Flip Your Way to Financial Independence


By Andy and Liz Kolodgie (24 1/2 minute read)

Have you seen all of the house flipping shows on TV? Every single one? But now you’re wondering how to get into fixing and flipping houses yourself? We cover the ins and outs of flipping houses, from finding a “good” deal to leveraging creative finance techniques and lowering your chances of ever having a flop.

House flipping has not changed dramatically since its inception. Sure, designs and styles have shifted, progressing from pastel-colored bathrooms and country-style kitchens to white accented bathrooms and open concept kitchens. But, the process of the flip itself has remained consistent in its simplicity:

  1. Buy a house in disrepair.
  2. Renovate the house.
  3. Sell the house for more than it cost to do steps 1 and 2.

One noticeable evolution from “old school” to “new school” house flipping arrives at step 1 in the form of lead generation. Although the old-school tactics such as direct mail marketing and bandit signs are still useful, millennials have transitioned primarily to digital infrastructures such as Facebook/Google ads, SEO, and joining buyer’s lists online. These new tactics provide the ability to reach a vastly wider audience and let the leads come to them without leaving their home. 

Millennials are keenly aware of technology’s power and have a significant advantage over the old schoolers when it comes to usability. This shift in acquiring houses to flip could be the advantage that is needed to beat the older competition. Let’s dive into flipping houses as a millennial in 2021.

How to Fix And Flip Houses in 2021

Gain A General Knowledge Of Real Estate

Real estate encompasses more than just house flipping, and it’s essential to speak the language. There are infinite resources to begin learning about real estate to gain a strong foundation. Start your journey by doing some basic research and taking the time to understand your market. Join local groups online and interact on real estate forums by asking questions. Let’s explore these fundamental tasks that will allow you to hold a more productive conversation when you start talking to realtors, sellers, contractors, lenders, and title attorneys.

Use Groups and Organizations

A community-driven website and a podcast– this is a great way to listen and learn and ask questions in the forums. BiggerPockets can be an effective way to meet other local investors in your region. The platform includes both regional forums and topics. Browsing the topics should help answer some of the common questions when first getting started and recent experiences and investing styles. 

Facebook Groups

Joining Facebook groups related to house flipping and real estate investment strategies is another common way to meet people with similar interests, and each region has its own Facebook group, as well. These groups are often filled with house flippers and can get found by searching “State/City Investor Network,” where “State/City” is the area you are looking to flip houses.

REIA organizations

Connect with local REIA organizations if you want to focus as local as possible and have real in-person interactions. These organizations are often paid (although the cost is low), but this cost typically weeds out many new members, allowing for a higher quality group and better connections. 

Do The Market Research

If you choose to fix and flip houses locally or at a distance, in a city or a rural area, you’ll need to understand the fundamentals of your real estate market. Dive deeper into what types of homes (i.e., bi-level vs. ranch, 3 bed/2 bath vs. 4 bed/4 bath, etc.) sell better in terms of price and speed than others and why (is your area filled with families and kids or single young professionals?). Use websites such as Zillow and Redfin to access the data of similar homes that have been sold. Once you understand the “buyer persona,” determining which properties are worth your time to fix and flip will be markedly easier. 

Price is not the limiting factor when house flipping. Sale timelines can limit your profit margins and are, therefore, a good indicator of house flipping market quality in your area. Further, it’s important to network within your market by joining Facebook groups and local REIAs. Working alongside other wholesalers and flippers will provide you a wider variety of deals (that they are assigning/wholesaling), which can be pivotal to your success. Don’t forget to shop your competition. Who is the best house flipper in your market? You can typically find the best local house flipper by searching we buy houses or “cash home buyers” on Google. Find out what is driving their success, and implement the great things they are doing: “The absence of copying is called a monopoly.”

Related read: Investing in Real Estate: Top 14 Ways

How To Finance This Purchase?

