Deciding How Much to Pay for a House to Flip

By Ralph R. Roberts, Joseph Kraynak

Part of Flipping Houses For Dummies Cheat Sheet

A key first step to profiting from a flip is not to pay too much for a house. When deciding how much to pay, estimate the amount you can reasonably sell the house for after fixing it up, and then subtract your expected costs, which include the following:

  • Purchase price
  • Cost of repairs and renovations
  • Any back taxes due on the property
  • Holding costs (property taxes, utilities, insurance, interest payments, homeowner association fees, and so on for the time you expect it will take to buy, fix, and sell the house)
  • Any agent commissions and closing costs when selling the house

Aim to earn at least a 20 percent profit after subtracting all costs.