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Real estate mogul: The 1 hard truth all home flippers should know

Self-made millionaire Sidney Torres built his fortune renovating houses in New Orleans. Today, he uses his money and expertise to help struggling property investors on CNBC's "The Deed."

In an upcoming episode of the show, one investor, James Brooks, has fallen in love with a house he's been working on for three years and finds himself not only out of money, but nearly half a million dollars in debt.

Brooks' situation is a good reminder of one hard truth about real estate: A renovation can easily turn into a million-dollar money pit, especially if you become emotionally attached and delay selling.

Real estate mogul Sidney Torres helps out property investor James Brooks on "The Deed"
Real estate mogul Sidney Torres helps out property investor James Brooks on "The Deed"

In Brooks' case, "I'm paying property taxes every year; I'm paying insurance; I have to carry a builder's risk," he tells Torres. Despite the money he's throwing at the property, he's having a hard time letting go: "I've been stuck, that this is my house. Still, right now, it doesn't seem natural to have the conversation that I would sell the house, but the truth is, if I don't do the deal, I'm just destined to let it sit."

Rather than letting it sit for another three years, Torres helps Brooks bring his center-hall cottage back to life in just over three months and encourages him to put it on the market.

They list the property, which Brooks bought for $230,000 and invested another $240,000 into fixing it up, for $1.35 million. That would leave him with a six-figure profit, enough to grant him financial freedom and allow him to buy and flip more properties.

If you want to be a successful home flipper, you can't let your emotions get the best of you, says Torres: "Don't fall in love with it because it won't love you back."

Watch Sidney Torres in CNBC's "The Deed," premiering Wednesday, June 13 at 10:00 PM Eastern.

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