How to Flip Distressed Properties for Beginners: 5 Steps to Your First $20k Profit
Want to make $20k flipping houses but don’t know where to start? Distressed properties—like foreclosures, hoarder homes, or houses with overgrown lawns—are your golden ticket. They’re cheap, ugly, and packed with profit potential. But if you dive in blind, you could lose money fast.
Here’s the 5-step roadmap I used to bank $20k on my first flip (without experience or trust-fund cash).
Step 1: Seek Out Homes that are ‘Ugly’ (Trust Me, It’s Not That Hard)
What’s a distressed property? Think:
- Foreclosures: Banks are desperate to dump these.
- Hoarder homes: Cluttered, smelly, but often structurally sound.
- Probate sales: Inherited homes nobody wants to deal with.
How to Find Them:
- Drive around: Look for debris overgrown yards, ‘for Sale’ windows, and board up statements.
- Use free tools: Search “pre-foreclosure lists” on county websites.
Pro Tip: Mail handwritten letters to owners—they’re more likely to respond than emails.
Step 2: Crunch the Numbers (Don’t Guess!)
Flipping is all about math, and money. Use the ARV Formula if you wish not to lose money:
After Repair Value (ARV) = What the house will sell for AFTER repairs.
Max Purchase Price = ARV x 70% – Repair Costs.
Example
- ARV = $300,000 (based on fixed-up comps).
- Repairs = $50,000.
- Max Offer = $300k x 0.70 – $50k = $160k.
FYI: You can get this House Flipping Calculator and save time doing this calculation yourself.
Step 3: Get the Money (No, You Don’t Need Rich Relatives)
Funding Options for Beginners:
- Hard money loans: Short-term loans (12% interest, 1-2 year terms).
- Cash partners: Split profits 50/50 with someone who has savings.
- HELOC: Borrow against your home’s equity (if you own one).
Script to Win Over Lenders:
“I found a house I can buy for $100k, put $30k into, and sell for $200k. Can you fund the $100k? I’ll pay you back in 6 months with interest.”
Step 4: Renovate Smart (Not Fancy)
Focus on Profit-Boosting Upgrades:
- Paint: A fresh coat = instant “new house” vibes ($3k).
- Kitchen: Swap cabinets, countertops, and appliances ($10k).
- Bathrooms: Reglaze tubs, update fixtures ($5k).
- Curb Appeal: Mow the lawn, plant flowers ($500).
Note: These are just rough estimates to give you an idea not the exact amount.
Avoid Money Pits:
- Don’t add a pool.
- Skip the marble floors.
- Real Talk: “I wasted $8k on ‘smart home’ gadgets nobody cared about.”
Step 5: Sell Fast (Before Holding Costs Eat Your Profit)
Price It Right:
- List 10% below market value to attract multiple offers.
- Example: If comps are $250k, price at $225k.
Stage It Cheap:
- Rent furniture ($500/month) or use virtual staging apps.
- Bake cookies before showings (yes, seriously—it works).
Free Download: House Flipping Calculator
- Plug in your numbers → See profit estimates instantly.
- Avoid overpaying for dud deals.
FAQ:
Q: Can I flip houses with no experience?
A: Yes! Start with cosmetic flips (paint, flooring, trim) and avoid major structural work.
Q: How long does a flip take?
A: 3-6 months on average. Don’t rush—but don’t drag it out either!
Final Tip:
Your first flip won’t be perfect—and that’s okay. Learn, adjust, and scale.
