The Beginner’s Guide to Flipping Houses for Profit

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OK, let’s get back to basics.

If you are just getting into flipping houses for profit, there’s much to learn, no doubt. So I may have bad news for you: you can’t learn how to do it a single weekend course.

You can’t learn how to do it by reading one article on a blog either (although there are tons of great articles from good writers right here on BiggerPockets). You also can’t do it by watching one episode of house flipping reality TV.

Contrary to what the gurus would have you believe, house flipping is not easy. But it’s obviously possible to be successful as a flipper, and the best way to learn is by doing it on your own, making mistakes along the way, and learning from them. That said, it’s important to have safeguards in place to make sure that you minimize your downside risk.

Is it as easy as people say? No way.

But there are ways you can shorten your learning curve, avoid the major pitfalls, and still come out with a nice profit. And of course, the more you do it, just like anything in life, the better you get at it. Experience, after all, is the greatest teacher.

Related: BiggerPockets Fix and Flip Analysis and Reporting Tool

The Different Definitions of House Flipping

So before we get into the “how tos,” let’s clarify the definition of house flipping first.

When people refer to “flipping houses,” many are referring to the process of buying deeply distressed properties at auction, from foreclosure, or bank short sales at a deep discount, then quickly flipping (aka selling) that property to a homeowner without much in the way of renovations. Although this kind of house flipping is popular and potentially lucrative, this not the kind of house flipping we are referring to here.

That kind of flipping relies on quick sales and even quicker profits. Unfortunately, at the same time, this kind of flipping has given the real estate investing industry a bit of a black eye in the process. Not only is that kind of flipping oftentimes irresponsible (reason No. 1 not to do it), but there is also less profit in it than traditional buy, renovate, and flip house flipping.

When you buy a distressed property, make no real improvements, then quickly “flip it” to a buyer, you really don’t add a whole lot of value to the end-user. But when you buy a distressed property, beautifully renovate, and then sell it, you are adding real value. And with that real value, comes even greater profit potential. That is the kind of house flipping that provides excellent living spaces for families and individuals while also helping to strengthen the emerging housing recovery.

Additionally, house flipping is oftentimes referred to and sometimes confused with wholesaling. Wholesaling real estate is often called “flipping” because a wholesaler flips a contract to a real estate investor, who then does whatever they want to do with the property. I use wholesalers quite a lot and find them to be tremendously helpful resources for many of my house flips.

Neither of these kinds of house flipping are what my definition entails, but we’ll get into that in just a moment.

Flipping Houses for Profit: Not as Simple as They Say

Learning any kind of real estate investing, whether it’s flipping houses or buying homes to buy and hold, is not simple. It’s capital-intensive and is a lot of hard work. In traditional renovation-style house flipping, you need cash to buy the house, cash to make the improvements, and then hopefully to get it all back (and then some) to make it worthwhile to you.

I am not going to kid you. All these factors make house flipping a risky investment—one that’s not for everyone. It’s fast paced and fraught with potential risks, but when you do it right, the profit margins are very sweet indeed.

So whether you are just starting out flipping houses or are thinking about getting into it on a part-time or full-time basis, there are some beginner’s steps that will help to shorten your learning curve and get you flipping houses profitably in a short period of time.

House Flipping Steps for Beginners

Step #1: Assess Your Cash Situation

When first learning all about flipping houses for profit, you need to take stock of your own financial resources. You need to know how much money you have to invest on your own or whether you’ll need to find investors.

Finding investors is an art unto itself, but knowing how much cash you have to invest before you begin is the logical first step. If you have money to invest in real estate, this is certainly a bonus. However, if you don’t, there are a myriad of ways to flip houses with no money of your own using banks, private money lenders, and other means.

One great way to get started flipping houses if you don’t have the money to do it all on your own is to find a joint venture partner (or partners) who have money to invest. Splitting your first house flip profits with other partners is a great way to start, while building some momentum and getting your first attempt under your belt.

Sure, you’ll have to split profits, but it’s far better to get 50 percent of something than 100 percent of nothing.

Step #2: Start Building Your House Flipping Team

As soon as you finalize your cash situation, the next step is to start building your house flipping team. This team will help you find, fix, and sell the property. The collective wisdom and expertise will surely help you reach your house flip goals that much faster.

No matter your level of experience, you simply will not be able to do everything on your own. So enlisting your own mastermind group will not only help you be more productive, but it will also help you work through the inevitable problems and challenges that you’ll face.

