Starting your own house flipping business is nothing less than a huge undertaking; not only because it’s going to require a significant amount of hard work and determination, but also because of the implications it could have on the rest of your life. You see, few investing endeavors can realize a more lucrative future than a properly run house flipping business. It is worth noting, however, that success is far from guaranteed; you will need to put in the time — especially in the beginning. If you are confident you want to make a career out of flipping homes, the best thing you can do is to start your house flipping business off on the right foot.
House flipping is a generalized term used to describe the acts of real estate investors. If for nothing else, house flipping doesn’t refer to a single exit strategy, but rather a means to an end. You see, house flipping can refer to wholesaling or rehabbing, so long as the investor serves as the middle man between a seller and an end buyer. The “flip” simply refers to the home changing hands, and will typically include a number of steps in between.
Rehabbers, for example, will aspire to buy a home under market value. Traditionally, they will target distressed homeowners who are motivated to sell at a discount; this ensures two things: higher profit margins and an increased likelihood of actually landing a deal. Once acquired, the home will be brought up to market value through any number of renovations. Some “flips” need a lot more work than others, and the after repair value (ARV) will help determine how much money should be spent doing so. Once the home is brought up to market standards, the investor will then proceed to sell the home (or flip it) to an end buyer for more than they spent on acquiring it and fixing it up.
Wholesale flippers, on the other hand, don’t actually buy the home; they simply acquire the rights to buy it. With a wholesale contract, the investor is then free to sell their rights to another buyer, making a profit in the meantime. Either way, the investor is acting as a middleman between two parties.
While starting a house flipping business can potentially lead to a lucrative career path, capital gains are not the most important reason for getting into the real estate industry. That said, money isn’t everything; time is. If for nothing else, starting a house flipping business has the potential to result in enough money to free up an investors time to do the things they enjoy most. Whether it’s spending time with loved ones or traveling the world, a house flipping business at least gives investors the optionality of how they spend their time once they are successful.
Starting a house flipping business can be intimidating for those on the outside looking in, but it doesn’t need to be. Like anything, there is already a system in place for investors to follow. Therefore, instead of relying on trial and error, consider following these seven steps below:
Do Your Homework: Nobody, and I mean nobody, should throw their hat into the house flipping business ring without having educated themselves on the subject at least a little bit. That’s not to say you need to be an expert by the time you start investing, but educating yourself will have a more profound impact on the way your business progresses than anything else. Just remember one thing: there is no better foundation to a house flipping business than a sound education.
Draft A Proper Business Plan: A good business plan is straight and to the point. Perhaps even more importantly, a great business plan will answer more questions than it asks. If you are looking to start a house flipping business, drafting a business plan should reside at the top of your to-do list. Drafting a business plan that clearly identifies how you intend to proceed is of the utmost importance. To make sure you create a well-crafted business plan, I urge you to continue reading.
Assemble The Right Team: Real estate is a people business; it always has been and always will be. Therefore, you can’t expect to make it as a real estate professional without the right supporting cast. That’s not to say you can’t invest alone, but rather that the relationships you foster are of critical importance. If you are going to hire a team, make sure they are a great fit for what you intend to accomplish and that they can bring something new to the table. If you intend invest alone, treat the relationships you create how they deserve to be treated: like they are the most important thing to your home flipping business.
Establish Proven Systems: I highly recommend implementing real estate systems to help you through your daily routine. Establish systems that are capable of replicating the results you want to see on a daily basis, and be sure to create a system for every process in your company. Everything from ordering office supplies to closing on deals and marketing should have a system in place. That way, you will be more likely to replicate the results you expect on a daily basis.
Line Up Financing: While I will certainly argue that real estate is a people business, it’s impossible to start a house flipping business without any access to funding. Without the ability to secure capital, there’s no reason to believe you’ll ever be able to land a deal. As a result, you should establish relationships with the right lenders before you even start investing in real estate. Remember what I said about it being a people business? Get the ball rolling before you even start investing and start working with lenders as soon as possible.
