So I thought it would be cool to document my goal of buying 150 flip houses this and documenting my progress here for the BP community.
My reason for doing this is to help educate and encourage others, keep myself accountable, get additional ideas and feedback, as well as create additional business relationships that will help me achieve this goal and continue to grow my business, and help everyone in the process. ABUNDANCE at it's best!
I will start out in this post by giving a summary of where I am up to this point, and will give weekly updates on our progress, as we continue to push towards this goal, and I will be happy to answer questions anyone might have along the way.
Rules of Engagement!
1) Purchases are counted when we put them under contract.
2) Anything that falls through is taken away from the overall total.
3) So essentially the goal is to get 150 houses under contract (not including anything that falls through) in 2014
Where We Currently Stand
As of right now on April 9, 2014 in the morning we are at 27 houses. I specify morning because we are VERY close on a package of 4 that I am hoping we can tie up later today. Fingers crossed!
Here is the breakdown of each month so far on when we put those houses under contract, and how we acquired them.
I refer to my "Main Agent" who is just that, he is the agent we have bought most of our houses with in the past 3 years. Agent # 2 is another agent we work with and have purchased some houses with. Then I refer once to listing agent which just means she had the listing and we worked with her in buying the house. Then in regards to wholesalers I just go in order of when we purchased properties and referred to them as #1, #2 etc. Just for the record # order doesn't refer to my favorite wholesaler or those who we are necessarily buying the most from etc. :-)
14th Main Agent
15th Agent # 2
20th Wholesaler # 1
21st Wholesaler # 2
25th Main Agent
30th Main Agent
As you can see in January we had kind of a late start. I was not super excited about the fact that I set a goal to buy 3 houses a week and had 0 for the first 2 weeks! However we got back on track at the end of the month, and were close to reaching our weekly goals.
4th Wholesaler #2
4th Wholesaler #1
4th Wholesaler #1
4th Wholesaler #3
12th Wholesaler #4
26th Listing Agent
26th Wholesaler #1
26th Wholesaler #5
In February we started out strong. I don't think we actually put all 4 of those houses under contract all on the 4th but that is what Vanessa (my assistant) has on the spreadsheet so I'm sure they were around that time and that is when she documented them.
I felt like we were picking up momentum and were getting back on track, and had a good chance of getting caught up and reaching our 150 goal for the year, but then I had a 2 week buying drought, which got me incredibly frustrated!!! After some serious outside the box thinking, implementing new strategies and really rolling up our sleeves we ended the drought and bought 3 houses in one single day, which happened to be the same day I went to Disneyland with my family.
I don't have time to go into all the details here but I wrote a blogged about my frustrations and the details of overcoming them and then buying 3 houses in one day on my site if you want to read the details.
Also worth mentioning in February we bought a lot from wholesalers but my main agent who is one of our primary buying sources and had a goal of 5 for the month struck out! We also fell short on our large Direct Mail campaign we recently launched so once again we were behind on our goal but considering what didn't go the way we planned there was still hope for the goal of 150 if we could get back on track and get everything to come together.
4th Main Agent
11th Wholesaler #1
13th Wholesaler #6
13th Wholesaler #6
19th Wholesaler #2
20th Main Agent
26th Wholesaler #7 (referred by #6)
I won't go into too much detail in March, but as you can see we fell short once again, with our main agent only getting 2 and our DM campaign just not being quite what we have planned for.
April-6 so far as of this morning April 10th
1st Wholesaler #1
2nd Wholesaler #1
2nd Main Agent
7th Wholesaler #8
7th Main Agent
7th Wholesaler #1
So far in April we are off to a great start with 5 houses under contract in only 10 days and hopefully we end up landing that package of 4 which would really help us begin to catch up and continue to gain some momentum!
So in total so far out of 3 months and 10 days, (or 14 weeks or 98 days) we have put a total of 27 houses under contract. Which means our average is about 2 a week which would put us on track for 100 for the year. So we are essentially behind by about 15 houses! YIKES! My main goal for now is to try to get to where we are averaging 3 a week and continue to implement new strategies, and build relationships to help us maintain that momentum and help us get caught up.
