I looked at how things have changed in my business this year, I compared what I have done up to this point in 2016 to what I did the last few years, and I tried to figure out what has gotten me to this point. I have written about scaling in the past but this post is going to go a lot deeper. So, here is what I have come up with…
Last year:
In 2015, I did one flip and bought two rental properties. All three of these properties were purchased and renovated using cash. The flip sold quickly and I made a nice profit on that one. However, I spent a lot of time there and managed the project myself to save money on the renovation. For the rentals, I did a very light renovation, got them rented out, and performed a cash out refinance on them. Each property now cash flows around $500 a month and I only have $2,500 of my own money in one and about $20k in the other. You don’t have to be a rocket scientist to figure out that the cash on cash return for those two properties is great, not to mention the built in equity that I achieved. I thought this was a great year, until 2016.
This year:
This year we have done 10 flips, 8 of those are traditional flips with a full renovation and 2 of those are more of a wholetail deal. When I say wholetail, what I mean is that we bought it and either did no work to it or just a very light cleaning and put it right up on the MLS for a quick sale. Of these 10 projects, 2 have sold, 1 is closing in a few weeks, 4 are listed on the MLS, and 3 are under construction.
In addition, we have closed 12 wholesale deals where we have found great properties and turned them around to other investors for a small profit.
We currently have 11 properties under contract that will end up in one of the three buckets above depending on our exit strategy. 5 of these 11 will close by the end of next week. On average, we are putting 2 houses per week under contract, which is exactly where I wanted to be by the middle of 2017.
So, how did this happen? And most importantly, how did it happen so quickly?
I am going to break that answer down into 3 different sections because they really are the pillars of my business and what make us so successful.
To continue reading, check out the rest of Bill Allen’s blog post here: http://blackjackre.com/scaling2/
Written by Bill Allen, U.S. Navy
President of Black Jack Real Estate in Pensacola, FL