How many house flips can be completed a year?

Question

I was wondering why do I see some investors flipping 2-3 houses per year. While there are other investors flipping 15-30 per year? My take was that people flipping only a few houses a year, were investing their own money to buy the fix and flip property. So their money is tied up in the the property, now they have to wait to complete the fix and flip to get their money back to capitalize on another potential fix and flip property. While on the other hand the investors who are flipping 15-30 houses per year are not using their own money, they are using or raising private capital, using hard money lenders etc. so they can execute as many deals, as their ability to find capital, and deals.

Account Closed · Answer

@Jonathan Olivares The reason there is so much difference comes from a variety of circumstances. When I do a flip in Seattle or Austin, my "buy in" is in the $300,000 range, requires high end materials and good craftsmanship. I've made as much as $250,000 on those kinds of flips. When people do a flip in Phoenix, they usually try to find houses in the $40,000 to $60,000 range (the market has changed and it is now hard to find them under $200,000 in Phoenix. Obviously, you can and have to do a lot more $60,000 flips to match the profit of a couple of $300,000 flips.The average PROFIT per flip across the country according to Realtor.com, after all expenses, is $15,000. That is not an exciting number to me. I am accustomed to profit after expenses of $80,000 to $100,000 per house.So, I am not at all impressed with how many flips someone does in a year, I am interested in how much profit actually wound up in their pocket and how many hours it took that year to get those profits.

Account Closed · Answer

I see you are out of Copalis, Kalaloch is one of my favoritest places on earth and in those days there were actually salmon when we went salmon fishing out of Westport. I'll try to find some pics of a couple of the flips I did in Seattle. I bought it for $220,000 put about $80,000 into it, held it a year or two, rented to out, learned that I am a horrible landlord, (too nice, and Seattle landlord laws favor the tenant ) sold it for $550,000 and I just looked it is currently pending for $747,000. Now, keep in mind I owned it a while back and my point is that as prices ebb & flow, your investment strategy will change. I only do Subject To now because it is less risky and more profitable, but I love flips.

Jonathan Olivares · Answer

Account Closed In the house flipping process, is it possible to be wholesaling a lot of deals along the way? Do any of you wholesale and fix and flip homes? So when you receive leads, pick which one is good to wholesale, and cherry pick the good fix and flips.

David MacClintock · Answer

I'll offer a differing opinion. I flip low volume in a low cost market. I know what products I'm using before I start (often I already have them in 'inventory' from a sale at a Box store or contractor discount days at the building supply store. There is very little that is custom about the houses, avoiding any customizing is big. No tiled showers/tubs, no tiled back splashes, no special color schemes. I use the same 3 sidings, always white trims in and out, the same carpet that I have determined is easiest to sell at the cost of it. I use the same faucets, lights, hardware, baseboards, vent covers. The process is dialed down to outlet covers. There is no cost overrun and no place to skimp on costs. I would love to use more creativity but creativity doesn't move product and in lower middle class, price sells a house. I list under top dollar and sell the house. I know this is the very unsexy side of flipping but it is the side of flipping that is a business. I think often these big flashy 600k flips serve to stroke the ego of the flipper as much as they are a business. Why put 500 or 600k on the line for 50k when I can chase 50k for less than 100k?

Chris Lemire · Answer

@Jonathan Olivares If you plan to do either, or both at scale, remember that they are very different businesses. It's almost always best to focus on one, build it up, and stabilize it, before branching out to the other significantly.Yeah, you can dabble in both fairly easily, especially if your goal is only a few projects a year. However, if your goal is a consistent, predictable business, I strongly recommend focus.

Account Closed · Answer

So much of investing depends on what you want to do. I can't quite tell if you are wanting to wholesale or buy wholesale and flip them. As with anything, there is an easy way and a smart way. And sometimes new folks don't know the questions to ask to do things the smart way. That's all I'm saying.

Account Closed · Answer

@Patrick PhilipIf a wholesaler "takes Title" and offers a Warranty Deed, I suppose I'd consider it. But since I do Subject To (take over the loan of the Seller), and wholesalers are cash sellers, that part doesn't work. A Title search could help if done at the appropriate time, but since the transaction doesn't include a Warranty Deed until later, a lien or bankruptcy may be pending that isn't noted yet. I never know what was promised to the seller, what was told to the wholesaler, & what got lost in translation. I deal directly with the seller. I find them "off market" and discuss details with them and put into writing what is expected of both sides.

Account Closed · Answer

@Jonathan Olivares I didn't have time to wholesale while I was flipping. To do a good job flipping, there are so many details to attend to, that I focused only on the flip. In my case, I did a lot of the work myself. Others hire a crew. The key to successful & profitable flipping is to get a good product out quickly and move onto the next one. During the flip, it is just costing you money. From the time you finish, if you use a real estate agent who gets 6% of the sale, (I sold these myself and saved the 6%, about $18,000 to $30,000 per flip) it can be two months before receiving an offer and then another month before closing where you actually get a check. In Subject To, no agents are involved and I can get $25,000 or more per property and it generally takes about 90 days each instead of the long time it takes with flipping. I can work 3 or 4 of these a month and I have a backlog. Since the backlog is there, I often times work with students and train them through the process. (That is laid out at my website) They become similar to the "crew" that flippers have. It is a lot less work and less risky for all involved. It is a TOTALLY different way of thinking. I still don't do wholesaling (haven't ever, really nor buy from wholesalers because I really don't know what the status the Title is and having a legitimate and clear Title is extremely important to me.

Patrick Philip · Answer

I'm wanting to buy wholesale and rehab. According to the wholesalers numbers (which obviously need to be verified), there are tons of deals out there. Wholesaling just seems boring to me and not my thing. I'd rather let them do the work of finding properties.

Matt Gragg · Answer

Account Closed I have not done any wholesaling of any properties at this time. My focus is more of the "buy the ugliest house for the best price, rehab and sell for current market price".I have had a restaurant, campground, 5 unit apartment building and lots of single family properties for rentals. I like the fix and flip best. Get in and get out and move onto the next one.