How Many Houses Can You Flip in a Year? What You Need To Know!
If you are a homeowner or investor looking to get into the lucrative house flipping business, one of the first questions that you are likely to ask is how many you can flip in a year. The short answer is that you can flip an unlimited number. However, house flipping is a long and complicated process, and the actual number of houses that you can sell will depend on several factors. Keep reading while we take a closer look at this interesting business.
How Many Houses Can You Flip in a Year?
There are no laws in the United States that limit the number of houses that you can sell each year. A quick internet search will result in a long list of people stating that they can sell 20 homes or more each year. While many people may indeed be able to sell large numbers of houses consistently, the average is considerably smaller, and if you are a beginner, it’s better to set your sights on a more realistic goal. Most full-time flippers average between two and seven sales per year.
Factors That Make It Difficult to Flip Houses Quickly
The median cost of a new home in the United States is almost $350,000. If you are looking to buy a house, while you don’t need to pay for it outright, you will still likely need a down payment of up to 20%, which is an upfront cost of $70,000 for a $350,000 house. In most cases, you will also need to pay closing costs that average about 3% but can be as high as 6%. At 5%, you will need an additional $17,500, bringing your total to $87,500 per house just to get started. This is at the high end of the average and you can get a better deal, but even at half that amount, many people can’t afford to purchase dozens of homes at a time.
Properties for Sale
Unfortunately for house flippers, every property in America is not for sale, and one of the first things that you are likely to discover when trying to get your business off the ground is that it can actually be quite hard to find a property in your area that suits your needs, never mind dozens of them. The house doesn’t just need to be for sale; it needs to be something that you can flip. You will likely find that many houses on the market are priced too high to make a good profit from a resale, many others are in a bad part of town, or you may need to do expensive remodels to convince people to move there, reducing your profit significantly.
To find any properties to sell, you will need to spend plenty of time researching the market to find possible homes. You will then need to contact the person in charge of selling the home so you can make an appointment to see it and learn more about it. Even a few of these appointments can take days or even weeks to complete, especially if you have an inflexible schedule. If you like the property, more time will pass as you make offers and counteroffers and hire people to do more research on the property, which can also take weeks. When you own the property and put it up for sale, more time will pass as you wait for a buyer. Some unlucky people may have to wait a year or more for it to sell. All of this time adds up and will significantly reduce the number of homes that you can sell each year. It’s also likely that the longer that you are in business, the houses that you need to inspect will get farther away from your home, and the travel time will cut into other areas of your work.
It is unlikely that you are the only person looking at a home for sale, so there is always a chance that you will face competition. There are multiple types of competition; you may find other people looking to flip houses who have their eye on the same property that you do. If they are more experienced or know the right people, they might be able to close the deal faster than you. There is also a good chance that you will find out that someone is looking at the same property to make it their home, and these people are likely ready to invest more money than you because to them, it’s more than just something to make a profit selling. Too many competitors can significantly reduce the number of houses that you can sell each year.
Real Estate Market
Another factor that comes into play when you are trying to flip houses is the current real estate market. The market is always in a state of flux and can change to work for or against you. In a hot market, people are looking to buy, and it’s easy to make a sale, but in a cold one, interest rates and other factors drive people away from the housing market, making it more difficult to make a sale. If you are looking to make a professional career in house flipping, you will likely see both markets many times, and each will affect the number of houses that you can sell each year.
How Can I Increase the Number of Houses That I Sell?
If you find that your investment capital is reducing the number of houses that you can sell each year, you might be able to increase it in several ways. For example, many people get an ordinary bank loan, but the interest can cut into your profits. A private loan might be less expensive, and you might also consider bringing in a partner who can add to your total capital.
Have Multiple Sources to Find Property
Many inexperienced house-flippers don’t realize that they can find property in several places and instead, only use one source of information to find their properties, which can significantly reduce income potential. Besides the multiple online sources, we recommend checking the newspaper frequently to learn about auctions, sheriff sales, estate sales, and more.
Once you start to sell houses frequently and have more income, you might be able to sell more houses each year by hiring people to do some of the work for you, which will free up your time to complete other tasks.
Streamline Your Process
As you flip houses, you will likely find that there are several steps that you will repeat, and there may be ways to complete these tasks more efficiently, which can help free up some of your time. Even small improvements can make a significant difference.
Be Careful With Pricing
You will get better at setting the best sale prices for your homes as you get more experienced, but it’s important to keep your selling prices reasonable to sell more houses each year.
- Related Read: How Many Homeowners Are There in the US?
While you can technically sell an unlimited number of houses each year, most full-timers sell between two and seven due to the high cost and the time that it takes to find, fix up, and sell each property. A cold market will further reduce your ability to sell houses. Streamlining your process and pricing your homes competitively will increase your sales, as will hired help, though the hiring usually comes after you gain more experience.
Featured Image Credit: Robert Kneschke, Shutterstock