Fix and flip properties typically require cash at closing. With this, conventional financing is generally not allowed. Most millennials do not have access to hundreds of thousands of dollars in cash, so typically, they start with hard money lenders to access capital. Over time, as experience increases, house flippers will graduate to a combination of private lenders and a guidance line of credit. Let’s explore some of the most common ways to close a transaction without getting a mortgage from a bank.


Using cash to purchase a property is beneficial in highly competitive areas because you don’t have an interest rate and/or points cutting into your profit margin. If you haven’t saved up enough money to buy a home with cash, there are other financing options.

Hard Money Lenders

Hard money lenders are organizations that lend money to people based on hard assets (real estate). If ever, they rarely require a credit score check and typically don’t care about your W-2 income. Their primary concern is the value of the property plus your plan and experience to repay the loan. Hard money lenders typically have 2 to 4 costs associated with them. The first is the initial points for requesting the loan (this gets paid at closing), which can vary between 2 to 4 points (Note: points are equivalent to a percentage of the loan, so 4 points is 4% of the loan). Further, there will be monthly interest-only loan payments. The interest on these payments is typically between 10-15% and varies heavily based on experience (i.e., the more experience you have, the lower your rate and vice versa).

Related read: How to Get Out of a Debt Spiral

Private Lenders

Private lenders are people, just like you and me, who are willing to loan money at a rate lower than a typical hard money lender. These people are typically doctors, lawyers, other real estate investors, or Mom and Dad who have an abundance of cash and are having a hard time finding a place to invest it. You may be surprised by how much money is out there just sitting and waiting to get used. Private lenders get found almost exclusively through your network. If you’re meeting a private lender on the internet from a Facebook advertisement, they are probably not a “private lender.” Private lender rates and points are negotiable– many real estate investors negotiate non-personal recourse loans based exclusively on the asset. These loans can go as low as 7% with 1.5 points.

Credit Cards

A more creative financing strategy is utilizing credit cards when fixing and flipping houses. Credit cards can be used to your advantage for materials and potentially labor. The advantage of credit cards is that you can leverage 0% APR cards such as Chase Freedom (typically, this is given as a sign-up bonus and lasts for a year). Using credit cards at 0% interest will allow you to avoid the high rates charged by hard money lenders. To avoid a hit on your personal credit from having a high balance on your credit cards, use a business credit card instead (e.g., Amex Blue Business Cash). Business credit cards typically do not report credit utilization to personal credit agencies, and therefore do not impact your credit score.

Related read: Credit Card Features

Guidance Line Of Credit

A guidance line of credit (GLOC) is the penultimate lending situation. A GLOC is a bank or credit union’s commitment to lend you up to a certain amount of money each year at X% interest rate with X points. The interest and points are substantially lower than hard money lenders and even many private lenders. The interest usually floats at 1 + prime rate, and the points are between 1 and 2 per transaction. The GLOC will allow you to lend up to ~70% of the ARV of the property, so you’re bringing substantially less cash to closing, and your interest rate is much lower. Combine this with a business credit card, and you will be a flipping machine! Unfortunately, GLOC’s are the most difficult to get as they require some level of experience and banking relationships.

Related read: How to Pay Off Debt Fast 

Who’s On My Team?

Getting your team together is one of the most important pieces of house flipping. Essential team members include a title company/attorney, general contractor or subcontractors (if you aren’t going fully DIY with the repairs), and a real estate agent.

Title Company/Attorney

Finding a title company is probably the easiest of the three-team members to find. Check local ratings and reviews and the price of settlement online. Ask around in local groups for recommended title companies, and usually, a few will get continuously recommended. Different states have different requirements for closing– not all states require a title company.


There are two primary types of contractors, general contractors, and subcontractors. General contractors are for those who would prefer to have management over a project. Their job is to manage the subcontractors and give direction in terms of workflow and progression. General contractors typically add 30% to the total labor cost for a project and are usually paid by the job. General contractors take on some amount of risk for unintentional failures. However, unforeseen issues still would be covered by the owner. 


