Scaling a House Flipping Business: How to Go from One Flip to a Portfolio of Income Properties

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More often than not, once an investor has successfully completed their first fix-and-flip project, they quickly become hooked. While the process can undoubtedly be a roller coaster of highs and lows, the art of fixing and flipping properties often ends up becoming a lucrative hobby (or full-time business) for many first-timers.

So, once you’ve been bitten by the house flipping bug, how will you keep the ball rolling by steadily adding properties to your portfolio?

We’ve compiled a number of tips below to help you do just that.

For starters, it may help to refresh yourself on how to keep your profit margin as high as possible. After all, maximizing the money you make on each project means you can invest in more properties down the road. Check out this recent blog article for tips on keeping your profit margins high.

Knowing what to look for in a potential fix-and-flip property is critical in building a successful portfolio, and that means adopting a realistic perspective about the condition of the properties you’ll be considering. It’s extremely rare to find an investment property that does not need repairs or renovation, so the goal should be to overlook the fixable flaws and focus on what makes the property a viable investment—especially location and resale potential. Finding properties that will be sought after once they’re flipped is of the utmost importance, as your business obviously won’t be profitable if you continue to purchase properties that don’t sell.

Location and resale potential are your primary drivers, so the aspects of a property that can be improved at a reasonable cost should be given less weight in your purchase considerations. The physical condition of the property and its curb appeal can all be addressed during the renovation phase, so as long as you’ve purchased a property in a good location where potential buyers actually want to live, you’ve checked the biggest boxes.

Due to the always-stiff competition in the real estate world, it’s also in your best interest to find a way to get a jump on potential properties hitting the market. Whether it’s through a personal relationship with a realtor, foreclosure websites or even real estate auctions, being in the know is key to making your move and snatching up properties quickly. Once you find a solution that works best, stick with it and be diligent in checking in at a set time every day to ensure you’re not missing any opportunities. Check out this blog article for more ideas on how to find fix-and-flip investment properties.

Another option that will help build your portfolio is to fix-and-flip a multi-residential property or apartment building. While these types of properties can often be overlooked in favor of the more traditional single-family property, you may find that a multi-residential investment will push your profits further, faster. Also, by diversifying your portfolio in this way, you’ll avoid depending solely on one type of property investment to help you meet your profit goals.

Leveraging your cash on hand with fix-and-flip financing can also help you make the most of your investments. With fix-and-flip financing, you can conserve your own capital to invest in multiple properties, while increasing your cash-on-cash ROI with each financed project. Just make certain to follow a strategic business plan in doing so, as many investors spread themselves much too thin during the real estate crash in 2008.

If you do decide to use financing to help grow your fix-and-flip business, make sure you perform due diligence when choosing a lender. Many house flippers are using hard money loans due to the relaxed borrower qualifications and fast funding these lenders offer. In the fast-moving real estate world, time is, quite literally, money. Obtaining funds quickly can ultimately be the difference between securing a property or not, which is why hard money loans are so popular with fix-and-flip investors.

For more information on your lending options, check out our blog “The Borrower-Lender Relationship: How to Choose the Lender That’s Right for You.

Once you have accumulated several properties, it may also be wise to hire someone to help manage your growing business. The time and effort that goes into managing multiple fix-and-flip projects can quickly snowball into an overwhelming situation. So, while accumulating properties may be a good problem to have, hiring a skilled, dependable manager to help direct the day-in and day-out of your fix-and-flip business is always money well spent.

Speaking of finding help, another key factor in building a successful fix-and-flip business is surrounding yourself with the right group of professionals. Building that essential team starts with the contractor, who will quickly become your go-to person as you navigate your property renovations. For help on finding the best contractor for you and your projects, visit our blog, “How to Properly Vet Contractors for a House Flip.

Once you’ve gotten the ball rolling and found some success in building your portfolio, the hard work you’ve put in up to this point will begin to work in your favor. By successfully completing multiple flips, your portfolio will speak for itself in terms of your credibility as you try to secure additional deals.

The knowledge you’ll acquire as you gain traction in the real estate world will become your most valuable asset. While the ups and downs of the fix-and-flip process may be unsettling the first few times, the various scenarios you face as you gain experience will solidify your expertise. Once you get several successful flips in your portfolio, you will discover the processes and methods that work best for you, allowing you to create a well-oiled house flipping machine.

Should you need assistance with your investment business, Anchor Loans is here to help. We’ve compiled a team of experts who are dedicated to helping you find a process that works best for you. Please contact us and see how we can help you build a portfolio to be proud of.

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