Fix & Flip Flowchart
Download REI Grove's Fix & Flip flowchart to understand the house flipping process from research and financing to buying, budgeting, rehabbing, appraising, staging, listing, and selling.
Key Takeaways
- A fix and flip is a real estate investing strategy where an investor buys a below-market property, renovates it, and sells it for a profit.
- House flipping requires market research, financing, contractor planning, renovation budgeting, staging, listing, and a clear exit strategy.
- A visual flowchart can help new flippers understand what needs to happen before, during, and after renovations.
Fix & Flip Flowchart
If you're interested in real estate, or have watched HGTV recently, chances are you've heard of a "fix & flip," also referred to as house flipping. Many people will tell you it's a great source of revenue, but they may not tell you what exactly goes into flipping houses or where to begin to get involved in the house flipping business.
This article will teach you about the fix & flip basics and the steps to renovating houses for profit. To better visualize the process, you can download REI Grove's Fix & Flip flowchart above.
In this article
- Learn what a fix and flip is
- Understand how to get into house flipping
- Review the main steps in a house flipping business plan
- Learn how renovations, staging, listing, and selling work
- Download a Fix & Flip flowchart
Fix & Flip Process Breakdown
| Flowchart Step | What It Covers | Why It Matters |
|---|---|---|
| Step 1: Research | Find a below-market property that could benefit from high-ROI or cosmetic rehabs. | Helps investors identify properties with profit potential. |
| Step 2: Finance | Secure funding, often through a hard money loan or private lender. | Provides capital for the property purchase and repairs. |
| Step 3: Buy | Review purchase price, rehab budget, insurance, taxes, closing costs, and ARV. | Helps flippers avoid overpaying before closing. |
| Step 4: Budget | Expand the rough budget into a detailed plan with quotes and timelines. | Keeps the project financially organized. |
| Step 5: Rehab | Complete structural repairs first, then high-ROI cosmetic updates. | Adds resale value while managing renovation risk. |
| Step 6: Appraise | Get a professional appraisal after renovations. | Helps estimate a new listing price. |
| Step 7: Stage | Clean, furnish, photograph, and prepare the home for buyers. | Makes the property more appealing on the market. |
| Step 8: List | List the property on the MLS and other platforms. | Helps buyers find the finished flip. |
| Step 9: Sell | Work with an agent to close with a buyer. | Completes the flip and allows the investor to collect profit. |
What is a Fix & Flip?
Before you learn how to flip properties, you first need to learn about what house flipping is. In simple terms, a fix & flip is a real estate investing strategy that involves an investor purchasing a below-market value home, renovating it, and selling it for a profit, usually in a short time frame.
This may sound like a simple process, but it involves many people, a substantial amount of cash, and a lot of work — steps we'll explain in detail shortly. If done right, though, house flippers can successfully make a profit and create a thriving business from selling flipped properties.
Flipping houses is more manageable for real estate investors with experience, but anyone can become a house flipper with a good plan and the right resources. Let's take a look at how to get into house flipping.
How to Get into House Flipping
The first step to beginning your fix & flip journey is research. You'll want to learn about how house flipping works in your local real estate market, specifically with the types of properties near you, the real estate agents and contractors working in your city, and how other flippers nearby, if there are any, are operating. Having a base understanding of how house flipping will work for you is essential before you actually begin the process.
Once you feel you have a good understanding of how to flip houses in your market, you can begin researching specific properties in your area, preferably below-market value homes that would benefit from high-ROI or cosmetic renovations such as new paint or an updated kitchen. You can either find these properties yourself through avenues like online listings or rely on a real estate agent who can use the MLS to search for homes quickly and efficiently.
The next step in getting into house flipping is financing. Ideally, you'll have enough cash saved to purchase a home to flip or cover its renovation costs, but this is unrealistic for most fix & flippers. Many people instead choose the alternative of a hard money loan from a private lender to cover the costs of the purchase and repairs.
Private money loans involve an individual lender, rather than a bank, who gives a short-term loan to a borrower, often a real estate investor. Fix and flip loans typically come with higher interest rates than loans like mortgages, but since they're meant to be paid off quickly, you can likely cover the cost of the loan before interest piles up.
Creating a House Flipping Business Plan
Once you've begun the process of flipping houses, you can move forward with the big steps, the first of which is buying a property. Once you've found a home that looks promising, put together a rough idea of a budget for the investment property, including the purchase price, rehab costs, insurance, taxes, and closing costs.
A good rule of thumb to follow is the 70% rule, which states that you should never buy a property for more than 70% of its after-repair value, or ARV. That way, you can ensure a profit to benefit from and cover any other payments. One benefit of house flipping is that you won't have to cover ongoing operating expenses after you sell the property, like property taxes, maintenance, landscaping, and more.
It's also important to note that paying for an inspection is a good idea before signing closing documents on a home. What may look like a simple job updating an old home may become a disaster if mold or foundational issues pop up as you renovate, so it's better to get an idea of a home's integrity before you lose the ability to back out of a deal.
Once you've completed the purchase of a flipper home, it's time to budget further and begin the renovation work. Staying on budget allows you to turn a profit without having to dip into savings or other cash reserves you may have.
You can start with your rough budget outline from earlier and add specific numbers, tasks, and deadlines to it for different work the house needs, like an estimate of the cost and timeline of new flooring or kitchen backsplash. Then, determine timelines and expenses for contractors. Unless you're a contractor, you should hire professionals for the renovations on a property.
What Does the Fix & Flip Flowchart Cover?
REI Grove's Fix & Flip flowchart gives investors a visual overview of the house flipping process from start to finish. It shows how a flip moves from property research and financing into buying, budgeting, rehab work, appraisal, staging, listing, and sale.
