Whether you’re a new Airbnb host or landlord with a portfolio of short-term rentals, it’s crucial to learn how to clean your space for guests. Doing so not only protects your reputation, but also ensures that the home’s well-maintained, generates consistent bookings, and gives you high and stable profits.
But while deep-cleaning your rental may be at the top of your to-do list—it’s innately a daunting task. It’s different from maintaining your own home, as it comes with a slew of specific challenges, like:
Fixing damages caused by guests
Coordinating cleaning with guest check-in and check-out times
Making sure the cleaning adheres to COVID-19 rules
If you’re dealing with all these challenges, don’t worry. We’re here to help. Here are our expert tips and tricks for cleaning and maintaining your short-term rental.
1. Establish Standard Operating Procedures (SOPs)
Step-by-step SOPs are the backbone of any successful business, which is why you should implement them in your short-term rental. Apart from ensuring that the cleaning process is running smoothly, they also help coordinate your staff, allowing them to work like a well-oiled machine.
Here are a few examples of what they should include:
How do you recruit, onboard, train, and manage new cleaning staff
How do you schedule, coordinate, and communicate with the team
How your team handles things that guests leave behind
How your team documents any damages caused by guests
How does your team cleans each part of the rental (e.g., what products to use)
You can even turn this into a checklist for your cleaning staff to remember all the things they must do. They can use it to check off tasks as they’re completed, standardizing the entire cleaning process and ensuring nothing was overlooked.
When they follow the SOPs, you can better maintain consistency and reduce the chances of extra stress and unexpected surprises for you and your guests.
2. Adjust Your Turnover Time
Competition on Airbnb is fierce, so most hosts tend to cram as many bookings as possible—often at the expense of maintaining the property. However, if your cleaning measures require more time to execute, consider lengthening your turnover time so the property is completely clean before the next guest arrives.
Adjusting your turnover time may seem like it could hurt your business. But that isn’t the case.
A clean and well-maintained property emphasizes that, as a host, you’re consistent, trustworthy, and reliable. All highly valued by short-term renters. On the other hand, finding crumbs on the floor or broken appliances will put guests off from booking your space again, stopping any chance you have of acquiring rebookings and high occupancy rates.
Cleanliness will make or break you. So always allot time to complete it, or your guests won’t return.
3. Consider Using Digital Tools
Thanks to technological advancements, there’s now a slew of digital tools for real estate companies that you can use to maximize your cleaning process.
Digital real estate tools solve tedious management responsibilities, like scheduling and payroll. Specific ones like remote smart locks also allow you to grant and revoke access without stepping foot on the property, so you can coordinate cleaning and repair work while keeping the rental secure.
5. Be Transparent
The COVID-19 pandemic has made travelers more aware of their health, so they’ll undoubtedly appreciate knowing the various measures you’ve taken to ensure the rental’s cleanliness. Even a simple note saying you changed the bed linens will increase the chances of them returning.
Here’s what your welcome note can look like to assure your guests:
Hello there! Our team has cleaned this rental for your safety. We are fully vaccinated, wear masks while cleaning the home, and use professional-grade products to disinfect every nook and cranny. Should you have any concerns, feel free to reach out to us and we’ll address your issues immediately.
Transparency also helps reinforce what a great place your rental is, making guests feel confident they’ll enjoy their stay away from home without compromising their health. If you took any additional precautions, mention them in the note as well. Guests will love that!
Short-Term Rental Cleaning: Tough, but Manageable
Cleaning a short-term rental isn’t just about mopping the floors and wiping the counter. It also involves managing the staff and ensuring that the property remains consistently well-maintained—no matter the number of guests who walk through its doors.
As long as you have established standardized processes and staff trained to adhere to them, your short-term rental will undoubtedly stay sparkling clean and, ultimately, profitable.
Do you need more help? Get in touch with our team of expert property managers at Logical Property Management. We have more than two decades of experience and can answer any of your questions.
Empty land is a valuable commodity. In some parts of the country, it’s worth more than homes—simply because there’s always a market for land for building a new structure or something else.
It’s also easier for wholesalers to find buyers for vacant land than for houses, as there is less competition in the market for land deals. As a result, you’ll find better deals on properties ripe for development than those with established homes.
So, if you want to learn how to get into this small real estate niche, we’ve got tips to get you started in the wholesaling process.
5 Steps to Wholesale Empty Lots
We’ve all seen those empty gravel lots in our neighborhood. But now, you’ll see them as more than just a pile of dirt. Instead, they’re an opportunity. While the land is valuable everywhere, some lots are worth more than others—highly sought after by the buyers you want to attract.
So, here are 5 ways you can start wholesaling land:
1. Look for Developing Areas
Look for areas that are being developed or zoned for development, as it’ll give you a good sign of where the market will move to in the coming years.
You can attend city council meetings to get a sense of which areas are being approved for rezoning or development variances. Search online for local land auctions—being good indicators of where the market is moving, and scan MLS listings for “raw land” or “vacant land” to identify hotspots.
2. Research the Title and Zoning
Do your due diligence when researching a piece of property. Check the title to see if there are any liens or encumbrances, and ensure that the property is zoned for the type of development your buyers have in mind. It’s also essential to determine if easements or rights-of-way could affect your prospective buyer’s development plans.
3. Get a Professional Opinion
Before making an offer on a piece of property, it’s always a good idea to get a professional opinion. Have a real estate attorney look over the contract, and have a land surveyor assess the property to determine its potential uses. You can also use the information to market the land to potential buyers.
4. Make an Offer
Once you’ve decided that a piece of property is a good fit for your portfolio, it’s time to make an offer. When making an offer on vacant land, it’s important to be realistic about the value of the property and the costs of development.
Remember: It may take longer to sell vacant land than it would to sell a finished home in some areas, so you’ll need to take the additional waiting time into account.
5. Close the Deal
With a buyer now confirmed, close the deal using a professional team to help with the process. Ensure that all the necessary inspections have been conducted and that the property is free of any environmental hazards, secure the appropriate permits for development from the local municipality, and verify that the title is clear and there are no outstanding liens or encumbrances on the property.
Turn Empty Lots into Enticing Deals
Next time you walk by an empty lot, remember that it’s more valuable than you think. By following these steps, you can successfully wholesale vacant lots in no time. Just remember to be patient, do your research, and work with a professional team to get the best results.
