<img src="https://cdn.builder.io/api/v1/image/assets%2Fea37b90b89334a2ab1714e2159c75418%2Ff5c15e65d3c24201a6efc554163b156e" alt="Tools leaning against a brick wall inside a home that's being renovated for a profit." loading="lazy">

How to flip a house

Most people won’t get rich quick by flipping a house, no matter how easy it looks on HGTV.

Successful house flipping requires patience, knowledge, and skill. Successful flippers know the right property to buy, they know what improvements to make, and they know how to sell the home for a profit after it’s renovated.

Successful flippers also know how to pay lower financing costs which creates more profit, too.

What is house flipping?

House flippers own a home for a short time, usually for only a few months. While they own the property, they fix it up to increase its value. Then they sell the home.  

The idea, of course, is to sell the finished home for more than it cost to buy and renovate the home, generating a profit. 

How much profit? In the first quarter of 2025, the median profit for flipping a house was about $65,000, according to ATOM, an organization that tracks real estate data.

So, $65,000 may seem like a nice payout for a few months of work, but there’s no guarantee every home flip will generate that amount. Some flips earn a lot more. Some lose money.

Investors who have experience flipping homes tend to earn the most.

<div style="text-align: center"> 

<a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/start">Use your existing equity on a new investment.</a></div>

<p style="text-align: center;">...in as little as 3 minutes – no credit impact</p>

The pros and cons of house flipping

Before starting on their very-first house flipping project, new investors should find out whether house flipping fits their schedule and skill sets. These pros and cons can help:

Pros of house flipping:

• Fun: People who like real estate enjoy bringing their vision for a distressed property to life. This can be a lot of fun, especially when people enjoy DIY projects.
• Potential to earn: Flipping a home should restore a distressed property to its potential value. When the flipper buysthe home below market value and sells it at or above market value, the earnings can be significant.
• Improving neighborhoods: Typical house flippers target the most dilapidated property in a given neighborhood. By fixing and flipping that home, they improve the appearance of the entire neighborhood and can even raise the value of nearby properties.

Cons of house flipping:

• Unpredictability: Investing is never certain. The market could change, making it harder to re-sell a home at a profit. The home itself could include surprises like asbestos on the ductwork or serious structural defects that drive up repair costs.   
• Expectation vs reality gap: The amount of time and work needed to succeed may surprise some first-time flippers. For some new flippers, all the work and responsibility will outweigh the fun. 
• Potential to lose money: Delays and surprises add to costs, eroding the project’s profits. Worst-case scenario: the project loses money.

Flipping a house for profit: the 70% rule

How much can you spend on a distressed property and still earn a profit flipping the home?

To answer this question, some investors apply the 70% rule. This rule says buyers shouldn’t pay more than 70 percent of the home’s after-repair value (ARV) minus the cost of repairs. 

That sounds complicated, so let’s run the numbers:

• The home in this example will be worth $300,000 after it’s repaired (ARV).
• Repairs to the home will cost $50,000.
• The $300,000 ARV minus the $50,000 in repairs equals $250,000.
• 70 percent of $250,000 is $175,000. 

In this example, the 70 percent rule says the investor shouldn’t pay more than $175,000 for the distressed property.

<div style="text-align: center"> 

<a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/start">How much equity can you borrow?</a></div>

<p style="text-align: center;">...in as little as 3 minutes – no credit impact</p>

Problems with the 70% rule

The 70 percent rule isn’t ironclad. For example, how can you know exactly what a home will be worth after it’s repaired? How can you know in advance how much repairs will cost?

There are no guarantees. The best you can do is to make informed decisions before investing. Investors should look up the value of comparable homes that are in good shape. Ideally, look for comparable homes on the same street or same neighborhood. Those homes can reflect the potential value of the investment after repairs. 

Then investors should determine what repairs the target property needs to be restored to its full value. How much will these repairs cost? 

Repairs cost different amounts in different places and for different investors. Some home flippers are also contractors who can do the work themselves, saving a lot in repair costs. Others need to pay a contractor to oversee the project. 

If nothing else, the 70 percent rule offers a general guideline that prompts would-be investors to ask the right questions in advance.  

