House Flipping Business Plan

What Is a Business Plan For House Flipping?

A house flipping business plan lays out the comprehensive strategy for launching and operating a real estate investment company that acquires undervalued properties, renovates them, and resells them for a profit. 

Creating a business plan for house flipping serves as a blueprint covering all key aspects, including:

• Industry analysis and market opportunity
• Target customer profiles and needs
• Competitive landscape and differentiation strategies
• Acquisition criteria and rehab specifications
• Sales, marketing, and pricing approaches
• Operational processes and workflow
• Management team and human resources
• Financial forecasting and funding requirements

A well-crafted house flipping business plan template, similar to a landlord business plan, allows investors and entrepreneurs to validate their concepts, identify potential risks, calculate startup costs, and model projected financials before investing significant capital.

Why Do You Need a Sample Business Plan for Flipping Houses?

A house flipping business plan example is invaluable for several reasons:

• Gaining Strategic Clarity: A comprehensive business plan for flipping houses forces you to think through every facet of the business in detail. This crystallizes your vision, go-to-market strategies, financial goals, and operational requirements.

• Securing Funding: Whether raising capital from investors or obtaining bank loans, providing professional house flipping business plan templates demonstrates you have a viable strategy grounded in careful research and planning.

• Evaluating Financial Feasibility: By conducting a breakeven analysis for house flipping business plan, you can assess whether your house flipping business is profitable and sustainable under various scenarios. This enables adjusting assumptions before investing.

• Facilitating Growth: Expanding your house flipping operation requires continual updating of the business plan template for flipping houses. A fix and flip business plan will allow you to monitor performance against projections and identify new opportunities.

An interior design business plan section would benefit those offering interior design services as part of the house flipping process.

A high-quality home flipping business plan is an indispensable management tool for de-risking your business, avoiding cash flow issues, and executing a proven investment strategy for maximizing returns.

Here’s a template for a house flipping company called Flippy that teaches you how to write a business plan for flipping houses. This house flipping business plan sample includes all the key sections, each providing valuable insights and strategies:

Executive Summary

Company Overview

Flippy is a newly established house flipping company based in Denver, Colorado. Flippy specializes in:

1. Acquiring undervalued residential properties
2. Renovating them to maximize their market value
3. Reselling them for a profit

With a combined experience of over 15 years in the real estate industry, our management team identifies lucrative investment opportunities and executes cost-effective renovations.

Franchise Business Planning 

Helps the franchisee get business case approval from the franchisor

Key Objectives

• Acquire and renovate 10-12 properties in the first year of operations
• Achieve an average gross profit margin of 25-30% on each property flip
• Establish a strong brand reputation for quality and reliability
• Implement eco-friendly and energy-efficient renovation practices

Mission and Vision

Our mission is to provide high-quality, renovated homes to buyers while generating attractive returns for our investors. We aim to become the leading house flipping business in the Denver metropolitan area.

Financial Summary

Flippy is seeking an initial investment of $500,000 to fund property acquisitions, renovations, and operating expenses. Based on our financial projections, we expect to generate revenue of $680,000 in the first year, with a gross profit of $120,000.

Company Overview

Mission Statement

Flippy’s mission is to focus on the neglected neighborhoods and housing stock in Denver by renovating distressed properties into livable homes. Our goal is to offer buyers a seamless experience in acquiring fully renovated properties with attractive investment returns.

Ownership & Legal Structure

Flippy is a limited liability company (LLC) formed in Colorado by equal partners Sarah Smith and John Joe. The company will operate as a partnership to start, splitting profits and management responsibilities. As the business expands, it may convert to a corporation.

Location & Facilities

The company headquarters will be a low-cost office space of approximately 1,000 sq. ft. in Denver. This will house the business operations team including owners, acquisitions, and administrative staff.

A 5,000 sq. ft. warehouse will be leased as a prep area for house renovations. It will store all construction equipment, materials, and appliances and allow for prep work before deploying to active sites. Larger projects will have a construction management business plan to prevent delays and increase efficiency.

Company History & Ownership Team

Flippy was founded in 2023 by longtime friends and business partners Sarah Smith and John Joe to pursue their mutual passion for renovating homes and real estate investing. Their complementary backgrounds make them ideal co-owners.

