Last week I bought another fix and flip property, which meant I have 16 at once. The most I had ever had at one time before this year was ten, but I have blown past those numbers recently. It can be a bit stressful having that many projects at one time, but it can be exciting and lot of fun as well. It is not easy finding, financing and repairing so many properties at one time. This year I have expanded the way I find properties, developed new ways to finance them, and used new techniques and contractors to fix them. I have not bought any rental properties recently, which is one reason I have been able to flip so many houses. I would usually invest most of my extra income into rentals, but I have poured that money back into the flipping business instead.
What kind of properties am I flipping?
Our prices in Northern Colorado have skyrocketed in the last few years. The median price in my town was $110,000 in 2012, but has risen to over $260,000 in 2016. This price increase has been awesome for the rentals I already own, but has made it tough for me to buy any new income properties. The rents have not increased nearly as much as prices have increased. Housing prices have increased greatly, but I am still finding my sweet spot to flip homes in the lower price ranges. My average purchase price for the 16 houses is $156,500 and that includes one I bought for $535,000. I definitely operate in the low-end of the market for most of my flips.
Even though our market has shot up in value and continues to increase, I never count on appreciation to make my money. I buy a flip assuming the price will not go up, and leave room in case prices drop as well. The average price I think these houses will sell for is about $273,000, which leaves me a lot of room for profit. Some of the houses need $15,000 in work and some need $80,000, but my average repair budget is $30,000 to $35,000. Below is a before and after video of one of my flips. This flip took about $50,000 in repairs after some unexpected issues and contractor problems.
How am I finding properties to flip?
Most of my properties that I buy to flip, I find on the MLS. However, I am finding new ways to source deals as well. 11 of the 16 properties I have were from the MLS, 2 were from wholesalers, 2 were from auctions (not listed on the MLS), and 1 from another agent. I have at least one more house that I am buying before the end of the year from a wholesaler.
I think many people assume you cannot flip houses in a hot market, but I have been flipping since 2001 through good and bad markets. It can be tougher to find deals in a hot market, but it can also be tough to sell houses in a down market. There are less foreclosures and short sales in my market, but most of the houses I buy from the MLS are not foreclosures. They were owned by regular home owners, but needed a lot of work. Thanks to the increasing prices, those homeowners can now sell their houses. Don’t think there has to be a lot of foreclosures to find good deals. It helps being an agent, and I spend a lot of time looking for awesome deals.
How am I financing my fix and flips?
Another challenge with having 16 flips at once is paying for them all! I have great relationships with local banks that provide the bulk of the financing for my flips. I can get loans for 80 percent of the purchase price at less than 5 percent and one point. I have 11 of my flips financed with local lenders, 4 financed with private money, and one financed with cash. I have a lot of my own cash tied up in the business and reinvesting my profits into more properties has allowed me to grow. In the last year I found one new bank and multiple new private investors who want to loan me money. I do not partner with those investors, I pay them interest like I would a bank.
How am I fixing my flips?
Repairing my properties fast has always been a challenge. I have used multiple contractors in the last year, some good and some bad. I have also hired a full-time handyman and may hire more. The problem with most contractors is they over promise the time it will take them to finish a job. I have to assume a job will take twice as long as the contractors says. Some problems I have had with a contractor recently is he keeps coming in over budget and does not tell me until the job is done! He is not coming in over budget because of added work, but because he miscalculated his bid. On top of taking twice or three times as long as he said it would take, he is over budget. This is one reason why you should get every bid in writing and have the contractor sign off on it.
I have a number of sub contractors I use as well. I try to sub out the plumbing, electric, roof, foundation, flooring, paint, HVAC, and drywall. The more subs I can use, the more money I can save and the faster I can get the work done. Luckily I have an awesome project manager who manages all of that. The handyman I have on my team can perform demo, paint touch ups, and other tasks that speed up the remodel. At some point I may have my own contracting company.
How do I keep track of everything and stay organized?
Having 16 properties at once is tough, and it could not be done without systems. We have a giant whiteboard in the office that lists the property, what stage it is in, who is working on it, and the time frame for finishing. I also have a fix and flip sheet that lists the details of each house, which I give to my team. I let my agents market my flips before they are for sale to help them generate leads. I also will sell a few properties a year to other investors before I fix them up. I also rely heavily on my team to keep track of the details, since I am not good with details. I am thinking of getting an online management system to keep track of everything as well.
How can you get help flipping houses?
I have completed well over 100 flips in my career. I will have bought 20 or 21 flips in 2016 and look to complete at least 30 flips in 2017. I have learned a little bit about the business and I am not one to keep secrets. I have written a book and created an online course for flipping houses. I created these in part because I was sick of seeing investors spend $30,000 on coaching programs that teach them nothing. You can find my book on Amazon here in paperback or eBook form. The book is $13.99 for paperback now, but that price could go up. My coaching program is a mix of video and other resources which can be found here. The flipping course also comes with my Complete Blueprint for Successful Real Estate Investing course, which comes with calls with me.