Fix & Flip
Buy distressed properties, renovate, and sell for a profit.
Fix & Flip is short-term real estate investing: buy a property below its potential market value (typically distressed, dated, or in disrepair), renovate it to current standards, and sell it to a retail buyer at the After-Repair Value (ARV). Your profit is the spread between ARV and everything you spent — purchase, closing, renovation, financing, holding, and selling costs. Most flips run 4-9 months end-to-end.
- 1Acquisition
Find a property at a price low enough that there's room for renovation costs and profit. Often financed with hard money (fast close, 10-14% interest, interest-only) since you're holding short-term.
- 2Renovation
Bring the property up to neighborhood standard — kitchens, baths, flooring, paint, mechanicals as needed. Build in a contingency (10-15%) because the wall always has something behind it.
- 3Hold
Every month you own the property, you're paying taxes, insurance, utilities, and loan interest. Time on the books is the silent profit killer — efficient renovations win.
- 4Sale
List at ARV, pay agent commissions and closing costs (typically 7-9% of sale price combined), repay the loan, and pocket the rest.
The single most important — and most often overestimated — number in the deal. Pull from recent SOLD comparables of fully-renovated homes in the same neighborhood, condition, and size. Not listings — sold prices.
What you keep after every cost. Your headline number. Should justify the time and risk.
Total cash returned ÷ total cash invested. A 1.5x multiple means $50k in becomes $75k out. Industry rule of thumb: aim for ≥1.5x.
Purchase + reno should stay under 70% of ARV. The 30% buffer covers selling costs, financing, holding, and your profit. If a deal blows past 75%, the math is fighting you.
How far ARV can drop before you break even. A 15%+ margin means the market can soften and you still don't lose money.
- The property has clear, identifiable distress with a renovation path to neighborhood standard.
- You have access to short-term capital (hard money, private lenders, cash).
- Your market has retail buyers willing to pay ARV — not investors looking for the same discount you got.
- You can manage contractors and stay on schedule, or you have a project manager.
- You can carry holding costs through unexpected delays without strain.
- Optimistic ARV. Use solds, not listings. Comp the same exact bed/bath/sqft/condition.
- Scope creep. Decide upfront what's in and out. Every "while we're at it" item compounds.
- Holding-cost drift. Every extra month is taxes, insurance, utilities, and 1+ months of loan interest. A 6-month flip that becomes 9 can erase the profit.
- Market timing. If you buy at the top of a hot market, ARV can soften by sale time.
- Permits and inspections — budget for them, factor them into the timeline.