There is absolutely no reason for a real estate investor in today’s competitive marketplace to treat a flipping career like anything less than a legitimate business. Whether flipping houses as a full-time job or to supplement a nine-to-five, every single investor could benefit immensely from implementing sound business practices into their existing strategy. More specifically, however, there’s no reason to think a well-devised house flipping business plan can’t maximize even a new investor’s potential. If for nothing else, treating flips like a business will tip the scales in an investor’s favor while simultaneously eliminating inefficiency and inconsistency–two of the greatest threats to today’s entrepreneurs.
A house flipping business plan is nothing short of the most important aspect of a real estate investor’s career. To that end, I remain convinced few things–if any–come with a better return on investment (ROI) than a well-crafted business plan for house flipping. I could very easily argue a great business plan is invaluable, which begs the question: What is a house flipping business plan? Better yet, why does anyone looking to flip properties need to implement one?
To be perfectly clear, a house flipping business plan is exactly what it sounds like: a plan for flipping houses. It is worth noting, however, that a truly great flipping houses business plan isn’t meant for flipping a single property, but rather multiple properties. You see, a house flipping business plan isn’t meant to be used on a single property; it’s meant to guide investors through the house flipping process over the course of their entire careers. Therefore, any investor intent on running a successful rehab company needs to have a house flipping business plan of their own.
Today’s most prolific house flipping business plans act as a blueprint for success; better yet, they award savvy investors the chance to make success habitual.
[ Interested in learning how to flip houses? Register to attend a FREE real estate class and learn how to get started, right here in your local area. ]
It is not enough to simply start flipping houses on a whim; doing so exercises a reckless abandonment nobody will appreciate. Instead, investors need to devise a plan of attack, as to increase their odds of realizing success and giving themselves a blueprint to follow in times of need. It is worth noting, however, that a house flipping business plan does more than simply tell investors where to go. A truly great flipping houses business plan will also:
No two businesses are exactly alike, and it’s unfair to expect even similar companies to share the exact same business plan. Perhaps even more importantly, there isn’t a single, universal house flipping business plan that will work for every investor in a given market. What works for one investor may or may not work for another, and vice versa. Case in point: there are several ways to draft a promising business plan. That said, no house flipping business plan template is complete without the following sections:
Aptly named, the executive summary section of a house flipping business plan should sum up an investor’s intentions in a clear, concise mission statement. Perhaps even more specifically, the executive summary will serve as the foundation for an entire business; it’s the first impression, and it’s what customers will use to determine whether or not they want to work with a respective company. Every executive summary should, therefore, clearly define the company’s purpose and long-term goals.
No house flipping business plan is complete without clearly identifying the team’s dynamic. Identify the most important positions that will be held, and who will hold them. There is no need to acknowledge every single person in the rank and file, but it’s important to include the most important positions. In addition to the title and name of each person included in the team dynamic section, be sure to include a description of the title and why it’s needed. This section is intended to identify each person’s role moving forward, and prevent any disputes over whose responsibility a specific task will be. More importantly, the team dynamic section will see to it that everyone has a clear idea of what they need to do.
A popular acronym used to acknowledge a company’s strengths, weaknesses, opportunities and threats, a SWOT analysis will help up-and-coming real estate investors identify the very components working for and against their current business plan. If for nothing else, success favors those that are most prepared. Few things will prepare a real estate investor for what’s to come better than identifying their own strengths and weaknesses. Perhaps even more importantly, an in-depth, unbiased SWOT analysis will help investors carve out their own niche moving forward.
It is in the best interest of today’s investors to identify not only the problems that plague their industry, but also the opportunities that are inevitably created as a result. It’s a sad reality, but a truth, nonetheless: distressed homeowners are in a difficult situation. However, their problems create an opportunity for investors to lend a helping hand. The said, investors need to identify their own opportunities and how they can take advantage of them. This part of the house flipping business plan should seek to identify what the target audience needs, and offer a solution.
The market analysis section of a flipping houses business plan should identify the main indicators of the area investors intend to work in. As its name suggests, a market analysis should offer an in-depth look at what’s taking place in the same neighborhoods investors intend to work in. Pay special considerations to the past, present and future. Among other things, be sure to reference changes in the market share, nearby competitors, historical shifts in the market, costs, pricing and anything else deemed important to an investor’s success. The more comprehensive, the better a market analysis will serve an investor.
