House Flipping Business Plan Template
If you want to start a house flipping business or expand your current house flipping business, you need a business plan.
The following House Flipping business plan template gives you the key elements to include in a winning real estate flipping business plan.
House Flipping Business Plan Example
I. Executive Summary
Business Overview
The [Company Name] is a new house flipping company that specializes in buying properties in [Insert Location Here] and turning them into exquisite homes suitable for a better living experience. The company will operate in a professional setting, conveniently located in [Known Landmark], at the corporate center of the city. [Company Name] is headed by [Founder’s Name], an MBA Graduate from [insert school] with more than 20 years of experience working as an real estate broker.
Products Served
[Company Name] will be able to provide the following services:
- Personalize house designs (both interior and exterior)
- Property restoration or renovation
- Project cost evaluation
- Broker opinion of valuation
- Marketing property for lease/sale
[Company Name] will primarily offer single-family, residential properties.
Customer Focus
[Company Name] will primarily serve house buyers and sellers interested in properties within a 20 mile radius of our location. The demographics of residents in this area are as follows:
- 66,437 residents
- Average income of $89,700
- 68.5% married
- 48.4% in Mgt./Professional occupations
- Median age: 39 years
Management Team
[Company Name]’s most valuable asset is the expertise and experience of its founder, [Founder’s Name]. [First name] has been a licensed real estate broker for over the past 20 years. He has spent much of his career working in different real estate agencies where he specialized in rentals for 5 years before moving to specialize in house flipping sales for the next 10 years.
[Company Name] will also employ an experienced assistant to help with various administrative duties around the office and a design team that will lead the repairs and renovations that needs to be done.
Success Factors
[Company Name] is uniquely qualified to succeed due to the following reasons:
- [Company Name] will fill a specific market niche in the growing community we are entering.
- Our location is in an economically vibrant area where new home sales are on the rise and turnover in homes and rentals occurs often due to the upward mobility of residents.
- The management team has a track record of success in the real estate brokerage business.
- We have a team of experts that are capable of restoring and upgrading old properties to their maximum potential.
Financial Highlights
[Company Name] is seeking a total funding of $1,000,000 of debt capital to expand its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Office design/build: $600,000
- Working capital: $400,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Topline projections over the next five years are as follows:
| Financial Summary | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
|---|---|---|---|---|---|
| Revenue | $965,742 | $1,878,611 | $2,718,300 | $3,477,900 | $4,285,228 |
| Total Expenses | $390,241 | $630,018 | $931,935 | $1,171,906 | $1,429,992 |
| EBITDA | $575,501 | $1,248,593 | $1,786,365 | $2,305,994 | $2,855,237 |
| Depreciation | $8,720 | $8,720 | $8,720 | $8,720 | $8,720 |
| EBIT | $566,781 | $1,239,873 | $1,777,645 | $2,297,274 | $2,846,517 |
| Interest | $5,077 | $4,442 | $3,807 | $3,173 | $2,538 |
| PreTax Income | $561,705 | $1,235,431 | $1,773,838 | $2,294,101 | $2,843,978 |
| Income Tax Expense | $196,597 | $432,401 | $620,843 | $802,935 | $995,392 |
| Net Income | $365,108 | $803,030 | $1,152,995 | $1,491,166 | $1,848,586 |
| Net Profit Margin | 38% | 43% | 42% | 43% | 43% |
II. Company Overview
Who is [Company Name]?
The [Company Name] is a new house flipping company that specializes in buying properties in [Insert Location Here], turning them into exquisite homes suitable for a better living experience. The company will operate in a professional setting, conveniently located in [Known Landmark], at the corporate center of the city.
While [Founder’s Name] has been in the real estate brokerage business for some time, it was in [month, year] that he decided to launch [Company Name]. Specifically, during this time, [Founder] met with a former friend, an architect, who has had successful projects related to building renovations and restorations. After discussing the business at hand, [Founder’s Name] clearly understood that there is a need for this business in his hometown and would enjoy significant success.
Now, [Founder’s Name] and everyone at [Company Name] is changing the game in the housing buying and selling industry, giving second chances to old properties and making people’s dream houses become a reality.
