Flipping Houses For Maximum Profit – Ultimate Guide (2022)

Flipping houses for maximum profit is something that I have been doing successfully for more than 12 years.

In this guide, I will explain what house flipping really means, the opportunities that exist for fix and flip in 2021 and how to start flipping houses.

Real estate flipping can be a very profitable activity, but as an experienced real estate investor I want you to understand what is involved and where it can all go wrong.

I want you to succeed with property flipping as I have, so I will share my experiences with you in this guide.

Successfully flipping houses for beginners and even experienced real estate investors can be a real challenge so you will find that I have left no stone unturned in this post.

What are my qualifications to write this post?

Well, I am a real estate investor with a dozen years of experience in the industry and over my time, I have successfully bought and flipped many houses for profit.

The profit on cost that I achieved with one of my recent flipping homes projects was a very healthy 18% and with another recent house flipping project I was able to achieve a profit on cost of 17.5%.

I would have loved to achieve my target of 20% but often changes in the market or unforeseen issues happen, and these affect the bottom line.

It only took a few months to realize these gains and some good profits were made, so the projects were very worthwhile in the end.

Keep reading to discover…

1. What is House Flipping? Flipping Houses meaning.

House flipping is a simple concept to understand. You purchase an investment property, rehab it to bring it to a saleable standard and then sell it for a profit. Your aim is to hold on to the property for the shortest amount of time possible and realize the largest profit.

Although it is possible to make a profit flipping a house without any rehabbing work, these opportunities are rare. It is much more likely that you will purchase an investment property that requires renovations to make it an attractive purchase. Buy low and sell high is the name of the game with flipping a house.

2. Is House Flipping Viable right now?

The Covid-19 pandemic has had a significant impact on the real estate market in the United States. It has resulted in there being less properties available because home owners assumed that less buyers were available.

People removed their property from the market because they were concerned about exposure to Covid-19 when they were showing their home to prospective buyers. This has all lead to a real shortage of properties for real estate investors to fix and flip.

Prior to the coronavirus pandemic, real estate flipping was on the rise in the US. For the first quarter of 2020, ATTOM Data’s report shows over 53,000 single-family properties and condos flipped. This was up by 6.3% on the final quarter of 2019. It was also the largest number of completed house flipping projects since quarter two of 2006.

The second quarter results for 2020 showed a slight decline in the number of completed house flips. This was due to lockdowns and social distancing regulations. Covid-19 also caused a rise in unemployment which affected the number of real estate purchases.

US mortgage rates fell to their lowest in history due to the coronavirus pandemic. Combined with the increased demand for home purchases, this means that real estate investors that want to fix and flip have an opportunity for higher profits. Rising house prices and lower mortgage rates are an ideal combination for successful property flipping.

So, the bottom line here is that there are still very good opportunities for flipping houses in the United States despite the Covid-19 pandemic. House flipping remained pretty resilient in 2020, and there are signs that this will improve in 2021.

3. Make a Commitment to Flipping Houses

If you want to be successful with house flipping and turn good profits then you need to make a serious commitment to it. The profit on cost numbers that I achieved from 17.5% to 18% are conservative and there is certainly scope to achieve better returns than this.

This should really excite you to the possibilities that flipping a house can bring.

You cannot go into buying and flipping houses in a half-hearted way. This is a great opportunity for you to make a lot of money in a relatively short time period so you need to take it seriously.

Fix and flip needs to be treated as a business and not a hobby that you do in your spare time. Make sure that you are totally committed to the house flipping strategy.

Your total commitment is necessary because things are going to go wrong with your house flipping projects. When things don’t turn out as you planned them you need to call on your resilience to overcome problems and bounce right back.

This will mean the difference between making a healthy profit and potentially losing money.

4. Invest in your Flipping Houses Education

One of the foundations of my success with real estate investing and property flipping is my commitment to continuous learning.

Despite being in the business for a number of years, I am always keen to learn new things and you need to make this commitment as well.

The real estate market is always changing and there are new strategies for successfully flipping houses emerging on a regular basis.

Reading this flipping houses for beginner’s guide in full is just the first step for you. There is a ton of good information available online as well as training courses and books that you can read.

When was the last time that you read a book? Don’t be embarrassed if this was in college. There are some great books available on house flipping now and I encourage you to read them.

