- If you wanna paint your walls pink and purple
and do gold toilets, go ahead.
Enjoy it, love it. (upbeat music)
Just know when you go to sell your house,
you're gonna have to replace your toilets
and you're gonna have to replace your wall
because you're gonna leave money on the table if you don't.
- My guest today is Tarek El Moussa.
You've probably seen them on HGTV on "Flip or Flop,"
"Flipping 101," or "Flipping El Moussas."
But Tarek is also a well seasoned real estate investor
who's bought fixed and sold over a thousand homes,
and he spent years helping homeowners
determine what adds value and what doesn't,
which makes him exactly the person I wanted to talk to
about ROI.
Welcome to "Own It." I am Angie Hicks, co-founder of Angie.
And the honest conversations that every homeowner
wants to have start right here.
In today's episode, we talk about what works
in home improvement, from choosing the right projects
and people to avoiding the mistakes that can cost you time,
money, and maybe even a deal.
Here's my conversation with Tarek El Moussa.
You got into real estate at a super young age.
You know, what drew you there?
- It was kind of out of the blue. I was 19 years old.
I had just graduated high school
and I was selling Cutco kitchen knives.
I developed the sales book.
So I had all my leads, all my contacts.
I had my little knife selling business.
And what happened was I lost my entire lead book.
(chuckles) And there was no computer, there was no database.
It was an actual book,
and I literally put myself outta business.
And I saw this crooked sign,
and it was flapping in the wind actually,
and it said, "Wise Old Owl Real Estate School."
I had what I call a defining moment,
which is a moment in your life
that changes the trajectory of your life,
because I looked at the sign, I thought to myself,
"If I can sell knives, I can sell houses."
And immediately I walked across the parking lot
and signed up for real estate classes.
And that is literally how I got into real estate.
So then my first six months in the business,
I got my license, I started, I showed up at 9:00.
I went to the coffee thing, I went to lunch
and Taco Tuesday.
And what happened was nothing.
I learned that I can't make any money
if I do what everybody else is doing.
I went from living in a garage
to almost buying a million dollar house at 21
because I had ended up earning a couple hundred thousand
in gross commissions in a 90-day period.
- I love what you're talking about here, Tarek.
I mean, when I started Angie's List, I was similar age.
I was 22, and I had to do sales,
and I had to go door to door.
And I treated it like a math equation.
It was like, "I have to knock on so many doors
because so many doors will result
in so many people saying yes," and it was just math.
It's a math equation.
- I'm gonna tell you this, this is...
Okay, I'm such a big fan of you,
but now I'm the biggest fan ever of you,
'cause most people don't know this about me.
I built my entire career door knocking and cold calling.
The first 10 years, I had no marketing.
I did what you did, I hit the streets.
Like even, that's how I started flipping houses.
I used to get in my car and go knock on foreclosures.
I mean, dogs would chase me.
There'd be drive-bys, police chases.
So to hear that you went door to door
shows me exactly why we're here today.
- True grit and character building is what I learned.
So tell me when you were, you know, so you got going,
things were going great, right?
But then you hit the financial crisis of '08.
No one thought the housing market
was gonna collapse like it did.
I remember sitting in a coffee shop watching it happen
and thinking, "Oh my gosh, what does this mean
for Angie's List back then,
because are people gonna be renovating?"
If they can't keep their houses,
they can't renovate their houses.
And I think you too had a similar story.
- Yeah. So man, the Great Recession.
So I was doing what I always did.
I was getting listings, I was putting them on for sale,
and then I'd go get the next one, I'd put on for sale.
And then I realized, well, I'm putting them for sale,
but none of them are selling.
Wait a minute, something's going on.
I started doing research.
I noticed that inventory had spiked 84%
in the summer of 2006.
So I really studied the market,
and I determined, for two different reasons,
one, based on studying and, two, based on my income,
there was a problem (chuckles)
because I wasn't making money, my houses weren't selling.
So I listed my main house and one investment,
I closed escrow, both of them.
One was December, 2006, the second one was March, 2007.
And as you know, the subprime market crashed spring of 2007.
So I barely, barely, barely made it out of there.
And then that first house that I sold right before the crash
sold almost exactly a year later
as a short sale for 700,000,
which was 300,000 less.
- As in I'm glad you did not lose your love
for real estate, that you were able
to pull yourself back from that.