As you can see most of the houses we have purchased so far this year have been from relationships we have developed with agents and wholesalers which is actually pretty different from years past, but that is where we are at right now with our home acquisitions. I don't have time to go into more details on each deal or where an how our agents or wholesalers got these deals, but I will try to cover some more details on future posts as well as cover how we finance our deals, manage projects, systematize our business etc.
I know we are behind, and I don't know that we will reach our goal of 150, but we are not giving up! So far April is off to a great start, and we are continuing to build more relationships and implement more strategies to help us reach our goal for the year. At the end of the day as long as I can look back and feel like we did everything we could then I guess I can live with that, but right now I think we still have a decent shot.
I have to admit that it is pretty hard to put myself out there like this. No doubt there will be days/weeks or even months when I fall flat on my face, but having this accountability and support will help keep me going and hopefully everyone else can learn from my failures and successes along the way.
I know there are probably a lot of questions and a lot I didn't cover, but I think this post is already long enough so feel free to ask any questions you have and I will do my best to answer them in this thread.
I'm not sure what the exact outcome will be but I'm looking forward to sharing my journey and experiences with you along the way!
150 houses or BUST!!!
My hat is off to you. I'm running a candy store and you're running a super market. Excellent motivation.
great hustle your definetly a go getter. You talk about putting the deals under contract but don't really speak about your exit strategy. Could you elabarate a bit on exactly what it is that you do with these houses and maybe how you are funding them. Are the rentals? fix and flips? Assignments?
Here on BP we kind of have a definition of a deal, it applies to the deals posted as deals accomplished.
A deal is closed, not contracts taken. So at this point, how many closings have there been.
Why not just send out offers on MLS listings, 12% under asking price, then relist and lower the price 3% and see what flushes out.
I'm not sure how many properties are listed, I'll guess about 1500. If 20% accepted the offer, which is probably low considering about half go for a price at around 8-10% of list price, so I'd think 20% is doable.
Those accepted also have an average DOM of less than 100 days I believe, contract for 90 days.
Relist and lower the price, if half closed on the average time line, that would be 150 properties.
So, why not have a goal of 450 properties turned in one year?
Looks like you'd pull off 9% at best but perhaps 5% on each property, average price 150K is 7,500 X 450, you only make 3,375,000 that year.
But I can tell you why it can't be done.
I can make predictions too. LOL :)
Well, I posted the above, then visited the OPs profile, yep, it's an under the radar post promoting the "Flipping Machine System". :)
who is in charge of the rehabs?
Can't wait to read more and the above questions answered.
Best of Luck!
one thing i noticed is that you are selling a "Webinar" on your site. also in your long post you mentioned multiple times "i dont have time to go into details".
i am not feeling this. not sure why, but i am just not.
thanks for your post. i want my "like" back.
Thanks @John Moore
Thanks @Manny Cirino I do almost all fix and flips. I am not opposed to wholesaling and that is how I started when I first got going in the business 7 years ago, and I have wholesold a handful of houses in the past couple years and would do that if it made sense but for the most part I am currently doing 100% fix and flips.
@Bill Gulley I appreciate you sharing with me your definition of a deal, which yes of course if you don't end up closing on a house then yes it doesn't matter how many you put under contract. This is simply the way I have chosen in my company to track this goal for this year. It helps motivate my team if we are shooting to put 3 houses under contract each week vs close on 3 houses, bc it is hard for me to say "alright guys we really need to close on 3 houses this week, and if you make that happen then I will give you x" BC if you don't have anything in escrow then it is hard to have that immediate feeling of achievement and reward. Of course like I mentioned if a deal falls through then we do go back and take that from total deals under contract, so all 27 houses have either been closed or are under contract, but as far as properties which we have actually purchased and closed on so far this year is 21.
@George P. Great question. I use 3 General Contractors for all of our projects. 1 of them does about 80% of all of our projects, and is able to manage multiple projects, and the other 2 can usually manage about 1 project at a time. My main agent helps manage the projects he get's as well as a few others we get in his area, and my assistant oversees these projects that we list ourselves, and oversees the other projects as well to the degree needed.
