Flipping Houses in 2025: What You Need to Know

The real estate market is constantly evolving, and with it, are ways of investing. One real estate investment strategy that continues to attract interest is house flipping. The idea of buying a house, rehabbing it, and selling it for a gain is certainly appealing. But is flipping houses still a viable option in 2025? 

A company that studies real estate statistics, ATTOM, says that nearly 68,000 homes in the United States were flipped in just one quarter of 2024 — one in every 12 houses sold. ATTOM statistics also show that house flippers typically realized a gross return of more than 30% per house sold. Working in the house flipping business, however, requires a close monitoring of prevailing trends, market forces, and specific challenges and opportunities.

Table of Contents

What is house flipping?

Types of house flipping

House flipping pros

House flipping cons

Key steps to flip a house in 2025

Common house flipping mistakes

Tools and resources for house flippers in 2025

The bottom line | FAQs

What is house flipping?

House flipping is buying a house, often one that is in disrepair or is undervalued, and fixing it up or rehabbing it to raise its sale price. The objective is to sell it for a gain. The process can be everything from a cosmetic improvement such as paint and landscaping to a more serious rehab that includes repairs to the structure, additions, or a total remodel.

Property flipping is a process that requires a combination of knowledge of suitable properties, construction work, and market trends. Flipping is not a question of buying low and selling high. It's a process of rehabbing a property strategically to get it attractive to potential buyers in a given marketplace.

Here is ATTOM's in-depth report of flipping home trends in 2024. 

Types of house flipping

House flipping is not a business that fits all. There are various strategies that work for different capital, experience, and risk tolerance. Some of the most common house flipping types are:

• Cosmetic flips: These involve relatively small repairs, focusing on making the home more aesthetically pleasing. For example: new paint, new flooring, and landscaping.
  
• Light rehabs: Light rehabs go a step further than cosmetic flips, making a few small repairs or system upgrades. This is updating or refreshing a bathroom or a kitchen without a total remodel.
  
• Full rehabs/Gut renovations: The most extensive style of flip and a total makeover of the house. Structural repairs, additions, or a complete rebuilding of the floor plan are sometimes included in a full rehab.
  
• Wholesaling: While not technically flipping, wholesaling is a process that is most commonly associated with it. Wholesalers find distressed properties and subsequently agree to purchase them under contract. Instead of doing the renovations themselves, they assign the contract to another investor who will do the flip. Wholesalers make a profit on the assignment fee.
  
• BRRRR (Buy, Rehab, Rent, Refinance, Repeat): This is a process of purchasing a distressed property, rehabbing it, renting it to tenants, and refinancing to pull out equity.

House flipping pros

House flips, when done appropriately, has a variety of potential advantages:

• As the ATTOM statistics would show, successful flips can generate potential profits, generally in excess of 30% of the purchase price.
• Unlike long-term investments in real estate, house flipping is generally done in a matter of a few months. This may enable a faster return on investment.
• Flippers have control over the process of renovation in a direct manner, enabling them to determine the style and quality of the end product.
• By revitalizing neglected properties, flippers beautify a neighborhood and boost property values.
• For some, flipping houses is a way of showcasing their design and renovation skills in a unique manner.

House flipping cons

Despite the potential rewards it could provide, house flipping also has its challenges and risks:

• Real estate is a cyclical business. A decline in the marketplace can affect a flipper's chances of selling a house for a profit tremendously.
• Renovation projects often encounter unexpected setbacks. These can be structure issues or rising material costs that take a hit on profit margins.
• Flipping requires a significant time commitment, especially for more in-depth projects.
• Flippers invest significant capital in a project. There's always the risk of losing money if the property doesn't sell as expected.
• The house flipping business is competitive, especially in hot real estate areas.
• While a house is rehabbed and sitting waiting to be sold, carrying charges are paid by flippers, often in large sums.

Key steps to flip a house in 2025

The house-flipping process requires a strategic approach and a keen understanding of the dominant forces of the marketplace. Here's a breakdown of how to start flipping houses in 2025:

Step 1: Research and planning

Meticulous research and planning is the key on how to start a house flipping business. Identifying profitable properties requires a deep understanding of the local real estate market. This is done by looking at current sales statistics, researching neighborhood patterns, and recognizing what homebuyers demand in a given area.

Tools and resources like online property databases, analysis software for real estate, and government records in a given area can be of great use in this endeavor. Preparing a good business plan, including accurate estimates and a timeline for the project, is also crucial to staying organized and on time. The business plan should also provide for a contingency budget in the event of unexpected expenses. Additionally, understanding the specific regulations and permitting processes in your target area is also crucial during the planning phase.

Step 2: Financing your flip

Securing good financing is one of the keys to house flipping. Conventional mortgages, however, can be a poor fit for flipping houses, as they demand a high down payment and sometimes restrict home improvement. There are various financing options for flippers. One of which is a hard money loan – a short-term loan secured by the property itself. Hard money loans have higher interest rates but are more attainable than conventional loans.

Other options would be to obtain money from private lenders, lines of credit, or even business partners. Be careful of each of the terms and conditions, including interest charges, fees, and repayment terms, before you opt for one. 

