Starting a House Flipping Business typically costs between $50,000 and $250,000 (SBA, 2025), and that number is the cash you need to control and rehab one deal, not the price of the house. You almost never buy a flip with your own money outright. You borrow most of the purchase and rehab from a hard-money or private lender and bring the rest in cash. The $50,000 version is a light-cash entry: you wholesale a contract or do a single hard-money flip in a lower-cost market where the lender funds 90% of purchase and 100% of rehab, so your cash covers the down payment, points, holding costs, and a thin reserve. The $250,000 version is a self-funded flip where you buy in cash, carry a heavy rehab, and float every holding and selling cost yourself. The discipline that keeps either version solvent is the 70% ARV rule: never put more than 70% of the after-repair value into a house, minus the rehab budget, so the deal has room to absorb surprises and still sell at a profit.
Quick Cost Summary
| Cost Category | Low Estimate | High Estimate | Type |
|---|---|---|---|
| Acquisition Cash & Down Payment | $20,000 | $90,000 | One-Time |
| Financing Points & Interest | $6,000 | $30,000 | One-Time |
| Rehab Budget | $15,000 | $90,000 | One-Time |
| Holding Costs During the Project | $4,000 | $18,000 | One-Time |
| Closing & Selling Costs | $3,000 | $15,000 | One-Time |
| Formation & Working Capital | $2,000 | $7,000 | One-Time |
| Total Estimated Startup Cost | $50,000 | $250,000 |
Costs are estimates for the cash needed to control and rehab one first deal. Self-funded cash purchases and heavy gut rehabs push the high end past $250,000.
Detailed Cost Breakdown
Acquisition Cash & Down Payment - $20,000 to $90,000
This is the cash you bring to take control of the property. With hard money, the lender funds 80% to 90% of the purchase price and you cover the rest as a down payment, so on a $200,000 buy at 90% leverage your cash is roughly $20,000 plus a $5,000 to $10,000 earnest-money deposit at contract. The down payment is the single biggest reason flipping needs real cash even though you are borrowing. At the high end you are either buying in cash to win a competitive deal or putting 20% to 25% down on a more expensive property, which is where $90,000 of acquisition cash comes from. Wholesalers sit at the bottom of this range because they never close on the house at all. They put a property under contract, then assign that contract to a buyer for a fee, so their acquisition cash is just the earnest-money deposit, sometimes a few hundred dollars.
Financing Points & Interest - $6,000 to $30,000
Hard money is expensive on purpose, because it is fast and asset-based rather than credit-based. Expect 10% to 12% annual interest and 2 to 3 points charged upfront, where one point equals 1% of the loan amount (industry standard, 2025). On a $180,000 loan, 2 points is $3,600 paid at closing, and interest at 11% runs about $1,650 a month while you hold the house. A typical four-to-six-month flip therefore carries $6,000 to $30,000 in financing cost before you sell a thing. Many hard-money loans are interest-only with a balloon at sale, and the rehab portion is released in draws, meaning the lender reimburses you after each phase of work passes inspection rather than handing over the full rehab budget at closing. That draw structure is why you need rehab cash on hand even when the loan covers 100% of renovation: you pay the contractor, then the lender repays you.
Rehab Budget - $15,000 to $90,000
The rehab is where the profit is made or lost. A cosmetic refresh, meaning paint, flooring, fixtures, and a light kitchen-and-bath update, runs $15,000 to $35,000 on a typical three-bedroom house. A full renovation that touches the roof, HVAC, electrical, plumbing, kitchen, and baths runs $40,000 to $90,000 and higher on larger or distressed properties. Price the rehab before you make an offer, because the 70% ARV rule works backward from it: take the after-repair value, multiply by 0.70, subtract your rehab number, and the result is your maximum purchase price. A house worth $300,000 fixed up, needing $50,000 of work, caps your buy at $160,000 ($300,000 times 0.70, minus $50,000). Pad every rehab estimate by 10% to 20% for the surprises behind the walls, because a rehab that blows through budget is the most common way first-time flips lose money.
