How Much Risk is Involved in the Business of Flipping Houses?

Wed Jun 12 2019


As with any form of investing, there will always be some type of risk involved and house flipping is no different. In the business of flipping houses, you are generally working with tens and hundreds of thousands of dollars. As you can imagine, this can be pretty risky if you don’t know what you are doing. But, even with the risk involved people are still willing to take the plunge because of how lucrative the house flipping business is.


House flipping can be very profitable, but there are a couple of mistakes that can make it risky if you aren’t careful.

Not planning for expenses involved with house flipping – If you aren’t anticipating certain expenses, you aren’t aware of the taxes and holding costs, or you can’t sell the property, then you are at risk of losing money.

Under- or over-estimating time, resell value and costs – Not learning how to make accurate estimations can be a huge mistake. If you don’t correctly estimate the time needed to flip a house, you run the risk of paying more on utilities, taxes, etc. than you had previously planned. The same goes for incorrectly estimating the resell value and costs associated with your flip.

Overpaying for the house – Buying a house that you won’t make a profit off of is a huge mistake. You could easily sink your whole budget and then some into the house, barely breaking even upon resell.


We aren’t here to scare you away from real estate investing, but rather we want to teach you how you can reduce the risk that is involved with flipping houses. Initially, our Real Estate Elevated workshops are a great way for you to learn the best strategies for eliminating risk and making a profit. In the meantime, we have a few tips that can help you feel a little more relaxed with the idea of house flipping.

Negotiate the price of the house – Chances are, you’ve heard it many times, but “you make the money when you buy the house”. Since you can never count on factors such as appreciation, determining how much profit you’ll be able to make will help you know if it will be a wise investment or not.

Inspect the house – Get a thorough inspection of the house and know everything about the house before you place an offer on it. You will be able to sleep better at night if you know up-front what repairs will need to be made.

Get the house insured – While this is always the easiest to overlook, after purchasing the house get it insured as soon as possible. You may not realize it, but disasters can happen when you are renovating a house. You never know if the basement will flood or if a fire will happen in the kitchen. Get it insured to give you better peace of mind.

Don’t cut corners – Lastly, when you are in the midst of remodeling a house, don’t cut corners. Buyers will notice, and they won’t want to buy a house that is less than sub-par. Doing things right in the first place will increase your chances of actually selling the house, instead of never receiving an offer.

While starting out in house flipping is always a little nerve-wracking, Real Estate Elevated was designed to provide real estate investing students with all of the tools and know-how they need to be successful house flippers.

For more answers to frequently asked questions, visit the Real Estate Elevated FAQ.

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