Thanks @Christine Glasner Hope that helps, I'm sure I will be elaborating overtime but feel free to ask any more specific questions you might have.
George, yes I have a blog, and yes I do have a coaching and mastermind program, and am not ashamed of the program I offer. I believe there is a place for good education for the right price. I have been taken advantage of by high end coaching programs including not getting a car I won, so I completely understand the aversion. All good, and I'm not offended if you take your like back, and don't want to follow the thread. No worries ;-)
Oh and I only mentioned not going into details right now bc of how long my post already was not to mention my wife was feeling horrible this morning and needed my help (but we don't need to get into that :-)) I am happy to go into as much detail on any questions anyone has and will be getting into much more detail on future posts, my main goal for this first post was just to try and get up to speed on where I am currently and what I am trying to accomplish, so I can get into more of the details.
BP is a site where generally we share our experiences and advice for the betterment of all, especially beginners.
Hi Justin, can I ask how you are financing all these deals?
@Justin Williams , I have no position yet on your model. I just wanted to post about how I liked your answer to the negative posts on your business model. It was professional, and you did not turn it into a personal attack. Very intelligent and classy.
@Larry K. completely agree. Thanks for the comment.
@Luis C. You bet. It might be best to explain first how I have financed my deals over the past 7 years. I actually spent the first 3.5 years when I started out in the business wholesaling properties so getting financing wasn't an issue.
Then in 2010 when I started fixing and flipping I started out with working with some private money lenders.
In 2011 when I started doing higher volume I still had some private money lenders, but also connected with a JV (50/50 split) partner who funded most of my flips that year, which led to getting another JV partner who also funded many of my deals.
Then in 2012 I still did some JV splits but started using hard money for the first time.
Today we have quite a few private money lenders, so whenever we get a new house under contract Vanessa (my assistant) will look at the houses we are about to close on and see which private money lender is on that house so she can transfer them to the new house. We also still use a lot of hard money and leverage it with our personal funds or private money to cover the gap of what is not covered by the HM lender.
I do have some bank loans on some rentals I purchased at the beginning of last year, and we are currently looking into getting an LOC which I am pretty excited about.
We have also done about 3 sub to deals this year, and 1 seller carry loan.
I think that about covers it, let me know if I can go into any more specifics on anything I have covered.
@Jerry W. Thanks I really appreciate you saying that. A couple months ago after doing an interview with a fellow colleague on my podcast I had someone leave me a pretty nasty voice mail, and write a rude comment on my blog. It effected me for several days. Since then I realized it is just going to happen from time to time and I could either stop sharing information or I would have to learn not to let it effect me so much. This time it only effected me for a couple hours :-) But I know it was meant well so it's all good. Although my coaching program helps me cover the expenses on and maintain my site, (hopefully someday it will make more than I spend on it :-)) it comes no where near the value I get from the relationships I make from sharing with others.
So it sounds like you have a big team in place.
It's about what you take not what you make. I always look at energy versus return.
I have friends that are flippers and it is a ton of work and after looking at it years ago it just didn't appeal to me but everyone is different. With your overhead what is your closed deal breakeven point each year to cover staff expenses and overhead?? Is it 30 deals,40,50 each year??
I am a broker and investor myself but in the commercial space. I saw some friends who listed REO's in the boom times 3 years ago. They had many assistants and overhead and were closing 200 to 300 deals or more a year. Then REO's started drying up and money shifted to short sales. They had to immediately shut down their REO business or whittle it down for the decreased inventory. The demand was still there from the buyers but inventory was not.
Some of my flipper friends used to do first time homebuyer houses but so many people who do not know squat get started and way overpay and margins are too thin now. So those friends either move to other real estate niches apartments, commercial or they focus on the move up homes that need rehab. There they do not get the newbies but you have to have more cash to play but can beat banks up more on price with better margins. As markets get hotter and rehab type properties dry up how will you maintain the volume breakeven??
