I've done a couple of flips and currently redoing my business plan for 2018.
I have a couple of questions for the people that are flipping 20+ properties within a year which is my goal.
1. If you're flipping 20+ properties, do you flip outside of your city or state?
2. Are you licensed as a real estate broker or a general contractor?
3. Most of your deals where do they come from? direct mail, MLS, HUD, auction etc.?
4. Do you implement a marketing strategy to collect private money to match with deals? if you have a financing marketing strategy what are they; such as direct mail, networking, hard money, bank relationships etc?
5. Which employees are vital to go from a few flips to 20+, such as personal assistants, marketing/sales associates, project manager ect? which would you hire first to expand your business?
6. I belief one of the key aspect to growth is to learn how to delegate, do you delegate important things such as obtaining financing & how to get mailer's list or give them access to mls for REOs? I basically worked for an investor that didn't want no one to know his core strategies and didn't like to delegate those things, I don't think that's a good idea if you want to grow.
7. If you were to do it again is there something you will do differently?
8. What other advice would you give someone like me that wants to upscale their flipping business?
I think focusing on volume is OK, but I do believe and have gotten the advice from someone with 150+ doors that looking back, focusing on volume as a goal kind of misses some of the basic considerations... The most basic is the bottom line.
IE if you can do 3 flips and build value by 1m in a year (ie build your net worth by that amount, vs doing 20 flips and make 20k per flip so 400,000 in the year, what would you prefer?
Is there something you can do to control / give yourself that option?
Just something to mull before you set out to get your question answered.
I'd prefer fewer more profitable, more interesting, and better learning opportunities to more JUST volume, ANY day!!!
Where are you doing 3 flips but adding $1MM in value vs $400k?
I can only speak to the HML side but people I deal with are flipping 15-20 a year and using HML, while acquiring thru auction sites and Sheriff sales.
It’s harder to acquire the higher value properties thru those methods or even REO, so it takes volume. Banks haggle less over lower values properties so there’s more opportunities.
The buy for $200, put in $60-70k and sell for $400+ is a crowded space, even in NJ where over 30k properties are in preforeclosure/foreclosure.
I understand your logic, but even if you have 3 great deals in a year, you still have time to acquire more deals if you delegate correctly.
Here is an example of a 4plex I acquired when I worked as a manager for a wholesaler (the numbers are a little different):
Repair: $107,190 / $30 per sqft (Living Sqft: 3,573)
Offer Price: $473,810
Total Cost $581,000 - ARV sale $830,000 = $250,000 profit
We kept the 4plex to flip, but the city of miami took forever to approved the plans. After a year and a half of holding the 4plex we sold it for a profit of $102,000 without making any renovations.
threw all the marketing in Miami and Broward, a deal like this didn't come that often for us. The bread and butter was rehabbing for 25- 50k profit.
Also, we tried marketing for upscale properties in the 1M range for spec homes to make a higher profit per property, but for 7 months are outside sales rep couldn't close a deal at the price we wanted. The avg. home owner in that price range are a lot savvier to their real property value.
At the end, regardless of the price of the property or how many property we had in our portfolio, if it was more than 25-40K profit per deal we didnt pass it up, the owner of the company will always have the financing setup. Also the owner of the wholesale company I worked for has flipped 75+ properties in other states but I never asked him what system he implement to achieve those flips in the other states.
well if your looking to do that volume. You would need to have inventory that doesn't need much rehab. The price for the property has to be right for you to generate a decent profit. I don't know about you guys but these banks and HUD aren't budging much on price here in Illinois and Indiana market. It's going be really tough to find properties like that righ now. Also banks are holding onto the good ones right now as well.
Your best option would definitely be to look outside your state for sure and have one lined up while the other is half complete. There are 52 weeks in a year.....that means for you to do 15-20 properties a year you would need to fix and flip properties that need no more than 4 weeks of rehab......also add in the inspection and appraisal periods and the title search for the property......do you think you can realistically flip that many based on those conditions?
I'm asking myself this same question approaching 2018. So basically the idea that doing fewer (3-4 year) higher return deals is better than doing more modest return deals (20+ year) I think is difficult to do and risky. I would rather hit singles and doubles than try to hit home runs everytime. Plus I think in most markets, mine anyway those deals are so few and far between, I dont think however just doing volume for volumes sake is a profitable or long term strategy either. You see this on Amazon where booksellers sell books for a penny just to make money on shipping lol. Scaling imo is about deal flow, finding off market deals is a must, and staggering your flips and even doubling up on them is necessary to do 20+ a year. Interested to hear other thoughts on this topic.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing