House Flipping 101: The Basics Every Newbie Needs to Know

So, you’ve decided to dip your toes into the wild world of house flipping. Congrats! You’re about to embark on a journey that’s part adventure, part strategy, and (let’s be honest) part HGTV-inspired daydream. But before you dive in, let’s talk basics. What exactly does it take to flip a house, and how do you make sure you don’t end up flipping out? Here’s your crash course in all things house flipping—with zero jargon and plenty of practical advice.

Step 1: Understand What House Flipping Actually Is

House flipping is all about buying a property (usually one that needs a little—or a lot—of TLC), fixing it up, and selling it for a profit. Sounds simple, right? But there’s a lot that happens in between those steps. The key to success is understanding the process and knowing your numbers. Which brings us to...

Step 2: Know Your Numbers Like a Pro

Flipping houses isn’t just about finding a cute fixer-upper and slapping on a fresh coat of paint. It’s a numbers game, plain and simple. Here are the big three you need to know:

• Purchase Price: This is what you’ll pay to buy the property. Pro tip: Don’t spend your entire budget here. Leave room for repairs and surprise expenses.
• Renovation Costs: How much will it take to turn the property into someone’s dream home? This includes everything from plumbing fixes to that Pinterest-worthy backsplash.
• After Repair Value (ARV): What will the house sell for once it’s fixed up? Do your homework on local market trends to estimate this number accurately.

The golden rule? Follow the 70% rule: Pay no more than 70% of the ARV, minus repair costs. This helps ensure you’ll actually turn a profit.

Step 3: Find the Right Property

Not every house is a good candidate for flipping. You’ll want to look for:

• A great location: Neighborhoods on the rise are gold mines. Look for areas with good schools, low crime rates, and plenty of amenities.
• A property with potential: Think ugly but fixable. Structural issues? Maybe. Cosmetic updates? Yes, please.
• The right price: It’s all about the deal. If the numbers don’t work, walk away (and don’t look back!).

Step 4: Build Your Dream Team

Even if you’re handy with a hammer, you can’t do it all alone. Successful house flippers surround themselves with a rockstar team, including:

• Real estate agent: They’ll help you find properties and market your finished flip.
• Contractors: Reliable contractors are worth their weight in gold. Get referrals and check reviews.
• Inspector: They’ll point out issues before you buy so you don’t get hit with surprise costs.
• Lenders: Whether it’s a hard money lender or a traditional loan, you’ll need funding to make it all happen.

Step 5: Renovate Smart

This isn’t the time to go full Chip and Joanna with custom shiplap walls in every room. Keep your renovations focused on what adds value:

• Kitchen and bathrooms: Buyers love an updated kitchen and shiny bathrooms.
• Curb appeal: First impressions matter! A fresh coat of paint and some landscaping go a long way.
• Energy efficiency: Features like new windows or a modern HVAC system can boost your asking price.

Step 6: Sell Like a Pro

Once the renovations are done, it’s time to cash in. Work with your real estate agent to list the property at the right price. Pro tip: Staging the home can help it sell faster and for more money. Make sure it’s clean, bright, and inviting for potential buyers.

Step 7: Learn from Every Flip

No matter how much research you do, your first flip will be a learning experience. That’s okay! Take notes, ask for feedback, and use every project as a stepping stone to get better.

Ready to Get Started? Let Us Help!

Feeling excited but maybe a little overwhelmed? We’ve got you covered. At REAP, we’re here to guide you every step of the way. Beyond our free in-person classes, we also offer a full course and mentoring services to help you master the art of house flipping.

Whether you’re ready to dive in or just have questions, we’d love to connect with you. Contact us today and let’s make your house-flipping dreams a reality. Because at REAP, we’re all about making real estate investing fun, simple, and ridiculously rewarding.

Dad Joke Bonus: Why did the mansion feel empty inside? … It just couldn’t fill the void.