Bill Allen is the CEO of 7 Figure Flipping. Bill and his team currently flip over 200 deals per year in Tennessee and northern Florida. Bill helps lead top flipping and wholesaling coaching programs around the country.
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Why Wholesaling and Flipping?
Bill began in flipping unintentionally, as he was moving frequently due to his service as an active duty Navy pilot. The first flip was profitable, and Bill began flipping one property per year. Over the years, Bill has scaled up to 200 houses per year over the last four years.
Bill began by using the MLS, short sales, and estate sales. However, Bill has only purchased about eight houses off of the MLS in the last few years. Today, much of his business is direct to seller. 50% of this comes from Google and Facebook Ads, the other 50% is a direct mail campaign with some targeted lists. In the first year, Bill went from 1 house to 67 houses. He did this through direct mail.
Today, Bill's business is 80%-90% wholesaling. They moved away from flipping in the last couple years, primarily because they're all virtual. With properties all over the Eastern U.S., it's difficult to efficiently do more than just touch ups without an individual on the ground.
Wholesaling vs. Flipping
In wholesaling, there's a bit more flexibility with numbers. Some investors may be looking at a property with the intention to rehab and flip. As a wholesaler, you must also look at other options, such as a full demolition + lot split + new development, or an Airbnb. Working the numbers for these different types of projects can expand the pool of potential buyers.
In flipping, Bill prefers to stay away from more expensive homes. He looks for standard, 3 bed 2 bath homes with a median home price, sold by first or second time home-buyers. He mentioned that he has gotten burnt on $250K+ homes. There's a lot less eyes on expensive homes, depending on the market. The time on the market is longer, the price drops are larger, and the buying pool is smaller.
Bill believes that flipping and wholesaling are two separate businesses. Many investors split their focus and end up robbing each business to support the other. There are different skills required for each of these businesses.
As Bill saw more and more deals through the flipping and wholesaling business, he was interested in SFH rentals. He was self-managing these properties. He realized about 8%-10% return, but this areas was too slow and active for him. He sold these homes and moved that cash to syndications. As a real estate professional, Bill can use depreciation from these K-1s to offset his active income.
"They're two totally separate businesses. You have many wholesalers that try to flip and wholesale. Then you have flippers that also try and wholesale. I had to learn the hard way. My flipping business was robbing money from my wholesale business. I've seen it go the other way too."
Challenges in Flipping
About three years ago, Bill wanted to flip 50 deals a year. He had the deals and cash ready to go. He hired a project manager for Pensacola. He ran into trouble with accountability. With such high volume, some tasks ran out of order. There were holdups with contractors who were scheduled to do work but couldn't. For example, a plumber coming to install a bathtub when the tile isn't done yet. However, the deals were continuing to sell, so these inefficiencies were hidden for a while.
"Nobody thinks about your business or money like you do. Even if it's a partner or project manager, "inspect what you expect"."
Bill saw a sharp decrease in buyers for a couple of weeks when the Coronavirus crisis first hit. After that, about 10% of buyers started buying more than ever. About 50% of buyers were still active but looking for larger discounts. The rest of the buyers decided to hold off and wait until the election. Demand today is higher than it was 6 months ago - nothing is on the market.
Today, Bill feels the economy is propped up on a feather. There's nothing to support the levels of our current financial markets. Nobody in the government can get on the same page. There's still a major housing shortage in the U.S., and still many people behind on their mortgages. This will bring distressed sales, foreclosures and short sales.
The market is hot for fix and flip houses or rent ready homes. Mortgage rates are so low that everyone is looking to refinance and rehab their homes. In the short term, until major distressed sales, the market should remain hot for another few months.
"Now is the time to start building your knowledgebase and building your network. Build out a plan for yourself, a six-month marketing plan. Do you have money and time? If you have time and no money, you're going to have to go hustle. Focus in one area and own that area."
"Figure out your strategy and stick with it. It took me 4 1/2 months to get my first deal."
Learn more about Bill and his work: https://7figureflipping.com/