Identify Your End-Game: No aspiring investor can possible know how to start a house flipping business if they have no idea what it is they want to accomplish. Or, perhaps more simply, you need to know where you are heading if you want to know which direction to start out it. Before you start investing, make sure you ask yourself what you want to achieve by the time it’s all over, because the answer you give will provide great insight on how to proceed.
Start With A Single Niche: Starting a house flipping business isn’t exactly easy, but there are things you can do to make things easier on yourself. For starters, don’t bite off more than you can chew. Star investing in one particular area, like wholesaling or fix and flip properties.
[ Want to create a roadmap to a financially secure retirement? Register for a FREE real estate class to learn the powerful wealth building strategies real estate investing has to offer. ]
Picking a legitimate house flipping business name is of the utmost importance. The ramifications of choosing a poor name are far too dangerous to simply neglect putting all your effort into the process. A great name, after all, will serve as the face of your company forever, so be sure to put some time and effort into it. On top of that, be sure to follow five simple rules:
Don’t Rush To Conclusions: Up-and-coming house flippers are strongly advised not to rush to conclusions. Despite how great a business name sounds, you really need to sleep on it. House flipping business names are very important, and they need to be perfect; not just anything will do. That said, you need to make absolutely certain that your name is flawless. Don’t pigeonhole yourself with certain terms or use anything that could be misunderstood. In other words, don’t simply assume you have landed on a good name. Dig in, do some research, and confirm the name is a good fit for your business. Only one you have put it through the ringer and are certain it will serve its purpose can I recommend moving forward.
Draw From Inspiration: If you are having a hard time formulating a house flipping name, try drawing from what inspires you. Take something that is presumably positive, and use it to shape your business. That way, you can simultaneously come up with a great name and use it as inspiration. What more could you ask for? Do you like helping people? Somehow conjure up a name that suggests your caring nature — it’s as simple as that.
Do Your Research: Today’s best house flipping business names are the direct result of hours of research. Don’t, for one-second, think a good name will just pop into your head. Of course, there’s always the chance a good name will “magically” appear out of thin air, but even then you’ll need to mind due diligence. Conduct the appropriate research to make sure it is a legitimate option for your business. Does it get your point across? Is it offensive to anyone? Is it evergreen? There’s are all questions that need to be answered through extensive research.
Establish A Web Presence: A real estate investment company name isn’t complete without a registered domain name or social media profiles. Be sure your real estate name is available across all platforms.
Make It Marketable: There’s no reason your house flipping business name should be hard to market. In fact, it should be able to market itself. The name you choose should give people a good idea of what it is you do, and nothing less.
As you may have already noticed, there is no single formula to follow for creating a successful house flipping business name. Company names range from bizarre to calculated, and there are many reasons why each end of the spectrum either works or doesn’t. That said, there are some guidelines you may want to follow when picking a house flipping business name. For example, the name should clearly describe what it is you do; it should answer more questions than it forces people to ask. Secondly, it needs to make sense within the context of your business, and it shouldn’t marginalize anyone. A good business name needs to speak to everyone in order to increase your exposure. Here are some good examples:
Swift Home Investments
Sell Homes Fast
San Diego Real Estate Investment Experts
San Francisco Investments
Residential Home Investments
It is no fluke that today’s best investors appear capable of repeating their success. In fact, a truly great flipper will make success habitual, which begs the question: What’s the secret? Here are some of the reasons today’s good investors remain, well, good at what they do:
They Prioritize Relationships Over Money: Real estate is absolutely a people business. Who you know is unequivocally more valuable than any amount of money, and today’s greatest investors know that. The right relationships, for that matter, can take your career higher than anything else. Remember one thing: all the money in the world won’t do you any good if you can’t foster healthy relationships with others in the industry.
They Offer A Genuine Helping Hand: Nobody wants to work with someone they don’t respect or trust, and homeowners are no exception. Consequently, homeowners are more willing to work with house flippers that are genuinely lending a helping hand. Put it the way: if you are genuinely in the business of helping people, your career will be much better off. That goodwill may reciprocated over the course of your career more than you could ever imagine.