Your team—at the very least—should be comprised of real estate brokers, contractors, architects, insurance specialists, accountants, and money lenders. All these professionals can help you figure everything out faster and get you making money flipping houses quicker than you would on your own.

Related: 6 Criteria for Finding Profitable Houses to Flip

Step #3: Find a Good House to Flip

Finding a suitable property to flip is certainly a challenge. This is especially true if you have decided to look in a specific geographic area you’ve fully researched that is situated in an area that interests you. Ideally, you should be able to buy the house for a low price, eyeball it to be able to rehab it quickly and relatively cheaply, so you can sell it at a higher price (and obviously make a profit). Knowing all these aspects in order to make the profit, you’ll need to rely heavily on your house flip team from step No. 2 above.

A good real estate agent can assist you in finding houses to flip. You may want to focus on properties that theoretically won’t need expensive repairs. Alternatively, you can focus on properties that do need more extensive repairs, but the repairs will substantially increase the equity. Both real estate agents and real estate wholesalers can help you in finding both kinds of properties.

Step #4: Do the House Flipping Math

When doing your initial house flipping analysis, you can do a little “napkin math” to estimate if the house is a winner. The first thing you need to do is determine the potential selling price of the house when it’s all fixed up. This is what’s known as after repair value (or ARV). Then simply subtract the purchase price, repairs, and all your monthly carrying costs. What you have left is your profit.

If all this initial math points to profitability, then you may have an excellent house flip on your hands. You should consider purchasing it!

Step #5: Manage the Rehab Tightly

Once you do purchase the house, don’t solely rely on your contractor to handle and supervise all the repairs. Make sure you manage this process tightly if you are doing the management on your own. Better yet, hire a professional contractor to oversee all the rehabilitation—especially if the rehab is extensive. Make sure you personally supervise the repairs to ensure that they are being carried out properly and on budget.

In the end, your profit largely depends on what you pay for the house initially, but making sure that the repair costs stay within your budget is equally, if not more, important. Likewise, overextending yourself by doing more than your budget allows on the rehab or taking your eye off the ball and allowing your contractor to run free are two of the quickest ways to ensure that your profits will go up in smoke.

Step #6: Work Fast, Make Profit

Time is of the essence when flipping houses for profit. It’s a race against the clock because the longer the rehab takes or the longer the house sits on the market once it’s done, the less profit you make. Soft costs, such as financing payments, insurance payments, town taxes, utilities, and any and all other carrying costs—all which have to be paid at regular intervals—will add up and diminish your profits.

It’s simple: the shorter the time you hold onto your investors’ money, the better your profits will be. So make your improvements fast.

Do the job well, but do it fast. Make sure your contractors do the job on budget and on time, and hire good real estate agents to help you price the final product so it sells quickly.

In all of our house flips, we estimate six months from purchase to sale but factor in a few additional months of expenses to make sure we profit on each and every flip we do.

The Bottom Line

Contrary to what many people think, rapidly appreciating markets are not a necessary ingredient for house-flipping success. As long as you stick to a disciplined set of rules, as big— if not bigger— profits can be made in slower markets, as well. Because it is such a short-term style of real estate investing, house flipping is largely immune to extreme market fluctuations. Successful house flipping can be done under any kind of prevailing market conditions as a result.

When you think about it, house flipping is one of the least risky types of real estate investing there is! When you buy right, do a good job on the rehab, stick to your budget, and put an end product on the market that shows beautifully and is priced right, you will make a profit every time.


What do you think about house flipping? Do you have any tips to tell the beginners?

Leave a comment below and let me know!


About Author

Mike LaCava

Michael LaCava is a full time real estate investor, house flipping coach and the President of Hold Em Realty located in Wareham, MA. He runs the website House Flipping School to teach new real estate investors how to flip houses and is the author of "How to Flip a House in 5 Simple Steps".


  1. Excellent! WOW! Amazing 6 steps. This is a winning recipe. I practiced several of those methods on my very first real estate investment and coincidently just added a post to my blog today describing my first Fix n Flip in 2003.

    I especially thought this was a salient point: “Contrary to what many people think, rapidly appreciating markets are not a necessary ingredient for house flipping success. As long as you stick to a disciplined set of rules, as big if not bigger profits can be made in slower markets as well.”

    This site is a wonderful read and I’ve added to my blog roll.