Subcontractors include electricians, plumbers, handymen, etc. Also, subcontractors typically don’t work as a company and have to be hired and paid individually. If you’re managing your own project, the challenge comes with getting the timing right to avoid significant delays. 

Making Comparisons

It’s essential to ensure that all contractors are licensed and insured (general contractors and subcontractors). If you hire someone without insurance, there can be difficulties with getting any permit code issues rectified. When interviewing contractors, it’s vital to ask about the timeliness of the work and cost.

Further, ask if they’ve ever worked in your region as code requirements can vary from county to county, and permit delays can substantially impact your project. Understanding how much to pay a contractor can be difficult if it’s your first time. Many new investors make the mistake of hiring the “cheapest” contractor. Generally, you get what you pay for, and hiring a cheap contractor will make the process more difficult (failing inspections, delays, additional costs).

Real Estate Agent

The vast majority of agents are focused solely on retail buyers and sellers. However, finding and working with an agent who understands real estate’s investment side is advantageous. Typically, these agents will have their own investments, be involved in a REIA, or be locally known for their high-volume real estate investment transactions. It’s essential to look for real estate agents in a couple of ways. 

First, check online forums and Facebook groups to see who is the most active. The agents who are involved in the community are the ones with the best information. Another way to find agents who specialize in investment properties is by calling people in the REIAs and joining Facebook groups to find recommendations.

Finding A Home To Fix and Flip

This is the part of house flipping that is rarely shown on television or discussed when speaking about a house fix and flip. However, this is the most important part! You can’t get started without a house, and it can’t be just any house– it needs to be a good investment that you can flip instead of a flop. So, what’s the most effective way to find a house that meets the “good investment” criteria in 2021?

Old School Tactics
Direct Mail Marketing

An old-school marketing tactic that is still heavily used is Direct Mail Marketing (DMM). DMM consists of sending yellow letters in the mail in the hopes that they view it. DMM almost always gets combined with a list of motivated sellers. House flippers buy lists of motivated sellers from public and private organizations. These lists contain homeowners with pain points such as foreclosure, divorce, tax liens, bankruptcy, etc. They will then send a targeted mailer to the homeowner in the hopes that they want to sell. The success percentage varies from market to market, but a ballpark average is 5,000 mailings to one deal. Each mailing costs between 35 cents and $2.00, depending on type and quality. 

Bandit Signs

Another common tactic is Bandit Signs. We’ve all seen them on the side of the road. Most say, “We Buy Houses For Cash, Fast XXX-XXX-XXXX.” In most localities, bandit signs are against the county ordinance. However, due to their effectiveness, the marketing tactic is still used. Material cost ranges from $1-$2 per sign and another $1 in labor. Bandit signs generally do not work well in higher-end markets.

Door Knocking

Door Knocking is a highly effective tactic for lead generation when you have more time than money. Like DMM, house flippers will use a list to find leads, drive to each homeowner’s residence, and knock on their door to discuss the situation. An advantage of door knocking is that the conversation is more likely to be successful than sending a letter. It’s important to understand that many other people use the same marketing tactics (DMM especially). Therefore, going face-to-face will provide you a unique advantage. Although the percentage of success may be higher with door-knocking than with DMM, door knocking is time-intensive.

Driving for Dollars

Driving for Dollars is a powerful tactic that even the “pros” use. You would generally drive around your local area searching for homes in distress (homes apparent signs of disrepair or long-term vacancy). At this point, you would either approach the house or write down the address for later and send a postcard. The advantage of driving for dollars is that not every home in distress has a “typical” pain point. Some homeowners are just going through a rough patch. 

