If you’ve been a fan of our show for a while, you probably remember the episode of Flip or Flop when Christina and I used all of our lifesavings plus a loan from my mom to buy and rehab a gorgeous $500,000 house in a high-end neighborhood. In the end, we had so many problems with the rehab that we needed to make about $750,000 on it to make a profit and pay my mom back, and the house sat on the market for weeks before we got any action on it.
That flip was one of the most exhausting and nerve-wracking things I’ve ever done in my life, and it was the biggest risk that Christina and I had ever taken with our business and our livelihood. However, it also marked a kind of turning point in our flipping career. After we flipped that house, we found out that we could survive taking that kind of risk, and we learned a lot about saving money on big rehabs for luxury homes. Suddenly, we were in a whole different ballpark with bigger and more lucrative flip houses to buy and sell.
After we got there, I did a lot of thinking about how we had gotten there and what it took to start flipping million-dollar houses. So how can you get to a million-dollar flip? Taking these steps definitely helped me and Christina get there, and I think they can help you too.
Build Your Flipping Portfolio
Before you have house-flipping experience, you’re probably going to be working with hard money lenders a lot. That’s fine, especially when you can rehab and flip your houses fast to avoid paying off those high interest rates.
However, once you put together a portfolio of house flips, you’ll have the evidence that investors and private lenders need to feel confident about putting their money on the line with one of your projects.
Start Small But Don’t Stay There
There’s nothing wrong with starting with small flip houses in less-expensive markets. These are great first flips, and they can help you learn what it takes to flip a house efficiently so you can move on to flipping bigger, more profitable properties.
Of course, if you’ve only ever flipped $100,000–$150,000 houses, you aren’t going to convince someone to lend you $600,000 or more for a flip house, even if its after repair value (ARV) is over a million. That’s why it’s important to start climbing the ladder, looking for larger, more lucrative houses in higher-end markets. People in higher income brackets get in financial trouble too, so there’s never any lack of higher-end flip houses. Keep looking out for them and build up toward flipping houses in more expensive markets.
Document All of Your Projects
Some flippers like showing before and after pictures and videos of their projects, while others don’t think it’s good business to show what a disaster their properties were before. Obviously, Christina and I love showing off the work we do, but it’s not just for a pat on the back or to show our buyers what they’re getting. It also shows our investors the scope of the work we can take on.
If you document all of your projects, you can show investors what they get when they trust you with their capital. With a great portfolio and these tips, you’ll be flipping larger, more luxurious houses in more expensive markets before you know it.