I’ll be the first to tell you that the road to real estate success isn’t all about curb appeal and sold signs.
Far too many real estate investors overlook the basics and end up failing—and this includes flippers. If you didn’t know already, these are individuals who purchase and renovate properties before putting them back on the market to make a profit.
If you’re ready to start transforming rundown properties into profit-generating gems, then crafting a solid house flipping business plan is your secret weapon.
In this comprehensive guide, I will walk you through the essential steps in writing a winning business plan pulling from my own personal real estate experience to turn your real estate passion into a lucrative venture.
Get ready to roll up your sleeves, grab a toolbox, and unlock the door to real estate success.
What is a House Flipping Business Plan?
A good house flipping business plan does more than just guide your real estate projects; it shows off your expertise and vision to lenders, investors, and partners. It proves you know the market, have a solid financial strategy, and a plan for handling the ins and outs of buying, renovating, and selling properties.
A house flipping business plan typically includes the following sections:
- Executive Summary
- Mission Statement
- Market Analysis
- Strategy, Timing, and Financial Projections
- About the Team
- Exit Strategies and Backup Plans
House Flipping Business Plan
Executive Summary
The executive summary is your business plan’s elevator pitch.
Think of it as a quick rundown of everything in the plan, kicking off with your mission statement and a snapshot of your project goals. If someone’s only got time for one page of your house flipping plan, this is the one!
They should walk away with a basic grasp of the whole project, your ideas, and what you’re offering. It’s usually easiest to tackle this part last, once you’ve nailed down all the details from the other sections.
Mission Statement
The mission statement is just a quick one to three sentence summary of your project goals and the ideas behind them. It reflects your core values and business culture—super important for setting up your project. When crafting your mission statement, ditch the jargon! Keep it clear, concise, and practical.
Comparative Market Analysis
A comparative market analysis, or CMA, is a handy tool to figure out your property’s value by checking out similar homes nearby. Knowing the neighborhood you’re buying in is key to your success. Doing your own research ensures you’re snagging a great deal. With thoughtful planning, you’ll be ready to roll with a successful project.
Websites like Realtor, Zillow, and Trulia are free and very helpful when it comes to getting information on the property and neighborhood value. They show you what nearby homes sold for and their details—bedrooms, bathrooms, square footage, lot size, and more—so you can easily compare. Additionally, they display what’s up for sale in the area, giving you a feel for the local market competition. Here’s a pro tip: Hit as many open houses in the neighborhood as you can to really get a sense of size, finishes, and layouts.
Project Timeframe
Once you have your executive summary, mission, and market analysis down, it’s time to set up a timeframe for your project. Just remember, rehabbing and flipping usually take longer and cost more than you expect. It’s always best to create a realistic timeline and then add some extra time for inevitable delays you can’t predict.
Next, you’ll want to “cost out” each month on your timeline in as much detail as possible. Here are a few questions to think about when you’re doing that:
- What’s the monthly payment on the loan for the property?
- How much are you shelling out for insurance and taxes each month?
- What will you need to pay your contractor?
- And don’t forget the monthly utility bills—how much are those going to be?
These details will help you get a better grip on your budget.
Financial Projections
Once you’ve figured out how long your flipping project will take, it’s time to draft a budget and financial projection. This means considering both the time and money involved in flipping the property. It’s a crucial part of your business plan.
When you’re putting together your budget, don’t forget these costs:
- What you paid for the property
- The estimated rehab costs
- Extra expenses like marketing to sell the property
- Any additional contingency expenses
Then, add all these up to get your total investment number. Give a realistic value for the property’s sale, deducting liquidation costs like realtor fees and transfer taxes, to see the projected profit.
After writing down all the costs to buy a home and estimating the rehab timeline, you should be able to get a good handle on your cash flow throughout the project. This financial projection will help you know how much cash you need to keep things running smoothly.
Financing Strategy
In this part of your business plan, you’ll want to lay out where your start-up capital for the rehab project is coming from. There are lots of options for funding a house flip, such as:
- Using all cash
- Getting a conventional mortgage
- Applying for government insured loans
- Opting for owner financing
- Securing hard money
- Tapping into private money
Remember, your funding choice can affect your timeline, costs, and overall budget. Once you’ve picked a funding source, be sure to explain which financial assistance you’re planning to use in your house flipping business plan.
About Your Team
Now, it’s time to think about how you want to set up your house flipping business. Are you planning to borrow in your own name as a sole proprietor, or are you considering forming a partnership, corporation, or limited liability company?
Also, don’t forget to talk about yourself in this part of the business plan. Share a little bio, any relevant experience, and the unique skills that will give your company an edge.
If you’re teaming up with a house flipping crew, introduce them and explain why they’re your partners of choice. Make sure it’s clear what you’re up to and how your team will help make your rehab project a success.
Exit Strategies and Backup Plans
Finally, don’t forget to include an exit strategy in your house flipping business plan. This is basically what you plan to do with the property once the renovations are done. And hey, it’s super important to think about backup plans just in case things don’t go as expected.
The Bottom Line: House Flipping Business Plan
A solid, well-written business plan can be a game changer for hitting your house flipping goals. Spending time on planning upfront can save you tons of time, money, and stress later on.