You know, one of the things that's interesting to me
is just how many houses you flip.
What, over a thousand houses, something like that.
What is it when you walk into a house,
and I'm not talking about just a house
you're potentially gonna flip,
but you've been in so many houses.
Like, what do you see buyer, typical average homeowner
who's buying it for themselves doesn't see?
What are things that catch your eye?
- The first thing I see is the potential,
and really the potential comes
from the layout and the bones.
Because if it's very expensive to fix the layout
and the bones, it's gonna be expensive
for the overall project.
So one of the things I really like to find
is an older dated house, but maybe it has good bones
and a good floor plant so I don't have to remove walls
and do heavy construction and fix foundations
and things like that.
- Are there things when you look at a house
that you're like, if I walked into this house
and I was getting ready to buy it,
what advice would you have for a homeowner of like,
"Hey, this thing or these two things
I would always steer away from."
What are things that you're kind of like,
you'll be in over your head quicker than you can imagine?
- Here's the truth.
We have a really big problem in this country where,
since 2008, 2009,
I mean, how many people have started flipping houses
probably 'cause that that show called "Flip and Flop"
on HGTV. - Right.
- It's very, very important for homeowners
or anyone looking to sell their house
to make sure they're aligned with the right people.
Because at the end of the day,
the right people are gonna make or break
your entire transaction, your remodel, your design.
And the biggest mistake I used to make
was looking at the cheapest person.
And I learned very, very, very fast,
you get what you pay for. (chuckles)
In 2026, what's important for a homeowner
is to do the things to their house
before ever putting it for sale
to reduce the risk of it falling out of escrow.
Because right now, of homes falling out of escrow,
seven out of 10 houses are falling out
because they're not passing the home inspection.
And a lot of times it's not passing over dumb items
that, if they were fixed beforehand,
they never would've been an issue.
So with my company, Nestla Home, if people want to,
I always suggest, before we list it, or before you list it,
get a home inspection.
That way if there's a red flag,
you could fix and remove the red flag.
- Right, put you in a much better negotiating.
- Yeah, and it puts you in a better position
for negotiating.
And when you really think about it,
imagine a family or a person spending months
trying to sell their house.
Every weekend there's open houses, they gotta leave.
And after six months of doing this, they get an offer,
they go into escrow and bam, it falls out of escrow
because of something this big.
So it's all about risk prevention with real estate,
and it's about doing the things you gotta do
before you ever list a house.
And that's what I'm focused on.
- It's interesting, what we've seen in our state
of home spending report with Angie
is that homeowners spending more on maintenance now
than they have historically,
which I think is super interesting,
which means they're probably taking care
of some of those little things.
Because I tell people, and I'm sure you do as well,
like when people come into your house looking to buy it,
they're actually looking for reasons not to buy it.
- I really believe the next couple years
we're gonna see, people doing way more remodeling
of their existing houses.
We're gonna see a lot more additions,
we're gonna see a lot more add-ons,
which tells me there's gonna be a lot of people
that are gonna need our help.
- Yeah, exactly, because they think about
that like, "Hey, I'll take that second
and merge that, blend that in with my mortgage,
and all of a sudden my rate's not that bad,"
versus totally flipping the mortgage to the higher rate.
You know, for those that are out buying right now,
it just makes thinking a little more long term
because people aren't staying,
they're staying in their houses longer,
you know, so location matters more.
It's like, where are you gonna be in five or 10 years?
So think about that
when you're thinking about that location,
because you can change many things about the house.
Can't change the location without moving.
- Absolutely. Oh, I love that.
Angie, do you mind if I ask you one question?
- Yeah.
- What drove you to start, Angie?
- So I started when I was fresh out of college.
I had done an internship with the guy
that then became my co-founder.
Bill had renovated a house in Indianapolis.
He'd bought like a 1920s house that needed tons of work,
and it was the first house he'd ever bought.
But it turned out there was a little business
in Indianapolis called Unified Neighbors.
And it kept track of who the good contractors were in town.
And he used that and was like, "This is great.
Like, I love owning houses."
And then he moved to Ohio
and bought another diamond in the rough,
and quickly discovered that there was no such thing
as Unified Neighbors there or anywhere.
So he convinced me to join him
and start this business.
Back then when we started,
we were competing against the Yellow Pages.
You're like, you just open 'em up,
and you're like which company's the best?
