Flipping is buying a property below market value, improving it, and selling it at a profit. The profit comes from the spread between your all-in cost (purchase + rehab + carrying + closing) and the after-repair value (ARV). Beginners lose money when they overpay, underestimate rehab, or hold too long.
The foundation of every flip calculation: your maximum offer is 70% of ARV minus estimated rehab costs. A $300k ARV property with $50k rehab means your max offer is $160k. This rule exists to protect your profit margin against cost overruns and unexpected market softness.
The best first deals come from motivated sellers — probate, divorce, foreclosure, estate sales. MLS distressed listings, direct mail, driving for dollars, and wholesalers are the main lead sources. You don't need an off-market deal to make money — plenty of profitable flips come right off the MLS.
Hard money loans are the most common funding source for first-time flippers. They close fast (7–14 days), lend on the deal value (not your credit history), and cover both purchase and rehab in many cases. Rates run 10–13% with 2–4 points. Factor this into your deal analysis before you offer.
Overpaying for the property is the #1 mistake. Second is underestimating rehab — always get a contractor walkthrough before you close, not after. Third is underestimating holding costs — budget 6–9 months even if you plan to finish in 4.
Dan White is a licensed Virginia real estate agent at Pearson Smith Realty and founder of FreeDealCalc.com. Dan White is a licensed Virginia real estate agent and fix-and-flip investor with 20+ years of experience in the Northern Virginia market.