Holding Costs During the Project - $4,000 to $18,000
Every day you own the house, it costs money whether or not a single nail gets driven. Holding costs are property taxes, hazard and vacant-property insurance, utilities kept on for the crew, lawn care, HOA dues, and the loan interest covered above. On a typical flip these run $1,000 to $3,000 a month, so a four-month project carries $4,000 to $12,000 and a slow six-month-plus hold pushes toward $18,000. Vacant-flip insurance costs more than a normal homeowner policy because the house is empty and under construction, a line first-timers forget until the binder comes back high. Holding costs are the meter that punishes a slow rehab and a slow sale, which is why experienced flippers obsess over days-on-market and crew speed more than almost anything else.
Closing & Selling Costs - $3,000 to $15,000
A flip closes twice, and you pay both times. On the buy side there are lender fees, title and escrow, recording, and transfer taxes, usually 2% to 3% of the purchase price. On the sell side the bigger bite is the agent commission, commonly 2.5% to 3% to the buyer's agent plus whatever you pay to list, on top of seller closing costs and any concessions to the buyer. On a $300,000 resale that is easily $9,000 to $15,000 out of your gross. Flippers who hold a real estate license list their own flips and keep the listing-side commission, which is one of the cleanest ways to add a few thousand dollars of profit per deal. Budget closing and selling costs as a real line, because the price you sell at is not the cash you keep.
Formation & Working Capital - $2,000 to $7,000
Form an LLC ($40 to $520 in state filing fees) and hold each flip in it, because you are taking on six-figure debt and inviting contractors and the public onto a property you own. A separate entity keeps a lawsuit or a loan default away from your personal assets, and many hard-money lenders will only lend to an entity anyway. The rest of this line is true working capital: the cash buffer that covers a draw before the lender reimburses you, an unexpected permit fee, a contractor who needs a deposit, or a month of holding costs you did not plan for. New flippers chronically underfund this reserve, then stall mid-rehab when a $4,000 surprise lands and there is no cash to pay the crew. Carry $2,000 to $7,000 of genuine reserve outside the deal math.
Monthly Holding Costs During a Flip
| Expense | Low Estimate | High Estimate |
|---|---|---|
| Hard-money loan interest | $800/mo | $2,200/mo |
| Property taxes (accrued) | $150/mo | $600/mo |
| Vacant-property insurance | $100/mo | $350/mo |
| Utilities & lawn care | $150/mo | $400/mo |
| HOA dues & misc. | $0/mo | $450/mo |
| Total Monthly Hold | $1,200/mo | $4,000/mo |
These costs run from the day you close until the day you sell. A flip held four months at the low end carries about $4,800; a six-month high-end hold carries $24,000.
Funding Models and How They Change the Math
How you fund the deal decides how much cash you need, how fast you turn it, and how much risk you carry.
Fix-and-Flip With Hard Money
The standard model. A hard-money lender funds 80% to 90% of purchase and often 100% of rehab in draws, and you bring the down payment, points, and holding costs in cash. You buy, renovate in three to six months, and sell. Leverage lets you control a $200,000 house with $30,000 to $40,000 of cash, which multiplies returns but also multiplies risk, because the 10% to 12% interest and 2 to 3 points run whether the flip wins or loses. This is the model most $50,000-to-$120,000 startup budgets are built around.
BRRRR (Buy, Rehab, Rent, Refinance, Repeat)
Same buy-and-rehab front end, but instead of selling you rent the house, then refinance into a long-term mortgage that pays off the hard money and ideally returns most of your cash. You keep the property as a rental and recycle the same capital into the next deal. BRRRR builds a portfolio and avoids the double closing costs and the dealer-income tax treatment of a quick flip, but it depends on the refinance appraising high enough to pull your cash back out, and a soft appraisal can trap your capital in the deal.
Wholesaling (Near-Zero Capital)
The cheapest way in. You put a distressed property under contract, then assign that contract to a cash buyer for a fee, commonly $5,000 to $15,000, without ever owning or rehabbing the house. Your only real cash outlay is the earnest-money deposit, which is why a wholesaler can start with a few hundred to a few thousand dollars. Wholesaling teaches deal analysis and builds a buyer list, but it is a marketing-and-negotiation business, not a construction one, and margins per deal are thinner than a completed flip.
Buy-and-Hold After a Flip-Style Rehab
You buy and rehab like a flipper, then keep the house as a long-term rental for cash flow and appreciation instead of selling. This avoids selling costs and short-term capital-gains treatment entirely and turns one rehab into a years-long income stream, but it locks up your capital, so it suits operators who have enough cash to leave a deal parked rather than recycle it every few months.
