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Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
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Tune in to HGTV on any given day, and you’ll come across programs where smiling people transform eyesore properties into jaw-droppingly beautiful homes. Sometimes these magicians are professional real estate investors, sometimes they’re just ordinary individuals — but they almost always resell the newly renovated property for a tidy profit.
Welcome to the lucrative world of flipping houses. According to real estate data firm ATTOM, nearly 68,000 U.S. homes were flipped in the first quarter of 2024 alone — that’s one out of every 12 homes sold. What’s more, ATTOM data shows that the flippers typically earned a gross profit of more than 30 percent on each transaction.
Of course, house flipping in real life is almost never as easy as it looks on TV. If you’re interested in giving it a try, here’s a guide to flipping houses for beginners.
House flipping is when someone buys a property, holds on to it for a short time and then sells it for a higher price. The quick-turnaround resale is why it’s called a “flip.” So instead of buying a home to live in as a residence, you’re buying it as an investment — in effect, speculating in it as you would a stock.
Sometimes, flipping houses means you buy a fixer-upper and renovate it to make it market-ready; other times, it means just holding the property until the market shifts and you can sell it for more than you paid for it. Either way, the goal is to buy low and sell high, earning a profit in a relatively short amount of time (usually within a few months to a year).
House flippers need a lot of money on hand for the upfront costs of purchasing, carrying and renovating the home, and they have to budget very carefully to make sure they don’t spend more than they’ll be able to earn back in resale. They also need a team of trusted contractors and service providers at the ready to get any needed work done as quickly as possible.
There are many rewards associated with house flipping, but there are serious risks, too.
While there is financial opportunity in flipping houses, don’t get into it without significant capital, guidance and preparation. Here are some common mistakes to avoid.
When it comes to flipping houses, it’s easy to be blinded by the potential for huge profits. But before jumping into a project, be sure you can afford a potential loss. Even if the renovations go perfectly according to plan, the real estate market can be volatile, and high interest rates mean there are fewer buyers out there who can afford a home purchase. Save your future self by keeping a solid emergency savings fund in case you lose money, and be sure you have a trustworthy team to work with before you buy.
Arrow Right Contributor, Personal Finance
Dori Zinn has been a personal finance journalist for more than a decade. Aside from her work for Bankrate, her bylines have appeared on CNET, Yahoo Finance, MSN Money, Wirecutter, Quartz, Inc. and more. She loves helping people learn about money, specializing in topics like investing, real estate, borrowing money and financial literacy.
