- Check out the fix and flip 10-year financial model template I built.
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1. Executive Summary
Concept. Acquire distressed single‑family homes in affordable, high‑velocity U.S. metros (e.g., Sunbelt and Midwest “secondary” markets), add value through targeted renovations, and exit within ~6 months per property.
Mission. Generate strong risk‑adjusted returns while revitalizing housing stock and local neighborhoods.
10‑Year Vision. Scale from 4 flips in Year 1 to ~120 flips in Year 10, delivering cumulative after‑overhead profit of roughly $12 million on less than $5 million of peak equity exposure.
In the template linked at the top, you will have an 'operating cash balance' where you can manage how much equity you end up needing over time based on the assumptions and scaling inputs for up to 3 property types.
2. Market Opportunity
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U.S. home‑flipping volume has averaged 7–8% of all single‑family transactions in recent years, with gross returns consistently 25‑30% of purchase price (ATTOM, Freddie Mac data).
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Tight post‑COVID housing supply, aging inventory, and persistent demand for move‑in‑ready starter homes underpin the strategy.
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Technology, remote management tools, and nationwide hard‑money liquidity reduce historic barriers to multi‑market scale.
3. Competitive Advantage & Strategy
| Pillar | Approach |
|---|---|
| Acquisition | Proprietary data model screens MLS, auctions, wholesaler lists at <70% ARV minus rehab. Target median‑priced homes to maximize buyer pool. |
| Execution | Repeatable “scope book” for kitchens, baths, mechanicals; local GC partnerships locked in at per‑line‑item rates. |
| Capital | 80% LTC hard‑money loans (10% APR, interest‑only), balance funded by sponsor/investor equity. Revolving credit facilities introduced once 25‑deal track record established. |
| Risk Control | 15‑point due‑diligence checklist, 10% contingency baked into budgets, builder’s risk & GL insurance on every project. |
4. Operations Plan (by scale phase)
| Phase | Deals/yr | Core Team | Key Systems |
|---|---|---|---|
| Pilot (Y1) | 4 | Founder + 1 project mgr (fractional) | Google Sheets / Excel underwriting, QuickBooks, Trello for rehab tracking |
| Build (Y2‑Y4) | 8 → 25 | Add acquisitions lead, GC liaison | Custom CRM, monday.com, outsourced bookkeeping |
| Optimize (Y5‑Y7) | 36 → 64 | Regional managers, in‑house designer | ERP (e.g., Buildium), PowerBI dashboards |
| Scale (Y8‑Y10) | 81 → 120+ | Cross‑functional VPs, centralized accounting | Proprietary deal‑flow API, AI‑driven pricing analytics |
5. Marketing & Exit
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48‑hour listing turnaround post‑completion via retail agents (6% broker fee assumed).
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Cross‑list on Zillow, Redfin, social media reels showcasing “before/after.”
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Early‑payment incentives for buyers’ agents to reduce DOM below area medians.
6. Financial Model – Base‑Case Assumptions
| Metric | Per‑Flip Input |
|---|---|
| Purchase price | $200,000 |
| Rehab budget | $60,000 |
| All‑in cost | $260,000 |
| Resale (ARV) | $320,000 |
| Gross profit | $60,000 |
| Financing (6 mo, 10% on 80% LTC) | $8,000 |
| Selling fees (6% of ARV) | $19,200 |
| Holding & utilities | $5,000 |
| Net profit / flip | ≈ $27,800 (≈ 11% ROI on cost) |
Corporate overhead starts at $100k and grows as headcount expands (details embedded in projections).
7. 10‑Year Projection Snapshot
| Year | Flips | Revenue($ M) | Net Profit ($ M) | Peak Equity Needed ($ M)* |
|---|---|---|---|---|
| 1 | 4 | 1.28 | 0.011 | 0.4 |
| 2 | 8 | 2.56 | 0.097 | 0.8 |
| 3 | 16 | 5.12 | 0.289 | 1.6 |
| 4 | 25 | 8.00 | 0.500 | 2.5 |
| 5 | 36 | 11.52 | 0.757 | 3.6 |
| 6 | 49 | 15.68 | 1.057 | 4.9 |
| 7 | 64 | 20.48 | 1.444 | 5.0 |
| 8 | 81 | 25.92 | 1.883 | 5.0 |
| 9 | 100 | 32.00 | 2.374 | 5.0 |
| 10 | 121 | 38.72 | 2.917 | 5.0 |
*Peak equity = 20% down payment on purchase plus 100% of rehab; capped at $5 M because capital is recycled every ~6 months as projects sell.
Highlights
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Cumulative after‑overhead profit ≈ $12 M over the decade.
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Operating margin improves from ~1% in the pilot year to ~7% by Year 10 as overhead is diluted.
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Debt‑to‑equity remains under 4:1 (80% LTC), satisfying most private‑credit covenants.
8. Funding Roadmap
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Seed (Y1‑Y2) – $1 M friends‑and‑family equity, matched with $2–3 M hard‑money revolver.
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Growth (Y3‑Y5) – Institutional JV or mezzanine line to add $5 M capacity; founder equity diluted to 70%.
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Institutional (Y6+) – Warehouse facility or small‑cap private‑equity partnership; issue preferred units to back office build‑out.
9. Milestones & KPI Targets
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Cycle time: ≤ 180 days acquisition → sale (target 150 days by Y5).
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Average net margin: ≥ 10% of ARV within three years.
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Lead‑to‑deal conversion: ≥ 3%.
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DSCR: ≥ 1.4× at portfolio level.
10. Key Risks & Mitigations
| Risk | Mitigation |
|---|---|
| Market downturn | Maintain 30% buffer below appraised ARV; hold‑to‑rent fallback with DSCR loans. |
| Rehab overruns | Fixed‑price GC contracts, 10% contingency reserve, weekly site audits. |
| Liquidity crunch | Staggered closings, interest‑reserve escrows, multi‑lender relationships. |
| Regulatory changes | Engage local counsel; focus on low‑litigation jurisdictions. |
Next Steps
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Validate local deal flow: Underwrite 100+ prospects to confirm assumption that ≥5% meet target margin.
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Formalize capital stack: Secure term sheets for pilot‑phase hard‑money facility.
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Build investor deck & data room: Use these projections, add comps, include sensitivity tables (price drops, rate hikes).
Feel free to adapt the unit economics, pace of scale, or overhead curve to match your preferred geography and risk tolerance. If you’d like a fully linked Excel / Google Sheets model where you can tweak every driver (holding periods, leverage, rehab scope, etc.), just let me know—happy to draft one.
If you have an idea for your own unique scenario and need help with the financial model, I'm available for custom work here.
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Article found in Real Estate.
