House flipping is all the rage right now. We all love them, whether we’re expanding our house-flipping portfolio or watching home renovations for fun. There’s nothing quite like seeing a run-down house turn into a beautiful home.
If you’re looking for some inspiration, here are a few of the best house-flipping shows of all time. You might even pick up a few pro tips that you can use in your house-flipping projects down the road.
#1 – Holmes Family Rescue
Does the name Holmes sound a bit familiar to you? You might have heard about Mike Holmes from Holmes on Homes. Holmes Family Rescue is a new show that now includes Mike’s son and daughter.
A Canadian series that debuted in 2021, it follows dissatisfied homeowners whose properties were ruined by low-quality construction.
Luckily, they’re saved by Mike Holmes, a general contractor, along with his 2 kids, who are home renovation experts, Michael Holmes, Jr. and Sherry Holmes. As a family, they show empathy and commit to their mission, “Make it right.”
If you’re not a big fan of the glamorized version of house flipping, then Holmes Family Rescue is the show for you. This show is a great option if you want to learn more about repairs and renovations.
In each episode, Mike, Michael, and Sherry show the substandard work done on the property and explain in detail how they should have been executed correctly. They also talk with the homeowners, asking them to describe their experience with the original contractor and how it affected the way they live now.
Holmes Family Rescue currently has 1 season and is renewed to have another season and will premier in the spring of this year.
Streaming giant, Netflix, is also riding the house-flipping trend with Stay Here.
In this reality show, you follow along with interior designer Genevieve Gorder and real estate broker Peter Lorimer. In each episode, the duo gives serious TLC to a short-term rental home, transforming it into a moneymaker for its owner.
One of the best things about the show is that it features unique vacation rentals, including a houseboat in Seattle, a firehouse in Washington, and a brownstone in Brooklyn.
Apart from remodeling these, Genevieve and Peter also provide viewers with updates on real estate industry trends, as well as advice about finding success in this line of business.
Currently, there’s only 1 season. Although, fingers crossed because there are rumors that season 2 will be released in August of 2024.
If you’re interested in learning what it takes to remodel historic properties, then Home Town is the house-flipping show for you.
It features Ben and Erin Napier, a husband-and-wife team restoring beautiful Southern homes in Mississippi using up-cycled materials to retain the property’s old rustic charm.
The couple is known for infusing their clients’ characters into the homes they remodel.
For example, one episode featured a local restaurant owner looking to settle into a cozy cottage with her grandmother. They ended up with a custom-built rolling kitchen island and a handmade raised garden bed. Both of which were inspired by their personalities.
If Home Town leaves you wanting more, I have some good news for you. They also have a spinoff called Home Town Kickstart.
Watch Home Town on HGTV and Home Town Kickstart on HGTV.
#4 – Designed to Sell
Want awesome tips and tricks that will help make your properties sell?
Sit back and tune in to Designed to Sell, a show where each 30-minute episode features a home that has sat unsold on the market for a long time. Real estate experts and general contractors are then given $2,000 to renovate the property to the best of their abilities.
Because of this limited budget, this show is perfect for flippers who want creative design ideas while getting the most bang for their buck.
It also highlights the country’s most cutthroat real estate markets—Los Angeles, Chicago, Atlanta, and Washington, D.C. Unfortunately, Designed to Sell ended; although, there’s still a backlog of episodes to enjoy.
You might know Tarek El Moussa from Flip or Flop. Unfortunately, Tarek and his past partner have broken up and gone their separate ways. Although Flip or Flop is still a must-watch if you haven’t seen it, we’re moving forward to the next reiteration of the popular program.
Tarek is now married to Heather Rae, a famous real estate agent from the Netflix series Selling Sunset. Together, they’re a power couple who are experts in their own fields. They’re unstoppable with Tarek’s experience in flipping homes and Heather’s eye for high-end real estate.
In the first episode, Tarek and Heather take on their first project together. It’s not an easy ride because there are already some issues with the odd floor plan and uneven floors. But, are their combined knowledge and work experiences enough to conquer this issue?
This show is so new that it just aired this year. Follow along their journey as they expand their business (and family) together.
House flippers need to stay updated with the real estate market to earn profits and with the current design, and trends to create appealing homes. And there’s no better inspiration than the hit shows we’ve listed above. We’re sure there’s at least one series for you—whether your niche is in historical homes, vacation rentals, or luxury properties.
What other house-flipping shows have you enjoyed? Is there anything on your watch list that we didn’t include here? Let us know in the comments—we’d love to hear from you!
And become a member today to join our upcoming meetings and receive our newsletter. You’ll get insider knowledge and learn from experienced flippers in the industry just by being a part of our group.
During the height of the pandemic, the real estate market took a big hit. Large markets like New York felt a significant decline in pending house sales, with a hefty 58% decrease. And in our case, the City of Detroit took an even more severe hit, losing 74% of pending sales.
However, when stimulus packages started rolling in during the latter half of 2020, housing sales came back with a caveat. For example, list prices spiked 27% due to the revived increase in demand. This is bad news for house flippers, as finding good deals is significantly more challenging.
Still, with the pandemic in the rearview mirror, it’s time to look at how the real estate market is shaping up in 2023. And more importantly, is it a good time to build your home-flipping portfolio this year?
Real Estate Trends for the City of Detroit, MI
To try and curb inflation, the federal reserve is looking to increase interest rates across the board.
Just this February, interest rates are up and are expected to keep rising in 2023. That being said, inflation is still going strong. We’re looking at incremental interest rate increases throughout the year.
This results in a more challenging time for house flippers to get financing for their flipping project. To give you an idea of how the real estate market looks in the city, here are some trends we’ve observed:
Days on the Market: On average, properties stayed on the market for 36 days as of November 2022. It’s an improvement from the earlier half of last year’s average of 44 days on the market. Flippers might have an easier time selling their flips because buyers are more willing to buy.
Average Home Price: Compared to June 2021, home prices increased by 38.3%, from $72,500 to $100,205. The increase means house flippers like you might see lower returns on investment because buying a house requires more capital.
Average Sale Price: The average sale price of a Detroit property is identical to its average home price and set a new record by surpassing the $100,000 at $100,250—an increase of 38.3%. This isn’t necessarily bad news, as you might earn a bigger profit when you sell your flip.