Having a sustainable business with a mainly flip only component in market cycles over time will be tough. I have seen flippers go across multiple states now because even with their private sources they can't get enough deal flow with increased competition.
It blows my mind that people would attack someone for sharing their experiences for the betterment of others. I personally, greatly appreciate all that you have to say and share and have never felt that you have unfairly solicited yourself or any product on this or any other site. I am a big fan of your site and all that you do. Keep up the good work and don't let the grumpy folks get to you. They simply don't have anything else better to do with their time. Keep killing it!
I appreciate your efforts to share and educate people who might not be as experienced as you are. People will always find fault with whatever u do. Stay positive and keep up the good work. I like what ur doing.
I've listened to every episode of Justin's podcast. He has great discussions and an infectious positive attitude.
how is your ownership set up? Is it all you or do you have partners? My goal is only for 15 flips in 2014. I agree it is tough to count closed deals since the goal is buy, the houses will sell.
I didn't read anything that @Justin Williams posted that was plugging his webinar or coaching. So what if he has the info at the very end of his profile.
I like the post, plug or not, keep it up man!
Well, to Justin's fans, note his post to Jerry W., it wasn't me posting negative comments.
My above post was:
1. just pointing out getting a contract isn't getting a deal, it is an accomplishment.
2. A shotgun approach to getting contracts, I wouldn't go there, there would certainly be issues but someone may have that capacity.
3. I point out "under the radar" posts that may support one's selling information, systems, books, etc. not as a negative issue but as to disclosure when the post is closely related to advancing such businesses.
I too like the positive attitudes. :)
@Justin Williams - welcome to BP! I've been listening to your podcast from the beginning. I have to say for the BP skeptics, he pretty much gives away the farm on the podcast and the blog, and only recently launched a cheap 'mastermind' type program.
Thanks for all the comments everyone. It took a lot of thought and is going to take a lot of time to commitment to do this thread and I have to be honest that after reading a couple of the first few comments I was having 2nd thoughts but the additional comments are very encouraging and much appreciated so thank you all! :-)
@Joel Owens Thanks for the comment. Before I address some of your questions I want to be clear here that I am not looking for validation of my business model. I have seen a couple comments that makes me feel like some people think that is the case, so just wanted to make that clear that this is not what the thread was intended for. I think it is obvious everyone is different and I don't think the goal of this forum is to try to be like everyone else. I don't think that would be very helpful to anyone. :-) Of course people are welcome to give their thoughts and I think the collaboration is always good, but in case I gave off that impression I just wanted to be clear that I wasn't really looking for the validation of my business model. Yes you are correct that flipping a high volume of houses is not for everyone. I'm not claiming that it is or should be, but it is what I have found to work for me and I really enjoy it! but thanks for the thoughts.
To answer your question about my team, yes I do have a team. I have my assistant Vanessa who pretty much runs the day to day operations of my house flipping business. She has 2 people who work under her, who handle all of the things like utilities, insurance, paperwork, book keeping/payroll, sending wires, entering listings we do ourselves/taking calls from potential buyers, manage the rentals that we do have (we have about 10), going to the bank as needed, running errands etc So basically 3 people who are a part of my overhead.
Other than that we have 3 general contractors, my main agent, a couple other agents, and several wholesalers we work with. Of course we also have our preferred title/escrow connections, our accountant, insurance person etc.
But as far as my overhead goes it is about 100k a year (not including bonuses but that is based on total profit so wouldn't to up front costs) but I don't look at it like that. I look at it more as $8,500 a month or $25,000 a quarter, so as long as we are making significantly more than that is is very worth the expense. In fact I don't even look at is an expense bc without these people I don't have a business :-)
Flipping houses or any other business for that matter like you said can be a ton of work. When you find something that is lucrative and easy to do please let me know! I'll be the first one in line, but I haven't really found that to be the case...;-)
Having that been said just like any other business, we can do things to make it easier or harder on us. Everyday I working towards streamlining my house flipping business, and so far that has gone pretty well, so like you said regarding energy, although setting up those systems has taken a lot of time, focus, and effort, they have more than paid off and do allow me to spend a lot less time and effort while accomplishing a whole lot more.
