Flipping houses may be the most popular, flashy, and enticing method of real estate investing in existence. It boasts dramatic projects, quick results, and major profits. People everywhere are posting pictures of large checks on Facebook and there are more fix’n’flip TV shows than you can count.
But the truth is, 97% of flippers struggle. Only 3% are absolutely crushing it. They’re truly making something of themselves – and a great income along with it.
What do these three-percent-er badassess have in common?
Out of everyone participating in the house-flipping craze, only 3% are finding success. In fact, they’re achieving the ultimate dream: market domination.
Why is this? Is this 3% more experienced? Do they work harder? Are they gifted?
No, none of the above.
What Do These Badass Flippers Have in Common?
They know how to market.
That’s the difference.
They understand that flipping houses is much more about the marketing business than the investing business.
Flipping Houses Like a Badass in Five Steps
I’ve shared a lot of information about general real estate investing on this blog, but today, I’m going to share the five things you need to know to become a total badass at flipping houses.
#1: Evaluate the Equity
Equity is the difference between what you have a property under contract for and what you can sell it for. Basically, it’s the potential profit of a property. What you need to decide is how much of that profit you’re willing to give up for the sake of time.
For example, if you’re struggling to make rent on your apartment this month, you have a marketing campaign coming up that needs funding, or – most commonly – you don’t want to use your own money to close the deal, you’ll probably be willing to share more equity than someone who has no immediate need for cash. By sharing more equity, you should be able to find a buyer and close much faster, finalizing the flip.
If you don’t need money fast, the situation can look quite different. You might want to go for maximum profit and not share any of the equity at all. Since you have more time, you can fix the property up however you see fit – increasing the square footage, changing its use, or anything else to push the value of the property to its maximum potential – and then just wait until you get it.
The above examples show the two extreme sides of the spectrum. You can follow either of the examples or anything in between to get the biggest amount of equity your time needs allow.
#2: Know Your Customer & What They Want
The only way to get what you want is to give enough people what they want.
After calculating equity, you should have a good idea as to who you customer will be. For example, if you need fast money and you’re willing to sacrifice some of your equity to get it, your customer will probably be another investor – likely, a cash-buying investor – for the fastest close. In most circles, this is referred to as wholesaling.
On the other end of the spectrum, after fixing up the entire property and maybe even adding square footage, your customer will most likely be a resident owner – someone who will actually purchase the property to make it their home.
Again, these are the two extremes, and you could have anything in between – buy-and-hold investors, resident owners who want to fix up the property themselves, etc. The point is, there are different types of customers who want different things, and your job is to know who they are and what they want before you can effectively market to them.
#3: Position Accordingly
Once you know your customer, you need to position the property within the market so that it becomes the most attractive to your customer. Not only do you want to catch their eye, but you want to be the first to do it.
Of course, different types of customers will be attracted by different things. For example, if your customer is going to be an investor because you need fast money, you need to think to yourself, “What does an investor want?”
Overall, they’ll want a return on investment (ROI), but mostly, they’re looking for a deal. They’ll want equity and the lowest price.
The Lowest Price in the Market
Look at your competition in the market. What properties for sale are similar to yours? Where are they priced? Position yourself at the bottom of the price range to be the lowest price in the market. You’ll become the best deal in the market at that time.
Many people shy away from this positioning strategy. That’s because they confuse underpricing with underselling.
I’m not saying to sell it as the cheapest property in the market. Rather, be the lowest price in the market.
Just because you price it low doesn’t mean you have to sell it low. It’s the low price that will get all the eyes on your property – FIRST. As a marketer, that’s your whole objective: to get the best amount of eyes on your property in the shortest amount of time for maximum exposure and positioning. This is just the first way to achieve maximum exposure, but it’s very effective and accomplishes a lot.
The Importance of Exposure
You’ll hear me mention exposure a lot. That’s because of the basic marketing premise that exposure creates demand and demand drives value.
If you get a lot of eyes looking at your property, that creates demand. When demand goes up, the price goes up, too.
So position your property to be the most attractive in the market. All of your customers will be human, and every human likes a deal.
#4: Promote, Promote, Promote
Promote, promote, promote! This is where the marketing really happens. You’re now positioned correctly and ready to promote the property.
Again, we’ll turn the focus to what your customer wants. If you give them what they want, they’re going to give you what you want.
So what does an investor customer want? They want a deal, equity, and opportunity. They love feeling like they have a steal!
Give them what they want in your promotions. “Investor Gives Up! Pick up Where I Left off! 40% Below Market!” might be a great headline for your marketing – it promotes the opportunity the investor gave up, the equity 40% below market, and the fact that it’s a steal. It portrays that the seller did half the work for them already, and they can just steal it from the seller and make a bunch of money. These are all things that the buyer wants, and that’s what you want to give them in your headline.
For a buy-and-hold customer, it’ll look a little different because their wants are different. A buy-and-hold customer is going to buy the property and hold it for income, so what they want is ROI, stability, cashflow, and leverage.
So, in your promotions, give it to them! “15% Cash-On-Cash Return! Tenants and Property Management in Place. Easy Financing.”
