Flipping houses has always been a lucrative venture for ambitious entrepreneurs looking to put in hard work and realize a tidy profit. A report by ATTOM Data Solutions found that in 2018 Q2, rehabbers sold houses for an average of $65,520 more than they paid for the properties.
Now for the bad news: That average represented a drop of nearly $4,000 from the first quarter, according to the report. Although the number is still relatively solid, it’s still a 5.4 percent drop in a few months. Folks, the market has tightened, so rehabbers must respond by doing their jobs better—and consider all the ways to maintain a profitable operation when times are tricky.
Great rehabbers can turn a crappy, dilapidated house into Neverland Ranch (minus the amusement park and general weirdness …) to make that profit, even when the housing market blows chunks. Yet, they are still missing an opportunity to cash in from the wholesaling point of view. Marketing your brand and sourcing your own deals complements your flipping business and can even take some of the pressure off it. Here’s a closer look at why this has become important for rehabbers:
Do You Know What You’re Missing?
Many flippers aren’t just in it for the money; they also love the work of transforming a cesspool of a property into something beautiful. As such, marketing and sourcing can be seen as distractions, taking you away from the core job that brings you joy. That said, if you aren’t sourcing your own deals, ask yourself these questions:
- Am I relying too heavily on deal flow from the wholesalers in my network? Specifically, am I truly getting the best deals that the market has to offer?
- Am I truly getting the best deals with the highest profit margins, or is someone else beating me to the punch?
- Do I have anything to fall back on if my preferred wholesalers flake out on me or if the market for rehabbed homes chills?
If you don’t like your answers to these questions, you should start considering building your brand and sourcing your own deals.
Mo’ Money, Fewer Problems
Supplementing your business with REI and wholesaling doesn’t necessarily mean piling on extra work or taking your focus away from flipping. Unless you are rehabbing houses 12 hours a day, 365 days a year, you should have time to fit the marketing/branding part of your business into your schedule. And when you do, you’ll realize some impressive benefits:
- As your own brand, you will be working more directly with sellers and will better build your reputation with buyers. Furthermore, you can market your successes and establish yourself as a specialist in a certain rehabbing realm (e.g., luxury homes, specific neighborhoods, historic districts, multi-family units, and so on).
- Screw the middleman! By incorporating a marketing component into your rehabbing business, you aren’t paying other people to find houses to flip. And as Ben Franklin taught us, a penny saved is a penny earned.
- Similarly, having your own marketing chops gives you greater control over the properties you pursue and the homes you want to rehab. Even with your due diligence, some degree of trust is necessary when you work with a wholesaler. And while many wholesalers are good at what they do, others are less than professional. When you rely on their numbers, you do so at your own peril. But on your own, the ball is entirely in your court, which ultimately provides more flexibility.
- Expanding your REI role to incorporate wholesaling takes an insane amount of pressure off the rehab part of your business. All rehab all the time is incredibly tough; consistent success is rare. And when times are slow, you might feel like you have no choice but to take on questionable projects that net a smaller return and frustrate the hell out of you. Knowing how to find your own deals and occasionally wholesaling some of the opportunities you come across actually builds a buffer around your business, especially during lean months.
- Of course, earning more money kicks ass! The most successful investors wear multiple hats and save Benjamins in the process, then make more money through efficiency and expanding their reach. The best part: To earn more, you won’t be necessarily working harder, but smarter.
Tap Terrific Tools
Rehabbers already know the importance of hard work—flipping a house requires plenty of it. Therefore, bringing that passion to wholesaling and investing shouldn’t be a problem. What they don’t know much about is how to find those magical motivated sellers the wholesalers are always talking about. They should take a page from the wholesaling handbook, and employ great REI software.
Today’s REI professionals don’t have to be saddled with tedious tasks that might have previously scared off rehabbers from expanding their businesses. Top-notch software streamlines their processes and, ultimately, makes their jobs easier. The best REI solutions feature:
- Robust call tracking capabilities geared for the REI professional
- Bulk skip tracing in five minutes—instead of days
- Ringless voicemail
- Smart landing pages
- Simplified list management
- AI-driven data analysis
- Phone append
Awesome REI software enables you to research properties, contact prospects, and know everything about a caller before you even answer the phone. You’ll have all the resources to market your brand and find and close deals. No matter what the flipping market throws at you, you’ll be ready!