Want more real estate advice?
Join REIA as a member today! Or attend our next meeting so you don’t miss any important information—just like this article. If you don’t have the time to spare, sign up for our newsletter instead to get content delivered right to your email address.
Over the years, the IRS has been cracking down on taxpayers taking advantage of the qualified business income (QBI) deduction. Because of that, some house flippers are wondering whether flipping houses can still qualify as a business.
So, let’s dive in and see what you need to know.
QBI Deduction: What Is It and Who Can Claim It?
QBI deduction is a tax break that allows business owners, freelancers, and independent contractors to write off up to 20% of their total taxable income. This effectively decreases the income tax they owe to the IRS. However, not everybody is eligible for it.
For instance, only business owners with pass-through income may take advantage of the QBI deduction. This includes the following:
Sole Proprietors: An individual, such as a freelancer or independent contractor, who runs an unincorporated business
Partnership Members: Two or more people who made a formal agreement to oversee a business together, sharing in its profits and liabilities
S-Corporation Shareholders: People who own shares in an S-Corporation and include its income and/or losses on their personal tax returns
In short, you’ll have to double-check if you qualify for the tax deduction to take advantage of it, as there are some income limits and business types that may affect your eligibility.
What Does Not Count as QBI?
Now, not all income types qualify for QBI. In fact, there are nearly 20 different income types that the IRS does not consider as QBI. Here are a few of them:
Income from out-of-country businesses
Investment items (e.g., capital gains and dividends)
Interest income not related to a business or trade
Annuities received from something unrelated to a business or trade
Of course, as a house flipper, your only concern is if income from flipping is included on the IRS list. Well, it’s not specifically mentioned by the IRS. So, are you eligible for the 20% tax write-off?
Does House Flipping Qualify as QBI Deduction?
The law says that the QBI deduction will only apply to taxpayers who are sole proprietors of a business or trade, a member of a partnership, or a shareholder in an S-Corporation. So those in the fix-and-flip business will be eligible if your operations are conducted within one of these entity structures.
However, there are still rules dictating how much you can deduct from your total taxable income:
If you’re single or unmarried and your total taxable income is less than $164,900, then you can deduct 20% of your qualified business income.
If you are married and filing jointly with your spouse and your total taxable income is less than $329,800—then you can deduct 20% of your qualified business income.
Because of W-2 wage limitations, things become more complicated when your total taxable income exceeds these thresholds. If this is your situation, then it would be better to call an accountant for advice.
Confused? Don’t sweat it—here’s a quick example to help you understand QBI deductions better:
Let’s pretend that you’re a single-house flipper whose net operating income is $100,000 and W-2 wages are $50,000. Since you fall below the $164,900 threshold, you can deduct 20% from your net operating income, amounting to $20,000.
Assuming that you belong to the 24% tax bracket, this QBI deduction will save $4,800 on your tax bill.
Yes, House Flipping Qualifies as QBI Deduction
The QBI deduction has undoubtedly benefited a lot of industries, particularly real estate, where house flippers are now seeing more profits earned from every sale they close. But if you are still confused about the calculations, then we recommend working with a certified public accountant (CPA).
Calculating your QBI deductions is a huge headache and as a busy house flipper, you simply do not have the time for that. That is why you should consider joining the Real Estate Investors Association of Oakland County—our members have access to tons of resources that help them take their house-flipping business to new levels of success.
From landing sales on your fix-and-flip projects to help you determine your tax write-off, REIA has everything you need. Interested? Check out our website to see what your next steps should b
Calculating your QBI deductions is a huge headache—which you may not have the time for. Consider reaching out to REIA and our team of experts to help you with everything. Subscribe to our newsletter as well and join as a REIA member to attend our upcoming meeting!
Landlording can be a lucrative business, but it also comes with its own challenges. That’s why it’s essential to minimize the learning curve as much as possible and get tips from those who have been in the business for a while. You don’t have to take the trial-and-error approach if you already know the “secrets” and tricks to landlording successfully!
Read on to know the four expert tips for successful real estate investing.
Make It Difficult for Rental Advertising Scammers
Unfortunately, there are a lot of rental property scammers out there—especially on Craigslist. One of the common scams is where other people will steal your real estate listing, use the property information and photos, and replace the contact details with their own numbers and email addresses.
They’ll then:
Attract interested tenants
Say that they’re “currently out of the country” and can’t turn over the keys to them
Have the tenants hire a locksmith to change the locks themselves
Collect rent money and security deposit
Then disappear into thin air. You’ll be left with clueless tenants you didn’t get to screen, and a rental property you can’t rent out without telling the scammed tenants to go.
How can you avoid these scams?
Be proactive and mark your photos with your phone number and contact information. Scammers won’t take the extra time and effort to remove your watermarks; they’ll skip over your listing and look for other opportunities elsewhere.
Another tip is never to publish the actual address of your home. Instead, use the nearest cross streets to give tenants a good indication of where your property is without revealing the address to scammers.
Be Attentive and Creative in Screening Tenants
The ultimate goal of screening tenants is to ensure they are responsible people who’ll pay rent on time, maintain your property well, and abide by all the clauses in your lease agreement. In other words, the best way to avoid bad tenants is by having a good screening process.
Here are our pro tips on how to screen them:
Assess their cleanliness: Walk them to their car. Take a peek at how clean or dirty their car is inside. Chances are, if their vehicle is filled with garbage (like this poor vehicle), they’ll treat your rental home the same way, too. Their car is a reflection of what’s to come for your home. Or even do a surprise visit to their current residence – how it looks is how your property will look after they move in.
See if they have pets: Don’t ask if they have animals, because they can easily say no to that. Instead, ask how many animals they have—indicating that you already know they have pets and you only want to know how many of them there are. Make it a bit harder for them to lie.
Moreover, don’t believe anybody who says that their animals will “live somewhere else”. All too often, those animals will only live elsewhere for a while before moving into the home.
In other words, make it slightly more difficult for them to hide secrets from you. By checking their car and assuming that they have pets, you’ll get more honest answers out of the applicants, making it easier to decide if you want to accept them as your tenants or not.
