Fix & Flip, "Flipping," or "Buy and Flip," are investment holding strategies in which an individual or group of investors acquires a property under market value, with the intention of refurbishing and reselling at a profit within a short period of time.
Real estate flippers follow the 70% rule; for a profitable flip, homes must be bought for 70% of their actual market value after renovations. For example, if a home is worth $100,000 if it were in good condition, but needs $20,000 worth of work, a house flipper will purchase the home for $50,000 ($100,000 x 70% – $20,000) and seek to sell it for the full $100,000 when completed.
Successful home flipping relies on negotiation and speed. The faster one is able to flip, the less number of months they need to pay carrying costs for. Carrying costs include financing charges, interest, property taxes, condo fees, utilities and any other maintenance bills.
Because it is one of the fastest paced real estate investment strategies, you want to ensure home flipping is right for you and can meet your overall profit margin objectives.