Welcome to Propelio TV! Today, we’re diving into the essentials of flipping houses. From finding the best deals to making your renovations efficient and profitable, this guide outlines steps that work for my business and can help you streamline yours. Let’s jump into it!
Finding Deals
Networking
Networking is one of the most efficient ways to find deals. Let everyone you know, especially on social media, that you’re in the house-flipping business. Whether you’re a wholesaler or a fixer-upper, get the word out that you buy houses for cash. Your network can be a goldmine of opportunities.
Wholesaler Events
Attending events with wholesalers is crucial. Wholesalers lock up deals and look for end cash buyers like you. Building relationships with wholesalers can result in multiple opportunities. Even if just one deal works out, you can make tens of thousands of dollars from that relationship.
Marketing for Deals
While networking and events are effective, you can also invest in your own marketing strategies if you have the time and capital. Although it’s more expensive, direct marketing can yield great deals if done right.
Evaluating Properties
After Repair Value (ARV)
The first important factor in evaluating a property is its ARV – what it will be worth after all repairs. Look at similar properties in the same subdivision, ideally within a quarter mile, and sold within the last six to nine months. Always be conservative in your estimates to avoid losses.
The Big Three: Roof, Foundation, HVAC
Evaluate the roof, foundation, and HVAC first. These are the costliest repairs and should be your primary focus. Fixing these issues first also lays a solid groundwork for the rest of your renovations.
Finding Subs (Subcontractors)
Driving for Dollars
Drive around neighborhoods and look for work trucks or vans without decals. These likely belong to subs who get work through referrals, indicating they do a good job. Trucks with decals often belong to those constantly seeking work, possibly due to lower-quality service.
Asking for Referrals
Ask fellow investors for referrals. Check Facebook groups or attend networking events. Be thorough and verify these referrals by asking for photos of completed work or speaking directly to previous clients.
Work Order and Process
Foundation First
Start with foundation repairs. A stable foundation is critical for all subsequent work.
Plumbing Test
Conduct a plumbing test while the foundation is dug up. If there are plumbing issues, fix them while the foundation is still exposed to save costs.
Electric and HVAC
Follow up with electric and HVAC inspections and repairs. These essential systems need to be in top shape before you move to other tasks.
Roof Inspection
Ensure the roof is in good condition. Banks will scrutinize this during resale, so it must be right.
Cosmetic Work
Do enough cosmetic work to make the house the nicest in the neighborhood without overdoing it. Focus on kitchens and bathrooms, as these areas significantly influence buyers.
Drywall, Paint, Floors, and Appliances
- Drywall: Wait until the foundation has settled before installing drywall to avoid cracks.
- Paint: Fresh paint gives the home a new smell, appealing to buyers.
- Floors: Install flooring last to prevent damage during other work.
- Appliances: Finish with installing appliances, particularly stainless steel, for a modern look.
Staging
Staging is key. Get a storage unit and buy used furniture to stage your homes. This small investment pays off by helping potential buyers visualize their life in the house.
Selling the Property
List Below Highest Comp
List your property slightly below the highest comparable sale to attract more attention and create urgency among buyers.
Pay Flat Fee or 1% Listing Agent
Use a flat fee service or pay a 1% listing agent. They’ll have more incentive to sell your property compared to a one-time listing fee.
List on Listing Spark ($7/day)
Listing Spark offers MLS, Zillow, photos, and signs included for $7/day. This service gives you more control over your listing and helps you negotiate with showing agents.
Relist with New Broker After 30 Days
If the property doesn’t sell in 30 days, cancel the listing and relist with a new broker. This resets the listing’s newness and attracts fresh eyes.
Offer Higher Buyer Agent Commission
Temporarily increase the buyer agent’s commission to 4% if necessary. This attracts more motivated agents, increasing the likelihood of a quick sale.
Scaling Your Business
Don’t Get Emotionally Attached
Stay focused on profits, not emotional attachments. Flipping houses is a business; treat it like one.
Buy at 80% ARV for Volume
Buying at 80% ARV allows you to do more deals. The time saved in finding perfect deals is more valuable than the small profit margin differences.
Invest Profits Back into the Business
Reinvest your profits to scale. Use the “repeat method”: one flip leads to two, two to four, and so on. This continuous reinvestment builds your business exponentially.
Key Takeaways
- Deals are everywhere if you look diligently.
- It’s fine to pay a premium for marketed deals; time saved is money earned.
- Building a loyal sub team saves costs and increases efficiency.
- Sell properties shrewdly by listing smartly and offering attractive commissions.
- Scale by focusing on volume and leveraging your profits back into your business.
This guide contains the strategies and practices that have worked for my business. Implement these tips to streamline your house-flipping venture and increase your profitability. Stay tuned for more insights and happy flipping!
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