Steps for flipping a house

New to house flipping? Good planning lays the foundation for success. Following these steps can help stay on track:

1. Get some education

Reading articles like this one can help you learn what to expect. You can learn more by talking to a friend or neighbor who flips houses. If you don’t know any house flippers, ask a local property management group to provide a few names. 

2. Set a budget

How much money do you have available to invest in buying and fixing up a home? This number will shape the overall scope of your project. 

If you’re short on cash, a mortgage loan can help. Lots of investors generate cash with a second mortgage on their primary residence. Better’s home equity lines of credit can provide funds quickly. 

3. Build your team

Very few investors have all the skills they need to flip a home for cash. Where are your knowledge and skills gaps? It’s essential to find people who can fill them before you invest in a project. For example, you may need:

• A real estate agent who knows the local market
• A professional home inspector
• A contractor to oversee repairs
• Skilled tradespeople like plumbers and electricians
• Painters and Drywall pros
• An interior decorator
• A lender to finance the deal

Most flippers have at least one or two of the skills above which they can use to save money on the project.

4. Look for the right property

Now it’s time to look for properties you can afford to buy and fix. Consider the purchase price and the cost for repairs. These two numbers tend to be interrelated: 

• Properties that need only cosmetic repairs like paint, fixtures, and decor will cost more to buy but less to repair. 
• Properties that need structural repairs, a roof, or major systems upgrades will sell for less but cost more to repair.

The right property will match your ability level. If you can’t take on a complete gut job, look for homes that need less work. Some investors search foreclosures for a house to flip.

4. Study the property for viability

When you’ve got a target property in your sights, it’s time to take a closer look. How much will the property be worth after repairs? How much will the repairs cost? What, exactly, does the home need?

A pre-offer inspection can help answer these questions. The real estate agent on your team can help arrange this. Or you could ask the owner to let you and your home inspector check out the home.

If the home has been sitting on the market for many months without attracting many interested buyers, the owner may be more willing to approve a pre-offer inspection.   

5. Budget for the renovations

When you know what repairs would be needed to renovate the home, you can budget for the renovations. Home flipperswho are also contractors may know, instinctively, how much repairs would cost. Less experienced investors will need to get quotes and consult experts. 

In any case, knowing the cost of repairs is essential to knowing whether to invest in the target property. Repair costs, combined with the need to make a profit, combined with the potential re-sell value of the home, will show how much to offer for the home.

To apply the 70 percent house flipping rule: If a home will need $50,000 in repairs in order to restore its full value of $300,000, the investor shouldn’t offer more than $175,000 (because $175,000 is 70 percent of the home’s after-repair-value minus the cost of repairs.) 

Many experienced real estate investors add a 10 percent contingency to their anticipated renovation costs because they know they may come across an unanticipated repair during the project.

6. Finance the flip

Do you have enough cash to buy the home and pay for its repairs? Are you comfortable parting with that cash?

Experienced and successful real estate investors may say yes to both of these questions. For first-time flippers, the answer may be no.

Some flippers turn to risky hard money loans, but a mortgage lender like Better can help close the gap by financing the project while also providing safer loans. For example, a Better HELOC could tap into the equity that’s already built up in a new investor’s primary residence. A cash-out refinance can do this, too.

Since home equity secures HELOCs and other home equity loans, they can offer lower interest rates compared to unsecured personal loans or non-regulated financing options. Buyers could repay only interest on the HELOC during the renovations and then pay off the loan’s balance when they sell the renovated home.  

7. Make an offer

Making an offer on the house to flip can take the project from an idea to reality. 

The real estate agent on your team can help you craft a winning offer. If you have your own cash, or funds from a HELOC or home equity loan taken out on your primary residence, you’ll be making a cash offer. Those tend to be attractive to home owners. 

Stick to the budget created in Step 5 above. Paying too much for a property makes earning a profit less likely. 

8. Schedule and complete the repairs

So, the seller has agreed to your offer and you’ve bought the house. Now it’s time to get to work. 

All the planning and budgeting in Step 5 will pay off now. If you’re not a pro, the contractor on your team should oversee renovations. Timing matters a lot. For instance, the plumbing and electrical work should happen before the painters arrive. 