This flowchart includes:
- Property research
- Below-market value property search
- High-ROI or cosmetic rehab opportunities
- Financing options
- Hard money loans
- And more!
Step 1: Research
The first step is researching the local market and finding a property, preferably at below-market value, that could be improved with high-ROI or cosmetic rehabs.
Common ways to find properties may include:
- Browsing online listings
- Working with a real estate agent
- Reviewing MLS opportunities
- Driving for dollars
Good research helps investors understand whether a property has enough upside before spending money on financing, inspections, or closing costs.
Step 2: Finance
The next step is financing the purchase and repairs. Many fix-and-flip investors use hard money loans through private lenders because these loans are designed for short-term real estate projects.
Financing includes identifying all of the following:
- Purchase price
- Rehab costs
- Closing costs
- Short-term holding costs
Because fix-and-flip financing can be expensive, investors should understand interest rates, fees, repayment timelines, and how quickly they expect to sell the property.
Step 3: Buy
Before closing on a property, flippers should sketch out a rough purchase and rehab budget. This budget should account for the purchase price, insurance, taxes, closing costs, and estimated renovation costs.
Many flippers follow the 70% rule, which recommends avoiding properties that cost more than 70% of the after-repair value. This rule is meant to leave room for repairs, financing costs, selling costs, and profit.
Before buying, investors should also consider:
- Property inspection results
- Major repair risks
- ARV estimates
- Contractor availability
Step 4: Budget
After buying, the rough budget should become a detailed renovation plan. Staying on budget helps protect the investor's profit and prevents the project from draining other cash reserves.
A detailed flip budget may include:
- Contractor quotes
- Materials
- Labor
- Permit costs
- Inspection costs
The more detailed the budget, the easier it is to monitor whether the project is still financially viable.
Step 5: Rehab
When completing the work needed to flip the house, it's vital to begin with any potential structural or serious issues before working on cosmetic fixes. That way, the challenging and unpredictable work can be completed upfront.
After major issues are addressed, focus on renovations and updates that will have a high return on investment, like updates to paint, landscaping, kitchens, and bathrooms. The usual selling features of a home will be even more attractive to buyers when they're brand new.
Rehab work may include:
- Foundation or structural repairs
- Roof repairs
- Electrical work
- Plumbing work
- HVAC work
Step 6: Appraise
After the house is remodeled to your standards, you should hire a professional to appraise the property based on the renovation value you've added. This can help you determine a listing price for the home.
An appraisal can help investors review:
- Updated property value
- Comparable sales
- Renovation impact
Step 7: Stage
Next comes staging the property. Before potential buyers walk through the home, it's important to stage the home by using good-quality furniture, cleaning the property, and taking photos of the home that frame the property attractively.
Staging may include:
- Deep cleaning
- Lighting
- Curb appeal
- Professional photography
Staging can make it easier for buyers to picture themselves living in the home and can make listing photos more appealing.
Step 8: List
When listing the property, be sure to use a real estate agent with access to the MLS and a network of other real estate professionals who can help you quickly find a buyer. Don't be afraid to use online listing websites as selling tools, too, so buyers have more avenues to find your listing.
Listing may include:
- MLS listing
- Online listing syndication
- Professional photos
A strong listing strategy helps the finished flip reach more buyers.
Step 9: Sell
Once the home is sold, your work is done — until you start the process over again, of course. Your real estate agent will help find an interested buyer, negotiate the sale, and move the property through closing.
After contractors, realtors, lenders, and any other necessary parties are paid, you can review the final profit from the sale and decide whether to move on to the next fix & flip property.
How Can This Flowchart Benefit Real Estate Investors?
A fix and flip flowchart gives investors a clearer way to understand the order of operations in a house flipping business. Instead of treating house flipping as one large project, the flowchart separates it into practical steps: research, finance, buy, budget, rehab, appraise, stage, list, and sell.
This can be especially useful for:
- First-time house flippers
- Real estate investors comparing strategies
- Rehab investors planning their first project
- Agents explaining the flipping process to clients
Conclusion
Now that you've learned about what house flipping is, how to do it, and why it's such a popular form of generating profits from real estate, you're prepared to begin the process of fixing and flipping your first property.
If you're looking for a visual plan to help you move forward with your flip (and other real estate investing tools and resources), visit REI Grove.
Fix and Flip: FAQs
What is a fix and flip?
A fix and flip is a real estate strategy where an investor buys a property, renovates it, and sells it for a profit.
How do you start flipping houses?
Most flippers start by researching the local market, finding potential properties, estimating ARV, securing financing, and building a renovation budget.
How much money do you need to flip a house?
The amount depends on purchase price, renovation costs, financing, closing costs, holding costs, and selling costs.
What is the 70% rule in house flipping?
The 70% rule suggests that investors should avoid paying more than 70% of the property's after-repair value, minus estimated repairs.
What is ARV in real estate?
ARV, or after-repair value, is the estimated value of a property after renovations are complete.
Are hard money loans used for flips?
Yes. Many flippers use hard money loans because they are short-term loans designed for real estate investment projects.
What renovations add value to a flip?
Common high-value renovations include kitchen updates, bathroom updates, flooring, paint, curb appeal, lighting, and necessary structural repairs.
Should I hire contractors for a house flip?
In most cases, yes. Unless you are qualified to do the work yourself, skilled contractors can help complete repairs, renovations, and code-related work properly.
How long does it take to flip a house?
The timeline depends on property condition, financing, contractor availability, permits, renovation scope, market demand, and closing speed.