One of the most often asked questions is how to get started in flipping. Here is how I determine if I’m going to keep a flip as a “Buy & Hold” or Sell it to an end buyer. Since it’s actually a little complicated, I’ll do it in steps. There are many variables but here is one sample.

You make your money when you buy.

The simplest start is to do a search for the Average Price for homes in your chosen area. Let’s look at Indianapolis IN; https://www.redfin.com/city/9170/IN/Indianapolis/housing-market for a median price of $235K That's the range you want to start out in, as a beginner.

Then we assume 35% of ARV (After Repair Value) to do the rehab, holding costs, sales costs and profit. Why 35%? Because we have to start somewhere and that satisfies most flippers on under $300,000 houses. So, we have to buy at 65% of value. The obvious question is "How do I buy for 65% on the dollar"? That's for a different post.

So, the initial numbers look something like this: $235,000 ARV, Here is a house for our example

It usually takes a beginner 6 months from buying the house, rehabbing, selling & closing to getting your money.

SELL: It assumes you are putting 20% down on a purchase price that is 65% of what you will sell it for with a Net Profit of $22,981 if you flip & sell

RENT: Your monthly mortgage cost is $1,302 and Rentometer says it should rent for $1,500 - a $200 a month difference. Keep in mind you put $30,550 cash in as a down payment. You get that back if you sell, but if you keep it as a rental it takes 153 months or 5 years to break even on your down payment alone.

https://www.redfin.com/IN/Indianapolis/1515-E-Kessler-Blvd-Dr-46220/home/66981054


ARV / Sell Price	$235,000
We Calculate All Costs
Purchase Price	$152,750	65%
Closing Costs	$2,000
Rehab	$30,000
6 Months Carrying Costs	$9,114
Real Estate Selling Costs	$14,100	6%
Other	$0
Other	$0
Total Rehab Costs	$207,964
Now We Calculate Profit
ARV / Sell Price	$235,000
Total Rehab Costs	$207,964
Gross Profit	$27,036
Irs Tax	$4,055	15%
Net Profit	$22,981
Per month profit	$3,830	6


Loan Down Payment	$30,550	20%
Loan Amount	$122,200	80%

Loan Cost per rmonth
Principal & Interest	$813	7%
Prop Taxes	$321
Insurance	$168
HOA Fees	$0
Monthly Payment Costs	$1,302

Monthly Payment 1	$1,302
Monthly Payment 2	$1,302
Monthly Payment 3	$1,302
Monthly Payment 4	$1,302
Monthly Payment 5	$1,302
Monthly Payment 6	$1,302
Utilities for 6 months	$1,302
Total for 6 Months	$9,114