They Never Stop Networking: Remember those relationships I just talked about? The best investors never stop looking to add more relationships to their contacts list. They know everyone is a viable contact, and they network like it. You never know who will turn out to be the reason for your next deal.
They Know Where The Cash Is: Cash is king in the real estate industry. Those with cash to secure deals will find the scales tipping in their favor. That said, it pays to know who has the cash. Today’s best investors create relationships with those that have the cash they need to secure a deal.
They Understand The Strength Of Leverage: Money isn’t the only determining factor when buying a home. Sometimes homeowners are motivated by something else, and the best investors can uncover their needs. Not only that, but the best investors can use the needs of the homeowner to their advantage as leverage. Again, there are more important things than money sometimes. Good investors will figure out what the owner wants and find out a way to give it to them.
Are you looking to write a successful house flipping business plan? Here’s a few steps you don’t want to leave out:
Mission Statement: A good mission statement will identify exactly how you want people to perceive your company. In a concise paragraph, explain what it is you are setting out to do via your company. That way, there’s no getting lost along the way.
Company Description: This section will include information on when the company was founded, the names of those who started the business (and their roles), the amount of people it currently employs, and the location in which it resides. The company description is more or less a detailed account of its internal infrastructure.
Growth Data: This part of the business plan will reflect empirical evidence of growth. Include data supporting how much your company has grown. Identifying areas of growth will be invaluable moving forward.
Products & Services: Briefly describe the products and services you intend to offer to the public. What is it you will bring to those in need of your services?
Financial Strategy: Leave room to identify your financial strategy, not excluding any money that you may need to borrow. If for nothing else, receiving a loan will alter a new entrepreneur’s financial strategy considerably. For starters, you must identify how it will impact your bottom line in the future.
Future Aspirations: Let your intentions be known, and articulate what it is you hope to accomplish in the next three to five years. Describe where you would like to see your business in the future. Remember, this serves as a road map; don’t aim too low or you will regret it in the future. Give yourself an achievable goal you will be proud to accomplish.
Knowing how to start a house flipping business is invaluable, and learning from those who have come before you can serve as the foundation of any company. That said, sometimes knowing what not to do is just as important as knowing what to do. With that in mind, here are five mistakes for you to avoid when starting a house flipping business of your own:
Having Insufficient Funds: Insufficient funds are perhaps the most common mistake new investors make. Whether it’s underestimating a project or simply not being able to secure capital in the first place, insufficient funds will derail a deal faster than just about anything else. Nonetheless, capital is necessary, so investors will need to secure sturdy relationships with those who have quick access to capital and to make sure they are intact.
Having No Time: Running a business takes a lot of time which means those who don’t have enough time to give their business will find success hard to come by. From the beginning, any venture into running a house flipping business will need to be met with one’s full attention.
Lack Of Skills: Investors without the necessary skills will find running a house flipping business to be extremely difficult. Therefore, it’s important to know what you are getting into. That said, anyone lacking in skills could always work with a partner that compliments their skillset. The key is to identify your own shortcomings and compensate accordingly.
Lack Of Education: Nothing is more important to a real estate investor than the education which they have founded their entire business on. A true knowledge of the industry is invaluable, and can potentially unlock limitless potential. That said, it’s not enough to know a lot, investors must strive to continue learning and keeping up with rules and regulations. Doing so will help avoid avoidable mistakes.
Having No Patience: Nobody ever said, a house flipping business was a get-rich-quick scheme; there’s a reason it’s called a business: it will take plenty of time to develop. As a result, one of the worts things a new investor can do is lose patience for their new company, or any subsequent projects they are working on. Doing so will result in poor quality, and perhaps a significant loss of capital.
Starting a house flipping business is an exciting endeavor, but it’s not something to be taken lightly. Done correctly, a great start to your business can serve as a solid foundation for the rest of your career. That said, you will want to give yourself the best start possible.