Has anyone here successfully sold a flipping business?

Question

Hi all,

Just curious if anyone has sold a successful flipping business, and if so for what type of valuation (EBIDTA multiple)?

J Scott · Answer

I've written on this a bunch in the past... It would be very difficult to sell a flipping business, for several reasons: they normally don't maintain inventory or much personal property, so there's little asset value; there's rarely any intellectual property; there's rarely any brand value; and there's not a lot of proprietary knowledge in the industry, so building a new brand from scratch has low barrier to entry.

Now, this isn't completely true. Companies like "We buy ugly houses" have been able to leverage their brand and trademarks to build value that can be franchised and sold.  But they are by far the exception, and their value is purely based on Brandon trademark, not any competitive advantage or intellectual property related to operations.

So, if you want to build a business that can eventually be franchised or sold, that's going to be the key... Building a brand that somebody's going to be willing to pay for. Not just building business.

Account Closed · Answer

If you can sell an established chiropractor, dentist office or restaurant business then absolutely we can sell a flipping business. If Magnolia, Chip and Joanna Gaines empire, decided to sell, how many people do you think will raise their hands to try and take over their empire? Pfft. Thousands of people will line up for that opportunity. At least, that's how I see it.

Evan Polaski · Answer

@James Bowers, I am only echoing the others, but that is because most flippers are not a business, they are a service.

Theoretically, there is no reason you can't create a business, but for most business to be marketable, you need to be wanted but not necessary.

So this means generating a deal pipeline that supports full time acquisition employees.  Full time project managers to oversee the ongoing renovations.  A sale team that is either directly selling the projects or managing the flow to realtors.  And on top of that, being profitable enough to offer growth opportunities or salary levels to be able to retain talent.

In reality, when most service business get to a level they can sell, the founders don't want to because they typically have a cash cow that requires less and less oversight as the business becomes its own self sufficient machine.

Joe S. · Answer

Does the house flipper come with it? Lol

Scott Johnson · Answer

My question was whether you're been building a brand or not. Think Coca-Cola. Their brand is worth billions.

It's true that there are few assets in a flipping business unless you keep a warehouse of supplies or have a company car you're willing to let go. We're building a brand right now, but unfortunately, a lot of the media and advertising is based on my face and personality. I don't like it and will eventually find someone who likes the camera more than me, but our logo/name is on point and neutral.

A recommendation is that you read "The Millionaire Real Estate Investor" cover to cover multiple times. Keller talks about key points that will allow you to sell your business. Lists of customers, brands, and systems are the key. I'm building my business to sell, just in case I decide to do so.

Has anyone here successfully sold a flipping business?

Most Popular Reply