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The idea of flipping a house is to buy a property for less than it’s worth and sell the same property for more. This can be done by purchasing an already existing home, fixing up the interior or exterior, then selling it after making some minimal profit. With proper planning and marketing strategy this business can turn into large profits with little effort required
The “sample house flipping business plan pdf” is a free template that allows you to create your own house flipping business plan. The plan will include information about the project’s budget, timeline, and more.
A home flipping business plan defines the aims of your repair and flip company and the measures you’ll need to follow to generate money. It’s also what lenders and Investors look at when considering whether or not to fund your repair and flip. Your goal price range, timescale, repair budget, and kind of house are all common elements of a business strategy.
Template for a House Flipping Business Plan for Free
It’s critical to have a home flipping business plan in order to set yourself up for success and to refer to various sections of it afterwards. Your home flipping company is more likely to fail if you don’t have a business strategy. A excellent home flipping business plan lays out the sorts of houses you’ll be flipping and how you’ll make money.
Downloadable Template for Free
The following items are included in our home flipping business plan template:
- Mission Statement — A summary of your home flipping business that explains what you do and where you do it, as well as what makes your firm unique.
- Targets Summary — This is a summary of your short-term real estate profit goals, as well as how you plan to attain them.
- Lead generation is how you’ll identify distressed houses to flip and potential purchasers once they’ve been rehabilitated.
- CMA (Comparative Market Analysis) — A CMA is a tool that analyzes comparable properties to help you figure out how much to spend for a property and how much to sell it for.
- The time allotted to purchasing, remodeling, and selling individual repair and flip houses is referred to as the timeframe.
- Budget – This defines how much money you have available to spend on purchasing, repairing, and flipping a house for a profit.
- Sources of Funding – These are often cash, Investors, or finance, and explain how you’ll pay for the acquisition and rehabilitation of distressed houses.
- Exit Strategy – This outlines how you plan to exit the property, which is generally by selling it, and is very significant to lenders and Investors.
Downloadable Template for Free
The following are the eight aspects that any home flipping business plan should cover:
Statement of Purpose
A concise overview of your company’s objective is a mission statement for a home flipping business plan. Your mission statement should explain that you will repair and sell dilapidated homes while generating employment and helping the community. It should also mention the geographic region where you want to flip homes and the sorts of properties you intend to flip.
When you buy homes, your target clients will often be distressed house sellers, and when you flip them, Investors or owner occupiers. It comprises your company’s values, competitive advantage, and long-term objectives. For example, you may pay for each sale’s closing expenses or provide a house warranty with each property. Those are the characteristics that distinguish your company, often known as your competitive advantage.
Don’t forget to highlight any social reasons that your company supports, as well as any causes to which you volunteer your time and supplies. These are fantastic items to add in your mission statement if you utilize environmentally friendly construction materials or contribute a percentage of your profits to Habitat for Humanity.
The goal statement of your home flipping business plan, for example, may be something like this: To acquire distressed houses, remodel them, and sell for a profit within 6-12 months, assisting buyers and sellers in getting what they want while also enhancing the local community.
2. Summary of Objectives
A summary of aims is precisely what it sounds like. It lays out your short- and long-term objectives, as well as how you plan to attain them. It should clearly indicate how you plan to achieve that objective and how you plan to do it. Include your top 5 home flipping company objectives, as well as a quick overview of how and when you plan to reach them, as a general guideline.
It’s a good idea to break down your top five home flipping company objectives in the following way:
- Annual objectives — These are your longer-term stretch objectives, such as annual earnings or annual flips.
- Quarterly goals — These are shorter-term objectives that, when added together, assist you meet your yearly objectives. If your yearly objective is 12 flips, for example, you’ll need to flip three times every quarter.
- Monthly objectives – These goals, like quarterly goals, assist you reach your quarterly goals. For example, identifying 5 quality leads every month can help you meet your goal of 3 monthly flips.
As you can see, a home flipping business’s objectives are usually focused on monthly earnings or the total number of monthly flips. This will assist you in better understanding the prospective performance and success of your firm, as well as your return on investment (ROI).
One of your objectives, for example, may be to earn $20,000 per month flipping properties. To achieve that objective, you must detail how you intend to achieve it by describing how much money you plan to gain from each repair and flip. Based on your timeframe, resources, and team, you would quickly write out the average profit on each flip and how many flips you can execute in a month.
