Discover the 7 traits of highly successful house flippers. Why do some succeed with real estate while others struggle? Here are the 7 key similarities that the most successful real estate investors possess:
1. 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 or are 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 NOT as productive as off-market deals.
The most successful house flippers aren't standing at the foreclosure auction every week buying on-market deals. Instead, highly successful house flippers focus on finding off-market properties that nobody else knows are for sale. 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.
DISCLAIMER! Many people ask me how my Apprentices and I find our off-market deals. I purposely avoid sharing that incredibly valuable information to the general public. Collectively, those in our group invest millions each year in marketing for off-market sellers and are always testing new ideas to stay on the cutting edge of this subject. There are some things in business that you should keep close to your vest and only share with your inner circle, as explained in this video: Giving Away Business Secrets.
2. Creative Terms Mavens
You may assume that the best real estate investors in your area are successful because they have the most money and they can pay fast cash to sellers. That's simply not true. In fact, the big lesson from iBuyers failures was having too much money and winning the battle by paying more for houses than anyone else would. Instead, 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 on 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 by reducing your risks. This allows you to do more deals and make more money. I have a very helpful training on How to Turn a Little into a Lot with Real Estate which explains exactly how creative structuring of deals allows you to do more deals with less risk and to make more money.
3. Due Diligence Experts
Highly successful house flippers can predict, with a high level of accuracy, what a house will sell for once it's fixed up. There is no gambling or guesswork. 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 and a real estate agent and a judge combined. Here's an extremely helpful training on the art of Predicting Final Sales Price.
Predicting what a property will sell for is just the beginning of due diligence. Successful investors know what surprises they may run into, especially if it's a major rehab deal. So, they're like an inspector. Only they are better because they can see things that even an inspector doesn't see. Here's an example of 7 Things to Inspect when Buying a House that Inspectors & Agents Don’t.
Highly productive house flippers 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. 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 that work. If you want to be a successful real estate investor, you must be a business owner, not someone that's doing all the work! Rather than use the mantra, "if I want something done right, I have to do it myself,", you need to say what the founder of Kinko's, which is now FedEx office, Paul Orfalea once said, "Someone else can always do it better."
A perfect example involves how a real estate investor works with contractors. I have three very powerful videos on this subject that illustrate the difference between being a Maestro versus doing everything yourself:
- 7 Things to Never Say to a Contractor
- How to Find Great Contractors
- How to Get Contractors to Finish the Job
The most successful real estate investors are renovation maestros, hiring and managing contractors rather than doing the work themselves.
5. Buyer Investigators
In the video The Biggest House Flipping Mistake I explain 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 your 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.
So, as a real estate investor, you must not only develop the skills of an agent, 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 stuck waiting months for your profits. When deals aren't closing, it can bring your investing operation to a grinding halt.
6. Fast Movers
Smart investors move quickly. They have incredible speed of implementation. You may be thinking that 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 reduce time frames, you reduce the opportunity for unforeseen problems to occur that completely derail the business and things you could have never predicted.
Here's an example of this principle in action from a deal that I lent hard money loan on.
- Renovation Delays: The investor took way too long to renovate the house. Instead of hiring qualified professionals, he wanted to do some of the work himself to save money and it delayed the project by two months, thereby violating lesson #4 above.
- No Buyer Investigation: When he finally got the property on the market, he didn't investigate the buyer. He was so excited to have a full price buyer that he ignored the basic rule described in #5 above. Unfortunately, after 45 days, this buyer was unable to qualify for the loan and had to back out.
- Unforeseen Hurricane: A few days after the buyer backed out, a major hurricane slammed the area and although his house did not sustain much damage, the entire area where the house was located was completely shut down for months. Recovery was slow because it was a somewhat rural community.
- Unforeseen Tragedy: Due to all of the delays, this investor had to take a second job to pay his bills and that left him with much less time to put towards this deal. Rather than follow my advice on the Best Way to Sell a House Fast in Any Market, he chose to hire a local real estate agent and literally fall into the trap of the Kiss of Death When Selling a House. A few days after it was re-listed with that local broker, tragedy struck when an awful massacre shooting occurred at a Baptist church in San Antonio. That broker/agent lost family members from it and became unreachable for weeks. There was no one else in her office so no one could schedule a showing or make an offer.
The mourning agent did eventually resurface and the house was sold. The investor did make a profit but it was delayed by several months. He couldn't have predicted a hurricane or a mass shooting. But he chose to do some of the work himself, which added months of delay, then he didn't investigate the buyer, which added another 45 days, and then he didn't use a flat fee listing agency and lost another month. When you allow a deal to drag on too long, you open the window for more problems to enter that you could have never predicted. If you want to be highly successful, you need to move fast so that reduce the likelihood of unforeseeable delays.
This is a huge problem today. People are not focused. They are easily distracted and as a result, get nothing worthwhile accomplished. Highly successful house flippers focus on one thing; creative real estate investing and flipping houses. They could have a full time job and be investing on the side but they area only investing as their sole side hustle. They have one side business, not three. Being focused allows you to be efficient and to get things done.
Creative real estate investing and flipping houses is the best small business in America. Nothing else even comes close. Regardless of whether or not you think it's a good time to be in this business, right now is the best time to be a real estate investor. Since it's the best small business and right now is the best time, why not focus on it alone? Why put your money making energies into any thing else besides this? Why allow yourself to get distracted when this is as good as it gets?
In this incredibly insightful training, I compare Investing in Real Estate vs Cryptocurrency, Stocks, Start-Ups, Gold, etc and prove that nothing beats real estate. So don't get distracted by all the noise out there. Focus on real estate and you'll be glad you did.
How Do You Measure Up to These 7 Traits?
- Are you generating leads off-market or are you calling real estate agents or looking for foreclosures?
- Are you structuring creative terms with sellers?
- How well are you predicting final sales price? Are you really drilling down on the due diligence or are you getting stuck two months later because of something you should've been able to evaluate before you bought it?
- Are you a renovation maestro or are you doing a lot of the work yourself?
- Do you investigate your buyers, making sure that they can get their loan? Or are you selling your deals to buyers that back out due to loan issues?
- Are you a fast mover or are your deals dragging on for months longer than they should?
- Are you focusing on creative real estate investing and house flipping or have been distracted by other so-called "opportunities"?
Finally, every highly successful house flipper and real estate investor has had a mentor. Get your mentor by applying to be my next Apprentice here.