How to Flip Houses for Beginners: The Ultimate Guide

If you've ever watched a house-flipping show and thought, I could do that, you're not alone. The pitch is simple: buy a rundown house cheap, fix it up, sell it for a profit. And it can absolutely work. According to ATTOM, the median gross profit on a house flip was around $60,000 in late 2025.[1]

But here's what those shows don't linger on: the permits that stall a project by six weeks, the contractor who goes AWOL after demoing the kitchen, or the market that softens right as you're ready to list. For every flipper who walks away with a big check, there's one who barely broke even or who lost money.

That doesn't mean you shouldn't do it. It means you should go in with clear eyes. This guide will help you figure out whether house flipping makes sense for your situation, how to run the numbers honestly, and what the process actually looks like from offer to closing — including the parts that tend to surprise first-timers.

What is house flipping?

House flipping is a real estate investment strategy in which you buy a home that needs improvements, renovate it, and then resell it for a higher price. The condition of the houses can range from those needing major repairs, such as a complete roof replacement, to those requiring only cosmetic improvements, like a deep clean and a fresh coat of paint.

House flippers focus on properties that might scare away the average buyer but have a lot of potential. For example, a house that has suffered from hoarding may struggle to find buyers looking for a place to live. But if that house is located in a desirable or up-and-coming area, it may represent an investment opportunity.

The key for many house flippers is time. Successful house flipping depends on purchasing and renovating properties quickly and then reselling them fast. The longer an investor holds onto a property, the more money they lose in maintenance, taxes, and interest.

How much can I make flipping homes?

The average gross profit per house flipped in the United States was $60,000 by the end of 2025.[1] However, profits vary greatly depending on local market conditions.

For example, among major cities, Memphis had the highest flipping profit margins at 75%, followed by New Orleans (72.4%) and Richmond, Virginia (72.2%).

Your profit will also be determined by how long it takes to flip the property. The longer you hold the property, the more money is spent on bills, utilities, and upkeep, all of which eat into your final profits.

In late 2025, it took an average of 161 days to flip a house, about five and a half months.

Is house flipping right for you?

Before you start pulling comps, it's worth asking a few honest questions. The investors who lose money on their first flip usually skipped this step.

You're probably ready if:

• You have enough capital (or access to financing) to cover the purchase price, renovation costs, and at least six months of carrying costs without draining your emergency fund
• You have time to actively manage a project, or money to pay someone who can do it for you
• You can walk away from a deal that doesn't pencil out, even after you've put time into it

You may want to wait if:

• You're counting on the flip to pay off debt or cover living expenses; the timeline is unpredictable enough that this is a real risk
• You've never managed a renovation before and don't have a contractor relationship you trust
• Your local market is softening; flipping in a declining market requires a much bigger margin of safety

None of this is meant to talk you out of it. It's just the conversation that a good mentor or investor-friendly agent would have with you before you wrote your first offer.

House flipping for beginners: Pros and cons

When done right, house flipping can be lucrative, with the average house flip generating tens of thousands of dollars.

Unlike a buy-and-hold strategy, where you rent out a property, flipping allows you to make a quick return on your investment, often in less than a year. Also, you don’t have to worry about the risks that rental properties bring, such as difficult tenants, evictions, or prolonged vacancy periods.

On the downside, flipping houses requires a large upfront investment in money and labor. You’ll not only have to come up with sufficient capital to purchase the property, but you’ll also need to budget for repairs and upgrades (and any potential surprises).

House flippers also face potentially high capital gains taxes, especially if they sell the property in under a year. Short-term capital gains is taxed at the same rate as your ordinary income, ranging from 10% to 37% (which could mean a tax bill of up to $37,000 on a $100,000 profit.)[2]

You’ll also be at the mercy of the market. While profits can be great when the market is red hot, demand can quickly collapse depending on economic forces beyond your control, resulting in a much smaller ROI or even a loss.

How to flip a house: A step-by-step guide

Step 1. Set a budget

Flipping houses isn’t a get-rich-quick scheme. You’ll need to budget in advance to account for not only expected costs but also unwanted surprises, such as a change in the market and repairs that can take longer and cost more than anticipated.

