Jump into a project, rush to get it done, sell it quickly. This may be the M.O. for some real estate investors, but it’s not the recipe for long-term success. At least, not according to New Western investors, Lauren and Frank Novak, and their business partner, Michael Morris. Together, the three pros own their own company, Capital City Flips. They offer carefully curated, high-quality homes in Austin, Texas.
A very thoughtful approach drives this successful trio. “We want to make sure we’re making a good name for flippers, putting out a great product, and a home that we would all feel comfortable living in,” Lauren explains.
But how did this team turn their vision of success into reality? And where does their story start?
“Lauren and I moved down to Austin for my job, and we ended up living in the same apartment complex as Mike. Our first conversation when we met was about houses,” Frank says with a laugh. It progressed to “Oh, maybe we should buy one and try flipping it,” he continues.
At the time, all three had separate full-time jobs. Frank wasn’t enjoying his work in civil engineering – and was not loving the constant travel. “I really wanted a job where I didn’t have to leave Austin that much because I like it here,” he recalls.
The conversation quickly turned from daydreaming hypotheticals to tangible research and the trio spent the next few months figuring out if they could turn talk into action. Mutual friends were working with New Western and had successfully purchased and flipped several properties from the real estate investment brokerage.
At their friends’ recommendation, the team connected with New Western agent Justin Mynier and went out into the streets of Austin to look at inventory. “We went to 20 or 30 properties with Justin before we bought something. He probably didn’t think we were going to get serious at any point,” chuckles Frank.
But the more they worked with Justin, the more he understood what they were looking for. They found a property that ticked all their boxes and things quickly progressed from there. What started with one flip, turned into another and another. The team continued to research and learn project by project, and gradually ramped up.
“We went from doing one property at a time to doing four. Things got busy and I quit my job – and then Mike quit his full-time job,” Frank continues. “So now we’re full-time flippers.”
Justin believes the key to the team’s success was due to their “get one, get it done, and learn” method. “They were looking to make base hits and then build on that until they can score some home runs.” He also believes individual strengths fuel their success: “Michael runs the analysis, Frank looks at the remodel perspective, and Lauren comes in with the design.”
Michael recalls being pleasantly surprised at how well things took off: “There was a larger potential in real estate, in this market, than there was in our current careers. This allowed us to control the rate at which we increased our success, our wealth, and our knowledge.”
Austin - Woodshire House - Before
Austin - Woodshire House - After
At the beginning, the team analyzed many opportunities from many different sources but found that New Western offered the most realistic deals that fit their strategy. “We’re very conservative investors. When we look at a property, we want a large spread for various reasons. We found that New Western really aligned with what we were looking for,” explains Lauren.
The team views their agent as a true ally which allows for honest conversations on whether deals are the right fit for them. There’s no pressure to jump on a deal that doesn’t meet the trio’s unique investment criteria and fit into their flipping strategy. According to Michael, “if it feels good, let’s try to make it happen. If not, let’s move on.”
Justin agrees that the team is not afraid to pass on properties: “They’re very analytical about it and stick with certain areas. And they do the work themselves, so they save a lot of money.” His goal is to find out exactly what clients are looking for – from location to profit margin — and deliver deals to match.
“I’m not in this for the short term to make a quick buck. I’m in it to build relationships and grow with the investors I work with – to help them become wealthy and have better lives in the long term,” says Justin.
Over the years, the team has found that working with New Western allows them to continue renovating and selling properties while their agent is actively finding new ones.
“The fee structure has been transparent,” notes Michael. He and the Novaks were very aware of what they were going to pay – without the typical double-talk of many wholesalers. “These deals are really complicated,” Michael adds,
“New Western doesn’t go for the clean, pretty ones because you can't get the deal on it. There are a lot of underlying nuts and bolts that go into making it happen.”
Working with an agent who is clear about the intricacies and issues involved kept the team from feeling overwhelmed.
One of the trio’s early flips was the West Gate house. This was a home built in the early 1970s and it had aluminum wiring. Mention those words now, and the team shudders. The first buyer under contract got hung up on the wiring, brought in their own electrician, and the deal fell through. The next buyer also had strong reservations about the wiring, but that deal closed. Even with all of the challenges, the home was only on the market for seven days. “That was the house that we’ve had on the market the longest. So that’s why it’s our horror story,” laughs Lauren.
Austin TX -
West Gate House
Run The Numbers
Austin - Westgate - Before
Austin - Westgate - After
The Woodshire house was another notable flip. It involved a sinking house with significant foundation damage, leading to a new roof. The renovation also included a new HVAC system, bathroom/kitchen re-do, and THREE installations of windows. “Every time the inspector would come out and see the energy stickers on the windows, he’d say they were wrong,” Frank remembers. He’d call the big box retailer, wait two weeks, and out they came with new windows. Again, the energy coefficients were wrong. So Frank would call again, get new ones, and the whole process repeated: THREE times. The silver lining? The windows wound up being almost free, with no delay in listing the house.
