October 28, 2024 | 2.5 Minute Read
SECOND COMMANDMENT: MULTIPLE EXIT STRATEGIES
Knowing the After Repair Value (ARV) is essential. It may sound simple, but often the simplest steps are the ones most easily overlooked. Success in this business comes from doing these basics consistently—right up to building a million-dollar business if you’re willing to put in the reps.
Now that we’ve covered ARV in the first commandment, let’s dive into the next key element of flipping: having multiple exit strategies with three profit strategies.
Quick Recap: The Ten Commandments of House Flipping
Thou shalt know the After Repair Value (ARV)
Thou shalt keep multiple exit strategies
Thou shalt make offers daily
Thou shalt leverage the inspection period
Thou shalt not advance money to contractors
Thou shalt build relationships
Thou shalt master Other People’s Money (OPM)
Thou shalt view failure as a lesson
Thou shalt respect the game
Thou shalt be nice
Second Commandment: Multiple Exit Strategies
House flipping is what I often call the “gateway” to real estate because when deals are structured right from the start with the correct ARV, it opens up doors for endless possibilities.
We focus on three main profit strategies:
The $15K profit strategy
The $50K profit strategy
The $1M profit strategy
Each strategy can apply to any deal, and we follow them to maximize choices and potential profits.
The $15K Profit Strategy
In the U.S., the average profit from wholesaling is about $15K. Wholesaling involves putting a property under contract and then assigning that contract to another investor for a higher price. The difference is your profit. If you’re unable to move forward with a deal, you can wholesale it to another investor, an approach that relies on having a robust network.
I also love joint ventures as part of the $15K strategy. Here, you put a property under contract, partner with a team that has a strong buyer network, and split the profit. This way, you handle half the work for half the profit. I enjoy joint ventures because while contracting properties can be straightforward, finding the right end buyer can be challenging.
The $50K Profit Strategy
My favorite strategy? Flipping houses without using a cent of my own money. Whether the property is local or across the country, I approach it the same way, leveraging experts for funding, renovation, and sale.
Private lenders provide funding
Contractors handle the renovations
Real estate agents manage the sale
Title companies coordinate the transaction
With the average net profit from a flip around $50K, this strategy provides a solid boost to your bank account. Flipping lets us work on our business rather than in it and doesn’t have to consume a lot of time when done right.
The $1M Profit Strategy
Once you master the $15K and $50K strategies, you’re ready to pursue the $1 Million Profit Strategy. This process isn’t for everyone, but it can help reverse-engineer any financial goal.
Here’s the blueprint:
Select three markets
Recruit 10 agents per market
Make daily offers
Flip six houses in each market
Wholesale four houses in each market
Achieve millionaire status
This formula works. But building momentum and carving out a spot as a high-earner takes time. While some may close their first deal in their first week or wholesale/joint venture their first month, the journey to a million dollar business is one of persistence and grit. I hope this serves as a valuable guide in building your own business.
Next week, we’ll cover the Third Commandment: making daily offers, one of the most important KPIs in our business.