Another objective you can have is to flip three residences every month. You should write down how long it takes to identify and flip each property, as well as how much money you’ll need to meet your monthly objective of three flips. Essentially, the ultimate aim of a home flipping business plan is to generate money flipping properties, and a strong goals summary will lay out the steps necessary to get there.
3. Generating Leads
After you’ve identified your objectives, you’ll want to concentrate on accomplishing them, which is where lead generation comes in handy. You’ll need to produce leads to assist you identify houses to flip, regardless of your unique house flipping aim. This component of your home flipping business plan explains where and how you’ll get leads, as well as how many leads you desire each project.
You may obtain property leads by working with a local real estate agent, joining an investing group, searching online at sites such as Zillow or Foreclosure.com, or canvassing areas with bandit signs. You may also hunt for homes that may sell at auction for less than market value. You may also purchase FSBO leads from websites such as REDX.
When you’re ready to sell your home, you’ll employ lead generation as well. The more people who are aware of the property, the more people who will come to see it. This implies you’re more likely to get an offer and sell the property so you can profit and move on to the next venture.
4. Market Comparative Analysis
A comparative market analysis (CMA) is a method used to figure out what a home’s selling price should be. It assesses the value of recently sold properties in the same neighborhood as the subject property. The comparable properties should be equivalent in terms of square footage, lot size, and number of bedrooms, bathrooms, and amenities. The houses should also be close to one another.
A CMA is typically completed by an experienced real estate agent, and most agents will perform it for free if you are already a customer. You will need to utilize online public data to ascertain the proper sales prices of the comparable houses if you decide to complete a CMA yourself.
Some pointers to keep in mind while examining or doing a comparative market analysis:
- To put it another way, compare apples to apples. Don’t compare a three-bedroom house with no garage to a five-bedroom home with a two-car garage.
- Pay attention to school district ratings, since a good grade may boost a property’s value and vice versa.
- Use comparable properties that are a reasonable distance from the subject property. In cities, this implies within three blocks; in suburbs, it may be closer to a mile; and in rural regions, it could be several miles.
- Don’t mix pending pricing with sold prices; the pending price might be much greater than the property’s actual sold price.
5. Timeline
Your timeline will influence how soon you can buy a home, remodel it, and sell it. Your finances and overall property flipping strategies are heavily influenced by your time frame. It’s critical to perform a decent job repairing the fix and flip house, and you shouldn’t cut shortcuts, but you should also keep to your schedule.
The majority of flips may be done in two to three weeks and sold in a few of months. You will be liable for the property’s carrying expenses for each day you possess it, which will cut into your earnings. You’ll want to specify precisely how long you estimate a project to take and, as a result, how many projects you believe you’ll be able to finish in any given month, quarter, or year when creating your timetable.
6. Budget
One of the most crucial aspects of any home flipping business strategy is your budget. It will influence how much cash you have on hand and how much promotion you can afford. It also determines how much of your money can be spent on hiring pros and how much a home will cost to flip. These expenses will include the expenditures of purchasing the property, rehabilitating it, and selling it.
Here are some examples of non-holding expenditures to consider in your budget:
- The cost of purchasing the property
- Closing expenses, such as lender fees
- Renovation expenditures to be expected
- The expense of marketing the property in order to sell it
- Staffing expenditures, which include the salaries of an assistant, a CPA, and an attorney, among others.
Keep in mind that your budget and schedule are intertwined. For example, depending on the estimated duration of each project, your budget should include carrying expenses. The following are examples of common carrying costs:
- Payments on a mortgage
- When a property is empty, the insurance premiums are often higher.
- Taxes on real estate
- Water, electricity, heating, and air conditioning are all included in utility costs.
- If there are any HOA fees, they must be paid.
- Fees for dumpster rentals or any other rental equipment
7. Sources of Funding
You need to figure out how you’re going to finance your repair and flip company now that you know what to put in your budget. The majority of home flippers employ cash, Investors, or loan borrowing to support their operation.
Fix and flip loans are offered by these lenders at higher rates than conforming loans. However, they are generally short-term, interest-only loans. They enable you to purchase houses in bad condition while also financing part of the upgrades.
