Real Estate Strategy
Fix & Flip
Buy a distressed property, renovate it, and sell for profit. Simple concept — but the details determine whether you make money or lose it.
How It Works
You find a property below market value — usually because it needs work, the seller needs out quickly, or it's been sitting. You purchase it, complete renovations, and sell at or near market value within a defined timeline.
The margin between your all-in cost (purchase + rehab + holding costs + closing costs) and your sale price is your profit. Most flips run 6 to 18 months. The faster you move, the lower your holding costs.
The Math That Matters
ARV (After Repair Value)
What the property is worth fully renovated. This drives everything else.
Purchase Price
Typically 65–75% of ARV minus rehab costs for a safe entry point.
Rehab Budget
Detailed scope of work. Add 10–20% contingency. Cost overruns kill margins.
Holding Costs
Loan interest, property taxes, insurance, utilities — every month it sits costs money.
Selling Costs
Agent commissions (5–6%), closing costs, concessions — typically 8–10% of sale price.
Typical Funding
Most flips are funded with hard money or private capital — not conventional mortgages. Here's why:
- —Hard money lenders move fast, lend on asset value, and don't require stabilized income. Rates are higher (9–14%) but the speed and flexibility justify it on short timelines.
- —Private capital is often more flexible — negotiated terms, potentially lower rates, relationship-based. Good for investors with a track record.
- —Down payment typically 10–25% of the purchase price, depending on lender and deal quality.
What Makes Them Work
- —Buying below market with clear ARV
- —Tight, accurate rehab scope
- —Fast execution — minimal holding time
- —Strong buyer's market or stable conditions
- —Reliable contractor relationships
What Kills Deals
- —Overpaying at purchase
- —Rehab cost overruns
- —Timeline delays (more holding costs)
- —Market softening during hold
- —Overestimating ARV
Is Fix & Flip Right for You?
Fix & flip works well if you:
- —Can identify and access below-market deals
- —Have or can manage reliable contractors
- —Understand the local market and realistic ARVs
- —Are comfortable with short-term capital tied up
- —Have a clear, realistic exit strategy
Not sure if your deal pencils out? Send it to me and I'll take a look.