A Window of Opportunity
- Major: Finance, Real Estate and Law
- Class Of: 1996
Pete de Best
“ We know change will certainly come one day so you have to prepare for it, not be overleveraged and have the liquidity to see it through ”
Pete de Best (’96, finance, real estate and law) knows all about fixer-uppers.
As a real estate investor, he and partners Tarek and Christina El Moussa buy outdated, dilapidated or repossessed homes and rehabilitate them for resale on the hit HGTV show “Flip or Flop.” The cameras follow series stars Tarek and Christina El Moussa, while de Best makes regular appearances to provide input.
That’s when de Best and his partners have to think outside the box to keep the renovation on track.
Fixer-uppers are recurring projects on episodes of “Flip or Flop,” which is in its sixth season. De Best’s freshman year at Cal Poly Pomona also could be described as a fixer-upper project. It was so bad that he was called into the department chair’s office and notified that he was placed on academic probation.
“Right after I did so poorly, I had a really good teacher for my business ethics class,” de Best says. “His thinking was out-of-the-box and required a lot of class participation. I loved it.”
De Best gained renewed focus and motivation. The library became a haven for studying as he worked his way out of academic probation. By the end of the quarter, he was at the top of his class Also, he changed majors, switching from computer information systems because his interest in property and stocks was a natural fit for the finance, real estate and law curriculum.
“I didn’t have a lot of direction going into college,” de Best says. “It was a few teachers that really made an impact in my life. The connections I made from the university definitely helped me get to where I’m at.”
During his senior year, de Best worked at a major bank that offered him a full-time job as a credit analyst after graduation. It wasn’t long until he wanted to be paid based on commission because he had faith in his abilities.
A chance encounter with a real estate finance broker would alter the course of de Best’s career. He went with his now-wife to a modeling job she had with a clothing line and struck up a conversation with the owner, who also owned a mortgage company. After they hit it off, de Best was offered a job on the spot preparing loans for mortgage lenders.
“They gave me $1,500 a month for the first three months and then it was straight commission,” de Best says.
He still remembers his first home loan. The customer had 30 days to consolidate student loans that required a minimum of 60 days to process, and that was one of the easier hurdles to overcome. Finalizing the loan documents required a lot of sweat equity from de Best.
He managed to secure lending, and even helped the woman move into the home. To show appreciation for de Best’s hard work, the customer’s parents bought him dinner.
De Best had found his career footing in the real estate sector. Over the next two decades, de Best endured housing market downturns and used outside-the-box thinking to help him stay ahead of the next ripple. One of those methods was flipping real estate.
In 2010, de Best began attending property auctions with Tarek El Moussa and other investors. It was an awakening to learn that the scraggily dressed competition often arrived with $10 million or more in their pockets.
“Everyone says they would love to be a flipper,” de Best says. “How are you going to get a house when you’ve got 15 people bidding and they’ve all got a lot more money than you? Flipping houses involves a high degree of planning. Most investors fail because they don’t have a plan. It’s not that they plan to fail, it’s just that they fail to plan and that’s basically the same thing.”
Tarek El Moussa and de Best began looking for less conventional ways to acquire properties, including combing the Multiple Listing Service for undervalued assets. Sometimes, it was a relative inheriting an out-of-state home. Other times it would be older houses in need of an extensive renovation the owner could not afford. When de Best would find a potential target, he would track down the owner and make persistent offers.
Tarek El Moussa had a friend film one of the flips. The footage was edited into a sizzle reel then sent to a production company before ultimately being picked up by HGTV.
Flipping properties isn’t de Best’s sole source of income. He has four real estate-related companies and recently consolidated them under one roof in a recently purchased commercial building in Anaheim. Even in a steady housing market, he plans for different scenarios and examines how to protect his assets.
De Best’s goals are taken from the title of the HGTV series: He wants to flip but not flop.
“We know change will certainly come one day so you have to prepare for it, not be overleveraged and have the liquidity to see it through,” de Best says. “You never want to lose.”