- Yeah.
- You know, and was all about really being able
to get to that real scoop because in 1995
there was no internet, reviews weren't really a thing.
It was really word of mouth was how you
a lot of times would then have to hear about people.
- And it's incredible to think the impact
you've made all across the nation,
because it's a very risky, difficult-to-understand industry.
And it's an industry where if you're a homeowner
and you don't do the right things,
it's easy to be taken advantage of.
And then the problem is, if you are taken advantage of,
trying to get your money back
or fight with the court systems,
it's very, very close to impossible.
So what I always tell people that the most important thing
you can do is spend the time on the front end.
It's the most important part
because the front end is where you find your team,
it's where you do your interviewing.
That's when you check the credibility.
Because if you make mistakes on the front end,
your entire project is just gonna be a roller coaster
and it gets off very stressful.
- Absolutely. So I couldn't agree with you more.
And I tell people it's like,
because it's emotional purchase, right?
Even when you're remodeling or something like that,
I might not be an expert roofer,
but over the course of my home ownership,
I might replace a couple of roofs,
and I've gotta trust that contractor.
So making sure you get a great contractor,
you're exactly right.
And especially if you're looking at a house
that needs some work, having a contractor that you trust
and you've built some rapport with
to go in and look at it with you
before you buy will also help you avoid some pitfalls,
I would think.
- Yeah, absolutely.
And the biggest mistake is usually hiring the wrong people.
And then once you do, you pay them in advance
and then they take your money.
- That is true.
And it's important to you make sure,
I think you brought it up, like make sure
you're getting several estimates,
checking their credentials,
and then also just getting to know the contractor.
I mean, you've been involved in lots of big projects,
and it's not something that you do overnight.
It's something you might...
You know, I joke around like,
you might be living with your remodeler
for a couple of months while they're doing a major project.
And it's like you've got to have a good rapport with them
in order for that project to go well.
Let's talk about ROI, because I think that is something
that homeowners spend a lot of time talking about it.
You've seen it from the investor perspective
of kind of how important it is to choose the right projects
to do in a house, and which ones you might wanna avoid.
You know, homeowners who are living in their house,
they may not have that same business sense
when it comes to their own home as you have
on the projects that you're doing.
But what types of projects oftentimes
tend to kind of result in the best ROI?
- So actually after buying, fixing and selling
a thousand houses, I've kind of identified
what I feel are the most important things.
So within my company Nestla,
I created something called Nestla Touch.
Touch means anything we've touched on the house.
And the thing is, I think every homeowner needs to do.
And this is important because this is,
I'm not talking about a fixer-upper.
I'm talking about the average am American homeowner
before selling their house,
one, I feel like it's very important, declutter.
Get someone in, take half of the stuff from every room,
put it in a box, label the box.
Go into your closet, take half your cloth-
- I'd say even take more than half.
I'd take three-fourths. (laughs)
- Exactly, your closet, right, all your stuff,
take 75% of the stuff out, make your closet feel bigger.
Go to the front of your house and look at it with your eyes.
You want green grass, you want flowers,
you want painted trim.
You want a new, fresh colored front door.
It's not about spending a fortune before selling your house.
It's about spending a little bit of money
on the right things that'll cause it to sell
just for more money and that much faster.
And I was just talking about the outside,
like I'm talking paint, kitchen,
replacing hardware, even as simple as lights.
I walk into these beautiful homes for sale
and they're using these yellow light bulbs.
So it's the details. You're telling a story.
And in today's market where it's slow
and it's difficult to sell houses,
this is the most important time ever
to do the right prepping and improving
before you ever actually list your house.
Imagine you're a buyer, you're walking into your house,
what would you wanna see?
I mean, I would wanna walk up to a clean porch,
a freshly painted front door, a welcome sign, a cute mat.
You're selling a story. - Right.
If I bought my house during the pandemic, for example,
I took advantage of that super low interest rate.
And I'm trying to figure out what ways
to make my house grow, because I don't wanna move right now,
which I think a lot of homeowners feel like that,
what projects, you know,
what are your top couple of projects you would consider
like making sure that kind of, in updating a home?
Which are the favorites that you go,
you think about first?
- Yeah, that really depends on the goals.
Is it looking for more size
or is it looking for more design?
- So if we think, like, why don't you gimme one of each?
If you're thinking size, where do you go?