Number of Listings: The number of listings increased from 2021 to 2022 by 38.9%, going from $1,983 to $1,428. This figure means that you’re off to a good start, as there are more houses on the market that you can list as options.
Total Sales (Unit): The total sales took a hit in 2022, by -10.1%, from $424 to $383. Your flipping projects might fall through because fewer people are buying, so you need to prepare a good exit strategy , just in case.
List Price: In January of this year, the year-over-year home prices were at an increase of 6.7%, and the average listing home price was $80,000.
Despite the climbing interest rates, the Detroit real estate market continues to climb in price, and the economic outlook in the City of Detroit is shaping up to be moderately positive this 2023.
Of course, we’ll have to wait and see if the interest rate hike will affect the situation, but it seems like 2023 is still a great year for you to potentially expand and earn from your flipping projects—as long as they make sense for your budget and risk appetite.
Flippers should Approach the City of Detroit Market with Cautious Optimism in 2023
Despite society moving on from the issues we faced during the pandemic, real estate prices continue to skyrocket. Sure, there’s pressure for the federal reserve to implement schemes to ease inflation, but various other factors also affect the housing market.
Regardless of what happens, the City of Detroit is still one of the most affordable areas, with its median sale price of $100,205, which is around 4x lower than the US median sale price of $405,900.
You’ll continue to find hidden gems in the famed Detroit real estate market to continue building your portfolio. Just be careful and get into projects that are guaranteed success, which you can do by joining as a REIA member, signing up for our newsletter, and meeting other investors in our upcoming meeting.
Leave a comment below if you have any other thoughts about the forecast for 2023!
Countless shows have entertained us with the possibility of flipping an old house (over 50 years old) for profit. It used to be simple, too: find a run-down house, fix it up, and sell it for easy money.
However, in today’s market, flipping a house has become much more challenging. Properties are increasingly more expensive to buy and fix up, and more and more wholesalers vie for the same investors.
And everything is exponentially more complicated if you flip an old house—the lower the starting point, the rougher the road is to flipping success.
So how can you flip an ancient house? Here are five critical tips for house flippers to remember.
1. Pick a Home in an Excellent Location
You can change everything about a house except for its location. So pick a home in a good neighborhood, often categorized by its amenities (e.g., near schools, public transportation, etc.).
No matter the potential you see in an old home, never choose one close to the freeway, with a high crime rate, or anything unappealing like that. Nobody wants a pretty property that’s in a terrible location. Instead, purchase a home in a prime location, and you’ll appeal to many potential buyers.
2. Check Your Numbers, and then Check Them Again, & Maybe Again!
How much is the house worth? How can you get it under the market value so you’re making money right off the start? Moreover, how much will it cost to bring it up to a sellable standard?
Knowing your numbers is vital in all real estate investments, but it’s especially crucial to flip an old home.
If you’re not experienced in answering any of the questions we’ve mentioned above, you’ll need to hire these professionals:
Real estate experts to know the estimated property value
Contractors or inspectors to determine the estimated renovation costs (ERC)
Real estate agent or broker to determine the after-repair value (ARV)
These professionals will help you flip an old home, especially given how tricky it is to renovate and know the value of a subpar property; doing things yourself might lead to underestimating or overestimating the cost and value, which could put your entire investment at risk.
3. Understand What Needs to be Done—and What Really Doesn’t
A home inspector can help you understand what needs to be fixed in a house before you sell it. Oftentimes, old houses need work in these areas:
Outdated outlets and electrical systems
Outdated heating systems (HVAC units)
Obsolete plumbing systems
Foundation issues
Deteriorating roof
Hazardous building materials
Old windows and door frames
These structural issues are called the “bones” of a house because they’re essential parts that make up the structure and safety of the property. You can get away with ignoring other cosmetic details like paint colors or flooring when flipping an old house, but you absolutely cannot ignore the bones. If any of these areas are not up to code or need significant repairs, it will be especially difficult (and expensive) to fix before selling. Contract a professional inspector to confirm the condition of an old home before you buy to stay in the clear.
4. Find Reliable and Honest Contractors for Repairs
Once you’ve bought the house and know what needs to be fixed, it’s time to find a contractor.
A lot of people try to save money by hiring an unlicensed contractor, or by avoiding getting multiple bids from different contractors. As a result, they often overspend on repairs or end up with a subpar repair job. Cutting corners can cost you thousands of dollars and cause significant delays in selling the property.
Find a good contractor by following referrals from friends, family, or other real estate investors who have flipped homes before. Once you have a few referrals, interview each contractor, get multiple bids, and check their licensing and insurance.
Here are the two categories of contractors you’ll choose between:
General contractor: If you choose a general contractor, you’ll only have one point of contact who’s in charge of managing the entire project from start to finish. A general contractor should be someone who is capable of managing every step so you can trust them the entire way.
Subcontractors: If you choose to go with subcontractors, you’ll do the overall managing yourself and have a group that includes electrical, plumbing, HVAC, framing, insulation, painting, and flooring professionals. You’ll also need backups to these roles so you’re never left hanging if one subcontractor calls out sick.
A good contractor is honest about the repairs that need to be done, gives you a fair price, and has a good reputation. Don’t be afraid to negotiate with contractors—remember, it’s your money and your investment, so you should feel confident in getting the best value for the repairs.
5. Build More Time than Usual Into Your Timeline
Old homes usually need major modifications and there’s bound to be a surprise or two!
You may need to redo narrow staircases, hallways, and doorways. Moreover, you’ll likely have to take down walls and rearrange the layout to modernize the old home by creating larger living spaces.
You’ll likely touch every part of the house—the electrical, plumbing, framing, and more—and you’ll need to strictly stick to your timeline to cover all the necessary steps. You don’t want to skip, delay, or rush any of those steps, either, (like installing drywall to see immediate improvement) because the structure or “bones” is what truly makes the property valuable.
Essential renovations take time and careful planning; don’t get too excited with the finishing stage.
Instead, plan ahead realistically, stick to your timeline, and schedule when each subcontractor should start their part of the project (if you’re not using a general contractor). You’ll make much better use of your time without sacrificing the quality of the finished property.