Related read: 28 Top Side Hustles – Make An Extra $1000 a Month in 2021

New School Strategies

Pay Per Click (PPC) 

Pay Per Click (PPC) is super popular, especially with Google ads and Facebook ads. However, this marketing strategy can get expensive quickly. Real estate keywords are highly competitive and therefore super expensive in Google ads land. Not to mention, most people clicking on Google ads are just curious about how much you can offer for their home in cash rather than coming to you with a need to sell now because they’re moving out of state or any other motivating scenario. Facebook ads take time and money to A/B test your ads. By the time you’ve collected enough data, you will most likely have spent a decent amount, so if you go this route, make sure you have the funds.

Search Engine Optimization (SEO)

As cash home buyers and house flippers ourselves, we find our leads using Search Engine Optimization (SEO). SEO is a long-term strategy that doesn’t cost much money except setting up a website (paying for a domain and hosting platform). However, there is a lot of time involved if you choose to learn about SEO and implement it to rank your website, but even if you pay someone else to do it. Google takes time to understand all on-page and off-page SEO signals. SEO is an entire topic within itself, but just know that SEO is the buy-and-hold strategy for marketing. It takes time but can be very affordable if self-taught.

Connect With Wholesalers

Another option for finding a house to fix and flip is to connect with wholesalers or “we buy houses” companies who buy properties at deep discounts. They are looking to assign the contract to someone who wants to flip the house. It allows them to put in all the lead generation work (and you will pay a little more for the house because of this). But, you save time and money to do that overhead yourself. You can join buyers’ lists in your area on Craigslist or through an organic Google search to get notified when an investor has a new deal under contract.


The MLS is another online place to look. However, if you are flipping houses in a metropolitan area or anywhere that is competitive, it will be hard to find good deals on the MLS. Typically the “good deals” get picked up by investors before even making it to the MLS.

Which Method Should I Choose?

Due diligence is critical when choosing one (or multiple) marketing methods. During this research, see if any of the strategies pique your interest. It doesn’t matter which way you choose. What matters more is that you master it. In the long run, SEO offers the highest quality leads in addition to the lowest ongoing cost. However, SEO can take years to master and as mentioned earlier, waiting to do your first deal is the worst thing you can do. Gaining that early experience in house flipping is crucial to building credibility and trust within your local area.

What’s A “Good” Fix and Flip Deal?

A good deal needs to fit within your budget and also produce a profit. No matter what marketing strategy your deal comes from, checking if the deal is “good” follows the same process.

After Repair Value (ARV): This is the home’s market value after it gets renovated.

Cost Of Repairs: This estimates how much it will cost to renovate the house to current market conditions. This should be directly quoted from an expert (usually a contractor) you trust.

Selling Costs: This estimates the cost of selling commissions, excise tax, property tax, utilities, insurance (title and property and escrow fees.) It’s typically around 10% of the ARV, but this can get calculated almost precisely.

Return On Investment (ROI): This is your profit margin on the flip. It’s typically between 10% and 20% of the ARV.

A good deal is equal to or less than the ARV minus Cost of Repairs minus Selling Costs plus ROI. Creating a spreadsheet with all essential values will help keep you organized and reused for future fix and flips. Let’s dive into how to calculate these values.

Find The ARV

It’s time to do comparables (comps) research. There is software that can assist with this, such as PropStream. But, if you have a local realtor you trust, they can also provide great insight into the ARV of the home. Zillow, Redfin, and other real estate marketplaces estimates are not recommended when finding the ARV as the data is typically skewed, especially in rural areas where fewer comps exist.

You want to be looking at similar homes in terms of square footage, bed/bath ratio, number of stories, lot acreage, location, and year built. Once you find a comp (or several), you want to see what price the house sold for, and in what year. The more recent the sale, the better indication you will have of what you can sell for (and the condition required to sell at that price). After arriving at a ballpark ARV, confer with a local agent to confirm your number. An agent can provide useful insight specific to your area that you may not have thought about when doing your research.

Consider the Cost of Repairs?