[Company Name]’s History
In [month, year], [Company Name] launched its first project in [Location]. It started off with a small house in one of the City’s most popular towns and has now sold over 30 flipped houses in a span of [insert years established].
Since incorporation, the Company has achieved the following milestones:
- Acquired the perfect location for their headquarters
- Redesigned 50+ houses
- Sold over 30 in just [insert number of years]
- Began recruiting key employees
- Has built design teams that have different specialties
[Company Name]’s Products/Services
[Company Name] will be able to provide clients with the following services:
- Personalize house designs (both interior and exterior)
- Property restoration or renovation
- Project cost evaluation
- Broker opinion of valuation
- Marketing property for lease/sale
III. Industry Analysis
Last year saw the largest increase in house flipping in 8 years. Over 200,000 single family homes and condos in the United States were flipped, up 2 percent from the previous year and the highest in over 10 years.
The number of homes flipped represented over 5% percent of all home sales in the nation.
While flipping activity rose, profit margins continued to rise as well.
The is projected to post solid growth over the next five years due to rising home prices, increased sales and greater construction combined with higher homebuyer demand. Furthermore, consumer spending will drive business expansion, and ensuing investor confidence in real estate will help raise commercial transaction volumes.
IV. Customer Analysis
Customer Segmentation
We will primarily target the following customer segments:
Home Sellers: Sellers are a key market for the company, as they need to capture new property at a competitive price in order to turn profits.
V. Competitive Analysis
Direct & Indirect Competitors
Property Fortune Flippers
Founded in 1985, Property Fortune Flippers is an integrated network of companies concentrated on real estate opportunities. A leading acquirer of distressed residential real estate across the United States, Property Fortune Flippers has grown into a diversified, vertically integrated company, expanding its business footprint to include residential rehabilitation, non-performing loans, property management, private lending, brokerage, and escrow.
House Flippers
House Flippers is a real estate investment, education, and coaching company. The company actively invests in real estate, and has been involved in more than $1 billion of residential and commercial real estate investments since its inception. This success prompted the company to develop a systemized process that could be taught to prospective investors. The company manages between 25 and 40 ongoing redevelopment single family and multi-family projects at all times, as well as acquiring apartment communities, retail shopping centers, and office buildings.
Equity Investors
Equity Investors is a real estate investment firm. It seeks to invest in distressed residential and commercial real estate asset investment, management, multifamily, workouts, and turnaround strategies in the United States and internationally. It focuses on raising, investing and managing third party capital, originating and securitizing commercial mortgage loans. Since its inception, Equity Investors has participated in the investment of billions of dollars of equity in real estate assets.
Equity Investors investment focus includes: Distressed Loans, CMBS, Commercial Properties and Direct Real Estate Lending
Competitive Advantage
[Company Name] enjoys several advantages over its competitors. These advantage include:
- Design Team: The design teams are made up of creative individuals that are adept to renovation/restoration/building projects. They all highly value the opinions and preferences of their clients, making their designs personal and unique to each one.
- Management: Our management team has years of business and marketing experience that allows us to market and serve clients in a much more sophisticated manner than our competitors.
- Relationships: Having lived in the community for years, [Founder’s Name] knows all of the local leaders, newspapers and other influencers. As such, it will be relatively easy for us to build branding and awareness of our bakery
- Location: We are located in the heart of the city and are near prime locations where we’re exposed to individuals who have the ability to purchase properties.
VI. Marketing Plan
The [Company Name] Brand
The [Company name] brand will focus on the Company’s unique value proposition:
- Client-focused designs, where the Company’s design and floor plans are aligned with the customer’s specific needs
- Service built on long-term relationships and personal attention
- Big-firm expertise in a family-owned, small-firm environment
Promotions Strategy
Industry Networking
In order to help promote and publicize their newly flipped homes, [Company name] will build great relationships with local real estate agents. Creating a network of agents that are the first to know when a new property hits the market will be key in selling our homes.
Direct Mail
The company will market its newly renovated homes with beautiful marketing pieces that are sent to local residents and real estate agents.
Open House Events
The Company will host creative and appealing open house events to attract top real estate brokers and potential home buyers. Events will be entertaining and include food and drink.
