Overview
Before you buy your first flip property, it's important to create a business plan to map out the future of your business, develop a course of action, and set quantifiable goals. A good plan does double duty: it keeps you accountable to real numbers, and it's the document lenders and partners read before they decide to back you.
Key Takeaways
- A house flipping business plan maps out your goals, strategy, and financial forecasts before you ever make an offer.
- You don't strictly need a formal plan to start flipping, but you do need one to raise money from lenders and partners, and to hold yourself to real numbers.
- A complete plan covers seven parts: executive summary, company description, team, strategies and processes, marketing and sales, financial forecasts, and keys to success.
- Your financial plan is the core. Forecast your projects, your revenue (projects times average resale price), and your profit (target 10 to 20 percent of ARV) over three to five years.
- Lenders back businesses that solve a clear problem, understand their competition, and can name exactly what makes them different.
- Use our free 14-page template as your starting point.
Download Our House Flipping Business Plan Template
Download a free copy of our comprehensive 14-page House Flipping Business Plan Template, editable in Microsoft Word and Google Docs, and use it as the starting point for building your own plan.
House Flipping Business Plan
Download the Editable House Flipping Business Plan Compatible with Microsoft Word & Google Docs!
No, you don't need a formal business plan to get started flipping houses. But at the very least you should think through what your goals are and set a plan of action for how you'll achieve them.
You'll want a formal, written plan when:
- You're pitching a private money lender, hard money lender, or business partner for funding
- You want a benchmark to track your actual revenue and profit against
- You're building a team and need everyone working toward the same goals
If the plan is purely an internal document to map out your own path, you can keep it lean and skip the formal polish.
FAQ
Okay, then why create a formal House Flipping business plan?
Reason # 1 To Map Out the Future of Your Business
A well-written business plan can be used as a road-map to plan out the near-term and long-term future of your business.
Reason # 2 To Create a Plan of Action
Your business plan can establish a course of action for your new business, including what you need to do to get started, and your business strategies and processes for managing your on-going business.
Reason # 3 To Set Quantifiable Revenue & Profit Goals
Creating realistic and quantifiable revenue and profit goals is the most important step of creating a business financial plan. You will use your financial plan as a benchmark to track your actual revenue and profits to hold yourself accountable for achieving your desired financial growth.
Reason # 4 To Get Funding From Business Partners & Lenders
A business plan communicates your strategy, objectives, and goals to the people you need to fund your deals.
FAQ
What should be included in my house flipping Business Plan?
Here are the seven components to include in your house flipping business plan:
- Executive Summary
- Company Description
- Organizational Structure, Team & Operations Plan
- Business Strategies and Processes
- Marketing and Sales Strategy
- Business Goals and Financial Forecasts
- Keys to Success
1. Executive Summary
The Executive Summary is the elevator pitch for your house flipping business. It's a brief overview that summarizes the key points of your plan and defines your business goals. It's the first section your investors and lenders read, so it needs to be concise, compelling, and engaging enough that they keep going.
Tailor it to your audience. If you're pitching a private or hard money lender, briefly cover your value proposition, experience, competitive advantages, and business goals, and make the case for why they should lend to or invest with your company.
Even though it's the first section, it's easiest to write last, once you've thought through and written every other part of the plan.
Highlight What Makes Your Business Different
Lenders and partners see a lot of flippers. What makes them back you over the next person is a clear competitive advantage, so name it directly. Ask yourself what you actually do better than the other investors in your market:
- Quality of work. Do you deliver higher-end, move-in-ready renovations that sell faster than the competition's lipstick jobs?
- Speed and reliability. Can you close fast and fund quickly, which is what motivated sellers and wholesalers care about?
- Market knowledge. Do you know a specific neighborhood or property type better than anyone else working it?
- Your process. Do you run tighter budgets and schedules, so your projects finish on time while others slip?
- Your relationships. Do you have a bench of proven contractors and repeat capital partners that lets you scale without scrambling?