Together, the founders bring over 25 years of experience in real estate and construction management which will be critical for Flippy’s success.

Industry Analysis

The house flipping industry has experienced a significant resurgence following the US housing crisis and recession in 2008. As per the report published by ATTOM Data Solutions, 308,922 single-family homes and condos in the United States were flipped in 2023.

In Flippy’s target market of Denver, Colorado, the median home value in Colorado is $545,124, with a 1-year appreciation rate of -2.3% as of Q2 2023. The active listings are 23,256 with 2 months of inventory. The median days to pending sale is 10, with a foreclosure rate of one in every 6,512 homes.

While a highly active market, demand for renovated turnkey properties continues to outpace supply. Develop an engineering consulting business plan for projects requiring specialized engineering services.

Several key market drivers are converging to create sustainable demand for house flipping in Denver, Colorado:

• Limited supply of developable land for new construction
• Aging housing stock requiring significant upgrades
• Strong influx of millennial & out-of-state buyers
• Low-interest rate environment

Some key industry challenges for house flipping in Denver, Colorado:

• Availability of suitable investment properties at reasonable prices
• Fluctuations in housing market conditions and economic cycles
• Rising material and labor costs impacting renovation budgets
• Regulatory requirements and zoning laws specific to certain areas
• Potential for market saturation in highly competitive markets

These demand drivers position Flippy for sustainable growth in a market primed for high-quality home renovation services.

Customer Analysis

Flippy’s primary target buyer groups are:

Target Customer Needs

• Move-in ready homes requiring zero renovations or modernization
• On-trend open floor layouts and interior design features
• Prime neighborhood locations close to jobs, schools, amenities
• Accurate pricing data to ensure turnkey homes are competitively valued
• Flexible financing/mortgage options to include renovation costs in mortgages
• End-to-end service to make transactions seamless and hassle-free

Flippy will customize its property acquisition strategy, renovation specifications, pricing models, and marketing business plan based on the specific preferences and needs of the target customers.

Competitive Analysis

The house flipping market in Denver, Colorado, is actively competitive with several established regional and national players. Flippy will differentiate itself with a laser focus on revitalizing homes for the first-time/move-up buyer segment within a specific pricing range.

Primary Competitors

Royal Flipping: A national franchise operation, Royal Flipping is a market leader focused on mid-tier homes in the $500,000 – $1,200,000 price range. Have significant resources for acquisitions. Lack customized renovation quality. Prioritize low renovation costs. Strong marketing.

Flip City: A local house flipping company known for completing luxury renovations in Denver’s most prestigious neighborhoods. Their niche is homes priced at $2 million on average after high-end renovations are completed. Strong brand but narrow customer focus.

Green Flip: A regional house flipping company primarily focusing on acquiring and renovating properties for the rental investment market. They prioritize maximizing rental income over cosmetic interior design updates meant to appeal to retail buyers. Limited marketing for property sales.

Competitive Advantages

While competitors exist, Flippy will differentiate itself and mitigate competitive threats through the following key advantages:

• Experienced management team
• Strategic property acquisitions
• Emphasis on quality workmanship
• Incorporation of eco-friendly and energy-efficient practices
• Efficient project management and cost control processes
• Strong relationships with local real estate agents

Marketing Plan

Flippy will employ a comprehensive, multi-channel marketing plan carefully tailored to its target buyer segments. Flippy’s business plan ensures cost-effective saturation to generate qualified leads and accelerate sales cycles.

1. Retail Buyer Marketing Tactics

• Branding & Websites: Each project will have its own brand and website with photos, 3D tours, and local information.
• Social Media Advertising: Ads for each property will target the ideal buyer audience on all relevant platforms.
• Open House Events: Regular open house events will be held to connect with potential buyers.
• Property Listing: All properties will be listed on major real estate sites and local MLS.
• Direct Mail: Mail pieces highlighting new listings will be sent to nearby homes.

