Finding another deal is one thing. Being ready to carry two projects is another.
If your first flip is still under renovation, what gives you the confidence to buy the next one?
Do you wait until the first property is listed, keep separate cash reserves for each project, or arrange additional business funding beforehand?
From the business funding side, one question I like to ask is: if the first property takes longer to sell, can you still cover both projects without depending on that sale?
For those running multiple flips, what milestone tells you you’re ready to take on another?
This is simply an effect from the buyer's due diligence. As long as the buyer has the necessary funds to proceed on the next real estate project, they don't necessarily have to wait until they sell their first investment property. Influencing factors are the speculative pressures from the market and cash reserve ready.
The most conservative investors I have helped with are the ones more methodical in their approach and and prefer to wait until they get through their first flip and use the proceeds towards their next down payment on the right flip. Every investor's risk tolerance will vary.
Good point, Steven. Having the funds to buy the next property and being comfortable carrying both projects are two different decisions. For the investors you work with, what usually gives them confidence to move forward—larger reserves or more experience completing flips?
My milestone is simple: the first house has to be rented and refinanced, or at least rented with cash reserves left, before I take on the next one. I do not carry two rehabs on one pot of money. I buy single-family in Memphis under $100K, rehab to an ARV of $180K to $265K, and rent it on Section 8 at $1,395 to $1,950 for 3 bedrooms or more, with DSCR at 70 to 80% LTV. If the first house is still empty, or the refinance is not done, I am not ready, no matter how good the second deal looks. Deal flow is the bottleneck, so the work is finding the next deal that passes the same test, not starting two rehabs at once. Finish the first cycle, keep the reserves, then go again.
Nicholas, for me the milestone isn't a stage on the first house. It's whether I can carry every open project through a slow sale without touching anything else.
I've bought 10 auction houses this fall. Some are listed, one is in escrow, one reverted back to the owner, and a few came with occupants who still had to leave. None of that runs on a schedule you control.
So before I buy the next one, I ask myself: if every house I own sits twice as long as I planned, am I still fine? If the answer depends on a sale closing, I'm not ready.
The second flip is less a money question than an attention question. For the borrowers you fund, what breaks first, cash or bandwidth?