I'm sorry flipping houses didn't work out for some of your friends, and considering you are focused on other investment strategies this probably isn't the thread for you but thanks for your comments, and hopefully the feedback is valuable to others who are interested in learning more about running a house flipping business.
@Jacob A. yeah I don't totally get it either. I think we have all been taken advantage of before in one way or another which can sometimes make us skeptics by nature, but I try not to let it get to me too much. Just like investing in Real Estate there will always be critics and people will say and do things to try and tear you down for one reason or another, but at the end of the day as long as know your heart and believe in what you are doing that is really all that matters. Really appreciate the comments! Means a lot!
Thanks @Anthony Aguillard! Really appreciate it!
@Kurt K. You are the man! Really appreciate the feedback!
@Mark Ferguson I use an S-Corp for flipping and an LLC for the 10 rentals I have. I am the sole owner of the corp but I do have investors that of course I pay interest or equity to on a per deal basis, and I will sometimes give a wholesaler a % of the equity on deals we do together so I guess in that sense I have some partners but as far as my company goes I am the sole owner. I have had partners in the past but not currently. Hope that answers your question. Let me know if I can elaborate on anything else.
@John Horner Thanks! Will do! Appreciate you comment!
@Bill Gulley No worries Bill! No harm no foul! I know you don't know me and meant well so all good, but I do appreciate the clarification.
@Anson Young Thanks Anson! Anyone who knows me know's I am anti high priced coaching/mastermind programs or people who sell education and don't actually do the business, not to mention when you pay $25k to be a part of a program and then every "free" seminar you go to or webinar you listen to they sell you on someone else's "amazing" course that you can't succeed without! I have spend $40k on such programs before I realized that it didn't have to be like that, however on the flip side I now see some people who no matter what anyone has to offer they are often very quick to judge and I can tell you from the perspective of someone who has recently started educating that just like investing in RE it is not always as easy or even "sexy" as it appears to be, and takes a LOT of work!!! So I don't care if you don't participate in my or any other program, contribute financially to BP (if you don't you SHOULD bc of all the value they give you, and trust me they work their BUTTS off!) but all I would ask is that you aren't so quick to judge when you really don't understand all of the sacrifice it takes to create something like this. I mean you really have no idea! If I were to spend the same amount of time on my house flipping business as I do on my educational platform, I would be WAY better off financially, but then again I love what I do and love educating, and actually wouldn't meet nearly as many people amazing people as I have that I now work with so maybe my statement is inaccurate. The only way for me to compensate the 3 employees I have for my site (without taking from my flipping business that is) is to have some kind program or sponsors, and if someday I can take that business and actually make it profitable, for me while giving incredible value to others than I have NO shame in that!
Ok that is all for my rant lol Sorry I guess I just needed to get that out :-) Hopefully now we can focus on what this thread was meant for! Really thanks again for the comments guys really appreciate it!
I'm amazed when I see the numbers. 150 flips in a year. Even if you hit 100, thats an unbelievable amount of money. So here are some of my questions.
1) What is your average profit per flip. I'm just curious to know what kinds of cushions you're dealing with when you grab a house. I'm seeing that your from california and am wondering if you're doing 300k houses with potential profits of 60 to 80k. Or if you're doing 150k houses with potential profits of 20 to 30k apiece.
2) Do you ever buy a home thinking you can set the comps? I'm strictly a buy a hold investor. And even when I get a home where I think the numbers could make sense to flip, I can't bare to let it go because the numbers work just as well as a rental AND I'm really trying to grow my passive income.
But I see some guys that I think are overpaying on deals, and instead, they're flipping them at prices above any comp that was out there. I actually see it quite a bit on the flipping shows lately too (vegas and the flip or flop one in california). They tell you the comps are coming in between 200 and 220k and then, at the end, after they've rehabbed it, they're getting 260k. (Double those numbers for california's flip or flip show).