2. Professional Marketing Channels

• Realtor Outreach: A program will be set up to provide realtors with early access to listings and co-marketing opportunities.
• MLS Tours/Events: Brokers will be invited to tour properties and suggest pricing and targeting. The team will attend local realtor events.
• Co-Marketing Partnerships: Partnerships will be formed with related businesses to reach new audiences and offer incentives.

3. Brand Awareness Initiatives

• Website and SEO: A website will be developed to highlight the company’s story, team, projects, and resources, and will be optimized for search engines. 
• Email Marketing: An email database will be built to send campaigns about new listings, open houses, and tips.
• Community Sponsorships & Events: The company will sponsor local organizations and events, and participate in home shows/expos.

Marketing Budget

As per Flippy’s business plan, the initial marketing budget for the first year of operations is $80,000, allocated as follows:

Marketing Budget Breakdown

• 28% allocated to direct property/listing promotional channels
• 25% to cultivate realtor/professional partner relationships
• 23% invested in digital channels (websites, SEO, email, social ads)
• 15% towards business development and branding initiatives
• 9% for physical events, open houses, promotions

This comprehensive marketing budget and spending allocation will maximize Flippy’s effectiveness in reaching prospective buyers through both retail and professional channels.

Operations Plan

Property Acquisition Strategy

Flippy will employ a multifaceted acquisition strategy using proprietary modeling, market expertise, and aggressive lead generation to identify exceptional, undervalued property acquisition opportunities that meet specific criteria:

• Property meets ideal specifications for target buyer renovations (2-4 BR, 2 BA, 1,500-2,500 SF)
• Strong school district and desirable neighborhood demographics
• Property can be acquired at a minimum 20% discount to market value
• Projected renovation costs no more than 25% of projected post-repair value
• Ability to execute a value-add, modern renovation within a set budget
• Sale potential in line with competitive demand analysis for the area

Properties meeting these guidelines will be sourced through:

• Multiple Listing Service (MLS) monitoring for attractively priced new listings
• Foreclosure/Pre-foreclosure auctions and monitoring
• Wholesaler and off-market property leads generated via marketing
• Direct outreach to owners of distressed properties via targeted mailings

Renovation Process & Specifications

Utilizing their decades of combined experience, the Flippy team has refined a detailed, multiphase renovation process designed to deliver contemporary, high-caliber finishes within predefined renovation budgets and timelines:

• Detailed 200-point inspection of property upon acquisition to assess all renovation needs
• Creation of a comprehensive renovation project plan, scope of work, pricing, and contractors
• Secure all required renovation permits, permissions and coordinate city inspections
• Contract and schedule renovation team composed of Flippy’s curated contractors
• Project oversight with regular quality assurance checks, contractor management
• Final walkthrough inspection to identify/resolve any remaining punch list items

The renovation specifications developed for each property will be guided by extensive market research, prevailing interior design trends, and the precise needs/preferences of the target buyer segment to maximize resale values and buyer appeal. For projects requiring architectural design services, an architecture firm business plan may be consulted.

All renovation projects will aim to include:

• Open, modern floor plans through the removal of strategically planned walls
• Contemporary kitchen and bathroom designs with quality fixtures and surfaces
• Refinished hardwood floors and energy-efficient windows throughout
• Enhanced curb appeal through landscaping, updated exteriors, and garage refreshes
• Smart home integration with wireless networking, security, lighting, and climate controls
• Upgraded core mechanical systems for HVAC, plumbing, electrical, and insulation
• Minimal to no additional work required for new owners for years

Sales & Listing Process

Once the renovation process is complete, Flippy will implement an exhaustive, rapid sales process to list, market, and sell each property quickly:

• Professional home staging and photography/videography to highlight interiors
• Prepare comprehensive market analysis to determine competitive listing pricing
• Launch all marketing initiatives (websites, video tours, MLS listing, advertising, etc.)
• Host open house events and facilitate private showings by realtors and prospective buyers
• Receive and carefully evaluate any offers submitted, negotiate ideal offer terms
• Navigate and oversee the closing process with the assistance of the title company and legal counsel
• Conduct comprehensive pre-closing walkthroughs with buyers to ensure satisfaction

Organization & Management

Company Leadership

Flippy will be led by its co-founding partners who will oversee all operations, financials, personnel, and strategic initiatives:

• Sarah Smith – President & Chief Renovation Officer
• John Joe – Vice President & Chief Acquisitions Officer

With their combined 25+ years of complementary real estate, construction, and entrepreneurial experience, Sarah and John are uniquely qualified to lead Flippy to success. They will be supported by a lean team of additional staff and external partners.