And if you're thinking design, where do you head?
- Oh, okay.
So I mean, if I'm thinking what is the best way
for me to get the best look on this house
with the lowest money spent,
if I can just clear my mind really quick,
empty out that house.
First thing I'd go in there is scrape all the ceilings,
replace baseboards, fresh paint everywhere,
white light bulbs.
I'd install canned lights, modern lighting,
modern light fixtures.
I'd repaint or refinish cabinets.
I'd put new hardware on.
I would tile the kitchen backsplash,
'cause it's pretty fast and easy.
Homeowners can do it.
And it's just the little things,
the hardware, the lights, the chandeliers, the paint.
And it makes just such a big difference
in modernizing a space.
- I think you're exactly right.
I mean, one of the things that I hear homeowners
talk about is like, "I wanna remodel my kitchen.
Does that mean I'm spending $50,000?"
And it's like, it's amazing the number of things
you can do in phases, right?
Or some of these smaller things that can give it a new look.
I mean, I tell them, if you can keep the cabinets,
keep the cabinets,
because they'll be the most expensive thing.
And do not change the footprint of the kitchen
because you don't wanna move plumbing and electrical.
- Oh my gosh. - Right?
I gotta tell you a story.
Two years ago, this is a funny store, I'll be quick.
It was on season two of my show "Flipping El Moussas."
We bought this house in a Hawthorne.
It was like a thousand square feet,
tiny little thing.
Last minute, me and Heather are in the kitchen
for the design.
We're like, "You know what, we're gonna move this
one little window from here to here."
We tell the contractor.
Oh boy, next thing we know,
that little window, it ended up delaying us three months
and costing $40,000
because we moved that little window.
They made us retrofit and do all this wild code upgrades.
And if I would've ever known,
I would've left that window.
- One thing I encourage homeowners to think about
is making sure they're giving some cushion
to their budget, right?
Because you hear about these things that happen
that go awry.
You know, make sure you got a good 10%.
Hold back, tell your contractor you have 20,000,
but hold back a few thousand
just so that you're prepared,
because they can't see behind walls.
They don't know the condition of absolutely everything.
And when you start moving some things around,
you can run into those things
that'll eat up all of your fun budget.
- So glad you just said that.
It's very important to pay on a payment schedule.
When I first started flipping houses,
the biggest lesson I've learned is choose the right people
and pay them on a schedule.
- Yeah, yeah. And get everything in writing.
- Yes.
- So one thing you talk about is every house
needs a sizzle feature, you know?
- Yeah. - One thing that kind of
really stands out and makes your house special.
How do you decide what that is?
I mean, is does the house inherently have it?
I mean, like, I love curved archways,
so maybe something like that is that sizzle feature,
but would love to learn more.
- I think every house inherently has it,
and I think every house's sizzle feature
should be the one that the homeowner wants.
So for me, I analyze every house.
I'll look at the inside, I'll look at the outside.
I always like to create sizzle features
in every house for a few different reasons.
One, it gives the owner an opportunity
to show off something cool.
You know, maybe people don't have enough money
to sizzle their entire house,
but you can do one part, like maybe a bar, maybe a fire pit,
but just something that's personal and you're proud of.
- So talk to me about your framework.
It's a four-step framework, right?
The evaluate, emulate, renovate, and duplicate.
Walk me through what that's like
for someone who just owns a house they live in.
How should they be thinking about that framework?
- So before you get started, you need to know
what you're going to do.
So what I like to do is, if I look at a house,
I'm like, okay, that's a 1970s house,
a four bedroom, two bathroom, it needs some love.
The first thing I want to know is,
well, like, how nice should I make this house?
And what do other people make houses look like in this area?
Because I don't want to do a LA Hollywood modern house
in the middle of Ohio, right? - Right. (chuckles)
- So identify your competition. What are they doing?
And then what are they doing that's working?
Find out what that is and then do what they did
and try to do it better by emulating,
which is what they've done, and enhancing it
with a personal touch to improve it.
That way you're always doing things based on
what's already been proven and you're always trying
to improve what's already been proven.
- Right. Right, right.
I like that.
I tell people that they wanna keep up with the Joneses.
They don't wanna kind of exceed the Joneses.
So I think you bring a good point,
like how often, like, homeowners should be thinking
about the market probably more.
