Are Profitable Flips Hard to Find?

Let me start with a short story. Last weekend, my friend Dennis stopped by for some beers and TV. We landed on one of those house-flipping shows. In this episode, the host took a rundown property in Texas, gave it a facelift, and showcased jaw-dropping before-and-after photos. By the end of the episode, the host walked away with a cool $50,000 profit. Dennis, eyes wide and inspired, turned to me and said, “Wow! This is what you do, right? I want in!”

That conversation inspired today’s topic: Are profitable flips easy to find?

Here’s the blunt truth: they are not. Profitable flips are incredibly hard to find, and the reason most people think otherwise is due to a psychological phenomenon called the availability heuristic.

Why Most People Think Flips Are Easy

The availability heuristic makes us assume that the information we frequently see or hear is the norm. Watching house-flipping TV shows where every project ends with a fat paycheck gives the impression that these deals are everywhere.

What those shows don’t highlight are the countless investors who lose money or barely break even. Think about it: if you’ve never played basketball and only watch Michael Jordan dominate, you might think, “How hard could it be?” But countless players stepped onto the court with MJ and got crushed.

The same principle applies to flipping houses. Seeing only the successes warps reality.

Where to Find Flips

1. MLS (Multiple Listing Service)

The MLS is a goldmine of opportunities—but only for those who act fast. Profitable flips listed on the MLS can be gone within hours. Deals that stick around? Usually, they aren’t great.

• Pro Tip: To stay competitive, have your funds ready and work with an experienced investor agent. They’ll spot the gems before anyone else.
• Look for Errors: Sometimes, a property is mislabeled or mispriced. Dig deeper; these hidden treasures are often overlooked by others.

While finding deals on the MLS is tough, the sheer volume of properties makes it a great place to start.

2. Off-Market Deals

Off-market deals are the bread and butter of wholesalers. These are properties sold before they even hit public listings.

• Industry Secret: Profitable flips yielding $50,000 to $100,000 are incredibly rare.
• Most flips fall in the $20,000 to $30,000 profit range. But seasoned investors can make these smaller margins work, especially if they leverage other people’s money.

The 70% Rule

The 70% rule is a simple guideline for evaluating potential flips:

Purchase Price ≤ 70% of After Repair Value (ARV) – Rehab Costs

For example:

• A house has an ARV of $100,000.
• Estimated rehab costs = $20,000.
• 70% of $100,000 = $70,000.
• Subtract rehab costs: $70,000 – $20,000 = $50,000.

So, $50,000 is your max purchase price.

Why 70%?

• ~10% goes to closing costs and agent commissions.
• ~20% is your desired profit margin.

Some seasoned investors bend the rule, accepting deals at 75%-85% of ARV minus rehab costs, depending on their risk tolerance.

Smaller Repairs, Bigger Profits

Here’s a golden nugget: flips requiring minor cosmetic repairs often yield better profits than full-scale rehabs.

• Why?
  • Big projects come with bigger risks: unexpected delays, hidden problems, and spiraling costs.
  • Cosmetic flips (like paint, flooring, or landscaping) are faster, cheaper, and less stressful.

Remember, time is money in real estate. The quicker you flip, the better your ROI.

Getting Your Ducks in a Row

Before you even start hunting for flips, prepare your foundation:

1. Financing: Have your funding ready—whether it’s cash, hard money, or a loan. Speed is key.
2. A Competent Team: Line up your contractors, inspectors, and agents in advance.
3. Exit Strategy: Know whether you’ll sell immediately or rent out the property.

Think of it like cooking. You wouldn’t start making a meal without ingredients and a recipe, right? Similarly, you need everything in place before jumping into a flip.

Why Graystone Investment Group Can Help

At Graystone Investment Group, we specialize in guiding both new and seasoned investors in their real estate journeys.

Here’s how we can help:

• Finding Deals: We have access to off-market properties and MLS opportunities you won’t see anywhere else.
• Rehab Management: Our experienced contractors know how to turn fixer-uppers into profitable assets.
• Investor Support: From financing to property management, we’ve got you covered.

Whether you’re looking to wholesale, buy-and-hold, or fix-and-flip, we can help you navigate the complexities of real estate investing.

Interested? Fill out our Investor Profile.

About the Author

Jorge Vazquez is the founder of Graystone Investment Group, based in Tampa, Florida. With over 20 years of experience and more than 3,500 transactions under his belt, Jorge has mastered all aspects of real estate investing.

Graystone offers a one-stop shop for investors, with divisions specializing in wholesaling, brokerage, private lending, rehabbing, and property management.

Ready to start your journey? Visit GraystoneIG.com or PropertyProfitAcademy.com and let Jorge guide you to real estate success.

Closing Thoughts

Flipping houses isn’t as easy as it looks on TV, but with the right preparation, knowledge, and team, it can be a highly rewarding venture.

Keep it consistent, stay patient, stay true—if I did it, so can you! Ready to learn? Let me guide you at PropertyProfitAcademy.com – Jorge Vazquez, CEO of Graystone Investment Group & its subsidiary companies and Coach at Property Profit Academy.