House Flips for Huge Profits: Old Homes for New Money
Have cautious optimism when flipping an old home. As long as you understand what you’re getting into before making an offer, lend your due diligence to inspections and contractors, and have a solid plan for repairs, you can make a tidy profit by flipping an old home.
Do you need more help flipping old homes? Sign up as a member, subscribe to our newsletter, and join us in our upcoming meeting! Stay updated with the latest tips and tricks by joining a community of like-minded individuals for your real estate investment journey.
We get it. It’s scary to get into real estate investing, especially if it’s to flip a home.
Countless shows have “proved” flipping to be easy, but the reality is much more challenging. As a house flipper, how much money should you spend on the renovation? How fast do you have to complete it?
And, most importantly, how can you flip a house legally?
Well, you must know eight legal risks when doing house flips. You may be in trouble if these aren’t handled properly, so we’ve outlined the most crucial house-flipping legal risks below.
Risk #1: FHA Re-Selling Restrictions
The Federal Housing Administration (FHA) is the largest mortgage insurer worldwide and gives mortgage insurance for loans made by approved lenders. Unfortunately, the FHA also places several restrictions on its mortgages, which limit how often a home can be bought or resold.
For example, known as the “anti-flipping rule,” you must wait at least 90 days before selling or flipping an FHA-financed home. Moreover, any resale between 91 and 180 days where the new property price exceeds its previous price by more than 100% will need more documentation for the FHA.
Risk #2: Building Codes and Zoning Regulations
Ensure that the property you buy complies with all local building codes and zoning regulations. Failure to do so can result in costly fines for both the buyer and the seller. So, take your time researching local laws to stay updated with any changes in any area before flipping a house.
Risk #3: Right of Rescission Rules
Be aware of any “right of rescission” rules that may apply in your jurisdiction when transferring property from one party to another. These legalities can vary by state, but they provide rights and protections if a homeowner wishes to back out of an agreement within three days of signing the contract.
Risk #4: Real Estate Contracts and Disclosure Statements
It goes without saying (rather, we wish it could) that you should understand the contract that you’re signing when purchasing a property. Read through the entire thing carefully and ask questions if there are any items that aren’t clear.
What novice flippers might miss, however, are the disclosure statements that must be included in real estate transactions, like lead-based paint disclosures or radon gas disclosures. Not complying with these regulations can result in fines and lawsuits against your flipping business, so always double-check.
Risk #5: Financing Fraud
Document everything thoroughly when financing a flip project. You’ll want to do this because lenders are tightening up, most notably regarding mortgage fraud and loan misrepresentation.
Refrain from misleading them about your financial situation to secure financing for a property, as failure to disclose all necessary information can lead to serious legal repercussions. And once again, fully understand the terms and conditions of any loan you take out.
Risk #6: Fair Housing Laws
Fair housing laws protect buyers from discrimination based on race, religion, gender, or nationality. As a flipper, you must abide by these laws and never discriminate against potential buyers when marketing your flipped home. If found in violation of this law, you risk heavy fines and even jail time.
Violations include, for example, sending out a direct mail advertisement for a home featuring only families with young children and not mentioning any other age groups or demographics—it’s considered discrimination.
Risk #7: Mortgage Loan Fraud
Chances are, you don’t have enough cash on hand to purchase your property. So, you’ll likely involve banks and lenders to finance your project.
Lending can become a cycle: you take out a mortgage to purchase the home, the next buyer acquires their own mortgage to buy the home from you, and so on. That cycle becomes ripe for mortgage loan fraud, where the buyer misrepresents their financial situation to get a larger loan.
To avoid fraud, request proof of income and other documents when dealing with buyers. You can also use third-party services that review potential buyers’ credit scores and verify their employment history before they purchase the home from you. These practices will help protect you from any fraudulent activities.
Risk #8: Issues With the Property Title
You may notice a lot of affordable properties in the market to flip for a significant profit. But between lenders, borrowers, real estate agents, and more, it can be challenging to know who owns the property you’re looking to flip—who can legally sell it to you.
So, before you acquire any property, ensure that you have title insurance to verify the title’s status on your behalf, and do your due diligence before making any major decisions. As much as possible, you should avoid dealing with fraudulent titles or legal disputes that could arise from a previous owner.
House Flipping With No Legal Repercussions
House flipping can be an incredibly lucrative business venture. By understanding these legal risks upfront, you’ll be in a much better position to have a large profit margin when entering this endeavor.
Just remember: consult with a local attorney if you have questions or concerns prior to doing any real estate transaction. Ensure that everything is done in accordance with all applicable laws and regulations to truly (and surely) build your house-flipping empire .
Do you need more help in house flipping? Join as a member, subscribe to our newsletter, and attend our upcoming meeting to stay updated with the market. You’re only as strong as those around you!
House flipping is a popular real estate investment strategy in which investors purchase properties, usually at a significant discount, fix them up and then resell them for a profit.
While the practice has been around for decades, it only gained popularity recently, particularly in the wake of the housing market crash of 2008, when many homeowners lost their homes to foreclosures—leading lenders to sell for cheap, and investors to buy rundown homes to rehabilitate and sell at profit.
Still, interestingly, house flipping is not just for professional real estate investors. Anyone can be a house flipper with the right knowledge and drive. In fact, many first-time investors have found success in this niche market—we’ve seen it happen.
If you’re thinking about getting into house flipping, there are a few things you need to know about the tax implications of this type of investment. Check them out below.
1. Document Every Expense!
As with any other investment, you must keep good records when flipping houses.
This will help you in two ways:
Doing so will make it easier to calculate your profits (and taxes owed) when you sell a property.
It will give you the documentation you need if the IRS audits you. As you can imagine, flipping houses can generate a lot of documentation, so it’s essential to have a sound system for organizing and storing your records.
2. Expenses to Deduct During Tax Time
If you’re flipping houses, there are a ton of expenses you can deduct when it comes to tax time.
There are two main types:
First, just about everything you spend buying, fixing up and selling the property.
Secondly, your business expenses, like auto payments, gas, for your auto, computer stuff, marketing the property, even snacks you buy for the contractors!