I mean, I've lived in my house for 20 years,
so maybe you aren't paying attention
to kind of the real estate market
if you're not in the market.
But you bring up a great point
about how that can actually help you educate you
on what you should be doing in your house,
even if you don't have a move in the horizon.
- 100%, you know, the best way to learn about your house
is to study your neighborhood.
What are the neighbors doing? Are there similar floor plans?
I mean, I've learned so much just by looking at photos.
It's amazing.
Like I've said, "Okay, I wanna do a remodel
of this beautiful house."
I've literally pulled up every house listed
along the coast between five and 20 million
just to get design inspiration.
So you can pull inspiration from anywhere.
You could take a look at a $20 million house,
and put it in a $500,000 house.
- Yeah. - But instead of using hand,
you know, formed clay tile, well you get a porcelain
with a print on it. (chuckles)
- That has a similar feel to it
and warms up the space the same way.
- Yeah, and here's one thing I've actually learned
doing this so long, is you can get
a super high-end designer look
by just choosing the right materials.
Because it's amazing the type of patterns
and stamping they can do on porcelain.
And nobody ever knows the difference.
- You've done so many of these projects.
You can always say like, you wanna invest in quality,
you wanna make sure you're doing everything right.
But sometimes you just wanna go after the trend, right?
Like, "Hey, I just want a little pizazz."
So where would you say like, "Hey, this is an okay spot
to go kind of trendy, maybe less expensive,
but I would never do it
with this kind of a product"?
- We only got one shot at this thing called life.
And I think it's very important to separate
business decisions and personal decisions.
And I feel like a home is very personal.
- It's emotional, yeah. - Here's what I tell people.
If you wanna paint your walls pink and purple
and do gold toilets, go ahead.
Enjoy it. Love it.
Just know when you go to sell your house,
you're gonna have to replace your toilets
and you're gonna have to replace your walls
because you're gonna leave money on the table if you don't.
- I think this is a great point,
and like paint can be one of those inexpensive things,
but you just have to remember to paint it
before you list it.
Because that paint could,
that off-white paint that you end up painting it
could be the least expensive thing you've ever put in
your house but turns out to be the best ROI
you've ever spent.
- Absolutely. Absolutely.
- You know, and people, for most,
their home is their largest investment.
So they wanna be smart, they wanna make good decisions,
and they want to feel like,
"Hey, when I do sell this, I am gonna make some money on it,
and it's gonna turn out to be
a wealth builder for me."
- I love what you just said because it is 100% the truth.
I mean, I believe it's 90% of this country,
the majority of their net worth is in their house.
- Exactly.
So, as we wrap here, what is the one room in a house
that tells you everything you need to know about the owner?
- The entry. (chuckles)
I'd say the entry.
Like you, for example, you come to my house,
you're gonna see a lot of organized shoes
'cause my wife has a rule.
"Hey, no shoes in the house."
- No shoes in that, fair. (laughs)
- Sometimes you go to a house
and, you know, there's stuff everywhere, right?
- Yeah. Yeah, yeah.
- So I think immediately you kind of know
the second you walk in. - Right.
You get that first impression. It's back to the front door.
- Yeah, it's back to the front door.
And a lot of times, it starts at the curb,
you know, based on the landscaping
and as they're peeling paint on the door
and stuff like that.
- This has been so much fun, Tarek.
I've really enjoyed this. Appreciate the conversation.
- Well, this is so fun.
I really am a big fan of what you've done,
and I love the fact that you did
this going door to door based off an idea,
who's someone who had a great experience off of a list.
I mean, I just love these stories.
(upbeat music) - Here's what I am taking away
from my conversation with Tarek.
Your house is personal. You should love it.
It's where you live, so live in your home.
But the day you decide to sell,
it stops being yours and becomes a real asset.
And the homeowners that come out ahead
are the ones that understand the difference.
They spend their money on the front end,
on upgrades that aren't dramatic
but deliver the best ROI; the basics but done really well.
And in today's market, where seven out of 10 deals
fall apart at the inspection phase,
these homeowners do a pre-inspection
and fix the items upfront.
It's the smartest money they'll spend all year.
Thanks for watching.
And if this episode sparks some interest,
feel free to follow along or subscribe or leave a review.
And if you know someone getting ready to sell their house,
this might be a great episode to pass along.
This is Angie Hicks with "Own It,"
and we'll see you next time.