7 Traits of Highly Successful House Flippers

There's a whole lot more to the house flipping business than meets the eye, and then making money on top of all that is more challenging than you would ever expect. The reality is the vast majority of people who do their first house flip barely make a buck, some even lose money. In fact a lot of people that are trying to house flip on either a part time or full time basis are struggling right now.

However, there is a small minority of investors that are making an absolute fortune right now flipping houses.  I'm going to share with you 7 traits of highly successful house flippers. Applying just one will make you more successful, but all seven together can turn you into a high performance first-class money making real estate machine.

 

 

1. Successful House Flippers are Off Market Masters

Highly successful real estate investors find their deals off market. By contrast, most unsuccessful house flippers find their deals on market. What's the difference?

On market deals are listed on the MLS and about to go to auction. More specifically, “on” means that other people know about it. Sometimes they're more hidden than others, for example they may be listed on auction.com instead of the MLS. Either way, if we're talking about a foreclosure, we're referring to a deal that other people will know about and those are primarily not as productive as off market deals. The most successful house flippers aren't standing at the foreclosure auction every single week.

Find Off Market Deals

Instead, they're busy working on finding deals that are off the market that nobody else knows about. Now, I do not 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'm being greedy, and I don't want to tell you. In fact, I want to preserve this industry. If I did open my big fat mouth, it would cause a lot of problems. Also, we spend millions each year in marketing and testing to always stay on the cutting edge of this subject. When you master the art of finding deals that are not already on the market, you're becoming more like a highly successful real estate investor.

 

2. Highly Successful Investors are Creative Terms Mavens

You may assume that the best house flippers in your area are successful because they have the most money and they can pay fast cash to sellers. However, even if they give off the air that they are the most well-funded, it's not the cash. Often the most successful house flippers can attribute 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 win by giving the seller more of what they want so you get the deal, but then you make more money as well. This 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 talks about how we use creative structuring of deals to do more deals. There are great ideas in that video with some of our go-to techniques.
 

3. Successful House Flippers are Due Diligence Experts

These house flippers can predict with a high level of accuracy what a house will sell for once it's fixed up. No gambling, it's very scientific, scrutinizing the comparable sales and looking at the withdrawn and expired, drilling down on what's going to happen. It's like an appraiser, only better.

However, that's just the beginning of due diligence. It's not just comps, it's also knowing what surprises you may run into, especially if you're buying a rehab. So, they're like an inspector. Only they are better because they can see things that even an inspector doesn't see. They also understand what a new buyer is going to complain about, and what they’re not going to complain about.

It's also about being aware of other issue that might arise. So often people don't do their due diligence well and they end up regretting it later, after learning a very expensive lessons or two when they're trying to resell the property. For example, discovering that they need to replace a septic tank because they didn't know about a new law requiring all septic tanks to pass title five. Being a due diligence expert can mean the difference between you barely getting by and making a fortune in this business.
 

4. Highly Successful Investors are Renovation Maestros

I use the word maestro because it depicts someone who is a conductor. They're in control and other people are playing the instruments. Other people are doing the work and the maestro does a great job overseeing it all. That's what you need to do if you're going to be successful at house flipping. You don't need to be picking up a hammer. Talented trades people can do the work. If you want to be a successful real estate investor this is an important distinction; the value of being 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 discuss how not to get screwed by them. I also have a helpful video on the Best Materials for Flipping Houses.

Even if you're used to doing the work yourself, you need to find capable people to do the work for you. As the founder of Kinko's, which is now FedEx office, Paul Orfalea once said, "Someone else can always do it better."
 

5. Successful House Flippers are Buyer Investigators

I have a video called The Biggest House Flipping Mistake. It describes how dangerous it can be to agree to sell your house to a new buyer without fully evaluating that buyer's credentials and their ability to close. You can get stuck for months and it can be crushing to the business.

Highly successful real estate investors are fantastic at investigating whether a buyer can perform. If it's a cash buyer, verifying that they have the cash. Most of the time we're flipping to retail buyers who are getting a loan which must get funded to close the deal. So much trouble can occur when a loan doesn't get funded.

