Get email alerts for new off-market deals — curated drops, no spam.Get deal alerts via email
OffMarket Deck · Updated 2026-07-10
House flipping is the practice of purchasing a distressed property below market value, renovating it to a condition competitive with nearby retail sales, and reselling it for a profit. The profit comes from the spread between your total investment (purchase + renovation + carrying costs) and the after-repair value (ARV).
According to ATTOM Data Solutions' Q1 2026 Home Flipping Report, 84,130 single-family homes and condos were flipped in the United States. The average gross profit was $72,000 per flip, representing a 27.5% gross return on investment. However, those are gross numbers — before holding costs, selling costs, and taxes. The flippers who net $50,000+ per deal are the ones who underwrite accurately before they buy.
Key takeaway Flipping is a math problem dressed up as a construction project. If you buy right, the rest is execution. If you buy wrong, no amount of renovation magic saves the deal.
| Factor | House flipping | BRRRR | Wholesaling | Buy-and-hold |
|---|---|---|---|---|
| Capital needed | $50K–$150K | $50K–$100K | $500–$2K | $30K–$80K |
| Time to profit | 3–9 months | 6–12 months | 10–45 days | Years (cash flow) |
| Skill level | Medium | High | Low | Medium |
| Risk level | Medium | Medium-High | Low | Low-Medium |
| Active/passive | Very active | Active | Active | Passive (with PM) |
| Tax treatment | Short-term capital gains | Long-term (if held) | Ordinary income | Long-term capital gains |
| Best for | Hands-on, construction-savvy | Long-term builders | No-capital starters | Wealth preservation |
Every flip is governed by five numbers. Miss one and your profit evaporates.
The flip formula:
Profit = ARV − Purchase Price − Renovation Costs − Holding Costs − Selling Costs
Or, working backward from your desired profit:
Maximum Purchase Price = ARV − Renovation Costs − Holding Costs − Selling Costs − Desired Profit
This is what our 70% rule guide simplifies into a single percentage. For your first flip, use the full formula above — the 70% rule is a shortcut for experienced flippers who know their numbers cold.
Flipping is a team sport. The investors who try to do everything themselves lose money. Here is who you need:
| Role | What they do | How to find them | Typical cost |
|---|---|---|---|
| General contractor | Manages renovation, subcontractors, timeline | Referrals from REIA, 3+ bids | 15–25% markup on subs |
| Real estate agent | Helps find deals, prices the sale, markets | Investor-friendly agents at REIA | 5–6% commission (sale side) |
| Hard money lender | Funds purchase + rehab quickly | Local lenders, Kiava, Lima One | 10–14% interest, 2–4 points |
| Real estate attorney | Contract review, entity setup | Local investor referrals | $300–$500/hour |
| Home inspector | Identifies hidden issues before you buy | ASHI-certified inspectors | $400–$700 |
| Accountant | Tax strategy, quarterly estimates | CPA with real estate clients | $200–$400/hour |
Key takeaway Your contractor is your most important relationship. A great contractor makes you money. A bad contractor costs you your profit. Interview 5, check references from 3 past clients, visit 2 completed projects.
Where flippers find deals:
Wholesalers — 43% of flipped properties in 2025 were purchased from wholesalers, according to ATTOM. You pay a $5,000–$15,000 assignment fee but get vetted, underwritten deals. Browse live wholesale deals on OffMarket Deck.
MLS (with agent) — Look for keywords: "as-is," "needs TLC," "investor special," "cash only," "estate sale." These listings often sit 30+ days and sellers get flexible.
Auctions — Foreclosure auctions (courthouse steps), online auctions (Auction.com, Hubzu). Riskiest option — you often cannot inspect before buying. Save for your 5th+ flip.
Direct mail — Target absentee owners, tax delinquents, probates. 1–3% response rate. Cost per deal: $3,000–$8,000.
Driving for dollars — Spot distressed properties, look up owners, send letters. Free except gas and time. Best for learning your farm area.
The 60-second property screen (do this before you visit):
Let us walk through a real flip in Indianapolis — a market friendly to beginners due to low entry prices and steady demand.
| Line item | Amount | Notes |
|---|---|---|
| ARV (after-repair value) | $275,000 | 3 comps sold within 0.3 miles, all renovated |
| Purchase price | $155,000 | Wholesaler deal, $5K assignment fee included |
| Renovation costs | $42,000 | Medium scope: kitchen, baths, flooring, paint, HVAC service |
| Holding costs (5 months) | $8,200 | See breakdown below |
| Selling costs | $19,250 | 6% agent commission + $2,750 closing costs |
| Desired profit | $35,000 | 12.7% of ARV — acceptable for a first flip |
| Total investment | $219,450 | Sum of all costs except desired profit |
| Net profit | $35,000 | $275,000 − $219,450 (after all costs) |
Holding cost breakdown (per month × 5 months):
| Cost | Monthly | 5-month total |
|---|---|---|
| Hard money interest ($155K at 12%) | $1,550 | $7,750 |
| Property insurance | $85 | $425 |
| Property taxes (prorated) | $120 | $600 |
| Utilities (electric, water, gas) | $95 | $475 |
| Lawn care / snow removal | $50 | $250 |
| Total holding costs | $1,900 | $8,200 |
This deal works. But change one variable — ARV drops to $260,000 because you comped against a superior neighborhood — and your profit drops to $20,000. Change two variables — ARV at $260K and rehab overruns to $52,000 — and you lose $2,000.
