How to Create a House Flipping Business Plan in 7 Simple Steps
Are you thinking about flipping houses? Are you already operating in this business and trying to keep on top of your paperwork? Either way, it’s important to have all of your bases covered when it comes to keeping your house-flipping business safe and secure. That’s why we put together this step-by-step guide on how to create a house-flipping business plan, using an example template we made so you can follow along with ease.
Step 1: Come Up With A Plan
There are many considerations when it comes to house flipping. What are your goals for the business? What do you have available, both financially and through your personal network of resources? How much time can you invest into the business? And what is your profit margin going to be, given all these other considerations? The important thing is for you to get crystal clear on this plan before moving forward with your house-flipping business.
1) What are my goals for the House Flipping Business?
2) What do I have available – money-wise and through my personal network of resources (labor, connections, local market knowledge)?
3) How much time can I invest into the House Flipping Business every day/week/month/year?
Step 2: Set Your Goals
One of the most important parts of any business plan is defining what you want to accomplish. Set measurable goals that help you decide whether or not your house-flipping business is successful. These goals should answer the questions of why and what are usually related. A few examples could be: -What is my goal for the number of houses I plan on flipping this year? -Why do I want to have an average gross profit margin of $5,000 per home? -What is my goal for the total amount of time I spend working on flips each week?
– What is my end goal with this project? The most common end-goals would be either: • Making money • Building wealth (via experience, connections, etc.) • Feeling fulfilled by helping others succeed
Step 3: Set Your Budget
-Make sure that your budget is realistic. If you don’t have the necessary funds, know where to look for financing. If you go into a flipping project with no money upfront, the entire endeavor will be at great risk and is most likely doomed from the start. You will probably need equity or a hard money loan for this process as well.
-It’s not just about how much time and money are invested – it’s also about what you’re willing to sacrifice as well. Put your lifestyle considerations aside when deciding on whether or not you should invest in house flipping and focus on the opportunity instead!
Step 4: Choose The Right Neighborhood
If you are going to invest time and energy into flipping houses, you need to know that there are different types of properties. There are three common property types; single-family, multi-family, and commercial. The type of property that you invest in is one of the first decisions that you will make when starting a new business as this could affect many other aspects such as whether or not your mortgage broker is qualified to offer to finance for the property and if your home inspector understands building codes for different types of properties. Single-family houses range from 1500 square feet with four bedrooms on up to 4000 square feet with six bedrooms. Multi-family properties typically range from three bedrooms on up to six bedrooms.
Step 5: Pick the Right Property Type
When choosing the type of property, you need to take into account your skill level, physical limitations, financial situation and time availability.
Residential flipping is considered easier because it usually takes less time for the project to be completed, is less expensive and does not require as much experience. If you are new at house flipping or are on a tight budget, residential flipping might be better for you.
Commercial properties can yield higher profit margins than residential ones if they are flipped at the right price point and renovated thoroughly. The downside of this option is that these projects can take up more time than residential properties because they often involve zoning changes, permitting requirements and government approvals as well as construction oversight.
Step 6: Prepare The Proper Paperwork
While the paperwork for purchasing the property may vary by country, there are certain documents you’ll want to have on hand at all times. These include: -copies of your driver’s license and ID card or passport, as well as proof of address, such as a utility bill from your home; -proof of income or sources of funds that will cover the purchase price of the property and any renovations, such as tax forms; -a copy of your credit report so you can establish proof that you can take out loans; -your solicitor’s consent letter if they’re dealing with your mortgage application on behalf of their company.
Step 7: Buy and Sell At The Same Time
When buying, look for bargain prices that don’t include the original purchase price. Don’t buy beyond your financial limits, and make sure you can get a good return on your investment. Consider how much you will spend on repairs and refurbishing, which often equals 20% of the purchase price. If you plan to sell at a higher rate than what you paid, then it’s worth considering whether or not there is enough profit margin after all expenses are accounted for.
If the property will be sold at less than what was paid for it initially, then it might not be worth doing this type of flipping business if there isn’t enough profit margin once all expenses are accounted for. The best way to do this is by calculating your total expense ratios (see Step 2) and comparing them with your return on investment ratio (see Step 6). If one number is higher than the other number, it means that more money should be spent in one area so that they’re balanced out.