Be Cautious in Accepting Upfront Payments Covering Multiple Months
Receiving upfront rent payments may seem great for you. You get to secure the money earlier without having to chase tenants for payments every month. However, take note of the following:
Is it legal? State and landlord laws might have a maximum upfront rent payment allowable, while some will require you to pay interest on it. Ensure that you’re familiar with the laws before accepting any upfront rent.
Why can the tenant afford it? Did they come upon some money and want to ensure that it goes somewhere necessary before they spend it irresponsibly? If that’s the case, they might not have a stable income or employment to afford the home in the first place.
Of course, there are exceptions to these situations. If you’re renting out to students, for example, the parents might pay upfront rent so their family won’t have to worry about paying monthly rent anymore.
Have a Thorough Lease Agreement
You may be tempted to use online lease agreement templates so you won’t have to create one from scratch. However, barebones templates won’t do much in protecting you or your investment property.
Plus, there are specific state and local landlording laws that you’ll have to consider in your lease, and other rental-specific rules that you’ll want to have (e.g., regarding smoking, pets, or painting the home’s interior). These are things that generic templates won’t guarantee or cover.
Instead, everything you want the tenants to know should be included in the lease agreement, so use online templates only as a guide to creating your own document.
Once your attorney approves the draft, sit down with your tenant and go through the entire thing. Don’t assume that they’ll read the agreement on their own—most of them will skim through it and call it a day. You’ll end up with tenants that will likely forget your rules, creating many problems down the line that could’ve been avoided in the first place.
Ensure that they know and understand your rules by having them put their initials at the start of every paragraph or sign every page of the agreement as confirmation. If anything unfortunate happens in the future, the tenants won’t have any excuse to say that they didn’t know the rental lease guidelines.
Pro Tips for a Successful Real Estate Investment Business
There are many other pro tips that you can learn from experts. Knowing these secrets is the best way to ease yourself into the rental business, become a great landlord for your tenants, maintain your real estate property, and protect your monthly cash flow for investment success.
Become a successful landlord today! Get in touch with me or my team at Logical Property Management.
We’ve been managing properties for more than two decades now, and have more tips and tricks to share for a thriving rental property business.
Are you interested in real estate wholesaling? Great!
But are you ready to start now?
Many would-be real estate wholesalers are afraid of the risks that this industry is notorious for. After all, who would want to pour their time, money, and effort into a project that’ll take months or even years to see returns?
Well, you’ve come to the right place because, in this article, we’ll walk you through the whole process of how to get your first wholesale deal in just 30 days. From finding the property to negotiating its price and closing the sale, we’ll give you the exact steps you need to take so you don’t waste any time committing rookie mistakes.
Ready? Let’s dive in!
1. Find a Property: 8 Days
The first step to landing a wholesale deal is to find a property you can acquire at a discount. This stage of the process will usually mean finding distressed properties that have motivated sellers, which you can easily find via the following techniques:
“Driving for dollars” or going around your area to spot vacant and abandoned properties
Checking tax lien or foreclosure records to find homeowners that are desperate to sell
Placing bandit signs in high-traffic areas that contain a short message and your contact details
Direct mailing or sending out postcards and flyers to potential sellers
Leveraging your network by joining real estate investment clubs and associations
Checking expired listings for properties that weren’t sold by the date specified in the contract
Finding distressed properties and motivated sellers will take some time but don’t let this challenge stop you from trying to succeed in this industry. Keep in mind that real estate wholesaling is all about generating leads––the better and faster you get at doing so, the more you’ll become successful.
2. Negotiate for the Right Price: 5 Days
Once you’ve found potential properties, negotiate with the seller to determine a good price.
As a real estate wholesaler, the money you make will depend on how well you negotiate. Moreover, you can’t be too selfish while negotiating. Instead, you have to create and reframe the situation for the seller to see the benefits of agreeing to a lower price.
Your goal is to find the sweet spot price that’s low enough for the seller to approve, but high enough for you to generate a hefty fee without struggling to find a buyer.
If you aren’t confident in your negotiation skills, consider taking a seminar, reading books on the subject, or working with a trusted friend who has experience in real estate wholesaling.
Pro tip: Pay close attention to your tone of voice, body language, and behavior throughout the entire transaction, as it’ll indirectly affect the property’s selling and a purchase price as well—tampering with your potential profit.
3. Find Buyers for Your Property: 10 Days
Once you’ve got a good price with the seller, it’s time to find potential buyers. Doing this may seem like an insurmountable challenge, but thanks to the Internet, it’s now easier than ever. Here are a few tips:
Create a website: Showcase your past work and customer testimonials so it’s easy to get new sellers and buyers to trust you. You can create simple websites with WiX or WordPress, or get in touch with a web developer friend to help you out.
Scan forums and social media: Online forums, wholesaling Facebook groups, and social media platforms are also rich sources of potential buyers. So join groups dedicated to helping people find their next home, and establish your trustworthiness and expertise as a real estate wholesaler there.
Work with agents: Ideally, you want cash buyers that wouldn’t need a loan to purchase a home, so the transaction is quicker and easier for you. The best way to find them is by working with real estate agents, as they’ll usually have a list of financially capable buyers.
Cold calling: In the real estate industry, cold calling is one of the most effective ways to find potential buyers. Reach out to your current connections and find out if they know someone on the market for a new property. Then, give those prospects a call to explain your deal.
Put up bandit signs: Another popular method of lead generation, bandit signs are poster-sized signs that contain an attention-grabbing message and your contact details. For a better shot at success, place them in high-traffic areas, like shopping malls and busy streets.
As challenging as this stage may be, know that there are many tried-and-tested strategies that will help you out. By leveraging your existing network and being creative with your methods, you’ll have a list of potential buyers in no time at all.
4. Close the Deal: 7 Days
After receiving confirmation from your buyer, you can now officially start closing the deal. Now, real estate wholesaling relies on short-term funding and compressed timelines, which means you’ll have to pay close attention to every part of this process to make sure that nothing goes wrong.
There are two types of contracts in real estate wholesaling. The type of contract you choose should largely depend on your risk tolerance and how fast you want to close the deal:
Assignment Contracts: Find a buyer and sell them the contract without buying the property yourself, so you won’t have to put down any of your own money. This entire process can take as long as a week to complete.