That is why flippers say: "You make your money when you buy, not when you sell."
Financing options for flips:
| Lender type | Interest rate | Points | Term | Qualification | Best for |
|---|---|---|---|---|---|
| Hard money | 10–14% | 2–4% | 6–18 months | Asset-based; credit 600+ | Speed, experience |
| Private lender | 8–12% | 1–3% | 6–24 months | Relationship-based | Lower rates, flexible terms |
| Bank HELOC | 8–10% | 0–1% | 10–30 years | Home equity, good credit | Low-cost capital |
| Personal cash | 0% | 0% | N/A | N/A | No financing costs, highest ROI |
| Partnership | Split profit 50/50 | N/A | N/A | Capital + sweat equity split | No-money-down flips |
Hard money loan structure (typical):
For your first flip, hard money is usually the best option despite the cost. The speed (closing in 7–10 days vs 30–45 for banks) wins you deals.
The scope of work (SOW) is your bible. It is a line-item document that specifies every task, material grade, and cost. Without it, contractors scope-creep your profit away.
Typical renovation costs by scope level:
| Scope | Per sqft | What's included | Timeline |
|---|---|---|---|
| Light cosmetic | $15–$25 | Paint, flooring, fixtures, landscaping, deep clean | 2–4 weeks |
| Medium renovation | $25–$40 | Kitchen, baths, flooring, paint, HVAC service, electrical updates | 4–8 weeks |
| Heavy / gut | $40–$75 | Full kitchen/bath gut, structural, plumbing, electrical, roof, windows | 8–16 weeks |
| Ground-up rebuild | $100–$200 | Tear-down to studs or foundation, full rebuild | 6–12 months |
Contractor management rules:
Pricing strategy:
Agent vs FSBO:
Buying at retail — If you pay 85% of ARV, there is no room for profit after renovation and carrying costs. Your max offer should be 65–75% of ARV minus repairs.
Underestimating timeline — Every month of holding costs is $1,500–$3,000. A 3-month project that takes 6 months does not just delay your check — it can erase your profit.
Over-improving — Granite countertops in a $180,000 neighborhood do not return dollar-for-dollar. Match the neighborhood, do not exceed it. Our rehab estimate guide has a per-project ROI table.
No exit plan if the market shifts — What if you cannot sell in 90 days? Have a Plan B: rent it out (our rental property analysis guide shows how) or refinance and hold.
DIY renovation — You are an investor, not a contractor. Your job is to manage the project, not install drywall. Contractors work faster and often cheaper than your time is worth.
Ignoring permits — Unpermitted work gets flagged in the buyer's inspection and kills deals. Pull permits for electrical, plumbing, structural, and HVAC work. The $200 permit fee is cheaper than a lost sale.
No reserve fund — Keep $10,000–$15,000 cash reserves per flip. Something always costs more than expected.
| Market | Median ARV | Entry price | Avg flip profit | Why it works |
|---|---|---|---|---|
| Indianapolis, IN | $220K | $100K–$140K | $45K–$65K | Low entry, steady demand, landlord buyers |
| Cleveland, OH | $175K | $70K–$110K | $35K–$55K | Cash-flow buyer pool, affordable rehabs |
| Kansas City, MO | $230K | $110K–$150K | $45K–$60K | Strong rental market, fast sales |
| Memphis, TN | $195K | $85K–$125K | $40K–$55K | Investor-friendly, low regulations |
| Pittsburgh, PA | $205K | $90K–$130K | $40K–$58K | Stable market, good contractor availability |
Avoid for first flips: San Francisco (high entry, regulation), New York (co-op boards, slow closings), Austin (cooling market, compressed spreads).
Q: How much money do I need to start flipping houses? $50,000–$150,000 depending on your market. This covers down payment (10–20% of purchase), closing costs, renovation buffer, and holding costs. You can reduce this with hard money financing (they fund 80–90% of purchase) or partnerships.
Q: How long does a typical flip take? 4–8 months from purchase to sale. Purchase and closing: 2–4 weeks. Renovation: 4–12 weeks depending on scope. Marketing and sale: 3–8 weeks. Timeline management is where beginners lose the most money.
Q: What is a good profit margin for a flip? Minimum $25,000 or 15% of ARV, whichever is higher. experienced flippers aim for $40,000+ or 20% of ARV. Anything below $15,000 is not worth the risk — one surprise and you are underwater.
Q: Should I get my real estate license to flip? Not required, but beneficial. Licensed flippers save 3% on the buy side (representing themselves) and can access MLS directly. The downside: continuing education, broker fees, and disclosure requirements.
Q: Can I flip houses with a full-time job? Yes, but start with light cosmetic flips (2–4 week renovations) and a reliable general contractor. Heavy gut rehabs require daily site visits and are difficult to manage while working 9–5.
Q: What taxes do I pay on flip profits? Short-term capital gains (taxed as ordinary income) if held under 1 year. This means 22–37% federal depending on your bracket, plus state taxes. Hold for 1 year+ to qualify for long-term capital gains (0%, 15%, or 20%). Most flips are short-term by necessity — budget for taxes in your profit calculation.
Every profitable flip starts with accurate underwriting. Use our free flip calculator to model your purchase price, renovation budget, holding costs, and selling costs — and see your projected profit before you write an offer. The investors who calculator every deal close more profitably than the ones who "eyeball it."
Written by the OffMarket Deck team. Last updated: July 2026.
Active off-market real estate deals across the US.
