New to Flipping? Learn These 5 Tricks

House flipping can be a lucrative investment strategy, but it requires knowledge, planning, and execution. Here are five essential tricks that every new flipper should master.

1. Buy Right, Profit Right

The most important rule in flipping is purchasing at the right price. Follow the 70% rule:

Never pay more than 70% of the after-repair value (ARV) minus repair costs.

For example:

ARV: $300,000
Repair costs: $50,000
Maximum purchase price: ($300,000 × 0.70) - $50,000 = $160,000

2. Focus on High-Impact Improvements

Not all renovations are created equal. Focus on improvements that provide the best return on investment:

High ROI improvements:

Kitchen updates (modern appliances, countertops, cabinets)
Bathroom renovations
Fresh paint throughout
New flooring
Curb appeal enhancements

Avoid costly renovations like:

Adding square footage
Luxury finishes in starter home markets
Over-improving for the neighborhood

3. Build a Reliable Team

Success in flipping depends on having trustworthy professionals:

General contractor: For major renovations
Real estate agent: Who understands investment properties
Accountant: For tax planning and record keeping
Insurance agent: For proper coverage during renovation
Attorney: For legal guidance and contract review

4. Understand Your Market

Research your target market thoroughly:

Study comparable sales in the area
Understand what buyers in that price range want
Know the average days on market
Identify the best times to buy and sell
Research neighborhood trends and future development plans

5. Plan for the Unexpected

Always build contingencies into your budget and timeline:

Financial contingencies:

Add 20% to your renovation budget for unexpected costs
Keep additional funds for carrying costs if the sale takes longer
Account for transaction costs (realtor fees, closing costs, taxes)

Timeline contingencies:

Permit delays
Weather-related setbacks
Contractor availability
Material delivery delays

Getting Started

Begin with smaller projects to gain experience before tackling major renovations. Consider starting with cosmetic flips that require mainly paint, flooring, and minor updates before moving on to gut renovations.

Remember: successful flipping is about making smart business decisions, not just creating beautiful spaces.