Say you spend $10,000 repairing and renovating a house that you sell for $50,000. In this case, you can deduct the $10,000 in expenses from your profits, leaving you with a taxable gain of $40,000.
3. You’ll need to pay capital gains tax on your profits.
When you sell an investment property, you must pay capital gains tax on any profits you earn. Capital gains tax is simply a tax on the profit you realize from the sale of an asset. In the case of house flipping, your asset is the property itself.
The good news is that there are ways to minimize your capital gains tax liability.
For example, if you hold the property for more than one year before selling it, you will be eligible for the long-term capital gains tax rate which is generally lower than the rate for short-term gains. Additionally, you can take advantage of certain deductions, such as the costs of improvements made to the property.
4. You may be subject to self-employment tax.
Another issue you can face is if you’re flipping houses as a business venture—then you may be required to pay self-employment tax on your profits. Self-employment tax is essentially Social Security and Medicare tax for the self-employed. The current rate is 15.3% which includes the employer and employee portion of the tax.
However, there are circumstances under which you may not be required to pay self-employment tax.
For example, you may not be subject to this tax if you’re flipping houses as an individual investor (rather than through a business entity). And if your total income (including your flipping profits) is below the self-employment tax threshold ($400 for 2019), you will also be exempt from paying this tax.
Of course, nobody is going to flip a home for a mere $400. But you get the point.
5. You can avoid capital gains tax via a 1031 Exchange.
Let’s suppose you’re looking to reinvest your profits from a house flip into another property. In that case, you can do so without paying any capital gains tax by taking advantage of the 1031 exchange provision. This provision allows investors to defer their taxes by rolling their profits into a new investment property.
For example, if you sell a house for a $50,000 profit, then you can use that money to purchase a new investment property without paying any capital gains tax on the sale.
The negative of doing a 1031 Exchange is that you can’t use any of the funds from the sale to live off of.
6. Other taxes depend on your location.
In addition to federal taxes, you may be subject to state and local taxes on your house flipping profits.
These taxes will vary depending on your location, so it’s important to check with your state and local tax authorities to determine what you’ll owe. For example, in some areas, you may be required to pay transfer taxes when you sell a property.
7. You may be required to pay estimated taxes.
Next up, if you’re flipping houses as a business, you may be required to pay estimated taxes on your profits. Estimated taxes are periodic payments made to the IRS throughout the year, based on your expected tax liability for the year. They’re due yearly on April 15th, June 15th, September 15th, and January 15th.
If you fail to make your estimated tax payments, you may be subject to penalties and interest. Therefore, staying on top of your estimated taxes is crucial if you’re flipping houses as a business.
Uncomplicated Tax, Uncomplicated Profits
We hope this quick overview gave you a better understanding of the tax implications of house flipping.
As with any type of investment, it’s important to do your homework and consult with a tax professional before getting started. But if you’re looking for a lucrative investment opportunity, house flipping may be just what you’re looking for.
Maximize your flipping profits today! Join as a REIA member, attend our upcoming meetings, and sign up for our informative newsletter. We can help you take care of all the details, from repairs and renovations to accounting and taxes.
Most house flippers don’t have the cash themselves to purchase a property & renovate it outright, so many have to learn how to acquire loans. But if you’re new to house flipping, securing financing may seem daunting.
So the question is—where do you start?
We’re here to help guide you through the process of financing your first flip. Here are the 4 steps to getting a loan for house flipping, so you know how to get one yourself.
1. Determine How Much to Borrow
The figure differs for every individual and investment. Generally, it’ll depend on your current purchasing power, the property’s purchase price, and estimated repair costs (ERC). If you’re new to house flipping, we recommend you work with a trusted and experienced inspector to have accurate numbers.
Once you know the total amount necessary, decide on what type of loan to get.
2. Decide on the Loan Type
Now, different types of loans are commonly used for financing a flip. However, if you want to play it safe, the most common loans are conventional, hard, and private money loans. Here’s the low down on a few different loan types:
Conventional Loans
Conventional loans are usually the best option if you have good credit and can qualify for a traditional mortgage. The interest rates on conventional loans also tend to be lower than other types of loans, making them more affordable in the long run. The only negative is that the property must be in livable condition, which doesn’t lead to the best deals.
Hard Money Loans
Hard money loans are typically easier to qualify for than conventional mortgages, but they come with higher interest rates. Hard money lenders will also often require that you have some skin in the game by putting down a higher down payment or using your own personal funds for the renovation.
Private Money Loans
Private money loans are given by private individuals or investors instead of banks or other financial institutions. Because of that, they usually have more flexible lending criteria than traditional lenders, making them a good option for borrowers with less-than-perfect credit. However, they take higher interest rates and fees.
3. Shop Around for Lenders
Once you’ve decided which type of loan is best for your financial situation, it’s time to look for lenders. You can find lenders online, through a local chamber of commerce, or by talking to other flippers in your area.
When you’re comparing different lenders, pay attention to the interest rate and fees associated with each loan. You’ll also want to ensure that you’re comfortable with the repayment terms. Some loans may have prepayment penalties which means you’ll owe a fee if you pay off your loan early.
4. Apply for the Loan
Finally, you’ve found a few lenders that you’re interested in working with; it’s time to start the application process. The first step is to fill out a loan application. You’ll need to provide information about your financial history, as well as the details of the property you’re planning to flip.
After you’ve submitted your loan application, the lender will review your information and decide whether to approve your loan. If your loan is approved, you’ll be given a loan estimate that outlines the terms of your loan, including the interest rate, monthly payment, and repayment schedule.
Take your time reviewing all options, sift through the best ones, and accept the one that gives you the best terms. Don’t accept loans haphazardly, or you’ll dig a financial hole before you even start flipping.
Expand Your Purchasing Power with Flipping Loans
You’re now ready to shop around for the best deal on financing your next flip!
As you can see, using a loan is much better than using cash, as it increases your flipping power. Even if you’re a seasoned flipper and have a ton of cash on hand, you still want to increase your deal flow as much as possible to flip more properties. Loans allow you to work on bigger and better projects—even multiple projects at once—without tying up all your own cash in them.
