Successful house flippers understand that profitability is essential to running a house flipping business, and how there are many processes and factors that determine the success of each project. Where there’s a looming threat of delays and expenses stacking up, profitability could hang in the balance at any point.
When plans, schedules and estimates change, knowing how to deal with the unexpected is essential to sustaining the trade. Success relies largely on the vagaries of the local housing market, and taking smart business practices to heart:
1. Seeking Knowledge and Aligning with the Experts
A couple of house flipping seminars don’t work like a magic wand that would suddenly transform you and get you all set for the royal ball. It’s a learning process where you’ll need to build mutually beneficial relationships, seek advice from business and industry experts, and align with trustworthy contractors and accounting professionals.
To scratch the surface, house flippers would at least need some basics, such as:
- Understanding the value of sweat equity
- Having a good grasp of different types of construction jobs and equipment
- Accurately keeping track of all your numbers and reports
- Training yourself to account for variable change
- Learning how to anticipate potential delays, expenses and threats to project completion and profitability
- Staying informed on economic, construction, and real estate news – and understanding what they mean for your current and future projects
- Reading up on all other relevant material
Study the industry beyond the reality TV bubble. No man is in an island in this business, and through every step of the way, you’ll need the combined knowledge and experience from specialists in each type of function to ultimately bring your project towards the most profitable outcome.
2. Remembering That It’s All in the Math
A profitable flip is rooted in the number work. You can’t just walk into a beat up house one day, and then expect to walk out with a hefty profit 30 days later. You need to accurately monitor and keep your numbers under control throughout the entire process to make sure you won’t go empty handed after all the rehab work.
From valuations and budget allocations, to taxes and deductions, house flippers need a skilled bookkeeper to take care of maintaining financial books and drafting performance reports. You’ll already have more than enough on your plate onsite; let the certified professionals who have the time, and won’t get confused with the records and computations, take care of what they do best. This way, you can reap the maximum financial benefit from each project, while staying in the good graces of the IRS.
3. Hiring Detail-Oriented Administrative Support
If you ever sold or bought a house, you’re aware of the ungodly amount of paperwork that comes with a simple change of ownership. When it becomes part of your business, it’s just the tip of the iceberg. Multiply that headache by four or more times a year if you plan on being a frequent flipper.
A dedicated detail manager will make sure you won’t have any missing or mixed up documentation to support your flip. All the job logs, research, scheduling, purchase orders, written correspondences, phone calls, worksheets and inspections will be taken care of, while you focus on creating your must-buy property.
4. Delegating Specialized Virtual Assistants
Thanks to the Internet, administrative and bookkeeping services can now be easily procured through virtual assistants (VAs). As long as there’s a good network connection available, you can have office help in Chicago and a bookkeeper in Boston, while flipping houses in Miami.
Whether it’s daily clerical work, bookkeeping, marketing, social media management, creative or technical support, you can delegate each function to specialized professionals, pay them by the hour or bundle, and get everything done more efficiently through cloud-based storage and project management software. You’ll never need to worry about office space and supplies, vacation and sick days, overtime, or even hiring-and-firing procedures – it’s a convenient service that you can simply click, change, or discontinue for the next payment period.
More particularly, construction virtual assistants have the relevant set of knowledge and experience to help house flippers with offsite needs. A huge part of house flipping is dependent on construction and remodeling, and construction VAs have industry-specific expertise on all the terms, requirements and processes from start to finish. They understand the demands of the business, and keep you steered towards your project goals.
5. Getting the Right Insurance for House Flippers
Needless to say, the risk involved in house flipping goes way beyond the simple homeowner’s policy. Bodily injuries, subcontractor negligence, property damage, fire, flood, vandalism, theft – there are numerous liabilities that need to be outlined and controlled.
Even if you create the most impressive transformation for your property, neglecting this step can cost you your project’s worth, and throw all your efforts into the dust. Your house flipping projects can’t function as a viable business if you’re always taunting your luck and putting profit in jeopardy.
With the right insurance policies in place, you can stay secure for payments and be covered for potential litigation costs. House flipping isn’t just about the makeover and getting paid for the sale; it’s about protecting your investments, managing risk, and keeping a healthy cash flow for a stable, thriving business.