren’t expecting. And that’s the hardest thing is you’re in it, you’re filming, there’s drama, and you come home. It’s our real life. We’re still 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, oh, you said that in a scene. And then-

Tarek:
It’s all editing though. They can make any scene look any way they want through editing.

Heather:
So it might not have been as bad.

Tarek:
That’s why I love HGTV.

Heather:
Yeah. And it’s a different platform like filming for Flipping El Moussas I get to film with my husband, it’s a very positive environment. The drama is with the homes, the dramas with the construction, the dramas with the permits and 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 personal and this is more about the home. So it’s a very more positive environment.

Scott:
Does that dynamic that you just described, does it ever make you kind of wish 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?

Heather:
I personally love it. I mean, I think I was born to be on TV. There was a point in my life I was like, what am I good at 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 a 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. I love it. I thoroughly love it. Him, not so much.

Tarek:
No, I love it. I love it.

Heather:
He does it.

Tarek:
Love it. Okay.

Heather:
No, you don’t like being on TV.

Tarek:
I’m a little different. Like I said, I’m an entrepreneur at heart and I love business. I love being 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’s, time to get off TV. But I’ve come to the point where I’ve realized I’ve been on TV so long and I’ve built a big enough platform that I actually have the ability to help an entire generation of people. Meaning I could teach people about real estate, I can teach people about tax arbitrage, I could teach about… I can take all the knowledge that I’ve gained in the last 20 years. And because of TV, I have this platform which really gives me the ability to help people. So because of that, I like TV.

Heather:
That’s a really good point as well that I didn’t bring up a lot of my following is women. 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 of, or they don’t have the platform that I do, especially 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.

Scott:
Looking back, if you could, what is one thing or what are a couple of things you would’ve changed now that you know the benefit of hindsight?

Tarek:
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, I’ve learned from everything I’ve gone through. If there was one thing I could change, the number one thing I would change 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.

Scott:
And what about you, Heather?

Heather:
I would say maybe when I got into real estate, really learned the bad, the good, the ugly, the deeper dive into real estate. I think I had a mentor in the beginning, which helped me a lot because 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. 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.
And 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’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 wished I would’ve 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 didn’t 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.

Tarek:
And now she’s a shark.

Heather:
And now I’m a shark. But I definitely was not aggressive enough in the beginning.

Scott:
All right. What’s the vision for the future? Where are the El Moussas going to be in five years here?

Tarek:
Oh, five years. Well, I mean, well five years since still doing what we’re doing, most likely, more investments, more businesses.

Heather:
I would love to buy more properties personally, I’m just getting started with that. So buy more properties on my own, with my husband, continue the success of flipping El Moussas and grow Home by Them even larger.

Tarek:
And then 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 us to help others get in the game. So I would say those are the two most important things.

Scott:
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 you.

Heather:
Thank you.

Tarek:
Awesome, Scott. And we’ll see you in Florida.

Heather:
Bye.

Scott:
All right. That was Tarek and Heather El Moussas. Well, look, I thought that the most fun thing about this particular episode was, look, you wonder, hey, these guys are HGTV Stars. How much of this is being set up by HGTV or whatever with that, but 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 wonder if 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 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 BiggerPockets 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/biggerpocketsmoney.

Speaker 4:
BiggerPockets money was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, editing by Exodus Media. Copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.