How Much Money Do You Need to Start Flipping Houses?

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  • House flippers need to be well capitalized and I think most people in this business forgot about this one key aspect. They take all of their savings and use it for the down payment and have nothing in reserves.

    Most of the time your flips will run over and you’ll need the reserves to cut the check. The capital gives you flexibility in the deal and allows you to make more rational decisions.

    Banks, hard money lenders, and crowd funding companies will always lend to the person with the higher reserves.

  • Great article, thanks!
    I want to get into flipping houses but don’t have any of the basic labour training. What would you advise as far as the best way to start learning?

    • Do you have any contractor friends or handy friends? I would start with the people you know and see if you can help them and learn at the same time.

  • I’d like to start flipping houses. I have some savings to sink into rehab costs and can do some of the work myself (demo’ing, painting, tiling, designing) but will need a contractor, plumber and electrician and possibly a structural engineer for actual construction work and whatever else needs to be done. A friend of mine is willing to finance the purchase/loan and pay for mortgage and closing costs while I finance all rehab costs. What percentage of the net profits would be appropriate to pay my friend for getting the loan on the property? He would not be doing any of the rehab work or time put into finding/selling the property. Also, what % should I estimate in outsourcing the rehab work (that I can’t do myself) in order to make a profit on the resale?

    • Hi Rebecca,
      In my experience I usually see a 50/50 split in your situation. You can negotiate whatever you can, but the deal can’t be done without the money and even though your friend isn’t doing any work, the money is vital. I would not estimate anything as a percentage, but make a list of all work that needs done on each house to determine the costs.

  • Paul Rogert says:

    I flipped this Yellow house, bought for 47,000 sold for 136,000. Spent about 52,000 on the remodel. Profitable project.

  • Christopher Hicks says:

    Buy fix flip Home.

  • Thanks for the knowledge! As a soon to be college grad, I have many worries but also a passionate desire to get into the fixing and flipping business. Any reccommendations on how to even begin this whole process? How do I get the money to even start? How do I gain the confidence of an investor if it is only my first time buying a house?

    • Mark Ferguson says:

      Well, you could buy a house as an owner occupant and slowly fix it up with less money and more time. Then you could live there while you go through the process.

  • I would like to do flip house business. but i don’t know how to start this business. do i need license for it? pls help me. give me some idea. thanks

    • Mark Ferguson says:

      No license needed!

  • I need to come in contact with a hard money lender
    Or private
    Who needs and knows a snap flipping
    Juju

  • Deb Calhoun says:

    If doing a 50/50 with one financier and the other the labor; does the labor person draw for a weekly salary plus get the 50% of remaining profit?

    • Mark Ferguson says:

      It all depends on how you have it set up

  • I have bought one house per year for the last four years as rentals. Some with my money, some with partners and have refinanced one. I have some more capital, but want to keep it invested in more liquid options, stocks and bonds, etc. I would like to do some flips, have secured bank financing with a 20% down. I would like to offer an investor to come in with me on a project, with them putting in the down payment, me the financing, u til we sell it. I can find the property and the rehab professionals. What percentage should I give my partner for their 20% down?

    • Mark Ferguson says:

      That is tough as they are taking on a ton of risk. They would have a second loan and would have to pay off the first if something went wrong. if you can find someone I would think well over 10 percent.

  • yanick mercier says:

    i found a place with 4 bed rooms 3 bath i nee to get for 85 thousand i would need about 45 thousand to fixt it nto rent or sale wich ever comes first pls help me i must get it by wendsday or some oone else will get it so pls answer mw as soon as possible i pray that you will be able to help me you can reach me at 321-614-7489 yanick.

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