Double Close Contracts: Buying the property and immediately selling it off to a buyer will give you bigger profits as the two parties won’t know what you bought and sold the property for. This process usually takes longer and can even last a few weeks.
Each type of contract has its own set of advantages and disadvantages so evaluate your situation before picking which one to go with. For instance, assignment contracts may be simpler and quicker but they also mean that both parties will know how much you’re making on the deal, which doesn’t give you a lot of negotiating power.
On the other hand, double-close contracts may mean more anonymity and privacy, in terms of the profits you’ll potentially walk away with. However, the process takes longer, is more complicated, and involves financial risks. With this type of contract, you’ll have to pay closing costs two different times—-when you buy the property and when you sell it off.
There isn’t a right or wrong type of contract to execute. Rather, the best option will depend on your risk appetite, financial assets, and how much you ultimately want to earn on the sale.
One Month Richer with Real Estate Wholesaling
Real estate wholesaling relies on short-term funding and compressed timelines, which means you’ll have to pay close attention to every part of this process so nothing takes too long. Ultimately, your goal is to have strong negotiation skills and the determination to find people looking to purchase the property.
If you can do these things fast and effectively, you’ll be reaping significant wholesaling profits within 30 days—we guarantee!
If you want more tips on navigating the world of real estate wholesaling, subscribe to our email newsletter. You can also check out our website, where you’ll find the date of our next meeting and an application form to become a member of REIA.
As the popular saying goes—” before you sell anything, you first have to sell yourself.” This statement holds true even In the house-flipping business.
Although flipping mainly deals with selling properties, don’t forget that you also have to deal with flippers, real estate agents, buyers, sellers, and other counterparts in the real estate industry. Because of this, in order to do good business and close flipping sales, you’ll first have to market yourself to establish business relations.
Why Market Yourself?
Apart from wondering how to market yourself using the SWOT analysis, you might be wondering why marketing yourself is even necessary.
To help you answer this question, we’ll ask you another question—as an investor, would you put money in an investment you’re not convinced will grow? You probably answered no. The same goes for lenders, investors, and other business prospects in the real estate industry. Before they shell out any money and do work with you, they first need to convince you’re worth the investment.
And how do you market yourself? By showing what you can bring to the table as a house flipper and why your house-flipping empire will be a success. And that is exactly what your SWOT analysis can do.
What is a SWOT Analysis?
The acronym SWOT stands for strengths, weaknesses, opportunities, and threats. The information in its subsections shows your capabilities and how you work as a house flipper in relation to competitors and your place of business.
Through your SWOT analysis, you can be accurately assessed. In effect, this will help lenders, investors, and other prospective business associates determine whether they want to work with you.
Take a look at this generic SWOT analysis to help you form an idea of how it works:
Chances are this is the first you’re hearing of a SWOT analysis since it’s not often used in real estate businesses like house flipping. However, its lack of commonplace use shouldn’t diminish its value.
Remember that house flipping is a business and the SWOT analysis plays an integral role in any business plan.
To help you grasp how you can leverage a SWOT analysis, here are three things you need to take into account: you or your company, your competition, and external factors. Think of you and your competition as the players, the external factors and the place as the stage, and house flipping as the game.
The more knowledge you have of the game, the better you can play it.
If you’re here from previous installments of the house-flipping business plan series, we’re happy to have you back for our third and final installment. If you missed the first two, be sure to check it out so you’re up to speed. In previous installations, we discuss the importance of a house flipping business plan[1] and the step-by-step process of making one[2] .
Here’s a chart that shows a SWOT analysis tailored for a house-flipping business plan:
Now that you have a general idea of the SWOT analysis’ role in a house flipping business plan, let’s dive in deeper and go through each subsection in detail. As we break down the 4 subsections, we’ll also tackle how you can leverage these to market yourself and your company.
Your Flipping Strengths
What advantage do you have going into the house-flipping business? Are you starting off with capital or partnering up with someone who already has experience? List down what you and those you work with can leverage and explain why these are valuable.
Here’s a list of questions to get started:
What is your competitive advantage (against other flippers in the area)?
What resources do you have that you can take advantage of?
What part of your flipping business is performing well above average?
For instance, starting out with capital means you don’t have to worry about securing loans or partnering with investors. Having your own finances to pull from lets you move more independently without relying on third parties for funding.
Showing your strengths is the most persuasive point of a SWOT analysis and is the main determiner of whether people want what you can provide. Your strengths also set what’s expected of you as a house flipper, so be careful not to under or over-sell yourself and highlight your strengths honestly.
Your Flipping Weaknesses
Where do you fall short in the house-flipping business? As important as it is to acknowledge your strengths, it’s equally important to acknowledge your weaknesses. If you’re partnering up or working under someone, this is where they’ll form accurate expectations of you.
For instance, if your network consists of young individuals, your flips will likely be within the city near office buildings. In this situation, you’re likely more familiar with flipping small houses for one or two people. A weakness here can be having no properties outside of the city or a lack of experience dealing with larger houses.
These are some questions you can ask yourself:
Where in your flipping business can you improve?
What part of your business is underperforming?
Where are you lacking in resources?
Identifying your weaknesses also lets you identify areas of improvement so you can actively work on becoming a better house flipper. Although weaknesses show your limitations, this can also work in your favor when doing business with others.
As strengths set what they can expect from you, weaknesses show what they can’t. By considering both your strengths and weaknesses you can be more accurately assessed as a house flipper.
Your Flipping Opportunities
These are external factors that work in your favor. Ask yourself: Which market can you tap into? What are people looking for? Which factors can help me close more deals?
When you identify the opportunities available in your area of business, you can gauge which house flip projects can turn a profit and increase the chances of a return on your investment.
On average, Americans start a family in their mid to late 20s.
Given these statistics, there is an opportunity for flipping houses that cater to young, new families, which is where your business is focused on.
If you’re still not sure where your opportunities are, here are some questions to get the ball rolling:
What new markets can your business explore?
What other investment routes can your business potentially consider?
What technology can you use to improve your operations?
How else can you expand your core operations?
By narrowing in on house flips with more profitability, you also increase the confidence of prospective business partners, lenders, and investors to work with you.
Your Flipping Threats
On the other hand, threats are external factors that set limits to your house flips. These external factors are often beyond your control, such as the local weather or building policies.