And if you need more help, don’t hesitate to join as a member of REIA today and attend our upcoming meeting. You can also sign up for our newsletter so you never miss any important tips to become a successful house flipper.
Are you getting ready to flip a house? If so, it’s important to make sure the outside looks as good as the inside.
After all, no one wants it to look like a neglected eyesore or it will scare away any potential buyers. And yet, you have to strike a perfect balance because you don’t want to spend too much time or money on it either.
In the house flipping industry, time is money—the longer you spend remodeling the property, the less profit you earn. Landscaping tends to eat up a ton of time and effort, which means that if you’re investing in long-term lawn care, you’re not flipping fast enough.
On average, flippers spend between 5 and 10% of their budget on landscaping. This may not seem like much but you’d be surprised at how much value this brings. In fact, studies have shown that sprucing up the lawn can increase the home’s value by as much as20%.
That’s a lot of additional profit for each flip. But this isn’t the only reason why you should invest in landscaping. Keep in mind that construction work to renovate other parts of the property will likely mess up the yard, so much so that you might need to redo the entire lawn.
So, let’s take a closer look at how you can effectively spruce up the lawn without going over budget.
How to Spruce Up the Lawn Without Breaking the Bank
No flipper wants to dedicate a huge swath of their budget to landscaping. So, here are a few cost-effective tips for you to improve the lawn without going over budget. The goal is to ensure that the home will attract potential buyers—notably, the target market that you want to reach.
1. Remember Your Audience
Before going crazy with your landscaping to-do list… first, consider what your target buyers will want. For example, if you’re hoping to sell to an older group of people, then perhaps it would be better to not have a lawn at all since they may not want to regularly maintain it. Young professionals, however, would likely opt for a patio or outdoor deck to entertain their friends, rather than a high-maintenance yard.
But if you’re targeting families, then feel free to go level up the landscaping. Chances are, these buyers are prioritizing wide open spaces for their kids and pets to play in. In fact, not having a poorly-maintained lawn may turn them off from seriously considering your property.
Apart from your target buyers, also consider what real estate class the neighborhood, tenant pool, and property belong to. For instance, it won’t make sense to create a beautifully-landscaped lawn for a Class C home since an expensive feature to maintain would be the last thing its tenants want.
2. Make the Grass Greener
A well-manicured lawn and tidy garden can go a long way in boosting your property’s curb appeal. The grass, in particular, has the most visual impact on guests when they first see the house.
Simply adding either fertilizer or grass seeds can go a long way. In fact, do this the minute you start on the flipping project. That way, the grass will already be fuller, healthier, and much greener by the time you’re finished and ready to sell.
As tempting as it is to constantly mow the lawn, it actually puts stress on the grass, especially if you trim off more than 20% at once. So check the cutting height of your lawn mower before turning it on and going to town with it, and ensure that you’re not mowing the grass too often.
This shouldn’t stop you from regularly pulling out the weeds, though. After all, who wants to see an overgrown lawn?
3. Edge the Lawn
If you want the lawn to appear tidier to potential home buyers, use an edger to trim the grass along its perimeter. Doing this creates a crisp and neat border that will make your property look cleaner and more professional, undoubtedly increasing its curb value.
Edging can also highlight landscaping design elements, which is important if you want to draw a buyer’s attention to a particular area of the lawn. It also prevents weeds and turf grass from growing into flower beds, so you no longer have to worry about the aesthetic appeal of your blooms.
4. Don’t Forget the Grass Clippings
For many, grass clippings are sent straight to the garbage can. But for flippers, they’re heaven-sent. Rather than bagging them after mowing the lawn, leave them where they are. Since they’re small and comprised of mostly water, it won’t take them long to break down and fertilize your garden.
However, make sure to clean up the grass clippings from your driveway, the sidewalk, and the other hard surfaces surrounding your lawn.
5. Invest in Lawn Repair Mix
You can easily fix bare patches on the lawn with a lawn repair mix, which typically consists of compost, fertilizer, and grass seedlings.
For better results, remove the dead grass and loosen the soil until at least three inches below the ground. This will give the lawn repair mix enough space to grow. Take care not to overwater this spot to prevent the seeds from scattering.
Sprucing Up the Lawn Won’t Break Your Budget
As always, the goal is to create a lawn that fits the criteria for selling that particular property to a particular target market. You don’t want to spend too much time, effort, and energy on a project that won’t pay off. In all flips, the faster you sell it, the more money you’ll get to keep, so make sure that your remodeled lawn will help you earn the profits you want.
In this article, we proved that landscaping projects aren’t as scary, expensive, or as time-consuming as you think they might be. With just a few easy fixes, you can increase your flipping profits without spending too much time and effort beautifying someone else’s lawn.
For more house-flipping tips, reach out to our team of experts at Logical Property Management. We’ve been serving the Metro Detroit real estate market for more than two decades now, and have everything you need to succeed in the area.
Over the years, the IRS has been cracking down on taxpayers taking advantage of the qualified business income (QBI) deduction. Because of that, some house flippers are wondering whether flipping houses can still qualify as a business.
So, let’s dive in and see what you need to know.
QBI Deduction: What Is It and Who Can Claim It?
QBI deduction is a tax break that allows business owners, freelancers, and independent contractors to write off up to 20% of their total taxable income. This effectively decreases the income tax they owe to the IRS. However, not everybody is eligible for it.
For instance, only business owners with pass-through income may take advantage of the QBI deduction. This includes the following:
Sole Proprietors: An individual, such as a freelancer or independent contractor, who runs an unincorporated business
Partnership Members: Two or more people who made a formal agreement to oversee a business together, sharing in its profits and liabilities
S-Corporation Shareholders: People who own shares in an S-Corporation and include its income and/or losses on their personal tax returns
In short, you’ll have to double-check if you qualify for the tax deduction to take advantage of it, as there are some income limits and business types that may affect your eligibility.
What Does Not Count as QBI?
Now, not all income types qualify for QBI. In fact, there are nearly 20 different income types that the IRS does not consider as QBI. Here are a few of them:
Income from out-of-country businesses
Investment items (e.g., capital gains and dividends)
Interest income not related to a business or trade
Annuities received from something unrelated to a business or trade
Of course, as a house flipper, your only concern is if income from flipping is included on the IRS list. Well, it’s not specifically mentioned by the IRS. So, are you eligible for the 20% tax write-off?
