You are getting into the real estate flipping business. You want to know how long does it take to flip and sell a house? The answer is complicated because it depends on how many things you have ready to go when you buy the home. The average flip will take you 4 to 5 months to go from buying the home to it being sold. Depending on how good you are at managing the buying, rehab, staging and selling process will determine if you can sell sooner or sell it past 5 months.
Buying a house
I wanted to mention you first have to buy the house to start the flipping process. You really will have to hustle especially in a housing market where inventory goes fast. I get calls and mailers every week asking me if I want to sell my houses that I own as rentals. We are not going to go into great detail about how to find houses that will be in another article.
How many houses are you flipping at once?
The more home you have in the pipeline flipping the tougher it is to get them rehabbed and sold quickly. This is because you only have so many contractors working with you and they can only handle so many rehab jobs. That is really where you can have a major bottleneck in your operation.
You can hire more contractors but it is tough because not all of the do good work. You may hire someone and 2 weeks later they do not show up for the work. Then you hire another contractor and they end up doing shoddy work.
The goal is to really get awesome contractors that can handle a ton of work but not slip on quality. If you can find crews that can do this then you can ramp up to several properties a month. This is with the understanding your pipeline is always full of homes to flip.
The process and system you put in place is the key to ramping up operations.
You have bought a house now the fun begins. You will need a contractor to come in and do all the work in 1 to 3 months depending on the amount of rehab. We need to understand why things take so long when rehabbing to home to sell.
You need to set up a contract with your contractors to do the work. You have to be really detailed on what you want them to do for the price you will be paying them. Any changes to the scope of work must be signed off by you. Whatever the contractor said they changed will not be paid for by you the owner unless you signed a change order. Contracts are a must and you may be able to get it done before you buy the house but that is not always the case. This takes time to align all the work and contracts.
Ordering home materials
You and the contractor will need to look at what needs ordered. Yes, you can grab most things from Home Depot or Lowes when buying general building material. You will need to order kitchen cabinets, bathroom vanities, flooring, carpet, windows, and much more. You may not need all these things but even some of them require time to order and get delivered for install. You need to get measurements to order what you need as soon as possible.
Demolition takes time to get everything out of the home so you can start with a blank slate. Some homes will need more demolition than other homes. You may be a home that only needs some cosmetic work where other may need the whole house gutted.
You start rehabbing the home. This means coordinating all the contractors to work in the order that makes sense. You cannot hang drywall until the electric, plumbing, and insulation are in the walls. You need all the plumbing fixtures, tub and shower base installed before doing any tiling. You want the walls and ceiling painted before putting in lights, outlet covers and any other home décor up. You see my point about making sure to coordinate each part of the rehab.
You may run into delays because your electrician is on another job so they will be 2 days late getting to your job site. You lose two days on electric alone. If you had that happen with other contractors it pro longs your timeline for completion. If you can lock down the contractors to only do your work until their part is done that is the best way to manage the rehab. You may not get them to agree but it never hurts to try. You may also have to get someone else to do the job if a contractor is not coming through for you. If they are delaying the project too much have your backup contractor ready.
This will happen to you at some point when a contractor does spotty work. You will need to get rid of them and bring in someone to redo the bad work. I don’t give contractors any room on bad work. I see it as they tried to fool you once they will try again. I don’t need bad contractors and doing rework. This is how you totally derail the timeline of the flip.
We have already talked about it but contractors may do a bad job. Hopefully you have not paid them for the crappy work. You need to be doing inspections on all the work that is being done. If you do not do this the flip will go bad. The contractors will do enough work to make it look good but the work they did is sub-par. Inspections will keep them honest and get rid of the dreaded rework.
The house flipping business takes time to get all the work done.
Short recap on overall flip work
- Buy the house
- You need to set up a contract with all the details of the work they will be doing
- There are bids you need back for the work
- Look over the bids make any corrections or negotiate a better price
- Have the contractor give you a starting date
- Align all contractors to do the work in the correct order
- Unexpected delays will pop up
- Inspect the work as they do it
- Correct any issues when doing final walk thru
- Get house ready to put it on the market
- List the house with a realtor or you do it if you are a realtor
Sell the home for a profit
You have most of the hard work done at this point. You need to now sell the home. Hopefully you have good price points on how much to sell the home for in your market. If it is a hot market the home should go fast but if it is a slow real estate market the home may sit longer. You need to know the real estate market for the town you do real estate in.
Some people who flip homes are also real estate agents. This makes it easy for them to list and the commission cost for selling is much lower if you do it. If you are not a real estate agent you can sell your flip for sale by owner or get an agent. I would get a real estate agent that you can work with for all your flips. Working with the same agent all the time will make things easy n you and you both can develop a smooth system. You may also be able to get a lower commission with selling agent because of the amount of properties you are selling.
The real estate agent will have house showings and generate traffic through the home. You are looking for people that are pre-qualified to buy a home. This will speed up the process to sell if buyers are already qualified. The sooner you get the home sold the sooner you get paid. This also frees up resources and cash for other flips.
If you are in the right neighborhood with a newly rehabbed home offers should pour in with today’s real estate market high. The offers will come in if you are getting the foot traffic to the home. Once the offers come in you have to decide on which offer is the best. You make go back and forth until settling on a deal. The paperwork will be drawn up and signed by both parties.
The buyers will usually have the house inspected and may ask you to do some small repairs. The home was just rehabbed so I doubt if anything will come up in the inspection. Once that is done it takes 30 to 45 days for the loan to close and you to get paid.
Once you list it you may get an offer in a week to 4 weeks it all depends on the market. Then the buyer has to get the loan which takes around 45 days. If you are lucky to get a cash buyer that would cut it to 2 weeks for closing but most people do not have cash to buy a house.
You can save time but setting up systems for flipping. The more you find ways to stream line the process the more homes you can flip. The more homes you can flip the more profit you can make. Once you start doing two homes then three homes at a time your systems should improve. If you just want to flip a few homes a year that is ok. Flipping a few homes a year is still good money.
Remember the longer you hold a property the more money you lose. You have holding costs and fees if you borrowed the money to do the flip. It is in your best interest to buy, rehab and flip as quick as you can. If you have too many properties and the rehabbing and selling is taking too long then lower your inventory of homes. You can maybe wholesale a house to another flipper to lower inventory.