When budgeting, many investors aim for the 70% rule. This rule states that you should only pay 70% of a home's after-repair value (ARV) minus the cost of repairs.

For example, if a property has an ARV of $500,000 and needs $50,000 in repairs, you should only pay $300,000 for it (i.e., $500,000 x 70% - $50,000).

However, the 70% rule is just a general guide, not a hard-and-fast rule that will work in every situation. You’ll need to consider other expenses, such as permits, contingencies, inspections, and financing costs.

Also, don’t rush into a deal without doing your due diligence. For example, if an inspection raises issues that could increase the renovation budget, be prepared to walk away or negotiate a lower price.

What a full beginner budget actually looks like

Here's a realistic cost breakdown for a modest first flip so you know what you're actually working with:

Cost Category	Notes	Estimated Range
Purchase price	Set by 70% rule	Varies
Closing costs (buy side)	Title, lender fees, etc.	~2–5% of purchase
Renovation budget	Get 3 contractor bids	Varies by scope
Contingency buffer	For surprises — and there will be surprises	10–20% of reno budget
Holding costs	Mortgage/loan interest, property taxes, insurance, utilities	~$1,500–3,000/month
Permit fees	Often overlooked; varies by market and scope	$500–$5,000+
Selling costs	Agent commissions + closing	~8–10% of sale price

The number most beginners underestimate: holding costs. Every month you own the property, you're paying to carry it. On a hard money loan at 10–12% interest on a $200,000 property, that's roughly $1,700–$2,000/month in interest alone, before taxes, insurance, or utilities. A project that runs two months over schedule doesn't just cost you time; it costs you $3,400–4,000 in extra interest.

Don't rush into a deal without doing your due diligence. If an inspection raises issues that would blow your renovation budget, be prepared to walk away or negotiate a meaningfully lower purchase price.

» Learn how much an investor should pay for a house

Step 2. Secure financing for the flip

Financing a house flip differs from getting a conventional mortgage since you’ll use the loan for an investment property and not as your primary residence.

While conventional loans may be an option, their eligibility and repayment requirements don’t always make them suitable for house flips. You can also look into other financing options with low down payments, such as FHA loans and Fannie Mae and Freddie Mac loans, but beware that these often require your investment property to be your main residence.

Hard money loans from private lenders may be the best option for flipping homes. These are short-term loans whose main consideration isn’t necessarily your creditworthiness or down payment amount but your investment property’s ARV.

"You can grow your real estate portfolio by using private money," says Danny Johnson, real estate investor and host of the Flipping Junkie Podcast. "Friends and family with low-earning savings are potential lenders who'd be happy to earn 6-10% interest. We've funded over 90% of our deals this way."

If you flip the house quickly, interest costs won't significantly impact your profits. However, market delays or issues can lead to high interest rates eating into your returns.

Step 3. Find the right house to flip

Target less expensive properties in desirable neighborhoods, such as those with top-rated schools or rising property values. Focus on homes that require only cosmetic repairs, like new floors, countertops, paint, and landscaping.

While properties with major issues, such as foundation damage or toxic materials, might be cheaper, they come with higher risks, costs, and renovation time.

There are several ways to find potential flipping opportunities:

1. Wholesalers: They often have contracts for properties needing work and can resell them quickly. Ensure you get proof of an inspection or conduct your own inspection before finalizing the deal.
2. Investor networking groups: Engage with experienced investors online through forums like Facebook and Reddit or attend in-person meetings via Meetup. Networking can provide valuable insights and leads on potential investment opportunities.
3. Traditional real estate agents: Partnering with a realtor can help you find the best house-flipping opportunities. Realtors often have deep local market knowledge and can identify neighborhoods or properties with high ROI potential. As Itay Simchi, founder of Proven House Buyers, says, "A real estate agent's local market knowledge can significantly impact an investor's success by providing valuable insights into property values, trends, and potential risks.”

By leveraging these resources, you can maximize your chances of finding profitable house-flipping opportunities.

» Find an investor-friendly buyer's agent with Clever

Step 4. Plan the updates and repairs needed

Once you've got the property, you face the decision that makes or breaks most first flips: what to fix and what to leave alone.