Projected Staffing Plan

To begin, Flippy will rely heavily on the co-founders’ expertise to keep staffing as lean as possible until additional help is required:

Year 1: Co-Founders, Administrative Assistant

Year 2: Hire Project Manager, Acquisitions Specialist

Year 3: Add Two Renovation Staff Members

Year 4: Potentially bring on in-house contractors (electricians, plumbers, etc.)

Year 5: Additional support staff as needed (bookkeeping, marketing, etc.)

The co-founders’ hands-on involvement during the early stages allows tight control over costs and quality standards as the business launches and scales. As deal volume and revenues increase, Flippy will make strategic hires.

Use of Outside Partners & Resources

To maintain lean operations, Flippy will leverage external contractors, vendors, and partners for several key functions:

• Property Inspections/Appraisals
• Renovation Contractors
• Realtor/Broker Partnerships
• Legal/Title
• Accountants/Bookkeepers
• Bankers/Lenders

Utilizing outside experts allows focus on core competencies versus developing non-revenue generating staff.

Financial Plan

Start-Up Funding & Use of Funds

The co-founders have successfully raised $500,000 in start-up equity funding from personal networks of accredited private investors. This capital will provide:

• $200,000 for business launch expenses & initial overhead (office, equipment, materials, etc.)
• $300,000 for initial property acquisitions and renovation projects
• Additional $100,000 general operating capital reserve

No other outside capital is required at this stage. Flippy projects being cash flow positive by the end of Year 1.

Projected Income Statements

Notes & Assumptions

• Real estate commissions of 5% included in Closing Costs
• Year 1 includes additional one-time startup expenses in G/A
• Payroll increases in Year 3 from hiring renovation/acquisitions staff
• Revenue growth of ~10% per year driven by increasing property values

Use of Profit

Flippy will be profitable from Year 4 as per the financial projections in the business plan and will use the net profit as follows:

• 50% retained for additional property acquisition and renovation investments
• 20% disbursed to co-founders
• 30% retained as cash reserves to mitigate risk

This disciplined approach prioritizes sustainable growth, co-founder returns, and a safety net for market fluctuations.

Exit Strategy

The ownership team’s goal is to build Flippy into one of the preeminent house flipping operators in the Denver, Colorado metro area over a 5-7 year period based on the forecasted growth trajectories. At that point, two strategic exit options will be evaluated:

1. Equity Sale or Merger: Partners with complementary businesses (homebuilders, real estate brokerages) that value Flippy’s systemized processes, brand equity, and operations.
2. Franchising Model: With refined systems, the business could transition to a franchise model with expansion in other markets through the sale of regional franchises.

Regardless of the ultimate path, the goal is to proactively plan an exit that maximizes value for the ownership team and investors given Flippy’s strong growth potential and successful business model.

OGSCapital for Your House Flipping Business Plan

At OGSCapital, we specialize in crafting professional, comprehensive house flipping small business plans. Our team of business plan experts averages over 15 years of real-world experience. 

We collaborate directly with clients to develop tailored: 

• Real estate flipping business plan
• Financial models
• Competitive analyses 
• Financial projections
• Operational strategies and more

Our business plan provides a solid strategic foundation and roadmap for launching new ventures and driving growth. Contact us for assistance with your business plan.

Frequently Asked Questions

What is the profit of flipping?

In 2023, home flips in the US yielded an average gross profit of $66,000, surpassing the median initial investment of $240,000. This represented a modest return on investment of 27.5% relative to the original cost.

What business entity is best for flipping houses?

The best business entity for flipping houses is typically a Limited Liability Company (LLC). LLC provides: 

• Personal liability protection
• Tax flexibility
• Ease of management

LLC effectively shields personal assets from potential investment-related risks or debts.

Download House Flipping Business Plan Sample in pdf