How you go about the repairs on your fix and flip is totally up to your skillset. If you are handy and know handy friends who can help you, go for it! It is a great way to save money when first starting to fix and flip houses. If you lack contractor skills, you are better off leaving it to the professionals. They have the experience to get it done faster, and we all know time is money. Another benefit of hiring a contractor is knowing the permitting process and familiar with the county’s code. Not passing permit inspections can add significant time delays and expense to the process.

Ideally, comps with pictures provide a starting point for the flip in terms of renovations. For example, the material of countertops, flooring material, updated roof and/or new windows, etc., are pieces you can show a contractor (if you aren’t doing the repairs yourself). This gets everyone on the same page regarding price points and what you’re looking to have done during renovations.

When conducting comp and market research, figure out what house you need to create for your ideal buyer. The perfect buyer is the “average” buyer in your market. For example, if you’re flipping a 1 bedroom condo, the buyer will likely be a first-time home buyer looking to get out of renting. And, you probably won’t need stainless steel appliances or fancy faucets. However, if you’re flipping a 4 bed/3 bath home, you’re likely designing for a family. Families will have more requirements that revolve around their children.

If you’re fixing and flipping houses in a warm location such as Florida, a pool could be important. If you’re in the Northeast, where it snows often, a garage may hold more value. These decisions come down to what the majority of the comps in the area look like. If you add the wrong amenities, you will be unable to recoup the cost that you spent. Further, it’s important not to over-improve a home when flipping. It’s easier to under-improve and offer a discount than to over-improve and get forced to sell at a discount. Plus, your repair cost on an over-improved home will be higher, which eats further into your profit.

We highly recommended waiting to purchase a property until you have seen it in person and given it a thorough walkthrough (ideally with a contractor or someone who knows what to look for). This gives you the best indication of the home’s condition. Moreover the contractor can give you estimates for all of the work that needs to get done right then and there. This will make your offer way more accurate because you know exactly what all the renovations will cost. This step is even more important if you were unable to find comps. Then, you can create and lay out your plan for the flip and price it out.

Determining Selling Costs

Now that you know the ARV and repair costs, you can estimate the selling costs. Selling costs include:

  • Holding fees.
  • Closing costs (buyer and seller).
  • Agent commission (if reselling with a realtor).

Holding costs encompass utilities, taxes, home insurance, maintenance, and HOA fees (if applicable). Make sure to multiply these holding costs by the number of months you may be holding onto the property (this is an estimate based on your market research, and it’s better to go conservative). The selling costs can get estimated nearly exactly except for the holding period.

Return On Investment

Determining your profit can be tricky. Of course, you want to maximize this, but you may not even get the house if your offer gets outbid if there’s a lot of competition. How you are funding the flip is also crucial. If you don’t have enough cash and need to pay interest to a lender, this will typically cut into your profit as your competitors will either have a lower interest rate or be able to fund the fix and flip with their own cash. In a more competitive market, when you’re just starting, taking an 8-10% profit margin should be considered “good.” As you scale and get more effective, your margin should increase dramatically to 17-20%. However, in less competitive markets (or markets with no competition), margins can vary wildly to as high as 50%+.

This is why it makes finances essential to figure out before putting in the offer. If you think you have enough cash to afford the home and later find out you need to use a hard money lender with a 13% interest rate and 3 points, this will change what you can offer for the house or cut into your profit! Get your finances in order, then make your offer.

Renovation Time

“Make Your Profit When You Buy, Not When You Sell”

Warren Buffett

This is the last step (other than putting the home back on the market). If you’ve prepared and executed all of the previous steps correctly, you know this is a good deal. You’ve walked the property with a contractor or expert. And now, you know what the flip will look like, along with the cost. You’ve also conferred with a realtor on the ARV and know your budget. It’s time for execution. 