    • Hey Curtis and welcome to BiggerPockets. Take some time to go through the blog — we’ve got well over 3,000 articles to peruse and many are just as helpful as this one. If you haven’t had the opportunity to also visit our social network, we’ve got a vast community of almost 110,000 members and close to 500,000 forum posts at — jump in and start getting involved; you’ll find no better place to connect and learn than here!

    • Thanks Curtis. Good to see a fellow house flipper using these strategies. Welcome to BP and the wealth of information you can get from other investors here is endless.
      Look forward to hearing more from you. Where you flipping these days?
      Thanks for your comments

  2. Great article, Michael!

    I’m so glad you emphasized how “it’s not easy.” Many investors start with the idea, “I’m just gonna flip a few properties for some quick cash.” Don’t we all wish! We’ve purchased a number of properties from “wannabes” who watched the flip-it shows and quickly got in over their heads.

    Step #4, Do the house flipping math. I also encourage people to figure their ARV, then count on selling at 80-85% of that, as very few houses are selling yet at full retail. And, unless you have a lot of hold properties or something else to give you plenty of write-offs, don’t forget you’ll be paying short-term capital gains on the profits (long-term if you own it 366 days or longer).

    Thanks for the great article. Investors who follow your lead will profit flipping properties!

    • Thanks Karen. I agree with you. I was talking to a potential client earlier this week and one of those national guys sales person told him he could flip 3-4 houses a month and make over a million dollars his first year. It just fires me up to hear this !#**&#@(>> & the false and unrealistic numbers they will tell new people in this business to make a coaching client sale. It is bad for the entire industry. I asked for his # because I want to sign up. LOL

      Thanks for keeping it real!

    • HI Karen, what are your thoughts on the tax issue being discussed here, is it capital gains or ordinary income? Remember, I learned the hard way that if your income exceeds 150 k, then you cannot take any deductions. I have asked my accountant several times how we should be buying these homes to take advantage of the deductions. He says just to file schedule 9 I think, s are not operating like a business, which I think would be best. But, he is adamant the current filing method is the best. As with anything, ever one has a different opinion. So, I thought I would ask you.

      • Randy: Sorry, I missed your question until now!

        Your flipping profits are taxed at ordinary income rate.

        And, you’re correct, you cannot claim deductions when you make over $150,000 unless you qualify for full-time real estate professional status (real estate professional status requires the majority of your working time is in real estate – at least 51% of your working hours, a minimum 750 hours – so keep track of your time). And, not all CPAs are created equal so be sure you use one who is a real estate expert.

        • Mark Wagner CPA on

          In addition to the 750 hours requirement, being a real estate professional also requires that >50% of your personal services must be in “real property trades or businesses.” This is difficult hurdle to meet unless you are a) a realtor, property manager or otherwise employed in the industry or b) a full time investor.

          Keep in mind when tracking hours for a real estate professional designation that the metric is 750 hours *per activity*. One rental property is considered one activity. This makes the 750 hour threshhold also difficult to meet.

          Investors are allowed to combine activities to reach the 750 hour threshhold, but understand that when doing so you will have made an irrevocable election to combine the activities forever. This means that if you sell a property at a loss, the loss will be suspended until you have disposed of the entire activity — e.g. sold ALL of the properties that were combined. If you then purchase a new property, and combine the hours with the remaining properties, you can enter a circle where you will never be able recognize the loss.

          Since the only benefit of being a real estate professional is to remove the $25,000 rental loss cap, it seldom makes sense (unless your regular job is in the real estate industry) to be classified as one. Any rental losses over $25k will be suspended, but they will be used to a) absorb future rental income or b) offset any gain when the single property is sold.

          Note that this applies only to rental income. Flip losses, which comes to the 1040 via sch C, will always be fully deductible and do not suspend.

  3. This is an excellent article, I am getting into house flipping and needed this information I have already flip one but I partnered on the deal and learned a great deal of information. I am looking to do it on my own now and this article has gave me the confidence. Thanks for sharing.


    • Not necessarily Mark. It depends on whether your houses are classified as inventory or as capital assets, which in practice depends on how many flips you do per year.

      A good strategy to minimize taxes could be to rehab, then rent for 1 year+, then sell it to the tenant. Your tax would be a long-term capital gain.

      • Mark Wagner CPA on


        How the property is classified is not a matter of choice, it is a matter of facts and circumstances. Flips are always “property held primarily for sale” (IRC 1221) taxed as ordinary income irrespective of holding period. The number you do is irrelevant. The only relevant criteria is ‘intent.’ Was the property held primarily for sale, or did you intend to buy and hold? Can you substantiate that intent?

