Last Updated on May 9, 2022
How Many Houses Can You Really Flip in One Year?
The primary goal of house flipping is to make as much profit as possible, but realistically, how many houses can you actually flip in a year?
There are technically no laws or regulations in the United States that limit the number of houses you can flip in one year. However, from a practical standpoint, there are factors that will put a cap on how many houses you can flip in one year. Some of these factors include how much time you have to work with, your financial situation, and the current status of the real estate market in your area.
On average, most full-time flippers can successfully flip two to seven houses per year. You might be thinking to yourself, “That’s a pretty large range for the average amount of houses that can be flipped in a year”. But truthfully, everyone’s experience with flipping houses is different, and each person has their own strategy and approach to house flipping.
In this article, we’ll take a deep dive at the determining variables that impact how many houses you can flip in a year.
What is House Flipping?
First, let’s examine some of the basics when it comes to house flipping.
House flipping is the act of purchasing a property, holding onto it for a short amount of time, then selling it with the goal of making a profit. Oftentimes, flipping a house means the temporary owner has to commit to making repairs or renovations to increase the house’s value, and other times it simply means holding on to the property until you can sell it for more than you initially bought it for. To be successful, you must be able to spend your money wisely and invest in properties that are below market value. The goal is to buy low, sell high, then earn a profit in a relatively short amount of time — usually within a few months.
There are many positive aspects associated with flipping houses. When executed correctly, flipping houses has the potential to net you an extremely large profit in a short period of time. You have the ability to put as much time and effort into it as you’d like. Some use it as a means of creating a secondary revenue stream, while others transition into house flipping full-time. It can also be a fantastic opportunity to build your network, through interactions with realtors, contractors, attorneys, and other investors, and it will undoubtedly increase your overall knowledge of the real estate industry.
With that being said, there are also negative characteristics tied to house flipping. The listings that you come across will likely have significant issues that need to be addressed before you can resell. There may even be underlying issues that you don’t notice until you begin renovations and repairs, such as mold, asbestos, or termites, so make sure to check thoroughly. There’s always the risk that you could suffer a financial loss if you end up investing more in a house than you originally expected, which is extremely important to be aware of.
So, now that you understand the fundamentals of house flipping, let’s look at the variables that determine how many houses you can flip in one year.
How much money/capital do you have to work with?
One of the most obvious factors that will impact the amount of houses you are able to flip in one year is the amount of money, or capital, that you have to work with. Even though you are able to fund up to 90% of the investment property with a hard money loan, you will still be required to invest some of your own personal money.
As you can probably imagine, capital plays a huge role in the amount of houses you’re able to flip consecutively and simultaneously. For example, if you have an abundance of capital at your disposal, it may be possible for you to flip multiple houses at one time. On the other hand, if you’re working with a limited amount of money, you may only be able to take on one house flipping project at a time, requiring you to work in a linear fashion, as opposed to simultaneously.
The amount of money, or capital, that you have to work with when flipping houses will vary from person to person, and it’s important to remember to strategize what will work best for you financially, and to not overextend yourself and take on more than you can handle.
Your ability to locate undervalued properties can also affect the amount of houses you’re able to realistically flip in one year. This is one of the most difficult steps in the house flipping process, and if you can find a way to quickly and efficiently find homes that have the potential to be flipped, you can maximize the number of properties you can flip in one year.
There are a number of ways to locate houses for below-market price in your area. The first thing you should consider doing is using your network. While it is not always a 100% guarantee that you will find a house to flip this way, there’s always a chance that you may find a lead or two by communicating with others in your community. Believe it or not, word of mouth is still important, and if you know the right people, there’s a possibility you can find out about deals as they are hitting the market.
An excellent way to connect with other real estate investors and realtors who have access to valuable information is to join a community real estate group. The chance of locating a great property alone makes it worth joining, and it can also serve as a fun and informative way to network with others in the industry.
There are also a number of online resources that you can use to assist you in finding the right property to flip.
FlipScout is essentially a free house flipping search engine that allows you to calculate flipping costs automatically, see ROI and rental income instantly, and aggregate results from various sources. Zillow’s Foreclosure Center is another valuable resource for those who are looking to buy and flip houses. This feature allows you to search Zillow’s entire database of pre-foreclosures, foreclosure auctions, and bank-owned properties in your community. Foreclosure.com can also prove useful for those in the house-flipping industry. It is a real estate database consisting almost exclusively of foreclosure properties, with an extensive range of properties that can potentially be purchased below market value.
How much time do you have to work with?
Time can be an enormous constraint when it comes to determining how many houses you can flip in one year.
First off, you need time to find undervalued properties to purchase. Having a real estate agent assist you can speed up the process, but at the end of the day, finding the right property takes time.
Next, you’ll need time to renovate and repair the property. This can take anywhere from two to six months, depending on the condition of the house and the severity of the renovations needed.
Lastly, factor in your own availability. Are you a full-time house flipper, or do you use it as a side hustle? As a full-time flipper, you may be capable of committing almost all of your time into your business, enabling you to flip upwards of seven houses in a single year. If you only flip houses on the side, you may only be able to fix and flip one to three houses in a single year, depending on the time commitment required by each project.
Housing Market Conditions
Another important factor to consider when trying to determine how many houses you can flip in a year is the current conditions of the housing market. Unfortunately, this is something that you as a flipper will have little to no control over.
In a hot housing market, a house flipper may be capable of reselling a property within just a couple of days after putting it on the market for sale. However, they might struggle to find houses to flip because there is so much competition for houses in that market.
Alternatively, in a cold housing market, a house flipper might be able to find plenty of houses to purchase, but their flips have the potential to sit on the market for months while waiting for a buyer. In this case, if all of your capital is invested in one property, that means you can’t work towards flipping another house until you sell the one you’re currently working on, thus limiting the amount of houses you can flip in a year.
The amount of houses that you are able to flip in one year will ultimately differ from person to person. A multitude of factors will come into play, like the amount of capital and time you have to spend on each property, your ability to locate undervalued properties, and the current status of the housing market.
Start out with a realistic and manageable number of flips, like one to three houses a year if your lifestyle allows it, and slowly work your way up once you’re more comfortable with the process.
At the end of the day, it’s best to not rush and to go about it the right way. The more houses you flip, the more experience you will garner to use on future projects down the line.
Adam Smith has spent the last 5 years in the Private Money Lending world helping real estate investors secure financing for their non-owner occupied real estate investments. When he’s not thinking about real estate, Adam is an avid Jazz music fan and fisherman.