What Most People Forget
Hidden costs that catch first-time house flippers off guard.
Holding-Cost Overruns From a Slow Sale ($3,000-$12,000 per extra quarter)
The budget assumes you sell in four to six months. When the house sits, interest, taxes, insurance, and utilities keep running at $1,200 to $4,000 a month, so an extra 90 days on market quietly eats $3,000 to $12,000 of profit. Price to sell, not to hope, and underwrite the deal at a longer hold than you expect so a slow market does not erase the margin.
Rehab Surprises and Permit Costs ($5,000-$25,000 unplanned)
Open a wall and you find knob-and-tube wiring, a cracked sewer line, mold, foundation movement, or a roof that needs full replacement instead of patching. Pull a permit and the inspector may require code upgrades the previous owner skipped. These surprises run $5,000 to $25,000 and are why every rehab estimate needs a 10% to 20% contingency. Unpermitted work that surfaces at resale can force you to redo it, so budget permits in from the start rather than gambling on a fast cosmetic flip.
Two Sets of Closing Costs ($6,000-$20,000 total)
A flip is two transactions, and most first-timers price only the sale. You pay lender fees, title, escrow, and transfer taxes when you buy, then agent commission, seller closing costs, and concessions when you sell. Across both closings that is $6,000 to $20,000 on a typical deal, often the difference between a profitable flip and a breakeven one. Run the full round-trip cost before you make an offer.
Dealer-Income and Short-Term Capital-Gains Tax (up to 37% plus 15.3% SE tax)
The IRS generally treats active flippers as dealers, so flip profit is ordinary income, not the lower long-term capital-gains rate, and a property held under a year never qualifies for long-term treatment anyway (IRS, 2026). On top of ordinary income tax that can reach 37% federal, dealer income is also subject to self-employment tax. A $50,000 profit can owe far more tax than a new flipper expects, so model the after-tax number, not the gross spread, when you decide whether a deal is worth doing.
Days-on-Market Risk in a Shifting Market (margin swings of 5-15%)
You buy on today's comparable sales and sell on the market that exists three to six months later. If rates rise or local demand cools mid-rehab, the after-repair value you underwrote can slip 5% to 15%, and a thin deal turns into a loss. Build a cushion into the ARV, avoid over-improving for the neighborhood, and have a backup plan, often renting the house, if it will not sell at your number.
Self-Employment and Dealer Income Tax (15.3% of net earnings)
Active flipping income is self-employment income, so it carries 15.3% for Social Security and Medicare on top of income tax (IRS, 2026). Set aside 25% to 35% of every dollar of profit, and work with a tax professional early, because dealer status, entity choice, and how you hold each property all change the bill.
How Long Does It Take?
Plan for 3 to 9 months per flip, with the business setup running in parallel up front.
Business & Funding Setup (2-4 weeks): Form the LLC, line up a hard-money or private lender and get pre-approved, build a contractor and contact list, and set aside your cash reserve. Lender approval gates everything, so start it before you find a deal.
Find & Close the Deal (2-8 weeks): Source an off-market or distressed property, run the numbers against the 70% ARV rule, get it under contract, complete inspections, and close. Finding the right deal at the right price is the slowest and most important phase.
Rehab (6-16 weeks): Renovate in phases, draw from the lender as each phase passes inspection, and manage the crew to keep holding costs down. Speed here directly protects margin.
List & Sell (4-12 weeks): Stage, list, field offers, and close the sale. Holding costs run the entire time, so days-on-market is the metric that decides the final profit.
How Long Until You're Profitable?
Most house flippers see profit on the first or second completed deal, but it is profit per project, not steady monthly income.
Flipping does not have a slow ramp to monthly breakeven the way a service business does. A single well-bought flip with $50,000 to $250,000 of startup cash can clear $20,000 to $80,000 in profit at sale, so the business is profitable the moment a good deal closes. The catch is that the gain is lumpy and the downside is real: one bad deal, a market shift, a gut-rehab surprise, or a house that sits, can erase the gains from two or three good ones. Profitability here is a function of deal selection and cost control, not time in business, which is why the 70% ARV rule and a padded rehab budget matter more than any other habit.