If you don’t have a lot of time then there are audio versions of a lot of the books available.

Getting a mentor for my real estate investing business was one of the best things that I ever did. I still use mentors today. It is a great comfort to me to know that I can turn to someone that has more experience than me to bounce ideas off and get answers to questions that I need. If you have the chance to get an experienced fix and flip mentor then grab this with both hands.

A word of caution here. When I first started with real estate investing and house flipping, I spent too much time learning. You need to get the balance right so that you spend most of your time “doing” and some of the time learning. There are no percentages that I would recommend here. Whatever feels right to you is the answer.

5. Due Diligence and Research

If the thought of spending a lot of time on researching the market and performing due diligence does not appeal to you then flipping houses for a living is probably not for you. Not performing the appropriate research and due diligence is a recipe for disaster.

I have the t-shirt to prove this!

In my early days as a real estate investor a friend of mine in the business recommended that I invest in a couple of properties that were primed for fix and flip.

I wasn’t familiar with the area where these properties were located and instead of thoroughly checking everything out for myself, I decided to go with the recommendation of my friend.

This was a big mistake. It turned out that I paid far too much for these properties and that my friend had significantly underestimated the rehabbing costs involved.

As a result, I had to invest a great deal of time and effort into this “hands-off” house flipping project just to break even on my investment.

Am I saying that you should never trust the recommendations of others that have more experience than you do? No, I am not saying that.

What I am saying is that you have to perform your own research and due diligence to be confident that a “flip that house” opportunity is right for you.

Once you have decided which location you will look for good property flipping deals you need to thoroughly research the area. Even if you believe that you know the area really well you must do this.

Never assume anything when you are buying and flipping houses.

House prices vary considerably across the country. For some locations, buying a good property for $250,000 would be a very good deal whereas in other locations this price would be considered expensive.

Make it your business to know the market prices in the areas that you decide are the best for real estate flipping.

Here are some good questions to ask about any potential fix and flip location:

  • What is the selling price for average properties in the area right now?
  • What are lender owned properties (foreclosures etc.) selling for right now in the area?
  • What is the average time to sell a property in your chosen area right now?
  • Are some areas selling properties faster than others?
  • What types of properties are selling the fastest (size, layouts etc)?

These are the main questions to ask but you can come up with more. Get out and about in your chosen area and gain a real understanding of the market.

Talk to realtors and other local experts about house prices and what is happening with the local economy.

I will discuss due diligence later in this guide. Always remember that you cannot do too much research if you want to be successful with flipping a house.

Your profits totally depend on you making the right decisions so keep this in mind at all times.

6. Know your Numbers for a Successful Fix and Flip

You need to decide what returns you want from flipping houses. If you don’t do this then you will not be able to easily assess whether a potential house flipping deal is right for you.

This is flipping houses 101 and it is the foundation of your success.

What may seem a good real estate flipping deal to me may not look like a good deal to you and vice versa.

When you know your numbers and you have created your personal house flipping spreadsheet, you can easily identify the maximum that you should pay for a property, your budget for rehabbing and the selling price you need to achieve your ROI goals.

This is a useful house flipping calculator to get you started. Here you can play around with different numbers so that you can know what to expect from a hypothetical flipping houses project.

It is essential that you understand how all of the numbers work here.

By creating your own flipping houses spreadsheet that includes your minimum acceptable ROI, you can then just plug in the numbers for any potential deal and you will know in seconds if it is worth spending your time on or not.

7. Set up your House Flipping Team

Although you can do a lot yourself with house flipping, you cannot do it all. You need to have a virtual team that you can depend on.

It is not necessary for you to get everyone on board at the start, but your virtual team could consist of:

  • A good realtor to help you find flip deals
  • A good mortgage broker to help you arrange finance for purchases
  • A good lawyer or title company to ensure all of the legalities are taken care of
  • Reliable contractors that will provide accurate estimates and complete rehab work professionally and on time

Financing your real estate flipping deals is very important. If you have the necessary cash at your disposal then you do not have to concern yourself with this.

Most people will not be in this position so I strongly recommend that you find at least one competent mortgage broker and can find the best deals for you.

Not all lenders will be keen to arrange a mortgage on a flip property. If a house requires a lot of renovation, then many lenders will pass on this.