SMS Marketing
SMS marketing can be extremely cost effective and multi-purposed for both locating motivated sellers and flipping houses quickly. Mass text messages can be sent to lead lists of defaulting homeowners who need to sell as well for announcing new homes we are selling to potential buyers.
Publications
[Company name] will list its properties for sale in key local publications, including newspapers, area magazines.
Seminars
By offering seminars on real estate investing and house flipping success, [Founder’s Name] will help position the company as an industry expert and leader. These seminars will be free, as they have general promotion, networking and marketing value.
VII. Operations Plan
Functional Roles
The Company intends to employ [x] architects, [x] junior architects, [x] engineers and [x] marketing managers and [x] HR, [x] admin assistant, [x] brokers and [x] contractors. [Company name] anticipates having [x] projects every 3 months.
In order to execute on [Company Name]’s business model, the Company needs to perform several functions. [Company name] anticipates using the services of X employees, divided into the following roles.
Service Functions
- Design Team
- Architect
- Designer
- Engineer
- Project Managers
Administrative Functions
- General & administrative functions including marketing, bookkeeping, etc.
- Sourcing and storing products
- Hiring and training staff
Milestones
[Company name]’s long term goal is to become the dominant provider of house flipping services in the [city] area. We seek to the standard by which other providers are judged.
The following are a series of steps that lead to our vision of long-term success. [Company Name] expects to achieve the following milestones in the following [xyz] months:
| Date | Milestone |
|---|---|
| [Date 1] | Finalize lease agreement |
| [Date 2] | Design and build out [Company Name] |
| [Date 3] | Hire and train initial staff |
| [Date 4] | Kickoff of promotional campaign |
| [Date 5] | Launch [Company Name] |
| [Date 6] | Reach break-even |
VIII. Management Team
Management Team Members
[Company Name] is led by [Founder’s Name] who has been in this industry for [Insert years]. While [Founder] has never run a house flipping firm himself, he has been a broker at a young age and spent most of his life working and sealing off deals from one client to another. As such, [Founder] has an in-depth knowledge of the business including the operations side (e.g., running day-to-day operations) and the business management side (e.g., staffing, marketing, etc.).
Hiring Plan
[Founder’s Name] will serve as the company CEO and president. In order to launch the business we do not need additional personnel beyond the pioneering design and management team who has already been recruited, but will hire the following in the future:
- Real Estate Brokers: Hire one additional broker every other year starting with year 2, assuming demand exists in the market
- Engineers and Architects: Additional one every other 2 years assuming there is an increase in demand in the future
- Administrative Assistant: Hire a second assistant in the next 3 years
- Marketing Team: Build a complete marketing team that will help promote the business through online and physical marketing campaigns.
IX. Financial Plan
Revenue and Cost Drivers
[Company Name]’s revenues will come primarily from the earnings from property sales and revamping projects. More than half of the deals each quarter are expected to be design projects and the rest will be from sales.
As with most services, labor expenses will be key cost drivers. [Founder’s Name] and future employees will earn a competitive base salary. Furthermore, the costs of transactions are projected to be roughly 45% of regular revenue and cover the advertising of listings, travel and supply costs for clients, and other direct costs for each deal.
Ongoing marketing expenditures are also notable cost drivers for [Company Name].
Capital Requirements and Use of Funds
[Company Name] is seeking a total funding of $1,000,000 of debt capital to expand its office. The capital will be used for funding capital expenditures and location build-out, hiring initial employees, marketing expenses and working capital.