Whatever it is, say it plainly and back it up. "We deliver quality renovations" is a claim. "Our last six flips sold in under 21 days at an average of 98 percent of list" is a competitive advantage.
2. Company Description
Before the strategies and forecasts, describe what your business is and why it exists.
Your Mission and Vision
Your mission statement is a one to three sentence summary of what your company does and why. Keep it short and genuine. For example: "We buy undervalued single-family homes in the Kansas City metro, renovate them to modern move-in-ready condition, and deliver quality housing to first-time buyers while generating strong returns for our capital partners."
What Type of Flipping Business Are You Building?
Not every flipping business looks the same, and lenders want to know your model. Are you focused on:
- Cosmetic single-family flips
- Full-gut rehabs
- Multi-unit projects
- A hybrid that mixes flips with BRRRR holds
Naming your model tells the reader exactly what kind of deals your whole plan is built around
The Problem You Solve
Every neighborhood has them: outdated, neglected, and distressed homes that most buyers don't want to touch. At the same time, plenty of buyers want a home they can move into today, not a project with an endless punch list. Your business bridges that gap. You take a house that needs work, do the work professionally, and hand a buyer a finished, move-in-ready home, raising the value of the property and often the whole block along the way. Lenders and partners back businesses that solve a clear problem for a clear customer, so state yours plainly.
3. Organizational Structure and Team
Business Entity & Structure
Before you buy your first flip property you need to decide how you want to organize your business. Are you going to be flipping houses as sole proprietor without creating a business entity? Or are you going to create a business entity, such as an LLC, or a Corporation to manage your business.
In the next Lesson, we will discuss the
How to Create a Business Entity for House Flipping Business.
EXERCISE
Do you have a team or are you a solopreneur taking on everything yourself?
Write a short resume about yourself and your work experience and provide information about key members of your team.
Talk About Yourself
As the founder, discuss the work and business experience that make you a strong leader, and describe your role in the ongoing operations of the company.
Talk About Your Team
It takes a lot of different skills to flip houses, so build a team of experts to help along the way. Your team doesn't have to be on payroll. It can be anyone, internal or external, who is integral to your operation and success.
Key Roles on a House Flipping Team
Few people do all of these well, so your plan should name the key roles, whether each is you, an employee, or an outside partner:
- Acquisitions: finds and analyzes deals and makes offers
- Project manager: runs the rehab, coordinates contractors, and holds the schedule
- Estimator: builds and updates the rehab budget
- Contractors and subs: do the actual work
- Real estate agent: pulls comps, then lists and sells the finished home
- Bookkeeper or accountant: tracks expenses, budget versus actual, and taxes
- Lender or capital partner: funds the deals
4. Business Strategies & Processes
EXERCISE
Where is your market and what is your typical flip project?
Identify the target markets, school districts, and neighborhoods where you will build your house flipping business.
Market Strategy
Understanding your market and your buyers is essential to delivering a home that meets demand. Identify the markets and neighborhoods with strong catalysts for demand:
- Strong job markets
- Good school districts
- Low crime rates
- Proximity to amenities
EXERCISE
What type of houses do your buyers want? How much? How many bedrooms, how many baths and how much square feet? What type of finishes?
Narrow down your market research and identify your target market and the characteristics of an ideal flip candidate that you will focus on for your business.
Know Your Competition and Alternatives
Your buyers have other options, and your plan should show you understand them. A buyer looking at your finished flip could instead:
- Buy a brand-new build, which is move-in ready but usually pricier and farther out
- Buy an outdated house as-is and renovate it themselves, which is cheaper but a project most buyers don't want
- Buy another investor's flip down the street
Knowing these alternatives tells you how to position your homes: the quality and convenience of new construction, at a better price and in an established neighborhood. It also names who you compete with on the buy side, the other flippers and investors bidding on the same distressed inventory.
EXERCISE
List the main alternatives your buyers consider, and write one sentence on why they'd choose your flip instead.