With this headline, the customer knows they’ll get ROI from day one. They’ll see it as a stable investment since the property management is already in place. And as for financing, if you’re not going to finance the property yourself, simply connect your buyer with a mortgage broker who is on your team. Now the financing is in place, and it becomes a selling point.
Resident Owner Customers
If your customer is a resident owner, they’re going to live in the property. Thus, their wants will be comfort, cleanliness, convenience, and safety. Some will want luxury and status. Put this in your promotions!
I see people overlook this step constantly. Their customer will be an investor, but their marketing will be targeted toward resident owners (“A cute little house in a great neighborhood…”). No matter how well it’s worded, a headline geared toward a resident owner is never going to hit home with an investor. Their wants are far too different. Don’t make this mistake!
Broadcast Your Message
Now that your message is aligned with your customer’s wants, it’s time to broadcast your message with the goal of maximum exposure.
At Epic, we created a 20-point marketing checklist. Every time we get a property under contract, our virtual assistant pulls out the list and works her way through the whole thing, top to bottom, one step at a time. Once she reaches the 20th point, we’ve achieved maximum exposure.
By using that list, we never miss anything. We know we will always get maximum exposure with every single property we get under contract.
If you’d like a copy of that checklist, you can download it for free here.
#5: Control the Customer
Now that you’re positioned correctly and your promotions have achieved maximum exposure, your phone will start ringing and your inbox will start filling up. You’re actually going to have to talk to people! What do you do now?
First, understand that you are in charge. You have the deal. You are in control. Recognize that and seize it. You have all the power.
It’s much more difficult to find a deal than it is to find the money. That’s why all of the people with money are calling you! You have the hard part done, so you are in control. You have what they want.
When they call, take control. Create urgency. Let them know that they have competition – but not so much that they get discouraged and disappear. Give them hope by letting them know that you’re fair and don’t play games. This will help them think they have a chance at getting your deal.
Coaching Your Customer
Once your customer has confidence, start telling them what they need to do to get their deal. Coach them up! Tell them, “This is how you can get the deal. This is how you put an offer together. Get it to me and send it right away. You could probably get this deal!” Give them instructions on how to win.
For example, a conversation might sound like this:
The customer inquires about the property, hinting a little about the price, trying to feel it out and see what the deal really is.
You respond, “You know, I’m getting some good inquiries on this property. I’m going to have some more offers coming in soon. I’m not sure if I’m actually going to get the price I want, but I am going to be making my decision quickly. If you send me an offer with your highest and best price, you’ll have as good a shot as any. Put your offer in writing and email it to me right away.”
This response covers all the bases:
- It lets them know they have competition…
- …but also that it’s not being driven up like crazy.
- However, you will be making a decision quickly…
- …so they know they need to take action or else they’ll lose this deal.
- You’ve told them to put their best foot forward to be considered at all…
- …but that they’ve got as good a shot as any.
Tell them EXACTLY what to do. This way, you’ll avoid all the indecisive tire kickers.
Create urgency, give them hope, and tell them exactly what to do.
Jeremiah’s Epic First Six-Months!
When I first met Jeremiah Johnson, his goal was to replace his day job’s income. He was desperate to quit his job but scared of going out on his own.
Jeremiah was also wondering whether flipping houses would work in his market. He wondered how he could possible how to succeed at flipping houses without a huge buyer’s list. And would there be enough opportunity? Would he be able to find enough buyers or money to create a consistent income?
He also didn’t sign up to work with me because of the expense, initially. Then, he was unsure whether the Epic coaching would even work, let alone whether flipping houses would work at all – or even if HE would work!
So, when we met, we broke flipping houses down to three key areas.
Jeremiah’s Three-Step Plan
- First, we needed to market to sellers. We reverse-engineered the amount of leads he’d need to generate the amount of income he was making from his day job.
- Next, when he got the contract signed from the seller, he would need to market for buyers. So, I gave him the 20-point marketing checklist to follow each time he got a property under contract.
- Finally, he needed to look for the cheapest and fastest money available to get it done.
To start building up reserves to make his transition from full-time day job to full-time real estate entrepreneur, these were the three basic steps: look for sellers, look for buyers, and look for the cheapest money available. We wanted to do this quickly and put a bunch of deals under his belt to build up reserves in his bank account. Then, he could actually make that transition in comfort.
We put the plan in place. After just a couple deals under his belt, his confidence went through the roof. He came to the conclusion that his day job was costing him money. So, Jeremiah made the decision to quit his job immediately and commit to flipping houses.
That was about eight months ago. Recently, I interviewed him for a Financial Freedom Friday (Episode 294). He flipped 60 properties in his first six months, and he’s not looking back now! Jeremiah is a total flipping badass.
If you want to become a badass at flipping houses like Jeremiah Johnson, you have two options:
- Keep reading this blog and figure out the details on your own. This is the slow method.
- Check out EpicCaseStudies.com to see how Jeremiah, Parker, Corey, and so many others have succeeded at real estate investing. Fill out the very same application they did at the beginning of their journeys and follow in their footsteps. This is the fastest method to success!