8 Questions You Must Answer When You Create a House Flipping Business Plan

Plan your work and work your plan. That is key to avoid chaos in your life. If we would all stick to what we plan to do, I venture a guess that there would be many more millionaires in the world.

Making money flipping houses is no exception. Many people plan to do it, the 2018 market is primed for it, but they never follow through and do the work. That’s why, if you want to succeed and make your financial, personal and professional dreams a reality, you need to put the time into creating a solid house flipping business plan. Build your ideas and vision into a realistic roadmap that proves this will work, both financially and logistically.

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What is a house flipping business plan?

A business plan is a document setting out your business’s future objectives and strategies for achieving them. Think of it as a roadmap for what you plan to do, as well as how and when you plan to do it.

Your plan helps you prove to yourself and others whether house flipping is a viable option for you. It’s the best way to ponder the implications and look at your idea as a whole. You can solve for issues that you would likely encounter down the road or avoid them altogether.

Tips for writing a business plan:

  • Keep it short. A few pages is all you need. It’s tempting to go into lots of detail and include pages on market trends, your end-to-end process and more, but that’s not necessary.
  • Keep it digital. If you want to start by handwriting, that is fine. However, make sure that you get it in a digital format at some point to allow for easy reading and updating later.
  • Keep it ‘living’. Revisit your plan often and make changes as you learn more about flipping homes.

What should I include in my house flipping business plan?

Your plan should answer these eight questions:

  1. Goals: What are my goals for my first flip? Understand what success means to you and how you will measure if your first house flip was worthwhile.
  2. Roles: Who is going to have what role in the business? A common scenario we see with our student flippers is that one person is responsible for design decisions and one person monitors the construction responsibilities.
  3. Funding: How will you finance your purchases and remodels? Cash purchase, hard money loan, etc.
  4. Location: What is your target flipping area and why? What is the market opportunity?
  5. Price: What is your target price point and why? We strongly advocate starting at the lower end of your price range to get your feet wet and gain some experience.
  6. Property Type: What type of property will you purchase? Know your ideal configuration before looking for a property. Do not settle. Characteristics to consider:
    • Age of home – New or old?
    • Type of home – Single family or attached? If attached, condo or townhome?
    • Yard size – Big yard or small yard?
    • Neighborhood – Urban, suburban or rural?
    • Bed/baths – What is the most desirable bed/bath configuration for your target area and why?
  7. Team: Will you use a general contractor? If not, are you prepared and qualified to do the work yourself? Do you know any general contractors? If not, how are you going to find them? 
  8. Selling your Property: How are you going to sell the property? For Sale By Owner (FSBO)? Full-service realtor? Discount realtor? Self-marketing? This is an important decision that affects many areas of how you plan to do business.

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Once you have this down on paper, you’re off to the races. Schedule a time to run your newly formed house flipping business plan past an experienced fix and flip veteran for feedback and additional tips on how to get funding, secure a property, cost-effectively rehab and sell.