00:00:00:05 - 00:00:24:12
Unknown
Welcome back to the Seven Figure Flipping Podcast. I'm your host, Adam Whitney, the CEO of seven figure flipping and Blackjack real estate, where we've done over 1400 deals. And I'm on part for the finale today of the 2026 House Flipping Market report. All the market data in the world doesn't matter if the math you're actually using is wrong.
00:00:24:13 - 00:00:44:09
Unknown
Okay, so this is the final episode. I'm going to give you the exact underwriting rules that I think survived the 2026 market. The cushion you need to get on the by the rehab number, that kind of hides all the surprises. I'm going to cover all of this stuff. This is the finale of our four part market report series.
00:00:44:10 - 00:00:56:22
Unknown
Today, it's the deal map that survives. So let me bring it all home. Let's get into it.
00:00:57:00 - 00:01:13:06
Unknown
Okay. Buying for the cushion, not the hope. Segment one let's talk about this because rule number one, in my mind it's the most important thing in this entire episode with margins compressed. You buy for the cushion and you can't be smoking hoping.
00:01:13:09 - 00:01:38:17
Unknown
So the report puts an actual number on it. So you should be targeting at least a 30% gross equity cushion on the by minimum minimum. That means the gap between what you pay and the realistic ARV needs to be pretty big. Because honestly, in this market, you got no room for things that go a little bit wrong and they always go a little bit wrong.
00:01:38:17 - 00:01:58:23
Unknown
So the spread is made at the acquisition. You cannot renovate your way out of overpaying. I say this constantly and I'll say it again here. The profit on the flip is locked in the date you buy, not the day you sell. So if you overpay on the front end, there's really no granite countertop on the earth that's going to fix that problem.
00:01:59:00 - 00:02:19:02
Unknown
A great rehab on a bad by is still a bad deal. So in a ascending market, it's like a rocket ship going in outer space. You could certainly get bailed out. And many of you guys did in 2020, 2019, 2021. But the bell it's gone. It's just flat out gone. And the cushion is really your only protection now.
00:02:19:02 - 00:02:42:08
Unknown
So you went on the bike. Write that down. Take it to the bank, put it on your mirror and look at it every morning. That's it. Now let's talk about rehab. Right. This is really rule number two. And it's about your rehab budget. And there's a hidden landmine in the data here that I found. The working range for rehab plus carry is 20 to 33% of Army.
00:02:42:13 - 00:03:10:01
Unknown
That's a pretty wide range. And where you land inside of it depends kind of on your market and long days on market. Metro with a budget towards the top of that range and potentially having longer holding, longer carrying costs, all that kind of stuff is going to impact this. So here's the landmine. The median home being flipped right now was built in 1978.
00:03:10:05 - 00:03:33:06
Unknown
Let that sink in. Where are your houses that are getting flipped at in terms of year built? So this is actually the oldest on record. So think about what that means to you. Cast iron plumbing knob and tube wiring asbestos. Think about those codes. And when they were put in in your market. And it's different everywhere. Foundations that have 45 plus years to move.
00:03:33:07 - 00:03:55:08
Unknown
I mean, they've been sitting there for a while. Old houses hide their problems until you open up those walls and then they're your problems. So this is why your due diligence has to be tighter than it was even five years ago. The housing stock across the country is aging now. Your market might be a little different, but do you know what it is?
00:03:55:10 - 00:04:15:01
Unknown
I can tell you, in Pasco County, Florida, over 50% of our houses are 1970 or newer, and a large chunk of that's in the 2000 or newer range. So you don't want to get caught with likes. You got all this old surprise, you have all this old supply and your rehab costs are going up. You got to underwrite for it.
00:04:15:01 - 00:04:37:10
Unknown
So you got a budget realistically, and inspect like the house is hiding something from you. 1978 is pretty vintage, and your rehab costs are going to be meaningful if you're not doing this. Okay? Rule number three is underwrite a longer whole time than you want to your gut and what you feel and what you've done in the past really doesn't matter.
00:04:37:12 - 00:05:07:14
Unknown
National days on market 49 days and rising in the cooling metros. We talked about on the last episode, 60 to 120 days and going up. So your gut, your feelings probably are from like 21, 22 and even into somewhat of 23. When you listed on Friday, I remember we listed a house in 23 on a Friday, had 60 showings, heel to toe ten offers that were asked that does not exist.
00:05:07:14 - 00:05:33:20
Unknown
So you got to bake this stuff in on the front end. Okay. Assume you might be one of these people that's got to be cut in prices like price. Well, all of those things know your number per day. Now this is a part of this underwriting part. What does it cost you per day to hold that property. And then you got to multiply that by a realistic hold time, not how you feel about the property.
00:05:33:21 - 00:05:56:12
Unknown
You got to be data driven. Okay. Cool. Now rule number four. And this is the one that kind of lets you sleep good at night in a soft market where every flip has a secondary exit strategy, some kind of rental backup, the data is really striking here. 71% of flippers now plan to hold more properties as rentals. Almost three out of four.
