Fix and Flip Loans Made Easy: Try Lender Finder Today
Enter your market to get started
Search by City
Understanding how much it costs to flip a house is key to successful real estate investing. Basic house flipping costs involve the purchase price, holding costs, renovation costs, and selling fees. A clear understanding of the cost components is crucial for ensuring your house flipping is a lucrative investment strategy. Otherwise, your budget will quickly disappear, along with any profit.
Flipping houses has gained popularity, with TV shows showcasing the process and potential profits. However, these shows often gloss over the cost of flipping a house. This can leave aspiring startup real estate investors unprepared for the financial realities.
Are you wondering, “How much does it cost to flip a house?” This comprehensive guide to house flipping costs explores crucial factors to consider before purchasing an investment property. At the end of the article, you will understand the actual costs of house flipping.
Importance of ARV in House Flipping Costs
Calculating the after-repair value (ARV) is the most crucial step in house flipping. You need to know how much money you’ll get after renovations and improvements. When you know the ARV, you can better understand all the costs associated with a house flip.
The best way to figure out ARV is to find three to six comparable property sales—also called comps—in the same area. Look for sold properties of similar size and features. The average selling price of the properties gives you a ballpark figure of the expected sale price for your investment property.
Here are a few things to keep in mind when comparing comps to determine the ARV:
- Sales only: Only look at houses sold, not ones just for sale.
- Recent sales: If possible, look for comps that have sold within the last six months—ideally, 90 days or less.
- Bedrooms and bathrooms matter: Adjust the price upward or downward, based on bathroom and bedroom numbers.
- Compare amenities: Look for updated features like upgraded kitchens and bathrooms, heating systems, or new roofs. Adjust upward or downward accordingly.
- Similar lot size: Look for other properties with similar lot sizes to your investment property. Remember to factor in other benefits like water views.
What if you cannot find comps for your ARV calculation? You can estimate the potential sales price of a potential flip by following this simple formula:
- Find a property with similar amenities.
- Divide its sales price by its square footage.
- Multiply the price per square foot by the number of square feet in the fix-and-flip property you want to flip.
This method can give you a good estimate. However, it’s still best to find several comps as close to the flip property as possible. This gives you the most accurate, up-to-date comparable sales data.
However, a lack of comps in the area could be a warning sign. No recent sales can mean that the housing market conditions are poor or houses are not selling due to overinflated prices.
The Ultimate Guide to House Flipping Costs
Looking into start investing in rehabs
Tomas, Investor in Florida
BiggerPockets Member
Hello to all, I am Looking to start my first and many more to come flips, I have a good team for tear down and remodeling, but I need guidelines on where to find deals and structure them correctly plug in numbers, etc any help will be very appreciated thank you in advance BP Community!
© 2025 BiggerPockets. All rights reserved.
How it Works
Select your location
Tell us where your Fix & Flip will take place
Tell us about your property and investment needs
Tell us about your fix and flip real estate needs, timeline, price range, and more
Choose from multiple lenders who specialize in fix and flip loans.
Find investor-friendly lenders... on your terms
Advice from the BiggerPockets community
Read our blogs
Looking into start investing in rehabs
Nate, Investor in Florida
BiggerPockets Member
Hello Tomas,
For your first and future flips, you can try finding deals through wholesalers or realtors. Wholesalers often have properties at below-market prices, and realtors can help you identify potential deals in your target areas. Good luck with your flipping projects!
FAQS About Lenders
What are good questions to ask your lender?
- Are you a direct lender or broker?
- What types of fix and flip loans do you offer?
- Will you communicate directly with the listing agent on the properties I make offers on?
- Where is the source of the money that you lend?
- Do you have access to down payment assistance programs that I can apply for?
- What information do you need from me in order to determine the best long-term rental loan for my situation?
- How long does it take you to provide a pre-approval letter?
- Do you offer any rate lock programs?
- Can you provide references from within the BiggerPockets community?
- Can you help me find other real estate professionals?
What are some best practices when choosing a lender?
- Compare rates and terms from multiple fix and flip loan lenders on the same day.
- Ensure that you ask your lender about what may change between your initial loan estimate and the final rate and terms.
- If your fix and flip loan is a private money loan, be very careful to understand exactly what may change while you are under contract on your property and what could cause your financing to fall through. The fewer surprises the better.
- Consider the reliability of your lender in addition to comparing rates. The lender with the lower interest rate may not always be the best lender for you.
- Carefully consider the pros and cons of fixed rate vs adjustable rate mortgages. Do not assume historical interest rates can be used to predict future interest rates.
How do lender fees work?
- APR
- APR stands for annual percentage rate. It represents the total yearly cost of borrowing money expressed as a percentage of the principal loan amount.
- Interest Rate
- This is considered the rate of interest on your mortgage note. It is less useful for comparing between lenders because the interest rate does not include fees that are a direct cost of borrowing money.
- Points
- Points are a one time fee charged by a lender expressed as a percentage of the loan amount. 1 point is 1% of the loan amount. Oftentimes, lenders will offer the opportunity to pay more upfront in the form of mortgage points in exchange for a lower interest rate over the life of your loan. Work with your licensed mortgage originator to carefully examine if this is worth doing based on your unique situation.
- Fees
- There may be other fees associated with underwriting a loan. It is important to ask your lender to disclose these fees up front.
Note: conventional lenders are required to provide a loan estimate, which discloses their fees. Private money lenders are not held to this standard and receive very little regulatory oversight. As such private money lenders are not recommended for inexperienced investors.
- A direct lender lends their own money. They have more influence over the underwriting process than a broker because they are lending their own money but they are not able to offer as many loan types or shop for the best rate.
- A broker does not lend their own money but instead they connect a borrower with a lender that offers the loan product that they are looking for. They can compare lenders to ensure they are providing the lowest rate and best terms. In exchange they charge a fee for their services.
Note: Some lenders are both direct lenders and brokers. They may lend their own funds for some loans and broker out loans that they cannot fund themselves.
- A direct lender lends their own money. They have more influence over the underwriting process than a broker because they are lending their own money but they are not able to offer as many loan types or shop for the best rate.
What is the difference between a direct lender and a broker?
How much do I need for down payment?
- Conventional loan Downpayment: 3%
Conventional loan (no PMI) Downpayment: 20%
FHA loan Downpayment: 3.5%
VA loan Downpayment: 0%
Private money rehab loan Downpayment: Varies
Private money rental loan Downpayment: Varies, but typically 25% or more
Note: Actual down payment requirements may vary depending on factors such as income and credit score.
What is the difference between a conventional lender, private money, hard money, and commercial lender?
- A private money lender is considered any lender that provides loans from a private individual or company that comes from a private source for investment property loans. Their loans are strictly for non-owner occupied investment properties and they are not limited by the underwriting requirements for conventional loans.
- Hard money lenders are a type of private money lender that underwrites their loans based on the hard asset itself rather than the borrower's qualifications like credit score or income.
- Conventional lenders are the most common type of lender. They offer conventional financing or government agency loans like FHA, and VA.
- All conventional lenders must have a national NMLS number and a state license in the states that they serve. You can search the NMLS license states on the NMLS consumer access website.
- A commercial lender specializes in lending on large commercial income producing properties like retail, office, storage and residential multi-family complexes.
- A private money lender is considered any lender that provides loans from a private individual or company that comes from a private source for investment property loans. Their loans are strictly for non-owner occupied investment properties and they are not limited by the underwriting requirements for conventional loans.