For example, Michigan experiences winters with temperatures as low as 18°F, so you might run into homes that require more winter-proofing, like replacing HVAC systems or adding more insulation. Threats like these can be laborious, requiring you to assess properties with more care.
These are the questions you’d want to ask yourself:
What local and state regulations threaten your operations?
In what ways are your competitors doing better than you?
What are the market shifts and trends that threaten your business?
Moreover, identifying your threats is essentially stating the factors that you can’t be held accountable for, so you can be assessed fairly.
For instance, if you’re being assessed based on a past project that experienced weather-related delays, that shouldn’t reflect badly on your work ethic as a house flipper. You can also think of your flipping threats as a kind of disclaimer.
Is the SWOT Analysis Worth it?
Challenges and growing pains are inevitable when you’re starting a house-flipping business. But remember that you have the power to make the journey easier with a SWOT analysis.
The insight you’ll get from conducting the analysis then becomes your handy cheat sheet. You can now enter the house flipping game with substantial knowledge, fully knowing how other players are doing on the stage, and exactly how you’ll give your business a leg up.
As always, remember to take your time conducting a SWOT analysis with careful consideration. It plays a major role in your house-flipping business plan, so let’s not get too hasty with it.
Be a House Flipper Worth Working With
A house-flipping business plan that comprehensively addresses all possible queries will leave no room for doubt that you will succeed as a house flipper.
This is your chance to lay down the foundation you need to build your house-flipping empire. Use the SWOT analysis as a marketing tool to show others that you’re prepared, knowledgeable, and set up for success—perfect for doing business in the long run.
This is the final installment of our 3-part house flipping business plan series. If you haven’t checked out the two previous installments, you can find these on the links above.
What other real estate business plans do you want us to discuss? Let us know in the comments below! And should you have more concerns, get in touch with us today.
Websites like Airbnb, VRBO, and Homeaway have made it easy for short-term rentals to gain popularity among real estate investors today. In Michigan specifically, you’ll benefit from the growing short-term property market, generate a higher return on investment compared to traditional rental properties, and quickly find new guests thanks to online booking platforms.
Michigan is one of the hottest real estate markets in the nation today. The only thing left is to know which city to purchase your short-term rental in, which we’ve listed below.
We based our list on two key factors: high cash-on-cash returns and rental income. They contribute the most to your short-term rental investment success, which is why we’ve based our list on the two factors.
Disclaimer: All the figures below come from Mashvisor, AirDNA, and Zillow reports.
1. Traverse City, MI
Traverse City is the largest city in Northern Michigan and the largest producer of tart cherries in the nation. In 2012 alone, more than 3.3 million visitor trips were made to this city, resulting in $1.18 billion in direct spending toward its tourism sector.
Guests come here to see the grapevines at Traverse Wine Coast, swim in deep freshwater lakes, and grab a cold one in many craft beer spots. Traverse City is a rustic, charming small city filled with artists, craftsmen, and musicians that contribute to its rich local communities.
Rental Channel: 46% Airbnb, 24% Vrbo, 30% listed on both
2. Grand Rapids, MI
Grand Rapids is one of the fastest-growing cities in the nation, attracting travelers interested in art museums, galleries, and competitions. Its tourism industry has also been growing for ten consecutive years from 2009 to 2019, thanks to economic growth and an evolving, diversified community.
Guests come here to visit the John Ball Zoological Garden, Belknap Hill, Gerald R. Ford Museum, Van Andel Museum Center, Frederik Meijer Gardens & Sculpture Park, and Grand Rapids Art Museum. There are also countless craft beer spots, as craft beer is the leading tourism driver in Grand Rapids since 2013.
Rental Channel: 78% Airbnb, 9% Vrbo, 13% listed on both
3. Lansing, MI
Lansing is Michigan’s capital city that attracts traveling families all year round. The city welcomes around 4.8 million visitors every year which fuels its strong tourism industry.
Here, they can visit the Michigan State Capitol with a cast iron dome, the Michigan History Center that details the state’s past, Potter Park Zoo with more than 160 species of animals, Impression 5 Science Center with interactive exhibits, and the R.E. Olds Transportation Museum for unique and vintage cars.
Rental Channel: 74% Airbnb, 8% Vrbo, 18% listed on both
4. Dearborn, MI
Dearborn is a historic destination for travelers worldwide. In fact, it is home to Michigan’s leading tourist attraction, The Henry Ford—the nation’s largest indoor-outdoor American history museum and entertainment complex. Henry Ford alone attracts around 1.6 million visitors every year.
Apart from The Henry Ford, guests can also enjoy Greenfield Village, Arab American National Museum, the Henry Ford Estate, the Islamic Center of America, the Automotive Hall of Fame, and more.
Rental Channel: 64% Airbnb, 22% Vrbo, 14% listed on both
5. Kalamazoo, MI
Kalamazoo is known for being the home of the US Tennis Association Boys 18 & 16 Championships for the past six decades, but it’s also the manufacturing domain of Gibson Guitars, Checker cabs, Kalamazoo Stoves, Kalamazoo Sled, Kalamazoo Corset, and Shakespeare fishing gear.
Guests can immerse themselves in the youthful energy and cultural spots in Kalamazoo, such as the Kalamazoo Institute of Arts, Kalamazoo Valley Museum, Gilmore Car Museum, Air Zoo, Bronson Park, Arcadia Creek Festival Place, and Kalamazoo Nature Center.
Rental Channel: 78% Airbnb, 9% Vrbo, 13% listed on both
4. Short-Term Rentals, Long-Term Success in Michigan
Take your pick from the list above and start investing in Michigan short-term rentals! All the areas we’ve listed are profitable areas for you to take advantage of local tourism industries.
As long as you conduct property rental investment analysis and create a comprehensive income sheet, you’ll be on your way toward investment success in Michigan.
The list doesn’t end here. We’ve gone ahead and evaluated the rental property opportunities in every Metro Detroit city and neighborhood, too. Head to our Deep Dive series to find more hotspots in Michigan.
If you only want to buy a single house to fix and flip as they do on TV shows, do you really need a full-blown business plan? Well, yes! You certainly need one if you want to succeed in the game.
Even if you’re just flipping one house, going in unprepared and without a plan is setting yourself up for trouble. You can go over budget, waste time due to lack of scheduling, and sabotage your house flip.
