Mistakes First Time Home Flippers Make and How to Avoid Them

The shows on TV make it look so easy. Find a cheap house, make a few cosmetic repairs, and sell it for a huge profit. They make it look like so much fun that everyone wants to try it. Homes are being flipped all over the country, but as many first time flippers are learning, it is not as easy as it looks. Many miss basic things and either lose money or make very little. Here are a few mistakes new flippers make and how you can avoid them.

Not Doing Enough Research

Flipping houses is a serious business, and it takes a lot of research before you jump in. Most new investors do not realize how much time and money a project will take. Many believe they have the skills and knowledge to do the work themselves, and they quickly find out that is not the case. Good judgment and good decisions are extremely important in real estate.

Paying Too Much

The simple explanation of house flipping is that you want to buy as low as you can and sell for as much as you can, and do it as quickly as possible. Every day that goes by costs you money, especially if you are borrowing. Every day you are paying utilities, property taxes, insurance, and interest.

So first, limit the amount of money you are risking. Start with the least expensive house that makes sense, not a mid or upper priced home. There is a market for homes in every price range once they are ready to sell.

Work backward from the after repaired value (ARV), which is what the house should sell for once the work is done. Subtract your repair costs, your holding costs, your closing and selling costs, and the profit you need. What is left is the most you can pay. Be conservative on the value and generous on the repairs, because it always takes more time and money than you expect.

Not Knowing Your Costs

Everything related to flipping a home is expensive, starting with the purchase. Research, research, research. Pay attention to the price per square foot that similar homes are listed for and have recently sold for.

If you will be financing your flip, talk to several local lenders. Explain what you want to do, and ask about their rates and how they handle draws for repairs. Go with the lender you are most comfortable working with, not necessarily the one with the lowest rate.

Underestimating the Time

Flipping houses takes a lot of time. It can easily take a couple of months to find a house, three or four months to remodel it, and several more months to sell it. If you try to do the remodel yourself while working a full time job, you will burn out quickly. Find a good contractor to do most of the work. They will keep the project moving and get it finished much sooner.

After the work is done, it takes time to market and sell the home. Then there are inspections to pass and repairs the inspector finds, and only then do you get paid.

So if you are thinking about flipping houses, make sure you understand the time and risks involved. Most new flippers do not realize the money, time, knowledge, and skill it takes to flip a home for a profit.

Update, October 2026

I wrote this in 2021, when mortgage rates were around 3%. Today Freddie Mac's weekly average for a 30 year fixed loan is 7.28%, as of October 1, 2026, and short term rehab loans usually cost more than that. Higher rates mean every month you hold a flip costs more, and fewer buyers can afford the finished house. Everything above matters even more now: buy right, know your numbers, and move fast.

You can see some of the houses we have brought back, along with my running journal of East Texas projects, at greg-mckinney-mineola-texas.com.

Greg McKinney, Mineola, Texas

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