Good mortgage brokers will find you lenders that specialize in financing flip projects.

If you want to raise money yourself then you can use the equity in your own home if this exists to organize a home equity loan.

There are also hard money lenders available but I suggest that you use these as a last resort.

Flipping houses with no money is possible if you can find the right joint venture (JV) partners. Your part of the deal will be to use your expertise to find good properties for flipping and to manage all of the rehabbing.

A JV partner will provide the necessary financing to purchase the property and fund the renovations as their part of the deal.

Even if you have the skills to carry out the rehabbing work yourself, it is still advisable for you to find good contractors in the area.

Going forward, you want to focus on flipping more homes and then leaving the renovation work to competent contractors. Your time is your most precious commodity so use it wisely to find more fix and flip deals.

8. Find Flip Deals that have Potential

The first step with finding good potential flip deals is to define what a good flip deal looks like for you. Your research will help you out a great deal here. It is essential that you choose investment properties in areas where people are looking to buy, so when defining your ideal house flipping deal take these things into consideration:

  • The maximum amount that you will pay for a flip property
  • The minimum amount that you will pay for a flip property
  • The minimum and maximum number of bedrooms that an ideal property will have

After defining this you are ready to start looking for real estate flipping deals. I recommend that you are fairly broad with your deal definitions as you may come across a property with two bedrooms that you could easily convert to three bedrooms for example.

Talk to your realtor and let them know what your deal specifications are. They will arrange for you to receive property listings within your specifications that you can filter with your house flipping spreadsheet. Quite often a realtor will send you automated emails about suitable properties that come on to the market.

9. Analyze the Deals you Receive

I want you to remember something very important from this post:

Real estate investment is a numbers game

It is essential that you properly analyze all of the potential fix and flip deals that come your way. I suggested that you create a flipping houses spreadsheet so that you can run your numbers fast. If a property seems like it could be a good fit for your next flip project, don’t just dismiss it on the basis of price. Everything is negotiable.

Of course, you need to take a realistic view here. If you are willing to pay $150,000 for an investment property and the owner has it listed for $300,000 then they are never going to come down to your price. But if a seller wants $180,000 and the property has been on the market for some time, then there is a good chance that you can agree on a deal.

Your continuing education in the real estate market will serve you well here. It is easy for you to get a handle on the true value of properties by using a website like Realtor.com or Zillow.com and start gathering data on similar properties and the prices that they sell for. This will increase your confidence when it comes to making offers.

You can find possible fix and flip properties when you go to the websites I mentioned and you can also sign up for MLS listings. I recommend that you go to the area that you want to find a property suitable for house flipping in and attend walk-throughs if these are available and ask a lot of questions.

Once you have chosen your desired area for potential real estate flipping properties, get in your car and drive around the location to see what is available. Look for vacant properties and those that are in need of renovation and rehabbing.

Never get emotionally attached to a property that you think is a good candidate for property flipping. You are not going to purchase the property to live in yourself so don’t let your emotions take over. Always analyze every opportunity by the numbers and you won’t go far wrong.

It may take months before you find the perfect house flipping opportunity so you need to be prepared for this. I have seen many newcomers to the fix and flip game rush in to purchase a property at too high a price because they did not have the patience to wait. You are going to lose money if you do this.

Always stick to your criteria for a good house flipping prospect. Believe me when I tell you that it is much better to wait a little longer than to jump in and make a decision you will regret due to impatience. You are in the flipping houses game to make the highest profits possible. Remain calm at all times and run your numbers for every flip property opportunity.

10. Get the Best Deal

When you find an investment property that meets all of your criteria for a flip then it is time for you to make an offer on it. This can be a nerve-wracking time if you are new, but you need to hold your nerve and make the right moves.

For every offer that you make to a seller, you need to furnish them with the following information:

  • What you want to pay for the property
  • When you want to close the deal by
  • How you will finance the deal
  • Who pays what when it comes to closing costs
  • Any non-negotiable contingencies that the deal relies upon such as an inspection

When you provide this information to the seller of a property, they are going to know that you are serious which is what you want. There is nothing particularly difficult in creating this information. If you are working with a realtor then they will help you to put your offer together.

