Looking to learn. How have you scaled flipping with financing and systems?

Question

All of my investing has been in re-development and I’m looking to learn the flipping business for income.

I can see the process and opportunities for properties worth flipping, but I’m trying to see the way to build a business around flipping for income while I work on larger re-development opportunities.

where have you learned financing and operations?

Zachary Deal · Answer

Most investor utilize short term hard money debt to scale their flipping operations where the lender will fund 80+% of the purchase price and the rehab budget which can allow investors to work on multiple projects at once. Typically there are no prepayment penalties on hard money loans, so you can limit your holding cost if you're able to quickly complete the project and sell or refinance in a few months. If you're looking at the BRRRR strategy DSCR rate and term or cash out refinances are an easy way to refinance the hard money debt.

Rory Cummins · Answer

If looking to scale flips and create systems around it to minimize your time and involvement, I'd highly recommend putting a team in place that can handle the day to day operations.

For the flip itself, this would mean a GC or better yet, have a crew there that can handle 60-70% of all the work meaning they are there working on it the day you close and stay there throughout the process till it's completed.

They do everything from framing, trim, painting, roofing, siding, flooring, cabinets, etc. and they can tell you when the plumber or electrician didn't show or did something wrong. This will save you tons of time on the job and minimize delays. You can then GC the project yourself and let them help be eyes and ears and offer you the speed to get the projects done on time.

As for financing, I had great success using a commercial loan product with a small community bank. Essentially, terms were prime +1 interest only for 12 months with only 1 discount point. Compare that to hard money at 10-12 and 3-4 points and you can see, this has been very cheap money to scale. They also would finance 85% of the renovation so I was only putting 15% down. Once you have a track record of success, they'll fund you for multiple projects at the same time.

Doing these two things alone should allow you to go from one or two flips per year to easily doing 5-10. At that point, you just need deal flow - perhaps that means its time to hire or paratner with an acquisition manager to help you find and close deals - a good realtor can step in here as well

Peter Mckernan · Answer

I would either use HML, Private Money, or partners if you are looking for help on financing these types of deals and building a business.

Operations, well, you need a PM/Sup, you need a bookkeeper, you need a good contractor, and you need an assistant to manage other stuff. This should be a small operation that could get you going on doing a good volume (10-50+ flips a year). There are people that do 20 flips a year on their own with one GC.. Really depends how you want to structure it.

@Robert Frazier

Amir Khan · Answer

@Robert Frazier are you saying that you are wanting to learn how to get financing for your flipping business?

Looking to learn. How have you scaled flipping with financing and systems?

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