Instead, go through this Build Your Flipping Empire series to learn how to make a flipping business plan before you jump in with both feet. Doing so, you’ll complete your investment on time and on budget, making a hefty profit that you can roll over into your next project.
In other words, you’ll carve out a path that’ll lead you to long-term success in house flipping.
The executive summary is a synopsis of your entire business plan and serves as the first impression. Remember that potential lenders, financiers, and other business prospects will often only read the executive summary, so ensure that it provides a concise and comprehensive overview of your plan.
You should also include your mission statement here to show your goals and values as a house flipper. For example, if you value family-friendly, move-in-ready house flip projects, your mission statement can say, “Our mission is to grow our house flipping empire one property at a time by turning distressed properties into profitable ones for aspiring young families.”
2. Management Team
A good business plan also has your contacts in place and responsibilities assigned. From the contractors to the real estate agent, list all of them down with detailed roles, qualifications, and experience in house flipping projects.
Here’s an example of what this section will look like:
My team is composed of professionals equipped with the necessary skill sets and work experience to get the job done with quality and efficiency.
General Contractor: John Smith
For over 20 years, Smith and his team of subcontractors (plumbers, electricians, painters, roofers, etc.) have fixed homes all around the City of Detroit. Regarded for his quick and skillful work, Smith has earned the trust of two generations of Detroit residents.
Real Estate Agent: Jane Doe
Doe is an exceptional licensed real estate agent specializing in wholesale and house flipping deals. In her 17 years in the industry, she closes a whopping 4-6 deals per quarter, averaging 20 per year.
Bookkeeper: Jody Miller
Alumni of the University of Michigan, Miller graduated with a bachelor’s degree in accounting. Her financial skills can effectively expense accounted for and within budget, helping our team generate the highest flipping profits.
If you’re new to house flipping and don’t have a lot of connections yet, then take this as an opportunity to build your team. You don’t want to waste time gathering people once a flipping project starts, as having the best people around will contribute to the stability of your operations.
3. Goals & Objectives
Think about what your ultimate goal is for the house-flipping business. Do you just want to flip 1 house a year? Or do you want to build a nationwide flipping empire to quit your day job? Remember to make your goals actionable, measurable, and realistic based on your available resources.
Here’s an example:
Our goal is to be one of the leading house-flipping empires in Michigan. Starting from the City of Detroit, we’ll grow our portfolio by expanding to neighboring cities until we have projects all around the state.
One by one, we will purchase distressed properties, and flip them into quality homes, all the while turning a profit to fund future projects as we continually grow our house-flipping empire. Our ultimate objective is to flip unloved properties into family homes.
Pro tip: Break down long-term goals into short-term ones so they’re easier to achieve and clearly mark the journey towards achieving the overall business objective.
4. Market Analysis
Knowing the real estate market in detail can help you make informed decisions moving forward. The market analysis provides insights to assess whether your business plans are likely to succeed or need some tweaking, all in relation to the competition.
Additionally, your market analysis will show prospective lenders, investors, and business partners your market knowledge and how you plan to use that for your financial plans and gain.
Here’s a list of questions to guide your market analysis:
Is the neighborhood gaining real estate popularity?
Is the property type you’re flipping in demand?
Is there a large pool of potential buyers?
What are the local crime rates?
How far is my prospective property from the necessary facilities?
What are my weaknesses against the competition?
What are my strengths against the competition?
Let’s use some data from 2021 to have a quick look at how a market analysis can go:
Recent statistics show a rise in flipping activity in Michigan. For example, in two Wayne County zip codes alone, 25% of all real estate sales were house flips, and Redford saw a 99.9% increase in house flipping in the first quarter of 2021—doubling the rates of the previous quarter.
Given the statistics, you can see these parts of Michigan are highly saturated and competitive. We can infer that pricing gets more competitive, with margins between buying distressed property and selling a flipped house getting smaller.
As for the whole state of Michigan, the online newsletter Michigan Chronicle reported in 2021 that house flipping is experiencing a huge resurgence providing “a lot of opportunities”. Michigan Chronicle used statistics by ATTOM data solutions and found that average Michigan flippers pocket minimum 20% of sales profits.
Although some cities in Michigan are highly competitive with advanced house flippers, there is still an abundance of opportunities state-wide for novices. Strategically, we can start in less competitive areas until we progress to more advanced markets.
The market is always shifting, however, so ensure that you constantly update your plan. After all, a great business plan is one that remains relevant and can guide you even in the later stages of your empire.
A market analysis is an opportunity for you to learn more about the house-flipping business. Another focal point of this section is getting to know the competition—how competitive is the market? What makes them competitive? Are there certain competitors to look out for?
Take note that getting into the flipping business without learning about it is one of the novice mistakes you want to avoid, so take your time with this section.
5. SWOT Analysis
“SWOT” stands for Strengths, Weaknesses, Opportunities, and Threats. Your SWOT analysis lets you gauge how you compare to the competition, identifying your relative performance in the market.
Let’s break down each letter and see what you should put within each section:
Referring to the infographic above, the guide questions show you what’s being asked for under each section. After the guide questions, the bullet points show sample information of what you input.
The SWOT analysis examines 3 factors: you, your competition, and the external factors of the area you plan to do business in. By having comprehensive knowledge of these factors, you can work smarter, and in turn, maximize your profits.
We’ve only scratched the surface of what goes in this section of a house-flipping business plan. If you want to take a deeper dive into the SWOT analysis, we’ll go into this in part 3 of the series!
6. Lead Generation & Marketing Strategies
Next, determine the best ways you can generate leads and market your business. We understand that this can be a challenge in the house flipping business, but try out these methods to get started:
Leverage Networking: Helping other real estate investors is a great way to keep your deals flowing. Pooling together resources can help you establish mutually beneficial relationships with other flippers and other real estate investors. Even if you have to split the profits, networking gives you consistent work while building your empire.
Drive for Dollars: There are many leads out there that can offer you profitable deals, and it’s just a matter of driving around and finding signs like “for rent” or “for sale.” These signs often have contact details of the assigned real estate agent or seller listed, where you can make direct calls to ask about possible deals. It’s also a great opportunity for you to build your network of agents.