Step 3: Finding the right property

Finding the ideal property is key to a successful flip. The properties you choose should be those that fit certain requirements, such as a desired location, a certain size, or potential for improvement. The ideal property is one that is undervalued in one way or another, such as in condition or otherwise. It should be one that has good bones and is in a desired area.

Technology plays an increasingly important role in how to find houses to flip, with online platforms and mobile apps providing instant property listings and marketplace data. Networking with realtors, wholesalers, and other real estate investors is also a way of finding potential house deals.

Step 4: Renovations and upgrades

The renovation process is where everything comes together. Opt for affordable improvements that yield a high return on investment (ROI). Focus on repairs and improvements that address safety needs and that make the property more usable. Remodeling kitchens and bathrooms is a sensible option in many situations, as these two areas are high-selling features for most prospective buyers.

Cosmetic improvements, i.e., new paint, flooring, landscaping, etc., also work a great deal. Tread carefully in the process of renovation, hire professional contractors, and budget accordingly.

Step 5: Selling the property

Pricing the property correctly is crucial to a quick and profitable sale. Compare homes in the area to determine a competitive price. Be guided by current market conditions and adjust accordingly. Proper marketing is crucial to enticing potential buyers in.

Also, you can utilize online marketing sites, social media, and professional photographs to showcase the amenities of the property and highlight its charm. Consider using a realtor or you can FSBO (For Sale By Owner). Real estate agents can be a wonderful source of knowledge and marketing exposure, but FSBO is commission-free. Compare pros and cons of each option before making a decision.

Common house flipping mistakes

Being aware of these common mistakes is crucial for any first-time flippers:

1. Overpaying for the property: Overestimating after-repair value (ARV) and overpayment for the purchase price results in a thin margin of profits or even financial losses.

2. Underestimating renovation costs: Unexpected cost of repairs, material price hikes, and complications in dealing with a contractor can easily inflate renovation budgets. Always budget a contingency for unexpected expenses.

3. Rushing the renovation process: Rushing or short-cutting during renovations is likely to lead to sub-standard work and costly repairs in the future.

4. Over-improving the property: You must focus on adding charm and value to the property that is appealing to the target demographic of potential buyers, rather than adding something that is incompatible to the neighborhood.

5. Poor project management: Lack of proper management of contractors, time frames, and budgets can lead to delays, over-budgeting, and frustration.

6. Neglecting marketing: Even the most beautifully renovated property won't sell itself. Proper marketing is crucial to getting potential buyers interested.

7. Emotional attachment: Flippers need to remain objective. Don't over-invest in improvements or refuse to negotiate a price reduction when it's warranted. Stay in business mode, not hobby mode.

Tools and resources for house flippers in 2025

Modern house flippers can use technology to analyze market trends, estimate construction costs, and locate potential buyers. Real estate investing tools like PropStream and Flipster provide in-depth property details, such as lists of foreclosures, owner contacts, and estimated property valuations. Sites like Zillow and Redfin also enable investors to track housing market trends.

How to flip houses is a science and an art, and knowledge is key to long-term success. But even experienced flippers need professional help to navigate legal, financial, and construction challenges. A real estate professional knowledgeable in investment properties can help find the best deals and negotiate for you. A licensed home inspector is also a must to find underlying defects before a purchase is completed.

The bottom line

House flipping in 2025 is a viable investment option and a potential challenge. The potential of considerable profit is there, but to be a success in this volatile market demands a realistic understanding of challenges to be met, a cautious approach, and in-depth analysis.

Remember that the house flipping process is not a get-rich-quick scheme. It requires hard work, patience, and a willingness to learn. With a solid approach, house flipping can be a profitable business, offering financial returns and the satisfaction of transforming properties and revitalizing communities.

FAQs

1. What are the costs involved in flipping houses?

The costs of house flipping can be categorized in a variety of different areas: acquisition costs, rehab costs, carrying costs, closing costs, and selling costs.

2. What is the average ROI for flipping houses?

The average ROI for flipping houses can vary depending on several factors. This includes market conditions, the flipper's experience, and the specific project. While some flips can generate returns of 30% or more, as indicated by ATTOM's data, others may yield lower profits or even losses. Remember that these are averages and individual results can vary significantly. 

3. How do I find the best markets for house flipping in 2025?

Identifying the most profitable house flipping markets requires careful analysis of a set of variables. These can be job market patterns, population expansion, housing affordability, and foreclosure rates. Keep an eye out for places that have a combination of affordable properties, high demand for purchases, and appreciation potential.

4. What are the most cost-effective renovations for flipping houses?

Prioritize repairs and renovations that address safety requirements and functionality of the house. Also, prioritize areas of high interest to potential homebuyers, such as kitchens and bathrooms. Avoid over-improving the property for the neighborhood, as this can be a costly mistake.

5. How does the 70% rule work in house flipping?

The 70% rule is used by some flippers to determine the maximum that one should pay for a house. The rule is that one should not pay more than 70% of a house's after-repair value (ARV). This is to help house flippers be in a position to have room for their profits after deducting all the expenses. 

6. Is it possible to flip houses without any money?

While it's challenging to flip houses without any of your own money, it is possible to use various financing options to lessen your initial expense. Some of these options include hard money financing, private money lenders, investing in partnership with other investors, and wholesaling. Flipping without investing any money is risky in nature and requires a high level of experience and contacts.