Flipping houses can be a lucrative business—but only if you choose the right properties. The key to success is knowing how to identify homes that offer strong profit potential while avoiding money pits that will eat into your margins. If you’re looking to spot a great flip, here are the top five things to look for.
1. The Right Location
The old real estate adage holds true: location, location, location. Even the most beautifully renovated home won’t sell for top dollar if it’s in the wrong area. Look for properties in:
✅ Up-and-coming neighborhoods with increasing home values
✅ Areas with strong school districts and low crime rates
✅ Communities near job centers, amenities, or desirable attractions
A good deal in the right neighborhood is far more profitable than a great deal in the wrong one.
2. Favorable Purchase Price & ARV (After Repair Value)
Your profit margin depends on how much you pay for the property and how much you can sell it for. A good rule of thumb is the 70% rule:
👉 Buy at 70% of the ARV minus repair costs.
For example, if a home’s ARV is $300,000 and repairs will cost $50,000:
💰 $300,000 × 70% = $210,000
💰 $210,000 – $50,000 = $160,000 max purchase price
Running these numbers ensures you don’t overpay and have enough margin for a profitable flip.
3. Cosmetic Overhauls Over Structural Issues
The best flips need cosmetic updates, not major structural repairs.
✅ Look for homes that need new flooring, fresh paint, updated kitchens, or modernized bathrooms.
❌ Avoid properties with foundation issues, major plumbing or electrical problems, or extensive mold/water damage unless you have the expertise to handle them profitably.
Cosmetic fixes are faster, cheaper, and offer a higher return on investment.
4. Market Conditions & Days on Market (DOM)
A profitable flip sells quickly. Before buying, research:
📊 Average days on market (DOM) – The lower, the better. A slow-moving market can eat into your profits.
📈 Supply & demand – Are homes selling above asking price? Are bidding wars common?
🏡 Buyer preferences – Are buyers in the area looking for turnkey homes?
A hot market makes selling easier, while a slow market means more holding costs and risk.
5. An Investor-Friendly Financing Plan
Even the best flip won’t be profitable if your financing costs eat up your profits. Consider your funding options:
💰 Hard money loans – Great for fast closings and short-term projects
🏦 Private lenders – Flexible terms and investor-friendly structures
💳 Lines of credit or cash purchases – Lower overall costs
Having the right financing strategy ensures you maximize returns while keeping costs low.
Final Thoughts
A profitable fix-and-flip starts with choosing the right property. By focusing on location, pricing, cosmetic renovations, market trends, and financing, you’ll improve your chances of success in the flipping business.
Looking for a reliable lending partner to fund your next flip? Low Tide Private Lending offers fast, investor-friendly financing to help you close deals with confidence. Contact us today!