If you’ve been watching popular home improvement and real estate shows lately, you know that lots of people are getting into the house-flipping business. If the idea of working hard to turn a nearly abandoned home into a masterpiece excites you, you may want to consider house-flipping as a new business venture. However, there are several steps you’ll need to take to increase your chances of success. SCUDO Real Estate & PM advises that having a solid plan when it comes to flipping houses will keep you organized and help you determine which tasks you can complete on your own and which jobs require the work of a qualified team.
If you’re seriously considering flipping houses, here are some important tips to keep in mind.
Come Up With a Business Plan
Before you take any action toward your business, you should have a business plan. The plan will help you keep your company on track as you estimate costs and profits. A solid plan will also guide you in choosing the right investors for your business.
Make sure your business plan is as detailed as possible. You’ll need to clearly explain every part of your business to investors so they’ll know what to expect if they decide to partner with you. A clear business plan will also provide insight into how to handle cash flow or employee issues should they arise.
Start the plan with an executive summary explaining the objective(s) of the company. Discuss your vision for the future and indicate who your staff/board members will be. It’s also a good idea to write down your financial projections so you’ll know which goals you need to reach each quarterly and/or yearly.
Your business plan should also explain why your company will be in high demand and how you’ll stand out against competitors. This is why it’s important to research real estate trends in your area so you’ll know how many customers to expect and what these consumers are looking for. Explain exactly what your company will accomplish, i.e. listing the home, making renovations, conducting open houses. Include how much you expect to make as well, along with how much money you’re starting out with and how much supplies and properties will cost. Explain how much of this money you expect to make back to ensure that your investments are worthwhile. It’s a good idea to review the plan every now and then to make sure you’re keeping up with your business goals.
Build a Network
The real estate business can be tough and competitive. You’ll need as many resources as you can find to help you make each home look its best. Identify the people you need to include in your network such as real estate marketers, brokers, loan officers, and contractors.
Let your friends and loved ones in real estate know about your plans to open a house-flipping business. This is especially important if these professionals live in the same region or state as you. Word-of-mouth marketing is a great way to find people who can help you complete home renovation or marketing projects in an affordable and timely manner.
If you’re leaving your current career field to go into house-flipping or are simply adding more expertise to your portfolio, talk to people in your industry network and let them know your plans. It’s also a good idea to learn about investment and real estate groups in your city and to sit in on a few meetings to see who can help move your business forward.
Selecting Your Business Entity And Partnerships
To legally operate your business, you have to choose a business entity. Then, you’ll have to register your company with your state of residence or in the state where you plan to do business. For instance, if you live in the Richmond area and want to partner with a roofing company to make repairs to the homes you purchase, Richmond Roofing can assist you once your business is officially up and running.
There are a few entities you can choose from, but it’s best to make your company a limited liability business. To do this, you’ll need to list the house-flipping company as a corporation or LLC. This will protect your personal assets if you have to go to court on behalf of the business.
Conclusion
These steps will help get you started if you want to start flipping houses. Connecting with the right professionals and filling out the right paperwork, along with networking to promote your services, can turn your house flipping efforts into a lucrative business.
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