Specifically, these funds will be used as follows:
- Office design/build: $600,000
- Working capital: $400,000 to pay for marketing, salaries, and lease costs until [Company Name] reaches break-even
Key Assumptions
The following table reflects the key revenue and cost assumptions made in the financial model:
| Houses Flipped per year | Average |
|---|---|
| FY 1 | 5 |
| FY 2 | 10 |
| FY 3 | 15 |
| FY 4 | 20 |
| FY 5 | 25 |
5 Year Annual Income Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| Revenues | ||||||
| Product/Service A | $151,200 | $333,396 | $367,569 | $405,245 | $446,783 | |
| Product/Service B | $100,800 | $222,264 | $245,046 | $270,163 | $297,855 | |
| Total Revenues | $252,000 | $555,660 | $612,615 | $675,408 | $744,638 | |
| Expenses & Costs | ||||||
| Cost of goods sold | $57,960 | $122,245 | $122,523 | $128,328 | $134,035 | |
| Lease | $60,000 | $61,500 | $63,038 | $64,613 | $66,229 | |
| Marketing | $20,000 | $25,000 | $25,000 | $25,000 | $25,000 | |
| Salaries | $133,890 | $204,030 | $224,943 | $236,190 | $248,000 | |
| Other Expenses | $3,500 | $4,000 | $4,500 | $5,000 | $5,500 | |
| Total Expenses & Costs | $271,850 | $412,775 | $435,504 | $454,131 | $473,263 | |
| EBITDA | ($19,850) | $142,885 | $177,112 | $221,277 | $271,374 | |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 | |
| EBIT | ($56,810) | $105,925 | $140,152 | $184,317 | $234,414 | |
| Interest | $23,621 | $20,668 | $17,716 | $14,763 | $11,810 | |
| PRETAX INCOME | ($80,431) | $85,257 | $122,436 | $169,554 | $222,604 | |
| Net Operating Loss | ($80,431) | ($80,431) | $0 | $0 | $0 | |
| Income Tax Expense | $0 | $1,689 | $42,853 | $59,344 | $77,911 | |
| NET INCOME | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 | |
| Net Profit Margin (%) | - | 15.00% | 13.00% | 16.30% | 19.40% |
5 Year Annual Balance Sheet
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | ||
|---|---|---|---|---|---|---|
| ASSETS | ||||||
| Cash | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 | |
| Accounts receivable | $0 | $0 | $0 | $0 | $0 | |
| Inventory | $21,000 | $23,153 | $25,526 | $28,142 | $31,027 | |
| Total Current Assets | $37,710 | $113,340 | $184,482 | $286,712 | $423,416 | |
| Fixed assets | $246,450 | $246,450 | $246,450 | $246,450 | $246,450 | |
| Depreciation | $36,960 | $73,920 | $110,880 | $147,840 | $184,800 | |
| Net fixed assets | $209,490 | $172,530 | $135,570 | $98,610 | $61,650 | |
| TOTAL ASSETS | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 | |
| LIABILITIES & EQUITY | ||||||
| Debt | $317,971 | $272,546 | $227,122 | $181,698 | $136,273 | |
| Accounts payable | $9,660 | $10,187 | $10,210 | $10,694 | $11,170 | |
| Total Liabilities | $327,631 | $282,733 | $237,332 | $192,391 | $147,443 | |
| Share Capital | $0 | $0 | $0 | $0 | $0 | |
| Retained earnings | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| Total Equity | ($80,431) | $3,137 | $82,720 | $192,930 | $337,623 | |
| TOTAL LIABILITIES & EQUITY | $247,200 | $285,870 | $320,052 | $385,322 | $485,066 |
5 Year Annual Cash Flow Statement
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
|---|---|---|---|---|---|
| CASH FLOW FROM OPERATIONS | |||||
| Net Income (Loss) | ($80,431) | $83,568 | $79,583 | $110,210 | $144,693 |
| Change in working capital | ($11,340) | ($1,625) | ($2,350) | ($2,133) | ($2,409) |
| Depreciation | $36,960 | $36,960 | $36,960 | $36,960 | $36,960 |
| Net Cash Flow from Operations | ($54,811) | $118,902 | $114,193 | $145,037 | $179,244 |
| CASH FLOW FROM INVESTMENTS | |||||
| Investment | ($246,450) | $0 | $0 | $0 | $0 |
| Net Cash Flow from Investments | ($246,450) | $0 | $0 | $0 | $0 |
| CASH FLOW FROM FINANCING | |||||
| Cash from equity | $0 | $0 | $0 | $0 | $0 |
| Cash from debt | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| Net Cash Flow from Financing | $317,971 | ($45,424) | ($45,424) | ($45,424) | ($45,424) |
| SUMMARY | |||||
| Net Cash Flow | $16,710 | $73,478 | $68,769 | $99,613 | $133,819 |
| Cash at Beginning of Period | $0 | $16,710 | $90,188 | $158,957 | $258,570 |
| Cash at End of Period | $16,710 | $90,188 | $158,957 | $258,570 | $392,389 |