Austin TX -
Run The Numbers
Austin - Woodshire - Before
Austin - Woodshire - After
Another unforgettable project felt, or rather smelled, much like a day at the zoo. Eight dogs and a couple of cats had previously called the Burly Oak house home along with rodents, raccoons, rats, and mice that had been living throughout the walls. The extensive animal presence and severe lack of home upkeep led to considerable research on remediating, both from a health and a smell standpoint – and a full gut of the house. Lauren describes their overall philosophy this way: “We wanted to make sure everything was not only safe but also new and beautiful for the new homeowners – that’s our number one priority. Rather than hiding things, we want to do it right.”
Austin TX -
Burly Oak House
Run The Numbers
Austin - Burly Oak - Before
Austin - Burly Oak - After
“Our most valuable asset is our people,” according to Michael. The team firmly believes that their contractors are critical to their success. “They really allow us to keep going and growing,” he continues.
The key to finding the right people? It’s all about personal recommendations or first-hand experience. “If it wasn’t for the team we have now, we’d be starting from scratch on every project,” Michael notes. He urges other investors to spend the time to get to know contractors, develop a relationship, and treat them with respect.
“Otherwise, you’ll get shoddy workmanship because they don’t care about you, or it’s a one-and-done thing and then you’re back to square one again,” advises Michael. In his experience, delays are the most expensive part of any project. He firmly believes that a good team keeps projects chugging forward: “We don’t have to sit there and try to get penciled in because we pay on time and are respectful of their time.”
Frank adds that they’re present during the work a lot more often than the typical investor. “We’re very interactive and present with our flips. Having that relationship off the bat with our tradesmen and our general guys has really helped because they know that we know what we’re talking about.” This is a team that does more than write checks from a distance: they are also there, ready to help.
Austin - Burly Oak House
Lauren has some advice for new investors. She encourages them to put some creativity into the design of their projects.
“Not doing everything white and gray really can help move your houses quickly because someone will fall in love with the unique design they've seen on Pinterest or on Instagram, and want that in their home,” she advises.
Buyers are often looking for rehabbed homes for the charm, a different feel, a different time, a different lot size. “Those unique touches have definitely got us to multiple offers,” concurs Michael.
Austin - Westgate House
“There’s no excuse for not writing down what you’re doing,” asserts Michael. He believes it protects both sides, the investor, and the team of contractors. Having expectations clearly and fairly spelled out from the beginning also helps eliminate conflicts that could damage the relationship.
“It just clarifies the scope of work. And it’s something that we’ve gotten better at. Even with people we trust. We’ll list out expectations, and assign a price to each so they know what they’re getting paid for,” he comments.
Another word for the wise? “Never, never pay all upfront,” Michael cautions. A pay-as-you-go model with specific breakdowns ensures the work gets done.
Research, research, research. This team attributes a lot of their success to their meticulous research. “If you don’t know, go find out before you sign anything,” suggests Michael. From flippers to internet communities to the associates at Home Depot, there are limitless sources of information to be tapped.
“It's okay not to know, but it's not okay to assume it's going to be okay. You need to have some idea of what you're getting into first,” says Michael.
The team has been tempted to make a deal prettier than it is, but pragmatism should always trump emotion.
For this team, choosing the right project to tackle is all about location, but not always for the reason you might think. “We’re not just chasing a dollar. We’re trying to maintain a lifestyle. So we’ve definitely set criteria for ourselves as far as how far we’re willing to travel,” explains Michael.
Time is their most valuable asset. What’s the secret formula? The trio has a minimum profit threshold and works back from there. “It’s not just a hard number, it’s the time calculus. Is it going to take six months? And do we need to do 50 different things to a house vs. another house that will yield the same return with only 25 repairs,” queries Michael.
Austin - Woodshire House
A key element of the team’s success is a focus on three-bed, two-bath homes and an evolving estimation process. “We’ve done really well on estimating our rehab and come within a couple thousand dollars of estimate. We have a spreadsheet that we work off of and have been fine-tuning it to make estimates go faster,” notes Frank.
This is a team that gets very granular on cost. “We actually take it down to the room – room by room. What are the expenses in that room: door, doorknob, ceiling fan, closet door?” remarks Michael. Part of their prep prior to making an offer is to research all of the expenses. “We walked in on our first project and came within $1,000 on budget,” he recalls.
With several years flipping houses under their belts, estimating the rehab comes much easier these days. “It’s easy for us to analyze and estimate our repair based on a quick walkthrough. We’ve done enough projects with the same tradesmen and know their prices” Michael continues. The team’s experience and their upfront research have helped them stay on budget.
At the end of the day, this thriving team believes their product is their brand. They pride themselves on trustworthiness and honesty, not only with their trades but also with their product.
The bar is high – they will only list a house that they would personally be proud to call home. “Their projects are under contract very quickly and pending with multiple offers, so that speaks to their quality of work,” notes Justin.
This is truly a business where the old adage applies: you get out what you put in.
Disclaimer: Success in real estate investing takes hard work, perseverance, and not a small amount of luck. The deal results shown here may have been preceded by others that weren’t as profitable, but paid dividends in the knowledge and experience gained. Every deal is different and you shouldn’t expect results like these on the typical investment. The investors featured by New Western volunteered to share their experiences with other investors and are not paid for their stories.