There’s a whole lot more to the house flipping business than meets the eye and making money on top of that is more challenging than you might expect. The truth is many people barely make a buck on their first house flip; some even lose money. A lot of people that are trying to house flip are struggling right now.
However, a small minority of investors are making an absolute fortune right now flipping houses. In this post you will discover 7 skills of highly successful house flippers. Applying just one will make you more successful, but all seven together can turn you into a first-class, money-making real estate machine.
#1. Successful House Flippers are Off Market Geniuses
Most unsuccessful house flippers find their deals on market. In comparison, highly successful real estate investors find their deals off market. How are they different?
Specifically, “on” means that other people know about it. On market deals are listed on the MLS and about to go to auction. Occasionally they’re more hidden and may be listed on auction.com instead of the MLS. Regardless, if we’re referring to a foreclosure, it’s a deal that other people will know about and those are generally not as productive as off market deals. The most successful house flippers aren’t at the foreclosure auction every week.
Find Off Market Deals
Instead, they’re finding deals that are off the market, that nobody else knows about. I don’t share with you in these posts how we find these deals and I have a video on why I don’t tell you that is called Giving Away Business Secrets. It’s not just because I don’t want to tell you. The truth is, I want to safeguard this industry. If I did open my big mouth, it could cause a lot of problems. Not to mention, we spend millions each year in marketing and testing to always stay on the cutting edge of this subject. Mastering the art of finding deals off market is key to becoming a successful real estate investor.
#2. Highly Successful Investors are Creative Terms Experts
Some of you assume that the best house flippers are successful because they have the most money and they can pay fast cash to sellers. However, it’s not the cash that makes them successful. Usually the most successful house flippers can credit their success to structuring creative deals with sellers. Creative terms allow you to:
- Reduce your risks
- Give the seller more of what they want
- Beat your competition at both sides
You beat your
competition by giving the seller more of what they want which gets you the deal,
but then you also make more money. This in turn allows you to do more deals and
make more money. I have a two-part series on How to Turn a Little into a Lot. Part-two
teaches about how we use creative structuring of deals to do even more deals.
There are great ideas and some of our go-to techniques in the video as well.
#3. Successful House Flippers are Buyer Investigators
Highly successful real estate investors are great at evaluating whether a buyer can perform. If it’s a cash buyer, they verify that they have the cash. However, often we’re flipping to retail buyers who need a loan and it must get funded to close the deal. When a loan doesn’t get funded, it can cause a lot of difficulties.
I have a video called The Biggest House Flipping Mistake. In it I describe how dangerous it can be to agree to sell your house to a buyer without investigating that buyer’s credentials and their ability to close. If a deal doesn’t close you can get delayed for months and it can be devastating to the business.
Confirm a Client’s Ability to Close
As a real estate investor, you’re also like a mortgage broker confirming a client’s ability get a loan. If you don’t make certain of this, it is going to hurt you over time. You must investigate buyers the same as you investigate houses otherwise you could get held up. When your deals aren’t closing, the whole system can get jammed up.
#4. Highly Successful Investors are Renovation Masters
They are in control, overseeing it all and other people are doing the work. It is critical you do this if you’re going to be a successful house flipper. There are talented trades people that can do the work. You don’t need to be picking up a paint brush. If you want to be a successful real estate investor you must remember you need to be a business owner, not someone that’s doing all the work.
I have a few videos on this subject. The first video is called How to Find Great Contractors. In the second video 7 Things to Never Say to a Contractor I talk about how not to get taken by them. I also have a helpful video on the Best Materials for Flipping Houses.
You need to find competent
people to do the work for you, even if you’re used to doing it yourself. As Paul
Orfalea, once said, “Someone else
can always do it better.”
#5. Successful House Flippers are Due Diligence Professionals
They can accurately predict what a house will sell for once it’s fixed up, similar to an appraiser. This isn’t guesswork, it’s very scientific. They drill down what’s going to happen by scrutinizing the comparable sales and looking at the withdrawn and expired.
However, that’s only the beginning of due diligence. It’s also knowing what surprises you may run into, particularly when buying a rehab. They also understand what a new buyer will complain about, and what they will let slide. They’re like an inspector, only better because they can see things that even an inspector doesn’t see.
So often people
don’t do their due diligence and they end up lamenting it after learning a few very
expensive lessons trying to resell a property. Being a due diligence expert can
mean the difference between you making a fortune in this business or barely
getting by.
#6. Highly Successful House Flippers are Fast
They are incredibly quick implementing deals. Although it’s true that finding a deal and successfully flipping it quickly allows you to do more deals and make more money, that’s not the main reason why speed is critical to success.
The most important reason why you need to be fast is because when you collapse time frames, you reduce the opportunity for unforeseen problems to occur. These problems can completely derail the business and they are things you could have never predicted.
I have a perfect example of this in a recent deal:
Mistake #1: The person took way too long to renovate because he wanted to save money and do some of the work himself.
Mistake #2: He didn’t investigate the first buyer that came along when he put it on the market. He was so excited for this buyer that he was like a dog in heat. This buyer couldn’t get a loan and tied him up for about a month.
Problems Arise That You Can’t Predict: Then Hurricane Harvey hit. Thankfully his house wasn’t damaged, but it shut down the economy for weeks. Nothing was done. Nothing was transacted. Now, he couldn’t have predicted a hurricane, which is exactly the point. When you have a deal that is drawn out, you have more time for problems you could never predict.
Mistake #3: I told him that he needed to do a flat fee listing, but he didn’t listen to that either. Instead he fired the first real estate agent and hired a new one. The new one was on the job for about a week when tragedy strikes. A family member of hers was killed in an awful massacre shooting at a Baptist church in San Antonio.
Suddenly, he couldn’t get a hold of the agent and since she was the broker as well, there was no one else he could call. The property sat there for weeks and he was clueless as to what was going on. Now we are approaching the holidays, and the house hasn’t sold yet.
Mistake #4: He ignored my advice and didn’t drop the price low enough to sell it quickly. He entered what I call the kiss of death in real estate. If you list it too high, you can get stuck for months. I think you’re better off as a house flipper selling it for less than you should rather than being stuck.
If you want to be highly successful you need to implement good ideas quickly. If you don’t, they’ll die on the vine.
#7. Successful House Flippers are Focused
A huge problem today is people aren’t focused. They’re all over the map and as a result are getting no where. Highly successful house flippers focus on one thing; flipping houses. Being focused allows you to be efficient and get things done. It is possible to flip houses part time and have a fulltime job. However, successful house flippers have one side business, not three.
I think flipping houses is the best small business in America and now is the best time to be house flipping. We’re doing deals at a rate I never imagined. This business is great for those who want to start small and grow into something special. Why not focus on it? Why not focus your energy into this and not be distracted? When you’re able to focus, that produces power and results.
How Do You Measure Up?
- Are you generating leads off market or are you calling real estate agents looking for foreclosures?
- Are you structuring deals with creative terms?
- Do you investigate your buyers, ensuring they can get their loan? Are you drilling their mortgage broker to confirm not only their credit, but also checking if their bank statements have NSF fees?
- Are you a renovation master or are you finding yourself doing a lot of the work yourself?
- Do you do your due diligence? Are you really nailing down these deals or are you getting stuck because you didn’t evaluate the deal before you bought it?
- Do you implement your ideas quickly? Are you pricing your properties to sell quickly?
- Are you focusing on house flipping or do you have 10 other things competing for your attention at the same time?
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