073: Update on my Flips with 13 sold and 15 bought in 2016

On this episode of the InvestFourMore Real Estate Podcast I discuss my flipping business. I have sold 13 flips already in 2016 and bought 15 more. I also have 5 more flips under contract to buy in the next month! I do not think I will sell 20 flips in 2016, but I should get 16 to 18 sold by the end of the year. I will buy at least 20 flips in 2016 and hopefully a few more than that. I talk all about my current flips, how I am finding them, new financing techniques, new repair techniques, my team, my high-end flip which has not sold yet, and my goals for 2017.

How many flips do I have going right now?

At the moment I have 12 flips in my inventory. Most of 2016 I have had from 8 to 13 flips going at once. Last year I often had 10 flips going at once, but my business was in a much different place. Last year it was taking me much longer to complete flips, and while I was holding almost as many properties, I was buying and selling fewer. Of the 12 I have going right now, 2 are under contract to sell, 2 more are listed, and a couple more are very close to being listed.

You can see the before and after videos on most of my flips here: Mark Ferguson YouTube

How have I been able to reduce the time it takes to flip houses?

Last year I held multiple flips over one year and in one case almost a year and a half. This year I have been able to clear out that old inventory and I am getting houses repaired much faster. I bought out the flipping business and real estate business from my father in 2013. When we worked together we did not flip nearly as many houses as I do now. It was much easier to get houses repaired, because we did not have as many jobs. I experienced a lot of growing pains and hired the wrong person to be my project manager in 2015. I have a house buying problem and kept buying more flips, even though we were not getting the current flips repaired fast enough.

This year I had Nikki who works with me take over the project management and she has been awesome. I have also taken a more hands on role with the flips and we are spending more time with contractors, checking up on houses, and finding more sub contractors. By hiring more contractors, using more subs, and paying more attention to our contractors we have greatly decreased the time it takes to flip houses. We still have problems with getting things done quickly, but I have only one flip that I have owned for more than 7 months. That flip was the high-end flip that was occupied by a tenant for many months and we could not start work on until I had owned it for 6 months.

What is going on with my high-end flip?

I bought a flip for $535,000 back in December of 2015. The home was occupied by a tenant who we had to negotiate with to end her lease early. I made some repairs to the houses and we put it on the market for $879,000. We had a lot of feedback that the home was not in as good of shape as people expected. I am used to selling houses in a much lower price range. Usually those houses are nice, but not perfect. I have learned that higher end buyers expect a little more! We took the home off the market and we are making more repairs and will relist it soon.

How am I finding so many deals to flip?

Most of my flips are still bought through the MLS. I have bought a couple from wholesalers and auctions, but MLS is an awesome place to find deals if you know how to use it. When I buy from the MLS I almost always wave my inspection and any other contingencies except for title. I also always follow through with what I tell agents and buyers. I have built a very good reputation in the area and I even have agents bringing me deals now. I had an agent ask my if I wanted first crack at his listing before he let other agents see it, because he knew I could close fast with no hassles if I wanted it. That is one of the houses I have under contract to buy.

How am I able to pay for so many flips at once?

In the last year I have not bought any new rental properties. I want to buy more rentals and still have the goal to purchase 100 by 2023, but our market is crazy in Colorado. It does not make sense for me to buy single family rentals here, or even multifamily rentals because prices are so high. I have started to look at commercial and other markets, but in the mean time I am putting the money I would have spent on rentals back into the flipping business. I have a lot of my own cash in the flips, plus I have found more private money lenders and more banks to fund my properties.

Goals for 2017 and the flipping business

I have done great in 2016 with my flipping business, but things can always get better. I want to flip 30 houses in 2016 and I think I can do it. I have to improve my repair process even more, but I have started to make changes on that front as well. I hired a full-time employee to work on my properties and plan to hire more. By hiring my people to work on my properties, I can tell them exactly when and what to do. This should shorten the time it takes to repair my properties, and help me buy and sell even faster.