Every house flipping project is different. Some need weeks of work; others need months. City or county permits and inspections may be needed, depending on the scope of the project.

9. Staging, listing, and selling

With repairs and renovations complete, the home is now an asset that should resell for its after-repair value (ARV).

Once again, the Realtor on your house flipping team will be an asset during this phase of the project. Depending on the local real estate market, the home may sell within days or weeks. In cooler markets, the home may stay on the market for months.

Some investors decide to rent the home instead of selling, but not everyone wants to become a landlord. 

10. Reinvest in the next flip 

The project went well. You were able to make money. What’s next? Investors who enjoyed flipping their first house usually use the money to buy properties they can fix and flip for more profit. 

Common mistakes when flipping homes

Most people learn from their mistakes, but with house flipping, mistakes can cost a lot. It’s better to avoid the mistakes to begin with if you can. Here are some common mistakes to keep in mind:

• Paying too much for the distressed home: The more you pay upfront, the less the project can earn, and the less room you have for error later. Be sure to run the numbers by your real estate agent or someone else who knows the market.
• Running out of money to repair the home: This can happen when the investor doesn’t inspect the home thoroughly to find out exactly what it needs. Other times, surprise repairs can pop up during the project. A good home inspector can help a lot here.
• Lacking the expertise needed for part of the project: Repairs to the home’s structure and major systems usually require a licensed pro. DIY projects by inexperienced investors may end up costing more by the end of the project.
• Skipping important renovation jobs: When a project falls behind schedule, it’s tempting to leave parts of the project undone. This will reduce the resale value, undermining the project's ability to earn a profit.
• Inflexibility re-selling the home: Setting the home price too high and refusing to bend keeps some investors from claiming the profit. Owning the home for longer than expected adds to project costs, especially when lenders need to be repaid.

Flippers may overcome one of these problems, but one mistake often leads to another mistake. Good planning before buying the property helps people avoid homes that won’t make a profit. 

Final tips for house flipping

Some first-time flippers become full-time real estate investors. Others stumble away from their first investment property feeling disillusioned and frustrated.

These tips can help first-timers achieve a positive and profitable experience:

Stay close to home

When you invest in your own neighborhood, you know the ups and downs of the local real estate market. You know the selling points of the area. You know the streets to avoid. You probably even know local service providers who could be an asset to your project.

Put all this knowledge to use in your first fix and flip by investing in a property close to home. There’s no need to learn how to be a real estate investor while also learning a new area. 

Know your role as a real estate investor

At the end of the day, the home is a real estate investment. That means the location and size of the home will cap its eventual value, no matter how much you spend fixing the home. 

Yes, make the home structurally sound and update its essentials, especially its bathrooms and kitchen. But think twice before buying extras like high-end appliances or unique customizations. Chances are the new owner may replace these anyway.  

Find the right loan

Money spent on financing charges cuts directly into profits. Investment property loans charge higher interest rates than mortgage loans used to buy a primary residence. Better’s interest-only HELOC can keep financing costs lower while you’re renovating the home. Plus, the same HELOC can be used, paid off, and used again on the next flip with no need to reapply.

Start with the exit strategy

Throughout the project, filter all decisions through the end goal: selling the home at a profit. Some repairs will increase the home’s potential to earn; other repairs can’t be recouped. Focus on the repairs that will pay off at re-sale.

Making the best decisions builds house flipping success 

Real estate investing can be boiled down to a series of decisions: what home to buy, what repairs to make, what team members to include, what resell price to ask, and so on.

There’s also the decision about how to finance the house flipping project. For new investors who can’t, or would rather not, spend their own cash on the project, a second mortgage on their primary residence provides an affordable alternative.

Better’s home equity loans and HELOCs simplify that question. 

<div style="text-align: center"> 

<a class="bet-Button bet-Button--xl bet-Button--primary" href="https://better.com/preapproval/5549c120-06d6-4365-8aa8-d638d8359869/nxt-heloc-intro">See your home equity loan options</a></div>

<p style="text-align: center;">...in as little as 3 minutes – no credit impact</p>