But I see it here in Illinois too. Do you ever list a finished rehabbed home at a number thats greater than what the comps suggest you can get it for? If so, have you been getting that number?
3) Lastly. Can you share some of your design tips for flipping. I know what works for me and my rentals. But its always good to see the finish thats going into flipping - as hopefully I'll be dipping my foot in the water at flipping sometime soon.
Hi Mike, great questions!
1) It is very hard to come up with an average profit per property bc I flip all throughout Southern California, and prices range drastically, for example Vanessa is looking at a house that Aaron Mazrillo just sent us in Barstow. I haven't heard the #'s but houses we buy there range anywhere from 20-100k or so. Then you go a little further South and you get into the 70-120k buy range, then you get into the Inland Empire and houses range from 100-300 depending on the area and house. Then coastal counties the houses range from around 250-500k and then of course you have your houses that are really close to the beach or in really desirable areas and you get up to 1M or more. In 2010 when I first started doing higher volume flips I was buying just about everything in the lower price points of the high desert. Now we are all over so Cal so it really varies.
It might be helpful if you understand how we analyze the houses we buy. In the current market my goal is to get a projected 40% annualized return on the total capital invested into the project. This calculation does not include the cost of money but accounts for what we pay for our capital. So for example if I am going to buy a house for 170k and I have 30k of repairs and other hard costs such as initial closing costs, cash for keys, utilities, insurance, lawn maintenance etc then that would be a total cash investment of 200k. Since my goal is to make at least a 40% annualized return on the invested capital then I would determine how much my return on that specific project would need to be in order to make that happen, so for example if we have a pretty basic project that is vacant, and we can turn in 3-4 months then I would shoot for a 13% return on the total cash invested. So in that case I would be shooting to have the deal make 26k. If it were an equity deal and I were splitting the profit then I would be making 13k and giving 13k to my money partner. If I were using private money and paying a 12% annualized return then that means 3-4% would be paid to my private money lender, and I would walk away with around 20k on the deal. If I were using Hard money then you can add an additional 2% (for points) to that 3-4% so I would end up with closer to 15k profit.
I would REALLY love to say that I am averaging 60-80k profits but NOT even close! :-)
2) It really depends. If I am buying a house that needs a lot of work and all the other comps need a lot of work then yes, I have no doubt that my house will sell for more than those other houses. It also really depends on the market. If the market is going up then yes you are probably going to set the comps for the area. We are very careful about this however, and don't push out luck. Last year the market was on fire, which is probably why you have heard a lot about it and see it no the flipping shows. Probably won't be as common in a flat or declining market, but if you do a really nice rehab and the market is on fire it is not very hard to set the comp for the area. However I never calculate my ARV based off of what I think that market will be. Do I get a little more aggressive in an inclining market and more passive in a declining market? Absolutely! So for example if we were in a declining market I would probably be looking to make closer to a 20% of so return on a basic 3-4 month flip.
3) Regarding design tips, I am much less of a designer and much more of a converter belt type personality. We use the same color paint for every house, same laminate wood flooring, same tile, same carpet, same stainless steel appliances, same granite, same fixtures, etc It's all about the creating a turn key system you can use time and time again. On some of our nicer rehabs we will use nicer finishes, and we do a couple high end homes which are more custom but even those are becoming more streamlined.
Being in a situation where you understand rental properties is a great place to be in. I actually got into high volume flipping after I was trying to gain financial freedom through rental properties. I ran our of capital and had to flip 4 of the 12 hours I acquired 4 months. I looked at my profit and thought "I wonder if I could do that every month?" From there I was HOOKED!, and continued to systematize and streamline ever since. The thing that helped me buy a higher volume was starting out buying houses that would work well as rentals as well, then I would always tell myself that if something ever didn't work out then I would still have the rentals I had originally set out to acquire! It was a great mind hack to help me just take action and really helped reduce the risk.
Hope that helps! Good luck with the foot dipping!
I've been following your podcasts for awhile. You're "the real deal" and I appreciate you sharing!
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