Hire a general contractor or manage it yourself?

Option 1: Hire a general contractor. A GC handles the hiring, scheduling, and oversight of all the trades: plumbers, electricians, tile setters, painters. You pay a premium (typically 10–20% of the total project cost), but you save yourself from managing a dozen different schedules and phone calls. For first-timers without renovation experience, this is usually the right call.

Option 2: Act as your own general contractor. You hire and manage each subcontractor directly. More control, lower cost, but significant time commitment and coordination overhead. This approach makes more sense once you have a few flips under your belt and a trusted network of subs.

In either case, get a signed contract before any work begins. It should include a payment schedule tied to milestones (not a large upfront lump sum), a completion timeline, and a lien waiver to protect you if a subcontractor claims nonpayment.

Which renovations actually make money?

This is the question most beginner guides skip. Not all renovations are equal. Some add more to your sale price than they cost, and some eat your profit without meaningfully moving the needle.

Renovation	Typical Cost	ROI for Flips	Notes
Interior + exterior paint	$3,000–$8,000	✅ High	Highest bang-for-buck, almost always worth it
Refinish/replace floors	$2,000–$8,000	✅ High	Clean floors are one of the first things buyers notice
Landscape cleanup	$500–$3,000	✅ High	Curb appeal drives showings
Kitchen refresh (paint cabinets, new hardware, updated appliances)	$8,000–$20,000	✅ Moderate–high	Good ROI if you don't over-improve
Bathroom update (fixtures, vanity, tile)	$5,000–$15,000	✅ Moderate–high	Same principle — refresh, not luxury
Full kitchen gut remodel	$50,000–$80,000+	⚠️ Low–moderate	Rarely pencils out on a flip; buyers won't pay full premium
Adding a bathroom	$20,000–$40,000	⚠️ Situational	Can be worth it if the home is under-bathed for the neighborhood
Swimming pool	$40,000–$80,000	❌ Poor	Almost never justified on a flip
Foundation/structural work	Varies	⚠️ Necessary if required	Doesn't add value, but prevents deal-killers

The renovations that work in flipping are the ones that make a house feel clean, neutral, and move-in ready, not the ones that make it feel luxurious. Buyers pay a premium for "I could unpack this weekend." They don't pay extra for the Sub-Zero fridge.

Prioritize structural and system issues (HVAC, plumbing, electrical, roof) first: these are what inspectors flag, what lenders care about, and what will kill your deal if ignored. Then focus your cosmetic budget on the kitchen, bathrooms, floors, and paint.

Step 5. Begin renovation and redesign of the house

When renovations begin, prioritize addressing the most serious issues, such as structural problems, which are more likely to cause delays or lead to unexpected expenses. Save cosmetic fixes for last, as they're generally more routine and less likely to cause major headaches.

Schedule regular meetings with your contractor or subcontractors to keep the work on schedule and within budget. During these meetings, review progress, discuss any deviations from the plan, and address any changes in cost estimates.

Also, remember to collaborate with architects, inspectors, and local building officials to ensure that all work complies with building codes and safety standards.

Once renovations are complete, conduct a final walkthrough. If any work seems incomplete or unsatisfactory, promptly address it with the contractor or subcontractor.

Step 6. Stage the home, put it on the market, and sell it

The final step is getting your property sold. You’ll need to decide whether to work with a real estate agent or try for sale by owner (FSBO).

While you'll save money on realtor commissions with FSBO, homes sold with realtors tend to sell faster and for more money. Our study found that sellers using an agent sell for nearly $50,000 more on average than those who don't.[3]

A realtor can assist with getting your house ready for sale by helping with staging, listing it on the MLS, pricing, and showings. Because realtors often have a network of local buyers, they can potentially help you sell your property before it even needs to be listed. Realtors are also invaluable for negotiating a strong selling price and ensuring a smooth closing process.

Another advantage of using a realtor is adding a long-term member to your house-flipping team. Having a trusted agent to return to for each house flip saves you the stress of marketing and selling each property on your own. This lets you focus on finding and working on your next investment opportunity.

» Find an investor-friendly listing agent with Clever

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