If this is your first time then you may want to use the services of an expert to look over your offer documentation. A realtor or a real estate lawyer will normally do this for you. It will cost you money of course, but you will learn a lot from their critique of your offer.

It is very important that you include at least one contingency with your offer. This is something that will be a deal breaker and offers you an escape clause. An inspection of the property by an expert is a common contingency. Be careful not to load your offers with too many of these contingencies or sellers will not want to deal with you. Don’t go with too few either.

Again, an experienced realtor or real estate attorney can help you here. You can also learn more about offer contingencies online. The most common contingencies that occur in offers are:

  1. Inspections – a qualified inspector needs to check the property to uncover any problems
  2. Appraisal – here you will insist on a qualified appraisal of the property value
  3. Raising finance – if you are unable to raise the necessary finance to purchase the property then you can back out of the deal

Sometimes you might here that a real estate investor makes an offer for a property without any contingencies involved. This does happen, but it is not something I would advise you do if you are new to flipping houses. It is a risky strategy that only experienced real estate investors should make to increase the strength of their offer.

If the seller of the property is interested in your offer, then they will provide a counter offer. This will reveal what they want from the deal. You have the right to reject any counter offer or send them another counter offer after considering everything. In most cases, you need to be prepared to expect counter offers. It is rare that a seller will just accept your initial offer.

You have now entered the negotiation phase of the deal. This can be a stressful time and your emotions can take over if you are not careful. Always remember to stick to your numbers. Never just raise your price just to make a deal. If you cannot agree a deal with the seller there will always be other opportunities.

Just because you walk away from a deal does not mean that it will never happen. I have had cases where my initial offer was rejected, only to have the seller come back to me several weeks later as they have not sold their property. A seller should always be more motivated than you when it comes to a property transaction.

11. Seal the Deal

When you agree an offer with a seller it is time for you to seal the deal. This involves you paying the “earnest money” so that everything is on an official footing. If a realtor tries to persuade you to provide the earnest money with your offer, then I would advise against doing this. It is unlikely that you will know and trust the seller so don’t give earnest money until you agree a deal.

To find the right house flipping property you will probably need to make quite a few offers. If you listen to your realtor and provide earnest money with all of your offers you will soon run out of cash! You will not provide earnest money directly to the seller. Instead, you need to find trusted third party to hold this money such as an attorney or title/escrow company.

It is likely that you will use a title company but, in some states, you can use an attorney. The goal of these third parties is to close the real estate deal. They will perform checks for any liens and any other issues with the property title. In addition to this, they will prepare all of the necessary paperwork and arrange for both parties to sign.

Once all of this is done you will be under contract.

12. Prepare for Successful House Flipping

As soon as your property is under contract it is time for you to take action. First on your list is a house inspection. You need to hire a professional inspector right away to check everything. It will cost you around $400 to $600 for an inspection of a single-family property. Make sure you are on site when the inspector arrives as you will learn a lot from the experience.

There is no such thing as a perfect property so expect to receive a detailed report from your inspector. If a property has major issues, then you need to know about this so that you can back out of the deal (as long as an inspection was a stated contingency in your offer) and it is the job of your inspector to identify such problems.

Most of the time the inspector will report on minor problems that you already knew about. It is not necessary for you to fix all of these problems. When you receive the report from your inspector you basically can do three things:

  1. Accept the condition report and move forward with the purchase
  2. Reject the property for a serious problem and walk away
  3. Renegotiate after discovering problems

You can ask the seller if they are willing to fix any serious problems before you make a purchase. Or you can go for a reduction in the price. Once the seller is made aware of the problem, they have to disclose this to any other potential buyers by law. They are likely to want to renegotiate with you.

After agreeing to move forward with the purchase of the property you need to create a scope of works list that includes everything that needs doing to make the property saleable. If you are not experienced in this area then find a qualified contractor to help. You do not want to make any big mistakes here or it can wipe out your profit potential.

This is also the time to perform your due diligence on the property. Here are some examples of the due diligence you need to perform:

  • Ensure that there are no outstanding debts and that the utilities are paid up
  • Sign the necessary documents provided by the attorney or title/escrow company
  • Purchase the necessary insurance for your property e.g. hazard insurance
  • Schedule the rehab work

13. Manage the Rehabbing

You are in charge of the rehabbing work whether you are going to do it yourself or use contractors. Your profits are on the line here, so you need to ensure that all rehab work is performed on time and within budget.

