How a passive investor can flip houses for profits like Zillow is much the same as a turnkey property.
By Charles Sells
When the “big guns” get involved in a real estate strategy, the time has come for passive real estate investors to sit up and take notice.
Now that Zillow has decided to join the ranks of fix-and-flip investors, if you have not tried flipping for profits yet, the time has definitely arrived.
However, most passive investors think that flipping houses is simply not an option for them because the process is too involved. In reality, you can flip houses without direct involvement the same way you can invest in turnkey rental properties or equity funds.
The key is working with a company that understands how to make the process profitable and work for the passive-income investor.
What is Zillow Up To?
Before we get into your future in passive income from house flipping, let’s take a minute to look at what real estate data giant Zillow is up to.
With more than 4 million listings and more real estate data at its fingertips than just about any other online real estate service provider, when Zillow takes action, we watch, listen, and learn. They usually have unique insights that benefit any investor willing to take the time to break down Zillow’s strategies and evaluate the pieces individually.
In late February 2019, the company announced that Rich Barton would return to Zillow as CEO after nearly a decade. At that time, Spencer Rascoff, who co-founded the company with Barton and has served as Zillow chief since Barton left, stepped down. Barton started Expedia in 1994, launched the employment website Glassdoor in 2003, and founded Zillow in 2005. Rascoff remains on the Zillow board, but Barton will be running the show as Zillow ramps up its flipping business, which mimics the models of Opendoor and other ibuyers that buy quickly and at a discount, make needed repairs, then relist the properties.
Zillow believes it can perform this process even better than the competition because of the massive amount of real estate data the company can leverage in real time when making offers and assisting its “premier agents” with listings after the renovations are complete. Furthermore, nearly every buyer out there peruses Zillow at some point to get an idea of the value of a property even though most understand they also need a true appraisal, not just a Zestimate.
Here’s the really interesting part, however: Zillow says it expects this segment of its business to bring in $20 billion in revenue in the next five years. That where passive income investors should really sit up and take notice.
What Does That $20 Billion Have to Do With You?
As a passive income real estate investor, you probably have never seriously considered fix-and-flip real estate as an option.
After all, flipping a house is hard work! You’ve seen our before-and-afters at PIP Group. They’re beautiful, but we will tell you that a truly profitable flip project like our beach house mansion we recently listed, for example, requires a lot of attention to detail and, well, basic “maintenance” in terms of keeping an eye on budgets, contractors, and design elements that every seller demands these days thanks to the popularity of flipping shows and “reality real estate” television.
Good news on how a passive investor can flip houses for profits
The good news, however, that you can glean from Zillow’s involvement in flipping is that there are serious profits to be had from being involved in this process from a fundingangle. Do you think Barton or any member of the Zillow executive team is really going to handle any flips personally? Highly unlikely. What you can bet on, though, is that Zillow believes Barton will be able to create a reliable process and team to help him leverage the leads his website generates into profitable flipping deals.
Here is the thing to remember, however: Zillow didn’t ask you to get involved with their flips. They are not looking for passive partners. Zillow is mainly looking for agents, honestly.
They even have their own inside contractors and they definitely have their own funding. Furthermore, we suspect their plan may not pan out because it relies so heavilyon creating a win for the company mainly by offering the seller a speedy purchase in exchange for a low, lowprice. Successful real estate investing has always relied heavily on investors’ ability to create win-win situations for themselves and sellers. We don’t think Zillow can do that because they are just too big.
Learn how a passive investor can flip houses for profits
That’s where PIP Group comes in. If you have not been involved in the passive profits associated with flipping in the past, we can tell you with confidence that the time to act has arrived.
Because we are turnkey service providers, PIP Group handles the active side of the flipping process, including:
- Due diligence
Just like any other fix-and-flip project, these investments have attractively short timelines and average 9 to 12 months in duration.
Unlike other fix-and-flip projects, we historically deliver better than 20% net to our investors, whereas nationally, flipping profits are falling into the single digits in most hot markets due, in large part, to an over-population of investors unwisely trying to out-compete ibuyers like Zillow and OpenDoor.
At PIP Group, we offer investments in Georgia, South Carolina, North Carolina, and Illinois, and we know our markets personally. When you invest in flipping passively with our turnkey services, you can be confident that your project is being personally managed with your success, profit, and truly passive involvement top of mind at all times.