Verify a Client's Ability to Close

So, as a real estate investor, you're not only good at being an appraiser and inspector, but you're also like a mortgage broker who is able to verify a client’s ability to close and get a loan. If you don't do this, it is going to hurt you mightily over time. You must investigate buyers the same as you investigate houses because otherwise you could get tied up. When deals aren't closing, it can literally clog up the whole system.
 

6. Highly Successful House Flippers are Fast

They have incredible speed of implementation. You may be thinking this is an asset because finding a deal quickly and successfully flipping it fast allows you to do more deals and make more money. Although that's true, that's not the main reason why speed is critical to success.  The most important reason why you need to be fast and furious is because when you collapse time frames, you reduce the opportunity for unforeseen problems to occur that completely derail the business. Things you could have never predicted.

I'm going to give you a perfect example in a deal that I recently funded:

First, this individual took way too long to renovate. He wanted to do some of the work himself to save money. Secondly, he put it on the market and the first buyer that showed up he didn't investigate. He was like a dog in heat. He was so excited he was panting for this buyer. This buyer tied him up for about a month and they couldn't get a loan. Then Hurricane Harvey hit. Thankfully his house did not flood, but it basically shut down that economy for weeks.

Problems Arise That You Can't Predict

Nothing was transacted. Nothing was done. Now, he couldn't have predicted a hurricane. But that’s exactly the point. When you have a deal that is elongated in time, you open the window for more problems to enter that you could never predict.

So, then I explained to him that he needs to do a flat fee listing. He didn't listen to that either. Instead, because he was working full time, he fired the first real estate agent and hired a new one. The new one is on the job for about a week and then tragedy strikes. There's an awful massacre shooting at a Baptist church in San Antonio and that broker and real estate agent, unfortunately had family members that passed away in that incident.

Suddenly, he couldn't get the real estate agent on the phone and since she was the broker, there was nobody else above her he could call. That property just sat there for weeks and he had no idea what was going on. Now we get into the holidays, and the house hasn’t sold yet.

The Kiss of Death

He entered what I call the kiss of death in real estate. In his case, not only did he ignore my advice and renovate himself which he shouldn't have done, and he didn't investigate the buyer, but he also didn't drop the price low enough to sell it quickly. That's 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.

When good ideas come about, you need to implement them quickly. If you don't, they'll die on the vine. If you want to be highly successful, you need to improve the speed of your implementation.
 

7. Successful House Flippers are Focused

This is a huge problem today. People are not focused. They're all over the map and as a result getting nothing done. Highly successful house flippers focus on one thing; flipping houses. Now, they could be part time and have a fulltime job, but they do house flipping as their one side gig. They have one side business, not three.

Being focused allows you to be efficient and get things done. I think flipping houses is the best small business in America. Right now, is the best time in the past 40 years to be house flipping. We're doing deals at a clip I never imagined in a million years. And this business is so good for those that want to start small and build and grow into something special. So, my argument is, if it's the best that you're going to get as far as a small business and for most people it is, why not focus on it? Why not put your energies into this and not be distracted?
 

How Do You Measure Up to These 7 Traits?

  1. Are you generating leads off market or are you calling real estate agents looking for foreclosures?
  2. Are you structuring creative terms with sellers?
  3. Do you do your due diligence? Are you really drilling down on these deals or are you getting stuck two months later because of something you should've been able to evaluate before you bought it?
  4. Are you a renovation maestro or are you finding yourself doing a lot of the work yourself?
  5. Do you investigate your buyers, making sure that they can get their loan? Are you drilling their mortgage broker to verify not only their credit, but also ensuring their bank statements have no NSF fees?
  6. Do you implement your ideas quickly? Are you pricing your properties low enough, so they sell quickly?
  7. Are you focusing on house flipping or do you have 10 other things vying for your attention at the same time? Because when you're able to focus, that produces power and results.

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