Real Estate Agents: If you’re looking for a helping hand that has substantial knowledge of the real estate market, a real estate agent is your best bet. They can help you find leads, teach you the tricks of the trade, and get word of your house flips out in the market. Since these relationships are mutually beneficial, they can even become a long-term business partner.
These are just some lead generation and marketing strategies we found will be the most helpful for your house flipping projects, but you can use a mix of different strategies for more results. Remember to list down and define which ones you plan on using in your house-flipping business plan.
7. Finance Plans & Projections
You can’t do any business if your finances aren’t in order. So, will you be financing your house flip projects out of your own pocket or will you seek the aid of a lender? Because if you need funding, then it’s paramount that you earn their trust.
So, here’s what you need to include in this section:
Documents: Prepare all the necessary documents that show you’re financially able and responsible. You can include income statements, cash flow statements, and balance sheets.
Earnings: Tackle how much you expect to earn and how you will allocate your earnings. If you expect to earn $50,000 per deal? $75,000? Will you allocate 80% for future project funds? Will you keep 20% or less for yourself?
Budgeting: Although each project will come with its own set of repairs and touch-ups, it’s always good to have a standard budget as a guideline. You can list them out as percentages, so you show how you’ll stick to a budget and avoid over-improving properties to protect your profits.
Projections: Go over your business projections. Where do you see yourself months from now? What about 3 years after? Your projection should cover the next 2-5 years to give a clear picture.
Remember: One of the main reasons for making a business plan is to use it for getting approval on loans. So make it awfully clear how financially viable your flipping business is to earn others’ confidence.
8. Growth Strategy
We understand that it’s hard to think far into the future when you’re still getting your business off the ground. However, setting goals can keep you in line while showing future lenders, investors, and potential business partners that you are dedicated to building your house-flipping empire.
Here are a few examples:
Invest in Single-Family Homes: Single-family homes are a commodity that most types of buyers consider, so the pool of prospective buyers is larger. Opting for these kinds of properties increases your chances of closing a deal while lessening the effort you put out to gather leads and market the property.
Diversify your Real Estate Portfolio: Although house flipping is the main priority in building a house flipping empire, that doesn’t mean you can’t add other real estate ventures to your portfolio like wholesaling real estate, as it also starts with distressed properties.
Plus, if a flip looks like it’s going to flop, an exit strategy and an alternate venture you can consider are property rentals. In a nutshell, it’s all about diversifying the investments in your portfolio to secure growth.
Growing Your Capital Faster: Another way of looking at “growth” is looking for opportunities that can grow your financial capital quicker. By choosing and making the right investments early on, you’re on the fast lane to having more financial freedom, and in turn, the liberty to take on higher risks and higher reward projects.
There are more ways to ensure that your flipping empire grows. You can conduct more research to see what else you can do (and include in your business plan) so your vision is both short- and long-term.
9. Exit Strategy
Considering that your house flip project can flop when you’re just starting out can be discouraging, but having an exit strategy can be a lifeline to saving your investment. Rather than looking at it as a backup plan for failure, see your exit strategy as a “Plan B” for you to turn a profit—whatever happens.
So, identify alternative ways where you can get a return on your investment. Here are some you can consider for your house flipping business plan:
Slash Your Price: Lower your price if you’re pressed for time. If your flip seems like it’s going to flop, lowering your price can effectively heat up the market again. Even if it’s not as high as you expected, you can still walk away with some financial gain.
Tap a Different Market: If your house flip isn’t picking up in the buyers’ market, tapping into a different market can be a viable option. Long-term rental can present itself as another business venture and a form of passive income.
Rent It Out: With a property flipped and ready for residency, an alternative to closing a sale can be renting it out. Apart from being an alternative way of getting a return on your investment, you can add rental properties to your portfolio. Having different avenues of income also helps with gaining the financial stability you need to grow your house flipping empire.
Your exit strategy should be the next most financially sound option that aligns with your circumstances, so evaluate your situation carefully before taking any action.
A Foolproof Plan for Flipping Success
Learning more about the business, strategizing growth plans, and planning exit strategies can provide you with the direction you need to move forward with your goals.
Apart from serving as your guide, your house-flipping business plan will also provide comprehensive information on all areas of your business for new investors, lenders, potential business partners, and other people might do business with.
Business plans aren’t just for you, but also for those who will work with you.
With all your bases covered, you are clear and confident in what you want to achieve and how you plan on achieving it. You’ll be well on your way towards creating a house-flipping business that won’t turn into an expensive, capital-depleting flop.
This is the second installment of our series on house-flipping businesses, so stay tuned for our last installment! And if you have any questions or specific topics you want to learn, let us know by dropping a comment below or getting directly in touch with our team.
Websites like Airbnb, VRBO, and Homeaway have made it easy for short-term rentals to gain popularity among real estate investors today. In Michigan specifically, you’ll benefit from the growing short-term property market, generate a higher return on investment compared to traditional rental properties, and quickly find new guests thanks to online booking platforms.
Michigan is one of the hottest real estate markets in the nation today. The only thing left is to know which city to purchase your short-term rental in, which we’ve listed below.
5 Best Michigan Cities for Investing in Short-term Rentals
We based our list on two key factors: high cash-on-cash returns and rental income. They contribute the most to your short-term rental investment success, which is why we’ve based our list on the two factors.
Disclaimer: All the figures below come from Mashvisor, AirDNA, and Zillow reports.
1. Traverse City, MI
Traverse City is the largest city in Northern Michigan, and the largest producer of tart cherries in the nation. In 2012 alone, more than 3.3 million visitor trips were made to this city, resulting in $1.18 billion in direct spending toward its tourism sector.
Guests come here to see the grapevines at Traverse Wine Coast, swim in deep freshwater lakes, and grab a cold one in many craft beer spots. Traverse City is a rustic, charming small city filled with artists, craftsmen, and musicians that contribute to its rich local communities.
Rental Channel: 46% Airbnb, 24% Vrbo, 30% listed on both
2. Grand Rapids, MI
Grand Rapids is one of the fastest growing cities in the nation, attracting travelers interested in art museums, galleries, and competitions. Its tourism industry has also been growing for ten consecutive years from 2009 to 2019, thanks to economic growth and an evolving, diversified community.