        If your intent was to flip, rental income is considered “incidental” to the flip business and will also be considered business income. This is true regardless of how long you “incidentally” rented the property you intended to flip — even if longer than a year. (Evidence: property was listed for sale, and was rented only after being listed for 6 months.)

        If your intent was to hold and rent, but you end up selling the property, the transaction is still capital provided that you can substantiate that you intended to rent the property (Evidence: advertisements, credit checks, tenant showings, etc). Here is where the number of flips you do is important: if you regularly do flips, you may be considered a dealer and the burden of proving that a particular transaction was capital is increased.

        Your strategy may work if you know that going in. But don’t be misled into thinking that you can advertise it for sale, put in a tenant to cover your cashflow, and still call it capital.

        I have seen exactly one case where a guy got busted when IRS asked to see the realtor’s contract and noticed that it was dated before renovations were even complete. Obviously his intent was to flip it. That opened the door to three flips he had treated as capital that year… plus 5 more in the previous two years. They may be dumb but they’re not stupid.

        • Mark Wagner CPA

          1 ) Hello Mark, Regarding taxes. Is it possible to set a list of things I can do to minimized Taxes, I got tag as a dealer and I feel I am paying to much. There is a way to minimize much tax and continue doing what I like to do. I buy, renovate and sale. I love renovating properties.

          2) I have my LLC and my wife just got her Real Estate License, shall I have to incorporate my wife to my LLC or not?, is this necessary? We do everything by the book but I wonder if she can be affect by any conflict of interest term and a way?

          Thank you Mark.

  4. Great article. I am currently doing research on how to flip properties. Bigger Pockets is definitely a top resource for newbies like myself who are looking to invest in Real Estate. I’m located in Miami, Fl where real estate prices are a bit over priced. Rogue investors have really destroyed this market. The challenge for me will be finding properties.

  5. Mike, Great article for the newbie and also for the experienced because I need to be reminded of those things you stated. Alot of folks believe flipping houses is a matter of buying a course(which I have bought several) reading a few books and then take advantage of the best real estate market of your lifetime. All those ingredients in my opinion are essential there is just so so so much more to it. Somehow along the guru parade Real Estate Investing has been casted as separate from the risks of starting a new business, and just a simple way to make massive profits. Maybe so if your in it for a flip or two and get really lucky,but as for a career be prepared for the ride of your life…….. I love the Ride!

  6. Hello, as others have noted, a very good article. We have purchased 8 properties, since January 2011. Our goal was ten income properties. But, we have decided to stop at eight, and use the last two spots, dedicated to flipping homes. We like your definition of house flipping, because we really enjoy renovating the home with as many high end products and upgrades as the market will support, without over doing it. We really want someone to buy their home because they love it and it is not only pretty, but well built!! There is something special about seeing someone walk through the home and say “oh wow, this is beautiful.” We have printed your article so we can refresh our thoughts on staying with the basics. Thanks for the reminder.

  7. Michael Foelber on

    Michael, Thanks for the advice. Do you factor in the higher income taxes if you sell within a year vs renting for a year and then selling under the lower capital gains tax?

  8. I’m new to this page but I have flipped 7 houses in the last year in Jacksonville, FL. I can’t find a house here anymore does anyone know where a better market is in FL?

    • HI Charissa,

      You check with your local real estate agent and see if she can refer you to another market area with a different agent. I don’t invest in Florida but maybe you can get on the forum page and ask there & I am sure the Florida investors on BP will chime in with what they know.

    • I buy and then wholesale houses. I have one available right now in the Brentwood section of Jacksonville.

      It’s 812 square ft with a separate detached garage.

      The house needs a complete remodel.

      Can be bought for 22,000.

      Text or call – 904-325-7898


  9. Great article. I suppose no one is buying foreclosures since u don’t get a warranty deed when the bank owns it? Or is there a way to get a general warranty deed from a bank foreclosure?

  10. As a individual doing research on Investing in real estate I found this article to be very informative and direct to the point. Lots of get quick too’s lack in the full picture. I am happy to be a part of bigger pockets. I will be taking into consideration what was mentioned in the article since I am looking into purchasing a 12 quadruples that need fixing. Even though it is minor repairs i am looking at the cost of repair verses the ROI. And like you mentioned in your article having a knowledgeable partner would be to my advantage. Maybe I should start looking for one. I was also thinking of improvising with the labor workers and getting some help together to do the minor things like clean out and landscaping. And like your article mentioned I have my work cut out for me but the work will be well worth it. Thank you once more for a article well writen.

