How to Flip Multiple Houses Per Monthon August 15, 2017 6:40 pm under Real Estate Investment Tips
Flipping even a single property is a lot of work. Anyone who has tried it knows that there are many variables that need to come together in order for a project to go smoothly. How can you possibly flip multiple houses? It may be obvious, but any real estate investing mentor will tell you to start with a small project and work your way up to bigger and more projects over time. This is because experience helps you lessen the amount of variables that can spiral out of your control and eat into your profit. Multiply that when you’re flipping multiple houses and you’ll see why it’s so important to be vigilant and prepared.
With experience and a managerial mindset, you’ll come to master the art of variable control and you can transfer all the lessons you’ve learned from your single, smaller project to the gigantic task of flipping multiple houses per month.
Here are some advanced tips from our experience in the industry that you can use to start flipping multiple properties at a time:
1. Maximize your Financial Leverage by Finding the Right Lender.
Let’s say you have some house flipping experience under your belt and you are now looking to transition to managing multiple projects at a time. Your house flipping empire is beginning to take shape. You’ll need a lender that can make the most of your available funds for the highest personal return. You call two lenders and heres what they offer you for a $200,000 loan:
The total cash you would need to bring to closing for Lender 1 would be around $11,600 because they arefinancing 100% of your project. Lender 2 allows you to only bring approximately $9,000 to closing, but in addition to this you’ll need to bring the 10% down payment ($20,000). This brings Lender 2’s estimated grand total due at closing to approximately $29,000.
When attempting to take on multiple projects, it helps to be able to use as much financial leverage as possible. Remember, $20k of the $30k paid to Lender 2 is not a fee, but equity, or skin in the game. That said, for the $30k you are shelling out for one project with Lender 2 you could have done three separate projects with Lender 1. Leverage, while not the be-all-end-all, is vital when doing multiple projects. Think of your whole empire when making financial decisions like choosing a lender.
2. Become an Expert at”Variable Control.”
This is a phrase we just coined because it fits perfectly with this topic. In most cases, it comes with experience. Of course, the connotation to the word “variable” suggests that there is something unknown about it, and for the purposes of this article, variable suggests that there are aspects to a project that are simply unforeseeable. That’s certainly true, but this doesn’t mean that you can’t better control them through having dealt with similar situations in the past or knowing someone who can extinguish the fire before it rages. You’ll come to recognize issues before they unfold and because you will, you’ll be able to remedy those issues before they hurt you where it counts: your bottom line.
3.Become a Master Manager.
Organization is the parent company to the following subsidiaries: coordination and focus. Heres what we mean:
Coordination Some of our best clients are the best because they coordinate with plumbers, electricians, realtors, attorneys, lenders, inspectors, appraisers, brokers, contractors, and others so effortlessly. It’s difficult managing all of those relationships, but the best flippers make it a habit to have everyone on the same page. This is especially true when flipping multiple houses at the same time. It only makes sense for you to coordinate multiple projects to, all at one time, have rough plumbing installed so that the plumber is contacted the most efficient amount of times. Your schedule matters, but think about the plumber. What if you can’t get in touch with him next time or he has multiple jobs and cant make it out? Regarding another relationship, if a draw is needed for one property, it makes sense to coordinate so that, at that particular time, all properties are in need of draw funds. Chances are you are saving money on wire fees and inspector fees if only one wire needs to be sent out and if the inspector only needs to travel to your properties once.
Focus We tried to sum it up in one word, but “present in the moment” may work best. Let’s say you are working on three properties. Be sure to distribute equal attention to each property. Sometimes, we see borrowers favoring a particular project. Maybe they think it will earn them more money, or maybe they think they have a buyer lined up. Whatever the reason, rid yourself of such favoritism and stay impartial to your projects. It seems trivial, but we find this to be a pitfall when flipping multiple projects at a time. Any experienced borrower will tell you that property one and two can do just fine, but if property three becomes a problem, properties one and two’s profits may not be enough to put you in the green.
Chances are, if you are successful flipper, the tips and traits listed in this article are among the top tips and traits used in your general business makeup. Don’t assume that because you have done some successful flips in the past that flipping multiple at a time will be a breeze. Be sure to continue your diligence but also, take these tips and traits and add them to your arsenal.