00:05:56:13 - 00:06:18:10
Unknown
That right there is a three out of four that's like crazy. This is where like operator, this is where you can see that the experienced operators are building in that floor for themselves and really executing on this principle why you should be thinking about what your contingency is to this is the principal here. If your flip doesn't sell, it should rent to carry itself.
00:06:18:13 - 00:06:38:23
Unknown
And I'm not talking about long term rental because sometimes that's too cheap. If you're in a higher priced market, can you short term, mid-term, etc. if you can follow this rule, it can really change everything for you. It's you're never going to be a forced seller, and a four seller is like somebody who's going to take whatever the market gives them, and it's going to be giving up a lot of equity here.
00:06:39:00 - 00:06:56:14
Unknown
Be more of a patient owner that waits. You're able to wait for the right buyer, the right season and just keep collecting those rents. So underwrite the rent number before you buy it, whatever kind of rental you're doing, not after the house. Don't don't wait until your house is not selling and go, dang. And I got to figure out what the rents are.
00:06:56:15 - 00:07:17:03
Unknown
That's a bad idea. And a soft or oversupplied metro. The rental backup is literally like having an insurance policy. And the beautiful part is, is if you buy that insurance policy doesn't cost you anything. It's not like real insurance, right? It's a contingency. And all you gotta do is check the rent comps, do a little bit of due diligence.
00:07:17:03 - 00:07:41:14
Unknown
Not hard to do. Okay. Now let's talk about the final two things. First, one, honestly is probably one of the most underrated deal killers in the entire country right now. And it's insurance in Florida and across like lots of parts of the Sun Belt. Insurance is the number one swing factor on it. Deal. And I'm talking about that are not just us two looking at the data.
00:07:41:14 - 00:07:52:13
Unknown
Premiums literally exploded over the last four years. And property some properties are not even insurable. Like it's kind of crazy if you think about it.
00:07:52:15 - 00:08:11:15
Unknown
Let's get a binding insurance quote before you buy a house. Let's understand what the insurance is like. You don't even have to have a deal under contract to be talking to the insurance agents. Now, in our community, we have a list of insurance agents who are best in market right now. But you got to go find that, right.
00:08:11:16 - 00:08:34:04
Unknown
That's really important. Get a real quote. Get a real quote. Get it in writing. Make sure you understand it and you underwrite for it. Now this is the last rule, and I'm kind of happy to end on it. Sell to the deepest pool of buyers. First time buyers are about 35% of all sales right now. And they they're loving the move in ready homes, especially the entry homes.
00:08:34:04 - 00:08:54:23
Unknown
They're using a lot of FHA financing. So what does that mean FHA financing? FHA means they're bringing 3.5% down. There's a reason they're doing that. Their income might not. And their cash and their bank may not be enough to do conventional. So they go to FHA. So you've got to be prepared to give concessions. You got to underwrite concessions okay.
00:08:55:00 - 00:09:17:06
Unknown
So if you can if you can think about this, you can have a rent exit and you're underwriting for concessions and you understand insurance, like you're going to be in a really good spot. And for you, let's like who moved my cheese? Where's the money? Find the deep buyer pool for your finished product. And that will help you with the faster, cleaner exit.
00:09:17:07 - 00:09:44:02
Unknown
Now if you want to read this full report for the 2026 House Flipping Market report that we have, simple, just click the link in the show notes. It costs you nothing, I just I love the data. I'm passionate about it. And I think, you know, you guys should you guys should pick this report. Hold on to it until next year and then tell me none of this stuff turned out to be true or man, this was spot on.
00:09:44:02 - 00:10:06:21
Unknown
I'd love to hear that. So let me tie this whole series together. In episode one, we talked about this being rebalancing, not a crash, an episode two. We talked about how kind of the map flipped and the spread left the Sun Belt in three. We talked about market selection being the game. That's the game there. And then today we talked about some of the things influencing the deal.
00:10:06:21 - 00:10:35:06
Unknown
Math by for cushion budget for those old houses, the insurance, the rent backup, all that stuff. So do all of that. And you're you don't have really a good reason to be afraid of this market. You're being. This is like what we talk about when we talk about operational excellence. So here's your final homework. Your final homework. Take your most recent deal or one you're looking at or your next deal and run it against these five rules from today.
00:10:35:07 - 00:10:53:11
Unknown
Be honest about where it's been. Be honest with yourself. Now drop a comment and tell me which of the five rules your weakest on on that deal. For most people it's a lot. It's the longer hold in the insurance. That's the one that bite people, right? I'll read the comments. I'll come back to you. Let's have some dialog.
00:10:53:11 - 00:11:11:07
Unknown
Now if you're listening on Apple or Spotify, do me a huge favor. Please go leave us a five star review. It helps me to see and get in front of more investors to share awesome information with. So really appreciate you guys. Thanks for tuning in to this series and I'll see you guys on the next one.