Does House Flipping Qualify as QBI Deduction?
The law says that the QBI deduction will only apply to taxpayers who are sole proprietors of a business or trade, a member of a partnership, or a shareholder in an S-Corporation. So those in the fix-and-flip business will be eligible if your operations are conducted within one of these entity structures.
However, there are still rules dictating how much you can deduct from your total taxable income:
If you’re single or unmarried and your total taxable income is less than $164,900, then you can deduct 20% of your qualified business income.
If you are married and filing jointly with your spouse and your total taxable income is less than $329,800—then you can deduct 20% of your qualified business income.
Because of W-2 wage limitations, things become more complicated when your total taxable income exceeds these thresholds. If this is your situation, then it would be better to call an accountant for advice.
Confused? Don’t sweat it—here’s a quick example to help you understand QBI deductions better:
Let’s pretend that you’re a single-house flipper whose net operating income is $100,000 and W-2 wages are $50,000. Since you fall below the $164,900 threshold, you can deduct 20% from your net operating income, amounting to $20,000.
Assuming that you belong to the 24% tax bracket, this QBI deduction will save $4,800 on your tax bill.
Yes, House Flipping Qualifies as QBI Deduction
The QBI deduction has undoubtedly benefited a lot of industries, particularly real estate, where house flippers are now seeing more profits earned from every sale they close. But if you are still confused about the calculations, then we recommend working with a certified public accountant (CPA).
Calculating your QBI deductions is a huge headache and as a busy house flipper, you simply do not have the time for that. That is why you should consider joining the Real Estate Investors Association of Oakland County—our members have access to tons of resources that help them take their house-flipping business to new levels of success.
From landing sales on your fix-and-flip projects to help you determine your tax write-off, REIA has everything you need. Interested? Check out our website to see what your next steps should b
Calculating your QBI deductions is a huge headache—which you may not have the time for. Consider reaching out to REIA and our team of experts to help you with everything. Subscribe to our newsletter as well and join as a REIA member to attend our upcoming meeting!
If you only want to buy a single house to fix and flip as they do on TV shows, do you really need a full-blown business plan? Well, yes! You certainly need one if you want to succeed in the game.
Even if you’re just flipping one house, going in unprepared and without a plan is setting yourself up for trouble. You can go over budget, waste time due to lack of scheduling, and sabotage your house flip.
Instead, go through this Build Your Flipping Empire series to learn how to make a flipping business plan before you jump in with both feet. Doing so, you’ll complete your investment on time and on budget, making a hefty profit that you can roll over into your next project.
In other words, you’ll carve out a path that’ll lead you to long-term success in house flipping.
The executive summary is a synopsis of your entire business plan and serves as the first impression. Remember that potential lenders, financiers, and other business prospects will often only read the executive summary, so ensure that it provides a concise and comprehensive overview of your plan.
You should also include your mission statement here to show your goals and values as a house flipper. For example, if you value family-friendly, move-in-ready house flip projects, your mission statement can say, “Our mission is to grow our house flipping empire one property at a time by turning distressed properties into profitable ones for aspiring young families.”
2. Management Team
A good business plan also has your contacts in place and responsibilities assigned. From the contractors to the real estate agent, list all of them down with detailed roles, qualifications, and experience in house flipping projects.
Here’s an example of what this section will look like:
My team is composed of professionals equipped with the necessary skill sets and work experience to get the job done with quality and efficiency.
General Contractor: John Smith
For over 20 years, Smith and his team of subcontractors (plumbers, electricians, painters, roofers, etc.) have fixed homes all around the City of Detroit. Regarded for his quick and skillful work, Smith has earned the trust of two generations of Detroit residents.
Real Estate Agent: Jane Doe
Doe is an exceptional licensed real estate agent specializing in wholesale and house flipping deals. In her 17 years in the industry, she closes a whopping 4-6 deals per quarter, averaging 20 per year.
Bookkeeper: Jody Miller
Alumni of the University of Michigan, Miller graduated with a bachelor’s degree in accounting. Her financial skills can effectively expense accounted for and within budget, helping our team generate the highest flipping profits.
If you’re new to house flipping and don’t have a lot of connections yet, then take this as an opportunity to build your team. You don’t want to waste time gathering people once a flipping project starts, as having the best people around will contribute to the stability of your operations.
3. Goals & Objectives
Think about what your ultimate goal is for the house-flipping business. Do you just want to flip 1 house a year? Or do you want to build a nationwide flipping empire to quit your day job? Remember to make your goals actionable, measurable, and realistic based on your available resources.
Here’s an example:
Our goal is to be one of the leading house-flipping empires in Michigan. Starting from the City of Detroit, we’ll grow our portfolio by expanding to neighboring cities until we have projects all around the state.
One by one, we will purchase distressed properties, and flip them into quality homes, all the while turning a profit to fund future projects as we continually grow our house-flipping empire. Our ultimate objective is to flip unloved properties into family homes.
Pro tip: Break down long-term goals into short-term ones so they’re easier to achieve and clearly mark the journey towards achieving the overall business objective.
4. Market Analysis
Knowing the real estate market in detail can help you make informed decisions moving forward. The market analysis provides insights to assess whether your business plans are likely to succeed or need some tweaking, all in relation to the competition.
Additionally, your market analysis will show prospective lenders, investors, and business partners your market knowledge and how you plan to use that for your financial plans and gain.
Here’s a list of questions to guide your market analysis:
Is the neighborhood gaining real estate popularity?
Is the property type you’re flipping in demand?
Is there a large pool of potential buyers?
What are the local crime rates?
How far is my prospective property from the necessary facilities?
What are my weaknesses against the competition?
What are my strengths against the competition?
Let’s use some data from 2021 to have a quick look at how a market analysis can go:
Recent statistics show a rise in flipping activity in Michigan. For example, in two Wayne County zip codes alone, 25% of all real estate sales were house flips, and Redford saw a 99.9% increase in house flipping in the first quarter of 2021—doubling the rates of the previous quarter.
Given the statistics, you can see these parts of Michigan are highly saturated and competitive. We can infer that pricing gets more competitive, with margins between buying distressed property and selling a flipped house getting smaller.