      • These will be my first ones. So I am working the numbers and looking at what to offer. And being a beginner I am also looking at the what if. I was also asking around for funding for a project with this many houses. Even though the numbers look pretty good it could be less or more depending on if I am able to do a block project.

        But if not I will just start with the 4 that are being posted as sales. Lets see how this goes.

  11. Great article Michael. Do you have any advice on finding investors? I have 30 years experience in design, construction, and remodeling, and general contracting. I am looking to start flipping however i need an investment partner. Am I wrong to think an investors money and my project management and labor for nearly all trades will equal more profit? Trying to get my head around how to approach an investor and enter a partnership with them by using myself as management, design, and labor, all coming from me. I realize I need to be paid for my work, however I am willing to figure that in at the profit end, thus actually providing my services for 50% of the profit so as not to scare off investors. Would eventually like to flip for myself but will have to flip a couple with a partner in order to finance my own. What do you think?

    • you are not wrong at all in your thinking Eric. you just need to go out there and start networking and telling people what you are looking to do. There are definitely investors out there that will work with you. where are you looking to do deals?

  12. You have spoken of calculating the ARV. I’m interested to know if there is a specific method to this? I’m doing the research you spoke of and trying to make headway in my own ventures! Great article!

    • The best way to start with is to find an expert real estate agent in the area of the subject property to help determine that ARV. Let them know what your plans are for renovating the house so they can anticipate what it will transform into. It is very important to get this number as close to the end sale price as possible. Everything is based off this ARV so you can see why it is important.

  13. Hey great article, I’m omly sixteen but im indulging myself in as much real estate knowloedge until im 18 and Of the hundreds of articles Ive read this is one of my favorites, thanks for a great post -aspiring future real estate investor

  14. Hi,
    In the past I have bought a house and rehabbed it over 1+ years and then resold. Claimed long term capital gains. On current property I went in with my brother, held 1+ year and will realize a $60k + long term capital gain. My question is, the house is in only my name but we agreed to split profit 50/50. For tax purposes do I need to add him to the title before we sell so that 100% of income is not reflected on me? I do not want to get pushed into AMT or jeapordize any financial aid for my wife who is in school.

    • I am no accountant Kent and I recommend you talk to your CPA but rather than do all that you can just pay your brother his share and 1099 him reducing your net gain. He will be responsible for his share on his tax returns and you will deal with your share on your tax return. That may or may not work for him because his gain will be income treated different than yours but I don’t know enough about your situations so my advise is to contact your CPA and go through it with him.

      This is not legal or accounting advice and should not be treated so.

  15. Seems like the best way to do it is just to do it. Based on your notes. There is a certain amount of preparation that should be done, but you have to start somewhere, so just start.

    I think flipping houses is an excellent way to earn a living in Real Estate Investing.

    To the beginners that are newer than myself. If you love it, don’t give up! If you do not love it, find an avenue in real estate investing that you do love and move forward to becoming an expert.

  16. Hi
    Not sure what to do, got laid off from my job, I have been involved in real estate before as a landlord, did not like that very much although I have been in the contracting business as a commercial painting contractor and consider my self some what knowledgeable and some what familiar with rehabbing and would like to get involved with flipping homes. I have around $60,000 in home equity and was thinking of selling out to get started. Not sure if this is a good starting point or not. As far as du diligence I have read different literature including the articles on this site and have familiarized my self with what you need to know to get started. Not sure if this is possible given the amount of funds

    • Hi Cole your desire to achieve is most critical. Many have started with less funds so $60,000 is a nice start but make sure you use it wisely. I don’t know enough about your financial situation to elaborate specifically in your regard.
      Your back ground helps for sure so you have familiarity in the business. Keep me posted and feel free message me for more specific questions.
      Good Luck!

  17. Hello Mike:

    I am so glad that I was able to find your blog because it is so informative. I am a real estate salesperson in New York. I am considering flipping as my next step into the real estate industry. I was wondering whether borrowing money from the bank to start my business is the right way to go! If so how can I convince them to lend me some money with my current income being no more 20,000 a year and have no preview experience in flipping houses before.


    Thank you

  18. Hi I am new to investing in real estate. I have been talking with someone who claims to buy and sell houses for a good profit. From what he has told me he looks for foreclosed homes that are selling for around 20 thousand. He then checks houses selling around the same area to find its selling value which in this neighborhood is 100 thousand for a home comparable to the foreclosed one. He would then buy the foreclosed house fix it up and put it back on the market for 80 thousand and make a 45 thousand profit after buying the house and renovations. How real is this? It sounds too good to be true.