During the rehab work you need to ensure that you pay all of the necessary bills such as your contractors, suppliers and utilities. Compare your bills to the budget you set for the rehab. You need to be organized here to stay on top of things. Having a lot of receipts, estimates and other documents is normal with flipping houses.

Unless you have perfect contractors (trust me they don’t exist no matter how much you pay) there are going to be things that they overlooked. So, you need to create a “punch list” and ask your contractor to sort the items on the list out fast. Hold an amount of money back from your contractors until they complete the items on the punch list to your satisfaction.

14. Sell your Flip Property

This is the exciting bit. Your flip property is ready to sell and you are close to realizing your return. In order to sell your property in the fastest possible time there are a few things that you need to do:

  • Use staging – this is where you place furniture, nick knacks, wall art and other objects in different rooms of the property so that it looks more “lived-in”. There are professionals you can hire to do this for you if you wish
  • Work with your realtor to list your property on the MLS
  • Ensure your realtor does their job – make sure that your realtor makes every effort to sell your property fast

When you start to receive offers on your flip property it is not time to celebrate just yet. The reality is that around half of the offers you receive will go nowhere. Analyze the offers you receive and dismiss any patently “low-ball” offers. For more serious offers, check to see what contingencies exist.

It is likely that you will want to make a counter offer to those that are serious. You can always expect this when selling a property. Some offers will fall by the wayside and eventually you will agree a deal with a buyer.

The potential buyer will want a home inspection and will perform the due diligence that you did when you first purchased the property so you will need to wait for these things to happen. After closing there will be costs to pay and taxes.

15. Avoid these House Flipping Mistakes

A lot of people make mistakes with flipping houses. Here are some of the most common ones that you need to avoid:

  • House flipping is not easy. If you go into real estate flipping thinking that it is all easy you are likely to lose a great deal of money or at best, not make anywhere near the profit that you should make.
  • Underestimating the money that you need. If you run out of money during a fix and flip project this can be a disaster. When you are creating your budget, my advice is to double it at least once. You must complete the rehab to be able to sell the property for top dollar and make the most profit.
  • Not treating flipping houses as a business. House flipping for profit is not a hobby and something that you work on “when you have the time”. You are either serious about it or you are not. Half -hearted house flips rarely turn out well.
  • Mot having the right team. You cannot do everything yourself no matter how good you think you are. Yes, you can find properties yourself and do the rehabbing work but this is not a sustainable strategy for long-term profits with flipping homes.

Successful house flipping is common sense and you need to plan your moves carefully. It is not for the work shy or the feint of heart. You will need to take some risks, but if you do your homework, you can minimize risk significantly.

My Final Thoughts on Flipping Houses for Maximum Profit

House flipping is still very much alive in the United States today. You can make significant profits if you do everything properly. Research and planning are essential. Always remember that to be successful with flipping houses you must treat it as a numbers game.

3 thoughts on “Flipping Houses For Maximum Profit – Ultimate Guide (2022)”

  1. Nick Nakolina

    I started getting into house-flipping back in 2009 when the market was at a low point. I was able to get started on my first property right away. I bought a foreclosed home for just 34k. It took me some time since I started out on my own and I didn’t get it finished until 2011 but it ended up selling within 3 months of being on the market. I sold it for $230k! Considering I only put around 90k into it, I made over a 100k profit. From there my brother and I started working together. We ended up getting a few friends on the team and even with splitting the profits, we all do well. I think it is worth it if you can stick it out. We have had some bad investments but you can make most things work out with a bit of money and time. You explained everything great here and I would not be surprised if you convinced others to give this a try.

    1. Harvey Raybould

      Thank you Nick for sharing your experiences. Thank you for your kind words too.

      All the best Harvey

  2. K. Anderson

    Thank you so much for this information on house flipping! My husband and I have been looking into our options for a while now. We wanted to start in 2020 but everything got delayed because of the virus. I am trying to gather all the information I can before we start. Since I was laid off and he is only working part-time, now is the perfect opportunity for us to start on the next chapter of our lives as business partners. You have given me so much valuable information and for FREE which I really do appreciate! I will be coming back to this site again and again. I can tell you are a very knowledgeable man on the topic.

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