As for the whole state of Michigan, the online newsletter Michigan Chronicle reported in 2021 that house flipping is experiencing a huge resurgence providing “a lot of opportunities”. Michigan Chronicle used statistics by ATTOM data solutions and found that average Michigan flippers pocket minimum 20% of sales profits.
Although some cities in Michigan are highly competitive with advanced house flippers, there is still an abundance of opportunities state-wide for novices. Strategically, we can start in less competitive areas until we progress to more advanced markets.
The market is always shifting, however, so ensure that you constantly update your plan. After all, a great business plan is one that remains relevant and can guide you even in the later stages of your empire.
A market analysis is an opportunity for you to learn more about the house-flipping business. Another focal point of this section is getting to know the competition—how competitive is the market? What makes them competitive? Are there certain competitors to look out for?
Take note that getting into the flipping business without learning about it is one of the novice mistakes you want to avoid, so take your time with this section.
5. SWOT Analysis
“SWOT” stands for Strengths, Weaknesses, Opportunities, and Threats. Your SWOT analysis lets you gauge how you compare to the competition, identifying your relative performance in the market.
Let’s break down each letter and see what you should put within each section:
Referring to the infographic above, the guide questions show you what’s being asked for under each section. After the guide questions, the bullet points show sample information of what you input.
The SWOT analysis examines 3 factors: you, your competition, and the external factors of the area you plan to do business in. By having comprehensive knowledge of these factors, you can work smarter, and in turn, maximize your profits.
We’ve only scratched the surface of what goes in this section of a house-flipping business plan. If you want to take a deeper dive into the SWOT analysis, we’ll go into this in part 3 of the series!
6. Lead Generation & Marketing Strategies
Next, determine the best ways you can generate leads and market your business. We understand that this can be a challenge in the house flipping business, but try out these methods to get started:
Leverage Networking: Helping other real estate investors is a great way to keep your deals flowing. Pooling together resources can help you establish mutually beneficial relationships with other flippers and other real estate investors. Even if you have to split the profits, networking gives you consistent work while building your empire.
Drive for Dollars: There are many leads out there that can offer you profitable deals, and it’s just a matter of driving around and finding signs like “for rent” or “for sale.” These signs often have contact details of the assigned real estate agent or seller listed, where you can make direct calls to ask about possible deals. It’s also a great opportunity for you to build your network of agents.
Real Estate Agents: If you’re looking for a helping hand that has substantial knowledge of the real estate market, a real estate agent is your best bet. They can help you find leads, teach you the tricks of the trade, and get word of your house flips out in the market. Since these relationships are mutually beneficial, they can even become a long-term business partner.
These are just some lead generation and marketing strategies we found will be the most helpful for your house flipping projects, but you can use a mix of different strategies for more results. Remember to list down and define which ones you plan on using in your house-flipping business plan.
7. Finance Plans & Projections
You can’t do any business if your finances aren’t in order. So, will you be financing your house flip projects out of your own pocket or will you seek the aid of a lender? Because if you need funding, then it’s paramount that you earn their trust.
So, here’s what you need to include in this section:
Documents: Prepare all the necessary documents that show you’re financially able and responsible. You can include income statements, cash flow statements, and balance sheets.
Earnings: Tackle how much you expect to earn and how you will allocate your earnings. If you expect to earn $50,000 per deal? $75,000? Will you allocate 80% for future project funds? Will you keep 20% or less for yourself?
Budgeting: Although each project will come with its own set of repairs and touch-ups, it’s always good to have a standard budget as a guideline. You can list them out as percentages, so you show how you’ll stick to a budget and avoid over-improving properties to protect your profits.
Projections: Go over your business projections. Where do you see yourself months from now? What about 3 years after? Your projection should cover the next 2-5 years to give a clear picture.
Remember: One of the main reasons for making a business plan is to use it for getting approval on loans. So make it awfully clear how financially viable your flipping business is to earn others’ confidence.
8. Growth Strategy
We understand that it’s hard to think far into the future when you’re still getting your business off the ground. However, setting goals can keep you in line while showing future lenders, investors, and potential business partners that you are dedicated to building your house-flipping empire.
Here are a few examples:
Invest in Single-Family Homes: Single-family homes are a commodity that most types of buyers consider, so the pool of prospective buyers is larger. Opting for these kinds of properties increases your chances of closing a deal while lessening the effort you put out to gather leads and market the property.
Diversify your Real Estate Portfolio: Although house flipping is the main priority in building a house flipping empire, that doesn’t mean you can’t add other real estate ventures to your portfolio like wholesaling real estate, as it also starts with distressed properties.
Plus, if a flip looks like it’s going to flop, an exit strategy and an alternate venture you can consider are property rentals. In a nutshell, it’s all about diversifying the investments in your portfolio to secure growth.
Growing Your Capital Faster: Another way of looking at “growth” is looking for opportunities that can grow your financial capital quicker. By choosing and making the right investments early on, you’re on the fast lane to having more financial freedom, and in turn, the liberty to take on higher risks and higher reward projects.
There are more ways to ensure that your flipping empire grows. You can conduct more research to see what else you can do (and include in your business plan) so your vision is both short- and long-term.
9. Exit Strategy
Considering that your house flip project can flop when you’re just starting out can be discouraging, but having an exit strategy can be a lifeline to saving your investment. Rather than looking at it as a backup plan for failure, see your exit strategy as a “Plan B” for you to turn a profit—whatever happens.
So, identify alternative ways where you can get a return on your investment. Here are some you can consider for your house flipping business plan:
Slash Your Price: Lower your price if you’re pressed for time. If your flip seems like it’s going to flop, lowering your price can effectively heat up the market again. Even if it’s not as high as you expected, you can still walk away with some financial gain.
Tap a Different Market: If your house flip isn’t picking up in the buyers’ market, tapping into a different market can be a viable option. Long-term rental can present itself as another business venture and a form of passive income.
Rent It Out: With a property flipped and ready for residency, an alternative to closing a sale can be renting it out. Apart from being an alternative way of getting a return on your investment, you can add rental properties to your portfolio. Having different avenues of income also helps with gaining the financial stability you need to grow your house flipping empire.