  19. I am doing research on flipping homes. I will be retiring in about 4 years and know that I will be bored. I have owned and sold homes in my lifetime, but more as vacation and investment rentals. I am a good project manager and pride myself as having good decorating abilities and ideas. I found your article very informative and realize that I am just going to take the plunge and do it to find out if this is something that will appeal to me. Of course the secret to success is having good people work with you, good contractor and real estate agent. Great reading all the comments.

  20. I am thinking about going into house flipping. After reading this article and a few others I understand that this is a huge undertaking, but i have such an interest and I truly believe I can do this. The only problem is not knowing entirely where to start?

  21. Mike Covington

    Great information written well. I am a newly licensed Realtor trying to gain traction while continuing a full time career. I am finding this site a great resource for knowledge and inspiration and has help me bring some key elements to focus.

  22. Thanks so much for the great advice. I am currently doing a lot of research on this and hope to start soon. This has helped me know that managing everything the correct way really matters.

  23. Gerald Harris

    Many new investors make the mistake of not knowing the true value of the property they have under contract. This was my mistake in the beginning. House Flipping is easy once you’ve done the process a hand full of times.

    Great Artice

  24. Elena Alvarez-Ramirez on

    This is a great article and overall website. Thanks for all the information!! 🙂 My husband and I are planning on starting this business and I’m wondering if it would be necessary or helpful for me to become a real estate agent?? Would it make sense?

  25. Greg Sonnier

    Great article. I followed all these steps which helped me rehab my first investment property. It’s under contract and now I need to learn what I am going to do with the profits from the sale. I understand a 1031 may not be an option unfortunately since I am not holding it for 1 year minimum.

  26. Jocaro Dodd

    Hi All,

    My name is Jocaro and I’m new to Bigger pockets. I’ve had an interest in flipping houses for a while, and my wife and I are now doing research in preparation to find our first deal… I have a few questions regarding step 2 in this article.

    the Quote from the article is, “Your team at the very least should be composed of real estate brokers, contractors, architects, insurance specialists, accountants and money lenders.”

    For my first flip, I’m looking for something that does’t require any repositioning. would and architect be required for a scope that include just installiing hard wood, new paint, upgrading apliances, and updating bathrooms?

    For homes that do require some repositioning, would you hire an architet to do the design or just have one on your team to bounce ideas off in the design phase?


  27. Tom Harvey

    Newbie here trying to make sense of flipping.

    I’ve read that most improvements result in less than a 1:1 ROI (for instance, spending $10,000 to put in a new floor would increase selling price by $10,000). Can someone confirm or explain this? Because if most or all improvements never result in more than a 1:1 return than why even bother (assuming cosmetic improvements for the “why bother inquiry”).

    I’ve also read from other investors that in certain markets installing a new floor (for example) for $10,000 could increase the home value by say, $20,000. So conflicting information.

    Where does one go to find such data in the local market? Besides asking a realtor.

    • Vaughn K.

      Ancient post, but for future readers…

      Basically it comes down to this:

      If you’re taking a perfectly serviceable kitchen, and tearing it apart to make it a fancy pancy kitchen, you will probably be looking at break even… But if you’re taking a kitchen that is trashed, cabinet doors falling off, no stove, etc you can come out ahead there.

      Also, it essentially comes down to when you buy it too. A house that is decent enough on all fronts to get conventional financing will sell for a reasonable amount, even if the kitchen is old, the carpet has seen better days but is okay, etc. If a house is not able to be financed, this almost instantly drops the price a ton… Even more than the cost of doing the rehab. So it is in this niche that one finds an opportunity.

      To use an analogy, imagine a perfectly fine running car, but that could use a major interior and exterior detail. Maybe the oil needs changed. But it’s in perfectly decent shape with a bit of spit and polish. This is the serviceable house that isn’t super shiny and modern. It will sell for close to what it is worth top dollar. Now imagine such a car where it also has a bad transmission. Maybe it’s a $10K car, and the transmission job will cost $4K at retail. Spit and polish another few bucks. Due to the sheer hassle of it such a car may sell for $3-4K. If you can get the tranny taken care of at retail price, or a little lower as many investors in houses do, then you stand to make a couple grand by the time it’s all done… Mainly because people are lazy.

      That’s about the whole of it.

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