How to flip a house step by step

What flipping a house involves

Flipping a house means buying a property that needs work, renovating it, and selling it for more than everything it cost you. The idea is simple. The execution is a sequence of decisions, each of which can add cost or time: what to buy, how to pay for it, what to fix, who does the work, and how to sell it.

This guide walks through those steps in order, from before you look at a house to after you sell one. It does not promise that any deal will make money. National data shows flipping margins have been narrowing: ATTOM's report for the second quarter of 2026 put the typical gross return on flips at 21.5% of the purchase price, down from 27.6% a year earlier, and that is before rehab, financing, holding, and selling costs. (Source: ATTOM Q2 2026 U.S. Home Flipping Report, attomdata.com.) A thinner market rewards careful underwriting more than it used to.

Step 1: set your budget and buy box

A buy box is the description of deals you will consider: price range, neighborhoods, property types (single-family, condo, small multifamily), age, and the size of rehab you can manage. Writing it down keeps you from chasing every lead and makes it easier for agents and wholesalers to send you the right ones.

Set your money limits at the same time. How much cash can you put into one project, including the down payment, closing costs, holding costs, interest, and a contingency for overruns? The guide on cash needed to close a flip shows how those pieces add up. Decide the minimum profit you will accept, in dollars and as a percent of ARV, before you see a deal you like.

Price range matters. ATTOM's Q2 2026 report found that homes bought for $50,000 or less produced a typical gross loss of $15,000, while homes bought between $100,000 and $200,000 had the highest typical gross margins nationally. Those are national gross figures, not a forecast for your market, but they are a reminder that the cheapest houses are not automatically the best flips.

Step 2: line up the money

Most flips are paid for with some mix of cash, a hard money or private loan, and occasionally seller financing. Hard money lenders lend on the property and the plan more than on your income, and commonly fund a share of the purchase price and some or all of the rehab through draws. Ask each lender what percent of purchase and rehab it funds, the rate, the points, the fees, how interest is charged on undrawn rehab money, how draws are inspected and released, the term, and the cost of an extension.

Get those answers in writing before you make offers, because they decide how much cash you need and how fast you can close. The hard money loan calculator on this site shows monthly interest, points, and total interest for a term you type. If a seller owns the house free and clear and wants income, the seller financing calculator shows what a carried note looks like, including a balloon.

Step 3: build your team

A flip is a small construction project with a real estate transaction at each end. You will need an agent who understands investors and can pull closed sales for you, a title company or closing attorney, at least one contractor you trust plus a backup, a home inspector, an insurance agent who writes vacant or builder's risk policies, and a CPA or tax attorney who works with real estate investors.

Check contractor licenses and insurance in your state, ask for references from recent jobs, and get bids in writing against the same scope so you can compare them. A low bid for a vague scope is not a low price.

Step 4: find deals

Leads come from listed properties that need work, wholesalers who put houses under contract and assign them, foreclosure and tax auctions, direct outreach to owners, and driving neighborhoods for vacant or neglected houses. Each source has trade-offs in price, competition, and how much you can inspect before you commit. Auctions, for example, often allow little or no inspection.

If you buy from a wholesaler, check their numbers rather than accepting the ARV and rehab estimate on their flyer. Their job is to sell you the contract. Assigning contracts or marketing a house you do not own can require a real estate license in some states, which is the wholesaler's issue to manage, but you should know who you are dealing with.

Expect to look at many properties for each one you buy. That is normal, not a sign you are doing it wrong.

Step 5: underwrite before you offer

Underwriting is where most of the money in a flip is made or lost. Start with ARV from closed, renovated comparable sales; the guide on how to pull comps and estimate ARV covers the process. Then scope the rehab: walk the house, list the work room by room and system by system, and price it. The rehab cost estimator gives a rough first number from square feet; bids replace it.

Add every cost line: buying costs, rehab, contingency, holding costs for the full timeline, financing, and selling costs. The guide on how to calculate fix and flip profit goes line by line. The fix and flip calculator on this site does the subtraction. Use the 70% rule calculator as a quick first screen if you like, but do not let a rule of thumb replace the full math.

From that, work backward to the most you can pay and still hit your minimum profit. That number is your walk-away price. Write it down before you negotiate.

If the flip does not pencil out, check whether the house works as a rental before you walk away. The 1% rule calculator is a quick screen; the rental calculator does the fuller math.

Step 6: make an offer with protection

Your offer should give you time and a way out if inspection or title turns up a problem. An inspection contingency, a reasonable due-diligence period, and a financing contingency if you are borrowing are common protections. A real estate attorney or your agent can tell you what is customary in your state.