Your exit strategy should be the next most financially sound option that aligns with your circumstances, so evaluate your situation carefully before taking any action.
A Foolproof Plan for Flipping Success
Learning more about the business, strategizing growth plans, and planning exit strategies can provide you with the direction you need to move forward with your goals.
Apart from serving as your guide, your house-flipping business plan will also provide comprehensive information on all areas of your business for new investors, lenders, potential business partners, and other people might do business with.
Business plans aren’t just for you, but also for those who will work with you.
With all your bases covered, you are clear and confident in what you want to achieve and how you plan on achieving it. You’ll be well on your way towards creating a house-flipping business that won’t turn into an expensive, capital-depleting flop.
This is the second installment of our series on house-flipping businesses, so stay tuned for our last installment! And if you have any questions or specific topics you want to learn, let us know by dropping a comment below or getting directly in touch with our team.
Flipping real estate makes for a great reality TV show, but it can also be a lucrative investment strategy if you know what you’re doing. What they rarely show on screen, however, is the importance of having a business plan for flipping homes—one that we’ll provide for you in this article.
Read on for our house-flipping business plan template!
The Ultimate Business Plan Template: Planning for Success
The goal is to build a solid foundation that serves as your living roadmap for your house-flipping empire. Only when you have the goals and action steps in place can you put yourself toward investment success, attracting real estate investors, financial partners, and home buyers to work with your company.
Here are the 8 steps you need for a thorough house flipping business plan:
Step 1: Mission & Vision Statement
Start by creating your mission and vision statement. Change the following placeholders:
[Company Name] [what you do] [what you offer] to [who your customers are] with [your benefits, e.g., faster, more reliable, lower cost].
Here’s an example of a great house flipping business plan:
Flipping Fortunes finds, fixes, and sells fixer-upper homes to investors and homebuyers in the City of Detroit. Unlike other companies, we are Detroit locals and partners of Logical Property Management company that has been operating in the area for more than two decades.
Step 2: Products & Services
Next, list down all your company’s services and support each title with a short description. Here’s what it may look like for Flipping Fortunes, the fake house flipping business we used earlier:
Flipping Fortunes will provide these services for investors and home buyers in Metro Detroit:
Complete property restoration or renovation: Our team will scout, inspect, budget, and manage property flipping projects from start to finish. Home buyers and property investors can then purchase affordable, quality homes at a fraction of the cost of a newly built home.
Professional assistance for house flipping projects: Our team will help real estate flippers and DIY home flippers with everything they need to complete their flipping projects, including connections to professional inspectors, licensed contractors, and experienced real estate agents.
The more details you can add, the better. After all, interested real estate investors and financial partners will want to know everything your company can provide for them before engaging and signing the dotted line with you.
Step 3: Management Team
In this section, you want to explain more about the “who” of your business. Is your team composed of knowledgeable and experienced real estate experts who’ll live up to your company’s promise?
Here’s a quick example:
John Doe, CEO: Licensed real estate broker and property manager for the past two decades. Doe began as a real estate wholesaler before spending most of his career working with several agencies and property management companies. In all of his ventures, he always specialized in house flipping projects, having now flipped more than 250 projects.
Be sure to include each individual’s expertise, experience, knowledge, and everything else that can prove their capability and solidify their role. The higher you can lift your team members, the more trust you’ll gain as a company.
Step 4: Success Factors
Next up, what needs or specific niche are you addressing in the particular real estate market? These things are crucial for getting financial partners to join your venture, convincing them you have a great business idea on hand.
Here’s an example of what a success factor could be:
Flipping Fortunes addresses the growing niche within the Metro Detroit real estate market. Our team opens opportunities for valuable fix-and-flop projects, making it easy for investors and home buyers to get their slice of the confusing yet high-performing hotspots in the tri-county area.
Pro Tip: You can also conduct a SWOT analysis to get a clearer picture of your strengths and weaknesses as a company.
Step 5: Target Market
As with any business, your house flipping company’s success depends on the supply and demand, as well as the cost of labor and value appreciation of the renovations. You don’t want to offer your services to a place that doesn’t need them.
Instead, your goal is to identify where you can “sell” most of your flipping services to a large market for many years to come.
Step 6: Business Entity
To operate your business legally, choose a business entity and register for your business in the state you’ll operate in. There are many business entity types to choose from, but we recommend that go with one that has limited liability protection, like an LLC or corporation.
Liability protection is crucial for a house flipping business, as there are many things that can go wrong. For example, someone can sue your company because of a property you’ve flipped—where you’ll want to ensure that your personal assets remain protected.
Pro Tip: Consult with a business attorney to learn your options and weigh them accordingly.
Step 7: EIN, Insurance, Permits, & Licenses
It’s also important to ensure that you have the required documents to run your business. Oftentimes, banks and private investors will want to see this anyway. After registering your business, go through the following processes before officially starting operations:
Register for an employer identification number (EIN), which you’ll use for tax purposes, applying for business loans, or apply for business bank accounts and credit cards.
Look into business insurance options, especially if you’re going to hire employees. You’ll need workers’ compensation, unemployment, and disability insurance. Moreover, research about general liability and commercial property insurance to protect your assets.
Obtain the property business licenses and permits for your state and scope of work. You might need to get several permits to work in the construction business. You can also check with your local chamber and business attorney to ensure that you have the complete paperwork.
Step 8: Financial Summary
Lastly, ensure that your flipping business will generate high returns—both for you and for your investors. Here are a few ways you can get financing:
Through friends and family loans: Also called Patient Capital, this is when you fund your projects with personal loans from family members, friends, or partners. It’s low stakes and an easier route than traditional bank loans.
Tapping into your 401(k): If you don’t plan on retiring soon, you can take a loan out of your 401(k)—either from the classic 401(k) loan or a ROBS loan.
Combining financing options: You can also find success in using several financing options to purchase and renovate your properties.
Start Flipping & Start Generating Profits
As your company grows, the projects will naturally increase in complexity and number as well. That is why having a business plan is important, especially if you want to attract investors. Your investors should see that you do your due diligence before putting any money on the line.
Have any more questions? Drop them in the comment below!