Guests come here to visit the John Ball Zoological Garden, Belknap Hill, Gerald R. Ford Museum, Van Andel Museum Center, Frederik Meijer Gardens & Sculpture Park, and Grand Rapids Art Museum. There are also countless craft beer spots, as craft beer is the leading tourism driver in Grand Rapids since 2013.
Rental Channel: 78% Airbnb, 9% Vrbo, 13% listed on both
3. Kalamazoo, MI
Kalamazoo is known for being the home of the US Tennis Association Boys 18 & 16 Championships for the past six decades, but it’s also the manufacturing domain of Gibson Guitars, Checker cabs, Kalamazoo Stoves, Kalamazoo Sled, Kalamazoo Corset, and Shakespeare fishing gear.
Guests can immerse themselves in the youthful energy and cultural spots in Kalamazoo, such as the Kalamazoo Institute of Arts, Kalamazoo Valley Museum, Gilmore Car Museum, Air Zoo, Bronson Park, Arcadia Creek Festival place, and Kalamazoo Nature Center.
Rental Channel: 78% Airbnb, 9% Vrbo, 13% listed on both
4. Dearborn, MI
Dearborn is a historic destination for travelers worldwide. In fact, it is home to Michigan’s leading tourist attraction, The Henry Ford—the nation’s largest indoor-outdoor American history museum and entertainment complex. The Henry Ford alone attracts around 1.6 million visitors every year.
Apart from The Henry Ford, guests can also enjoy Greenfield Village, Arab American National Museum, Henry Ford Estate, Islamic Center of America, Automotive Hall of Fame, and more.
Rental Channel: 64% Airbnb, 22% Vrbo, 14% listed on both
5. Lansing, MI
Lansing is Michigan’s capital city that attracts traveling families all year round. The city welcomes around 4.8 million visitors every year that fuels its strong tourism industry.
Here, they can visit the Michigan State Capitol with a cast iron dome, Michigan History Center that details the state’s past, Potter Park Zoo with more than 160 species of animals, Impression 5 Science Center with interactive exhibits, and the R.E. Olds Transportation Museum for unique and vintage cars.
Rental Channel: 74% Airbnb, 8% Vrbo, 18% listed on both
Short-Term Rentals, Long-Term Success in Michigan
Take your pick from the list above and start investing in Michigan short-term rentals! All the areas we’ve listed are profitable areas for you to take advantage of local tourism industries.
As long as you conduct property rental investment analysis and create a comprehensive income sheet, you’ll be on your way toward investment success in Michigan.
The list doesn’t end here. We’ve gone ahead and evaluated the rental property opportunities in every Metro Detroit city and neighborhood, too. Head to our Deep Dive series to find more hotspots in Michigan.
Many people in the real estate industry frown upon wholesalers. In general, it seems that wholesalers have developed a bad reputation because many investors and sellers think they can find each other without an expensive middleman pocketing some of the profits.
But the reality is far more complicated than just that…
The truth is real estate wholesalers make everyone’s lives easier, helping sellers to actually sell their unwanted homes and connecting buyers with properties they actually want. In a way, they fill a gap in the real estate investment game that nobody else can, providing genuine value to both seller and the investor.
Still, not everyone thinks that and so we wanted to address the question: Are wholesale real estate transactions ethical?
Let’s take a closer look at the issue.
When Is Real Estate Wholesaling Unethical?
Here’s how we see it: Real estate wholesaling is only unethical if someone conducts their business for the wrong reasons. After all, real estate wholesaling is legal in all 50 states—although with many local and state rules governing it.
Here are two situations where real estate wholesaling becomes unethical:
#1 – Deceiving the Seller
If a wholesaler deceives the seller into thinking that their property is worth less than it actually does, they’re effectively tricking them so they can earn more profits. But if the wholesaler tells them the actual value of their home and is clear about the extra cost they’ll pay for their expertise, then everything is done ethically.
As a wholesaler, the goal is to convince the seller that your list of buyers and connections will help them greatly, so they can sell their homes as soon and as easily as possible. After all, most sellers have the following problems:
They don’t have access to interested investors or buyers.
They don’t have real estate knowledge to handle the transaction.
They don’t want to take care of the property anymore and would rather liquidate it.
They don’t have the time and finances necessary to repair the property.
They don’t have time to waste as the property is near foreclosure already.
Another situation is if the property is already in foreclosure and the bank just wants to liquidate it. A real estate wholesaler can then step in, offer their expertise and knowledge, and get the job done quickly and efficiently.
#2 – Deceiving the Buyer
Another example of an unethical situation happens when the wholesaler underestimates the repairs needed and oversells the property to a buyer.
Sure, the wholesaler will certainly gain a hefty profit, but that effectively pushes the problem to the investor—where they have to repair and renovate the property at a much higher cost than expected. With a bloated after-repair value (ARVs) and inaccurately estimated repair costs (ERC), they’ll have lower their profits and struggle to bring the home up to standards or find another exit plan before they sink too deep.
Unethical situations like these are what fuel the negative reputation wholesalers have today.
Instead, you want to be known as an expert deal finder. Give accurate ARVs and ERCs, and put in the effort to build your experience, knowledge, and reputation in the community. The more you do this, the more buyers will see your added value to their investments—becoming an irreplaceable asset to them.
Ultimately, it boils down to the quality of deals you provide. If you offer pathetic deals for hefty profits and push problems to other parties, you’re only fueling the negative reputation that wholesalers already have to deal with in this industry.
Wholesalers = Real Estate Pawn Shops
Pawn shops also have a bad name, but they also fill a niche in local economies. Someone in need of quick cash chooses to sell their item at a pawn shop, usually for less than they could get by selling the item on Facebook Marketplace, Craigslist, etc.
Doing Real Estate Wholesaling Ethically
Many real estate agents look down on wholesalers as predatory, when they should actually look at them as another avenue for a quick sale in certain situations.
As long as you conduct your transactions the right way, you’re wholesaling real estate ethically and shouldn’t have any problems. After all, when you can build trust and credibility as a wholesaler, you’ll get far more recommendations from other buyers and sellers as well.
And when it comes to real estate wholesaling—networking is more important in the long run than acting out of your own self-interest for short-term profits.
What else do you want to know about wholesaling? Drop us a comment below!