Targeting Your Ideal house Flip
Once you identify your markets and neighborhoods, research the property types and finishes that best meet your buyers' expectations:
- Use the MLS, Zillow, and Redfin to research inventory, values, and the competition
- Walk through as many open houses as possible to see the finishes and materials competitors are using
- Talk to your local realtor to identify the ideal markets, neighborhoods, and homes buyers are seeking
EXERCISE
Where will you get leads and find deals?
Create a plan to start generating leads and finding deals.
Leads & Acquisition Strategies
To hit your project, revenue, and profit goals, you need a strategy for finding leads and deals. Dedicate a section of your plan to your lead generation and acquisition strategies. We cover different
lead strategies for finding house flip deals in a later chapter.
EXERCISE
How will you analyze deals to minimize risk?
Establish the parameters you will use to evaluate deals to determine the maximum purchase price you should offer for a property.
Deal Due Diligence
Once you find leads, you need a repeatable process for analyzing deals to make sure your projects are profitable. Your due diligence process should include:
- A property inspection
- A repair estimate
- A comparable sales analysis
- A maximum purchase price analysis
We've built an entire chapter on
how to analyze house flip deals.
EXERCISE
How will you manage projects to minimize risk?
Once you get a deal under contract, you need to have established project management systems to help you track your project progress and expenses to keep you project on-schedule and on-budget.
Project Management Strategies
Once a deal is under contract, you need processes to keep projects on time and on budget. Dedicate a section to how you'll manage your contractors, schedule, and budget, and consider using rehab project management software (like FlipperForce.com).
In Chapter 5, we discuss the processes necessary for Managing your Rehab projects.
5. Marketing and Sales Strategy
Finding and renovating the property is only half the business. Selling it fast and for top dollar is the other half, and it deserves its own section.
How You'll Market the Finished Home
- Stage and photograph it professionally. Staged homes with strong photos get more showings and sell faster.
- List it everywhere buyers look: the MLS, Zillow, Redfin, and Realtor.com, with a complete description of the finishes and upgrades.
- Market it on social. Before-and-after posts on Facebook, Instagram, and in local community groups draw attention and buyers.
Your Sales Channels
Decide how you'll actually sell, because each channel has a tradeoff:
- A listing agent on the MLS: the widest reach, at the cost of a commission
- For sale by owner: saves the commission, takes more of your time
- Cash buyers and investor networks: a faster close, often at a slight discount
- Auction: a fast exit in the right situation
Most flippers lead with an agent on the MLS, but knowing your backup channels matters when a house is sitting.
6. Business Goals & Forecasts
Creating realistic, quantifiable project, revenue, and profit goals is the most important step of your plan. You'll use this financial plan as a benchmark to track your actual results and hold yourself accountable.
3 to 5 Year Financial Plan
Create a short-term financial plan for your business that forecasts the number of projects, revenues & profits for your first 3 to 5 years of operation.
EXERCISE
How many projects do you plan on doing in your first, second and third years?
Forecast the # of projects you will flip in your 1st, 2nd, & 3rd years of business.
Project Goals
Start by planning the number of projects you'll flip in a calendar year. Set a realistic goal for year one, then forecast your growth for years two through five.
EXERCISE
How much revenue do you plan on generating?
Use your forecasted # of projects to calculate the amount of revenue your business will generate in 1st, 2nd & 3rd years.
Revenue Goals
Your revenue is the sales revenue generated from selling your properties. Determine your average resale value (After Repair Value), then multiply your number of projects by your average sales price:Annual Revenue = Number of Projects per Year x Average Sales Price
Example: In year one, you plan to flip 4 properties with an average ARV of $250,000.
Annual Revenue = 4 x $250,000 = $1,000,000
EXERCISE
How much profit will you generate from your house flips?
Use your revenue projections to calculate your profit goals in your 1st, 2nd & 3rd years.