An early morning close on the property will let you and/or your contractors get started on the renovations that day. Flipping as quickly as possible is crucial to maximizing your profit. Every day you don’t sell the house, your holding costs increase (interest, taxes, insurance, etc.), which can amount to a couple of hundred dollars a day in most regions. If permits are required, schedule permitting inspections a week ahead of time to avoid delays. Unknown issues can (and probably will) arise if you’re doing a full gut. But, as long as you have a team you can rely on and have the time to act quickly, your profit can still be positive.

If something is going to eat your budget in a flip, it will usually be delays. One of the more considerable risks in a fix and flip is failing a permitting inspection. Always, I repeat, always schedule your permitting inspections ahead of time. Some contractors charge a significant amount extra to have them handle the permits. If this is something you want to take on (and it’s quite simple to do), be sure to manage the communication between the inspection and the completion of the task at hand with the contractors. 

Delays can also come in the form of poor contractors. If this is your first experience with contractors, there are a couple of “basic rules”. First, do not pay more than 0-⅓ upfront. Some states have laws around this. For example, California says you can not ask for any upfront labor costs (only material). However, Maryland is ⅓ in labor upfront. Next, have a fully vetted and well-documented contract with your contractors. Specify when they will get paid and how. Pay them at each completed step. Then, be sure to hold back some amount of funds until they are fully done, including passing all inspections.

Related read: How to Make a Budget

Fix and Flip Risks

Major damage to look out for before purchasing a property is water, fire, mold, and termite damage. Fire damage is easy to spot unless it’s hidden behind drywall. Make sure to check the attic for any noticeable signs. If the attic is painted, be sure to peel some of the paint to check for charring, as fire restoration experts will paint over the charred wood to protect it from further deterioration. 

Next, water and mold damage go hand in hand. Check for smells both in the air, the closets, the bathrooms, and the basement. Small areas that are not black or large are typically easy to remediate, given that they are not touching drywall. However, if there is extensive mold damage, then the cost can be astronomical. Be sure to check with an expert. There is mold damage if there is standing water, or there will soon be unmaintainable mold damage. 

To look for termite damage:

  1. Check for blisters in the wood or any evidence of termite wings near windows or doorways.
  2. Check for termite droppings near and around the house’s edge (both inside and outside).
  3. If you are unsure that there is termite damage, contact an expert as termites can quickly mean you have to tear down the home. 
Back On The Market

It can be tempting to sell “For Sale By Owner,” also known as FSBO. However, using an agent can make for a faster and better sale. A real estate agent has the experience, connections, and local market knowledge because selling houses is a huge part of their job! Spending the 2.5-3% commission is worth it to free up your time for acquiring and flipping the next house.

What If The House Isn’t Selling?

This is a common issue among new house flippers and is often seen when the repairs exceed the comps, or the home didn’t get bought at a low enough price initially to afford the repairs needed. Either way, you are better off taking a loss and moving onto the next house than losing money in holding costs and keeping your money tied up when you could be putting it towards a flip instead of a flop.

Fix and Flip Final Words

Like many things, house flipping is easier said than done, and there are risks. But, your due diligence must get done beforehand to mitigate known risks. If you don’t feel ready to fix and flip a house until you’ve read the building code’s newest release or you’re waiting for the market to stop shifting, shift your mindset. You can start taking real actionable steps today to make house flipping your side hustle or full-time business.

No matter how you go about fixing and flipping houses, the process itself will have surprises and challenges along the way that you will have to overcome (but that’s what makes this process fun– every fix and flip is unique). As a millennial, you are uniquely qualified in digital forms of communication such as social media. Innovate and use new medians going forward as a way to propel your house flipping business (or side hustle).

Flipping houses is only a small part of real estate and a great place to begin.

[vc_message message_box_style=”solid-icon” message_box_color=”blue”]This article originally appeared on The Financially Independent Millennial and was republished with permission.

TheFinanciallyIndependentMillennial posted on SouthFloridaReporter.comMay 13, 2021[/vc_message]