Your quick-start guide to profitable real estate flips

Flipping properties can be one of the fastest ways to build wealth in real estate—if you know how to spot the right deal. But without a solid process for identifying and analyzing properties, it’s easy to overspend, under-improve, and lose profits to costly surprises.

In this blog post, we’ll walk you through how to find a great flip opportunity, assess its potential, and make sure the numbers make sense before you swing the first hammer.

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🔍 Step 1: Know What Makes a Good Flip

Not all “fixer-uppers” are created equal. A profitable flip usually checks off these boxes:

• Below-market price due to condition, distress, or motivated sellers
• Located in a desirable or up-and-coming area
• Strong resale demand and comparable homes selling fast
• Minimal structural issues (no foundation or roof nightmares)
• Clear ROI after renovations and holding costs

✨ Pro tip: Always start with the end in mind. Research what renovated homes sell for in the area before deciding if a property is worth flipping.

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🧭 Step 2: Use the 70% Rule

The 70% rule is a quick formula flippers use to estimate a property’s max purchase price:

Maximum Purchase Price = (ARV x 70%) – Repair Costs

Where ARV = After Repair Value
Example:
If the ARV is $300,000 and repairs cost $50,000:
→ (300,000 x 0.70) – 50,000 = $160,000 max purchase price.

This gives you a safety cushion to cover closing costs, holding expenses, and profit margin.

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🔨 Step 3: Estimate Repair Costs Realistically

Don’t eyeball it—get specific. Walk through the property (or photos/videos if remote) and create a repair estimate based on:

• Exterior improvements: Roofing, siding, landscaping
• Interior updates: Kitchen, bathrooms, flooring, paint
• Major systems: HVAC, plumbing, electrical
• Permit-related work: If required by the city

Use a repair cost calculator or work with a contractor for accuracy. Overestimating is better than underestimating.

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📊 Step 4: Run Comps Like a Pro

To determine ARV, you need solid comps (comparable properties). Look for:

• Homes sold within the past 6 months
• Within a 1-mile radius
• Similar size, layout, and style
• Recently renovated condition

Use sites like Zillow, Redfin, or access the MLS through an agent to get accurate data.

🛠 Real Estate Tools like Realeflow’s Deal Analyzer can make this part lightning-fast.

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⚠️ Step 5: Factor in Holding and Selling Costs

Don’t forget the “silent killers” of your profit:

• Holding costs: Utilities, taxes, insurance, loan interest
• Selling costs: Agent commissions, closing fees, staging
• Buffer: Unforeseen repairs or delays

Create a budget that includes these extras. A flip that looks good on paper can turn into a loss without this step.

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📦 Step 6: Consider Your Exit Strategy

You might plan to flip—but what if the market shifts? Always have a Plan B, like:

• Renting the property short-term or long-term
• Selling to another investor as-is
• Holding the property and refinancing

Your ability to adapt = your ability to stay profitable.

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Final Thoughts

Flipping houses isn’t about gambling—it’s about due diligence and data-driven decisions. By learning how to properly identify and analyze flip opportunities, you set yourself up for flips that fund your freedom, not drain your wallet.

Need help analyzing your next potential flip? Tools like Realeflow’s Deal Analyzer and Repair Estimator can save hours of guesswork.

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