During due diligence, get a full inspection, and for older houses consider sewer scope, roof, foundation, and electrical specialists. Confirm with the title company that the seller can deliver clear title and ask about liens, open permits, and code violations. Get an insurance quote for a vacant house under renovation. Re-run your numbers with what you learned, and renegotiate or walk if the deal no longer works.

Step 7: close and run the rehab

After closing, pull permits for the work that requires them. Unpermitted work can delay your sale, trigger a buyer's lender to refuse the loan, or force you to open finished walls. Set a written schedule with your contractor, tie payments to completed work rather than dates, and match the draw schedule to what your lender will release after inspections.

Track spending against the budget every week, and track the schedule just as closely. The guide on fix and flip profit shows how three extra months can cost more than a modest budget overrun once interest and holding costs are added. Decide in advance how you will handle change orders, and keep the contingency for surprises rather than upgrades.

Step 8: prepare, price, list, and sell

Before listing, finish the punch list, clean, and consider staging and professional photos. Re-check the comps: sales that closed while you were renovating are better evidence than the ones you used when you bought. Price from those closed sales, not from what you need the house to sell for.

Expect buyer inspection requests and possibly appraisal issues. Buyers using FHA-insured loans face an extra rule: if the buyer's purchase contract is signed 90 days or less after you closed on the house, the property is generally not eligible for an FHA-insured mortgage. If the contract is signed between 91 and 180 days after your purchase and the price is 100% or more above what you paid, the lender must get a second appraisal. Some sales are exempt, and HUD has proposed revising the rule, so check the current version with the buyer's lender. (Source: 24 CFR 203.37a, ecfr.gov.) If buyers in your price range commonly use FHA loans, plan your listing timeline around it.

When the sale closes, collect your settlement statement and every receipt from the project for your tax preparer.

Step 9: review the numbers

After each flip, compare actual numbers with the plan line by line: purchase costs, rehab, contingency used, months held, interest, selling costs, and the sale price against the ARV you underwrote. The gaps tell you what to change in the next deal's assumptions, whether that is a bigger contingency, a longer timeline, a different contractor, or a more conservative ARV.

Example

Illustrative example. A made-up timeline to show how time adds up. Two weeks of due diligence before closing, one week to pull permits, eleven weeks of rehab, one week of punch list and photos, four weeks on the market, and five weeks for the buyer's escrow is twenty-four weeks, about five and a half months from contract to sale closing. Holding costs and interest run for roughly the five months after the purchase closes, not just the eleven weeks of construction.

If holding costs were $700 a month and interest $1,900 a month in this made-up case, each month costs $2,600, so a one-month delay anywhere in that chain costs $2,600 before any extra rehab spending. None of these figures is a market rate or a real project.

Common pitfalls

Shopping for houses before the financing terms are known, then finding out at closing that the lender funds less of the rehab than you assumed.

Skipping specialist inspections on an older house and finding the sewer line, foundation, or wiring problem after closing, when it comes out of profit instead of the price.

Letting work start without permits to save time, then losing more time when a buyer's inspector or appraiser flags it.

Paying a contractor ahead of completed work, which removes your leverage if the job stalls.

Pricing the finished house from the number you need instead of from closed sales, then sitting on the market while holding costs run.

Sources

ATTOM, Q2 2026 U.S. Home Flipping Report, attomdata.com. Gross returns by purchase price range and the year-over-year change.

Code of Federal Regulations, 24 CFR 203.37a, Sale of property (FHA property flipping rules), ecfr.gov.

Steps

1. Set your budget and buy box

   Decide the price range, neighborhoods, property types, and rehab size you will take on, and the minimum profit you will accept.

2. Line up the money

   Know whether you are paying cash, using a hard money or private lender, or asking a seller to carry a note, and what each will fund.

3. Build a team

   An investor-friendly agent, a title company or closing attorney, a contractor or two, an inspector, an insurance agent, and a tax professional.

4. Find deals

   Listings, wholesalers, auctions, direct mail, and driving neighborhoods all produce leads. Most will not pencil out.

5. Underwrite before you offer

   Estimate ARV from closed comps, scope the rehab, add every cost, and set a maximum price before you negotiate.

6. Make an offer with protection

   Use an inspection contingency and enough time for due diligence, then confirm title, permits, and insurance before closing.

7. Close and start the rehab

   Pull permits, set the schedule and draw plan with your contractor and lender, and track spending against the budget each week.

8. Prepare, list, and sell

   Finish punch-list items, price from current closed comps, list, negotiate inspection requests, and close the sale.

9. Review the numbers

   Compare actual costs and timeline with your plan and adjust your next underwriting.

Questions