Profit Goals
Once you forecast revenue, forecast your net income. Generally, house flippers target a profit of 10 to 20 percent of the After Repair Value on a project. To forecast your net income, multiply your profit percentage by your forecasted annual revenue:
Net Income = Annual Revenue x Profit %
Example: $1,000,000 in revenue at a 15 percent margin.
Net Income = $1,000,000 x 15% =
$150,000
Learn How Much Profit You Should Expect to Make on an Average House FlipYour 3-Year Financial Projection
Your revenue and profit goals are the starting point. Lenders and partners also want to see your expenses and how the whole picture grows over three years. Build a simple projection, even with rough numbers.
A three-year view shows a lender you've thought past your first deal.
| Financial Projection |
Year 1 |
Year 2 |
Year 3 |
| Projects |
4 |
8 |
12 |
| Revenue (projects × avg resale) |
$1,000,000 |
$2,000,000 |
$3,000,000 |
| Project costs (purchase, rehab & deal costs) |
−$825,000 |
−$1,650,000 |
−$2,475,000 |
| Business operating costs (overhead, software, marketing) |
−$25,000 |
−$50,000 |
−$75,000 |
| Net profit (15% margin) |
$150,000 |
$300,000 |
$450,000 |
Figures are illustrative. Use your own project count, resale values, and cost estimates.
Startup Costs and Funding Needs
Before you can flip, you need capital, and your plan should spell out how much and where it comes from.
- Startup costs: the down payment and closing on your first deal, rehab reserves, business setup (entity, insurance, software), and a cash cushion for holding costs and overruns.
- Operating funding: the hard money or private lending you'll use per deal, plus reserves to carry each project.
If you're using the plan to raise money, add a clear funding request: how much you need, what it's for, and the terms or return you're offering.
7. Keys to Success and Meeting Your Goals
To meet your Company Goals & Objectives over the 3 to 5 year period, your Team will have to execute your business strategies & processes.
Over the course of the first few years use your Business Plan as a gauge to track your business progress against business goals.
Set Milestones for Your First Year
Big goals are easier to hit when you break them into concrete milestones. For year one, map the markers that show you're on track:
- Establish your business entity and get any required permits and licenses
- Line up your funding and first lender relationships
- Identify and purchase your first property
- Complete your first renovation
- Sell your first flip
- Review what worked and what didn't, and fold the lessons into your next project
Tracking these gives you tangible markers of progress long before the annual profit number tells the story.
Project Team/Strategic Hires
As your company grows, make strategic hires that fit your culture and share your values. Let your first few projects reveal your skill gaps, whether that's a project manager, an estimator, or a dedicated acquisitions specialist, so you can scale your team accordingly.
Strategic Partnerships/Relationships
Build relationships with local contractors, realtors, and professionals to grow your network and your brand in the community. Early on, prioritize the key contractor and agent relationships whose reliability and expertise will be essential to your success.
Business Systems
Your company will need to build systems or utilize
house flipping software (like
FlipperForce.com) that will help your team be more efficient which will ultimately support your ability to take on more projects to increase revenues and profitability.
Funding
Build relationships with
private and hard money lenders to fund your projects. As you scale, securing reliable funding sources early and maintaining those relationships is critical to keeping your project pipeline healthy.
FAQs
Do you need a business plan to flip houses?
No, you don't need a formal business plan to start flipping houses, but you should at least set clear goals and a plan of action. You'll want a written plan once you're raising money from lenders or partners, or building a team that needs to work toward the same goals.
What problem does a house flipping business solve?
House flipping solves the problem of outdated, neglected, and distressed homes that most buyers don't want to renovate themselves. A flipper buys the property, does the work professionally, and delivers a move-in-ready home to a buyer who wants a finished house, not a project, while raising values in the surrounding neighborhood.
How much money do you need to start a house flipping business?
You rarely need the full purchase price in cash, because most flippers fund deals with hard money or private lenders. Plan for the down payment, closing costs, rehab reserves, business setup, and a cash cushion for holding costs and overruns, which often runs $30,000 to $50,000 on a median-priced first flip.
