Is It Time to Become a Full-Time Flipper?
Jul 16, 2018 / Fix and Flip
You’ve found a property or two to fix and re-sell. You’ve borrowed money, found suitable investors, or sunk your own nest egg into renovating these houses. Now, you’re done with the remodel, and several potential buyers have already indicated they’re interested! You get a couple of bids, accept the highest, and the deal is done. You’re now an official fix-and-flip professional!
So, it’s time to quit your day job, right? Hold on, you may not be ready to make that jump into financial uncertainty just yet.
Look at the Numbers
Before you give your notice and tell your boss to take a hike, you want to make absolutely certain you can actually make a living off of fixing and flipping homes. There are a few things to look at:
- Do you have other properties lined up to flip? If you don’t, it could take you a month or more to find a good investment house. During that time, you won’t be making any money.
- How long did it take you to fix and flip your current property? Figure out how many hours you spent (ideally you kept track of it as you went) and then divide that total by eight since you’ll now be renovating houses full time. You were planning on putting in a full eight hour day on your properties, right? If not, consider how many hours you are willing to work and divide by that figure.
- Say you have determined that working full time, it would take you three months to fix and flip a property. Add another couple of months to find an interested buyer (hopefully less, but it’s always good to give yourself a buffer) and you have five months. Will the sale of your last property provide you with enough money to live during that time?
- Don’t forget that each home you sell may have to finance the purchase of another property plus tools, equipment, and supplies!
So let’s say that after you pay whatever taxes you have to pay, you’ve made $200,000 off a property. You invested your own money, so there’s no loan to pay off. If you divide that by 52 weeks in a year, your weekly salary is $3,448. Sounds great, right? But then consider that you need to sink $75,000 into another property to flip and have a renovation budget of $20,000. Now your salary is $2,019.
Of course, you have to keep in mind that you’ll make more than just that one sale a year. Maybe you make a profit of $200,000 off of two properties. Doubling all the numbers above, your weekly average salary jumps to $4,038.
Fixing and flipping homes can make you a ton of money, but you do have to work for it, especially in the beginning. If you’re willing to make it a full time, 40 hour a week job, though, you’ve already got the dedication needed to make a lot of money.