105: Mid Year Update on House Flips, Rentals, and Real Estate Team
This year has been pretty good so far. Things never go as you plan, but that is what makes life fun. I have had many challenges and successes and tried out many new ideas and techniques. I have sold 11 flips and purchased 11 flips. I bought one rental property, and there was quite a bit of change on my real estate team.
I think I have a good chance of reaching many of the goals I set for this year, but I won’t have as good of a chance with others. I set challenging goals on purpose so that I am forced to think of new and better ways to do things. I will go over the basics in these show notes, but make sure you listen to this episode of the InvestFourMore Real Estate Podcast to hear the full story.
How has my flipping business grown and changed?
I flipped 18 houses last year, and by flipping I mean sold 18 properties that I rehabbed and always intended to flip. I also sold two long-term rentals, but I am not counting those as flips. The most houses I had flipped before this year was 12, so that was a huge jump for me. Part of the reason I flipped so many houses was I stopped buying rental properties. The market is still going crazy in Colorado, and single family or multi-family rentals do not make sense to me here.
The median price has jumped from $110,000 in 2011 to over $280,000 in 2017. This is great for the value of my rentals, but rents have not increased nearly as much as prices. Houses I was buying for $120,000 and putting $15,000 of work into historically rented for $1,400 per month. Now, I have to buy houses for $200,000, and after putting $20,000 of work into them, they may rent for $1,500 or $1,600. There are very few homes below $200,000 that I would want as rentals, and those houses also command much lower rent.
I have continued to build my flipping business since the market is much more suited for it than rentals. I made a goal to flip 30 houses in 2017. I have flipped 11 houses to this point, which is on pace for well below 30 houses for the entire year. However, I am not that far away from hitting my goal. I have five flips under contract and set to sell before the end of July. That would put me at 16 completed flips, and I have 16 flips in my inventory right now. I will get all of those houses sold in 2017, which would put me at 26 flips if I don’t sell any more. I have another flip under contract, and I am not going to stop buying. I think I will hit 30 flips in 2017, or at least come very close to it. For the details on how I find deals, finance them, and repair them, make sure you listen to the podcast.
How has my real estate team done this year?
Typically, when the market increases in value so much, it is a great time to be a real estate agent. However, there are almost no houses for sale ,and that is why prices continue to rise. We have had record low inventory each of the last five years. When there are no houses for sale, it makes it really hard for real estate agents to make money.
My team is still surviving and doing well, but we recently lost a great agent. That agent decided to move to another office that was closer to his house and provided a more steady income but with reduced upside. Our current agents are doing well, my other team members are doing great, and we are adding another agent next week!
I will not come close to hitting my team sales number goals this year, but that is okay. Our team is also a huge part of my flipping business, and there is no way I could do everything I do without them.
How has my rental property portfolio changed this year?
I have not bought any single-family rental properties this year, but I did buy a rental. I bought a 1,000 square foot commercial shop where I can store building supplies and a car or two. I have been using storage units to hold carpet, flooring, fixtures, and other materials I buy in bulk from Home Depot.
I purchased the shop for just over $70,000, which was a decent deal and will save me a lot of monthly storage unit costs. I also could rent out the unit and cash-flow much better than I could from single-family rentals in the area. Here are the details on that shop. I am also making progress towards buying more commercial properties, but nothing else has been purchased.
How has the blog done this year?
The main goals I have had with the blog involve my books. I enjoy writing them, although it takes forever and is very tedious. I published two new books in 2017:
Both books have done great, and books are also an awesome way to create passive income. So while I have not been buying as many rentals as I would like to, I have been creating passive income streams. I am also working on making The Book on Negotiating Real Estate an audio book.
You can find all my books here.
2017 has been a fun year and has included a lot of flipping. I have also been learning a lot about the commercial world. I look forward to the last half of the year to see what happens and what exciting things I can share.