Flipping houses can be a lucrative real estate strategy—when done right. Success starts with a thorough understanding of all the costs involved and realistic expectations about the market.
A key to profitable flipping is factoring your desired profit into your maximum purchase price. Here’s a simple example to illustrate:
Market value when fully repaired: $200,000
Repair materials and labor: – $20,000
Holding costs: – $5,000
Agent selling fees: – $10,000
Closing costs: – $1,000
Desired profit: – $20,000
Contingency (“fudge factor”): – $5,000
Maximum purchase price: $139,000
At first glance, the gap between the $200,000 market value and the $139,000 purchase price may seem wide, but remember: properties needing extensive repairs typically sell well below market value.
Can you still make money flipping houses today? Absolutely. The market has changed—houses take longer to sell, and values can be less predictable than years ago. Flipping is no longer a guaranteed windfall, but with the right approach, it remains a profitable venture for years to come.
Here’s some essential advice for successful flipping:
Avoid low profit margins that risk negative cash flow.
Choose properties in good neighborhoods and steer clear of those needing major structural repairs.
Always get a thorough inspection before purchase to uncover hidden costs.
Plan your renovations based on the needs and preferences of the local market, not just your own tastes.
Keep emotions out of the process—treat it as a business investment.
At HomeWork, our experienced team is here to reduce the stress of flipping houses. We focus on delivering quality, efficiency, and expertise to protect your investment every step of the way.