Fix and flip finance may be obtained from a variety of sources, including:
- All cash
- Investors
- Using a hard money loan as a source of funding
Keep in mind that the source of your finance will have an impact on your holding expenses, timing, and total budget. Make sure to include these parts of your home flipping business plan in your financing sources. Check out our definitive guide to the finest hard money lenders for additional information on financing options.
LendingHome is a hard money lender that we endorse. They can prequalify you in minutes and finance your loan in as little as 5 days if you apply online. They have reasonable rates and lend up to 75 percent ARV and 90 percent LTV.
Pay a visit to LendingHome.
Exit Strategy (#8)
Having an exit strategy in place is the last phase in your home flipping business plan. This is critical to your Conclusion, and your lender may need it if you’re financing a repair and flip. Simply said, an exit strategy is a plan for getting your money out of the property.
A repair and flip investor’s best case exit plan is to rapidly sell the property for a profit and pay off the loan with a share of the revenues at settlement. To do so, you’ll need to know what kind of property to buy, in what location, and for what price. You’ll also need to keep to your budget and timeframe, as well as enlist the help of specialists.
A cash out refinancing is an alternate exit strategy in which the investor refinances the property to extract equity. The investor uses the new loan to pay off the current mortgage and gets the difference in cash. Typically, investors will use this money to buy another investment property or improve one of their existing ones.
Repair and resell Investors may refinance their completely refurbished property into a long-term loan in order to pay off the hard money loan’s high interest rate. This is normally done only if you want to maintain the property and rent it out or if you are unable to sell it.
Assemble a team to carry out your strategy.
After you’ve created a thorough home flipping business plan, you’ll need to figure out who you’ll need on your team to carry it out. Based on your requirements and budget, you must decide who to employ and when to engage them. The duties of each team member must then be clearly defined.
Each member of your team will be employed at different times during the life cycle of your company strategy. A real estate agent, for example, is normally engaged first, followed by an attorney, a contractor, and lastly a CPA. Keep these recruiting fees in mind while planning your budget.
The following are four crucial members of your home flipping team:
- Hire a real estate agent when you begin searching for homes; they are usually compensated by the seller. You’ll need a real estate agent to assist you sell your completed flip, and you’ll have to pay them a commission, which is usually 5–6% of the sale price.
- Attorney: Before acquiring a home, consult with an attorney. To reduce your personal responsibility, he or she might incorporate an LLC for your property. Make sure the attorney is a real estate attorney who is conversant with local zoning rules and other issues you may not be aware of.
- Once you’ve found the property, you’ll need to hire a contractor. He’ll go out and purchase supplies, engage subcontractors, and work on rehabbing your rental property. If you need landscapers or cleaners, he may be able to suggest them.
- CPA: Hire a CPA after your first flip so you have available funds to pay him. He will advise you of tax deductions such as mortgage interest and Taxes on real estate, as well as property depreciation deductions.
Why Do You Need a House Flipping Business Plan?
Regardless of their degree of expertise, every home flipping company owner should have a business strategy. It compiles your elevator pitch, revenue model, objectives, timeline, and budget into a single, easy-to-understand structure that can be adjusted or updated as your company evolves.
The following are some of the reasons why a business strategy is necessary:
- It’s a tool for keeping track of things.
- It makes your goals more visible to lenders and investors, allowing them to take you seriously.
- A home flipping business plan can help you determine if your income model is viable.
- It calculates how much you can spend depending on your budget and income projections.
- A business plan is a location where you can readily access your company’s goals and discuss them with your team.
- Investors and lenders examine it to see whether they wish to fund the company.
“House flipping is a roller coaster ride, and if you want to do it full-time, preparation is essential.” A good business plan will tell you how much money you need and how money will flow in and out of the enterprise. Nothing is more frustrating than finding you’re halfway through a remodel and your bank account is empty. This is something that a property flipping business strategy may assist you avoid.” — Evan Roberts, Dependable Homebuyers’ Owner
Conclusion
The first step in launching a home flipping company is to write a business plan. It puts all of your ideas and aspirations on paper and tells you how to attain them and start generating money step by step. To get started, download our free business plan template.
The “how to start a house flipping business with no money” is an article that provides a template for creating a house flipping business plan. The article also provides tips on how to create your own plan.
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