Not surprisingly, the best house flipping business plans will detail a company’s financial outlook. Financial literacy pertaining to one’s own company can’t be underestimated, and should take priority over almost everything else involved in a house flipping business plan template. Be sure to explain not only the model you intend to use, but also any pricing assumptions gleaned from the market analysis. Additionally, investors will also want to include where exactly they intend to get their funding from, and how they will secure money for future deals. To be safe, consider forecasting for at least three years; that way investors are less likely to receive rude or unwelcome awakenings.
The financing section should also touch on how the investors intend to finance future deals. Include which sources will be used, and their respective fees and timelines. The more methods of financing a deal investors have at their disposal, the better. This section should include, but isn’t limited to:
Creating a business plan for house flipping will require investors to think proactively. More importantly, house flipping business plans–even those accommodating new investors–should be written with the intentions of future growth. Scaling a business can prove difficult for those companies that aren’t ready for it. Therefore, it is best to include a section in your initial house flipping business plan that outlines any growth strategies that may be relevant. The best time to entertain a growth trajectory is from the onset of one’s career, not in the heat of the moment. Those prepared for growth from the beginning will find the transition to be a lot easier.
Every great house flipping business plan will include a section on how to generate leads through a proper marketing strategy. If for nothing else, this section will serve as the foundation for a great deal of the company to function off of. It is with a great marketing strategy that investors will be able to operate and maintain a funnel of hot leads. It is worth noting, however, that a truly great marketing system is the sum of its parts. There isn’t a single marketing strategy investors should be using, but rather several. For a better idea of what today’s investors are using, here’s a list of what has worked for us:
No real estate investor can hope to realize success if they can’t clearly define what success for their own company would look like. In other words, it’s impossible to succeed if there are no clear goals and objectives to aim for. You can’t possibly know if you realized success if you never sought to define what success actually means. Success is, after all, a relative term. What one investor may deem as a successful business, another could completely disagree with. Therefore, today’s new investors need to come up with their own definition of success; that way they can have something to strive for, and even reference when times get tough.
For as important as it is to know your own business, it’s equally important to keep tabs on the competition’s business. There is a great deal of information that can be gleaned from the way your competition runs their business. Therefore, I recommend dedicating an entire section of your house flipping business plan to the people you intend to compete against. What are they currently doing that is working? What hasn’t worked out well for them? Do they currently have a competitive advantage? In understanding the competition, investors will not only have a better idea of how to proceed, but also what not to do. Be sure to learn from their successful efforts, but don’t ignore their shortcomings; they are just as valuable.
No house flipping business plan is even remotely close to being complete without a section that outlines potential exit strategies. It is, therefore, at this point in the planning process that investors need to weigh their available options. First, evaluate the property based on its own merits and try to find out how it may meet your specific investing goals. If for nothing else, there’s an ideal exit strategy for each property, but it must line up with your own goals. In other words, you need to know whether you will flip, rehab, wholesale or rent the asset before you even buy it. Not only that, but you’ll need a backup plan in place in the even things don’t go according to plan.
It is entirely possible to pull off the perfect house flipping business plan by yourself. After all, one of the best reasons for becoming an investor is to become your own boss. That said, this industry can get very involved very fast. There are many skills required to complete a single deal, all of which can be preformed by a different professional. As a result, it may be in every investor’s best interest to assemble a well-qualified team. With a competent team at your side, you’ll be free to do more important activities. Not only that, but if you hire the right team, you can remain confident the job is getting done well.
A good real estate team is invaluable, and can increase productivity exponentially. To see to it your team is able to compete on the highest level, you may want to consider enlisting the help of the following individuals:
Today’s greatest real estate investors know it, and it’s about time everyone else did, too: no real estate investing company is complete without a thoroughly crafted house flipping business plan. As the blueprint for running a successful company, business plans are instrumental in developing a new investor’s name, and even furthering the success of seasoned entrepreneurs. All things considered, the majority of today’s most successful investors can attribute their current position to a sound business plan.