- Kevin Hart accumulated a lot of debt after opening his own insurance branch.
- He got out of the red by flipping homes and now does real estate full-time.
- Hart recommends new investors get started with a flip, but cautions against costly mistakes.
Kevin Hart found himself in the red when, after working as a sales rep for State Farm for a few years, he opened his own branch in 2017.
“I was dead broke and at a failing insurance business,” the Louisville native told Business Insider. “I had a $50,000 business loan I had to pay back at some point. I had a bunch of credit card debt from trying to get that business going.”
Hart wasn’t in a financial hole for long. In 2019, he flipped his first home. He said it profited about $30,000, which he split with his business partner at the time. Before the end of that summer, he purchased two more flips and left insurance to work in real estate full time.
He said that his success flipping, and later wholesaling, helped him pay off his debt in two years: “There’s not much else out there where you can make lump sum checks to help you pay off that debt.”
Hart now works alongside a different business partner, Mike Gorius. They formed an official business partnership in 2024 under the Joe Homebuyer franchise and, in their first full year working together, did 50 transactions between wholesales, wholetails, and flips. They also own more than 20 rental properties, including short-, mid-, and long-term, in the Lousiville area. BI verified their property ownership and deal history by looking at settlement statements and closing documents.
They agree that rookie investors should consider starting with a flip for a “quick capital boost to help you get going,” said Hart, whose two-pronged real estate strategy involves flipping and wholesaling to bring in cash, and then buying and holding rentals.
Of course, when it comes to flipping homes, there’s always risk involved. To minimize risk and avoid losing money on your first flip, Hart and Gorius highlighted three costly mistakes.
1. Hiring the first contractor you find. Unless you’re planning on doing all of the renovation work yourself, you’re going to need to work with a general contractor — and finding the right person for the job is key to a successful flip. This is the person you’ll be relying on to transform a fixer-upper into a marketable home.
Avoid selecting “some random contractor you find online,” said Hart. “You definitely don’t want to hire the cheapest one you find. They’re probably cheap and available for a reason.”
Instead, interview multiple contractors, call references, and look at their previous work. The more due diligence, the better off you’ll be.
Keep in mind that there are residential contractors and contractors who work with investors. You want to work with the latter because “they understand what flippers are looking for,” said Hart.
2. Biting off more than you can chew. “Don’t take on a project that’s way bigger than you can handle,” said Hart, acknowledging that it’s easier said than done, especially if you draw inspiration from HGTV shows that tend to feature full gut renovations. “That’s not what you want on your first flip.”
If he was starting from scratch in Louisville, he said he’d target a 3-bedroom, 1-bath ranch-style house that could use cosmetic upgrades: “Floors, paint, kitchen cabinets, update the bathroom and a few minor things like light fixtures and call it a day. You don’t want to start a huge construction project when you have no experience doing construction.”
Stick to the basics, added Gorius: “Don’t pretend that you’re the one moving into this house and start putting finishes on there that are overpriced or don’t make sense. Stick with what works, talk to contractors, and walk other people’s flips to see what finishes and paint colors and materials they’re using, because they’re doing that for a reason.”
Their goal with a flip is to create a home that appeals to the most amount of people possible, which means neutral colors and flooring.
“In reality, if you’re doing a lot of flips, flipping is a pretty boring business,” said Hart. “You’re using the same paint colors, you’re using similar flooring. Whatever’s in style that year, we’re like, ‘Okay, for the next five houses, this is what we’re doing.'”
3. Running your numbers too optimistically. Assume the project will cost more money and take more time than you think.
“Get really good at running your numbers, and be realistic about it,” said Hart, who built his own flipping calculator in Excel. That means, if you’re running comps and see that one home in your market sold for $250,000 but the rest are selling for $220,000, “you can’t get too excited and think, ‘my house is going to be worth 250.’ More likely, it’ll be 220 or 230. Don’t try to force the numbers to work.”
Allow yourself a financial cushion because, especially as a new flipper, “something inevitably is going to go wrong or you’re going to miss something in the rehab,” he said. “It always happens. You can’t go out there and project a flip is going to make $10,000 off the bat, and all of a sudden, you buy it and miss this $10,000 foundation issue and now you’re in the hole. So you just have to make sure you’re buying correctly and getting your rehab cost as accurate as possible.”
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