Typical Deal Timeline
| Phase | Stage | Cash Position |
|---|---|---|
| Weeks 1-8 | Funding setup & deal acquisition | Cash going out (down payment, points) |
| Months 2-5 | Rehab in draw phases | Cash out, reimbursed by lender draws |
| Months 4-7 | List & sell | Holding costs accruing |
| At closing | Sale & loan payoff | Profit realized (or loss absorbed) |
Most flippers turn a profit on the first or second deal, faster in a rising market and slower if a rehab or a sale stalls.
First Deal Cash Flow Summary
| Category | Low | High |
|---|---|---|
| Cash Into the Deal (startup) | $50,000 | $250,000 |
| Holding Costs Over the Hold | $4,800 | $24,000 |
| Typical Profit at Sale | $20,000 | $80,000 |
| Cash Back at Closing (incl. profit) | $70,000+ | $330,000+ |
Profit is the spread after the loan payoff, holding costs, and both sets of closing costs. A single bad deal can turn the profit line negative.
How to Start for Less
Wholesale First to Build Capital (Start for under $2,000)
Before risking six figures on a flip, put a few distressed properties under contract and assign them to cash buyers for $5,000 to $15,000 each. You learn deal analysis, build a buyer list, and stack capital with almost no money at risk beyond the earnest-money deposit. Two or three wholesale deals can fund the down payment on your first real flip.
Partner on Capital and Split the Profit (Save 50-100% of the cash)
Find a partner who brings the cash while you bring the deal and the rehab management, then split the profit, often 50/50. You contribute none or little of the acquisition and holding cash, which lets you do a real flip with sweat equity and a track record instead of savings. This is how many flippers complete their first few deals before they have the capital to go solo.
Use Hard Money and Keep Your Cash Light (Control a deal with $30,000-$40,000)
Maximize lender leverage on purchase and rehab so your own cash covers only the down payment, points, and holding costs. A 90%-purchase, 100%-rehab loan lets you control a $200,000 deal with $30,000 to $40,000 of cash instead of buying outright, freeing the rest of your capital for reserves or a second deal.
Get a Real Estate License and Self-List (Save 2.5-3% per flip)
Holding a license lets you list and sell your own flips without paying a listing agent, keeping 2.5% to 3% of the resale price in your pocket, often $7,000 to $9,000 on a $300,000 sale. The license also gives you direct MLS access to find deals before other buyers and to comp ARV accurately.
Manage the Rehab Yourself With Trusted Subs (Save 10-20% of rehab)
Acting as your own general contractor and hiring subs directly, rather than paying a GC a 10% to 20% markup, keeps real money on every project. It demands time and a vetted crew, but on a $50,000 rehab the GC markup alone is $5,000 to $10,000 of margin you can keep by managing the work.
Tools & Resources
Accounting: QuickBooks - Track acquisition, rehab draws, holding costs, and profit per flip, and keep clean books for dealer-income and quarterly tax reporting.
Business Insurance: Next Insurance - Vacant-property and builder's-risk coverage for houses under renovation, plus general liability for the crew and visitors on your job site.
Business Formation: LegalZoom - Form the LLC that holds each flip. Six-figure debt and an owned construction site make entity protection essential, and many hard-money lenders require it.
Payments: Square - Pay subs and vendors, track deposits, and send invoices. Free reader, no monthly fees.
Website: Squarespace - A site for motivated-seller leads and a buyer list. Off-market deal flow is the lifeblood of a flipping business.
Payroll: Gusto - When you bring on a project manager, an acquisitions person, or in-house crew, Gusto handles payroll and tax withholding.
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Comparing Startup Costs
- General Contracting Business - GC skills run straight into flip rehabs, and many flippers either hold a contractor's license or partner with a GC. Managing the renovation yourself is one of the biggest margin levers in flipping.
- Real Estate Agency - A license helps you find off-market deals and list your own flips without paying a listing commission, saving 2.5% to 3% per sale. A natural complement to a flipping operation.
- Short-Term Rental - Lower startup cash ($15,000-$150,000) and a buy-and-hold cousin of flipping. Flippers often convert a deal that will not sell into a rental rather than take a loss.
- Property Management Company - Lower startup cost ($5,000-$25,000) and a fit for flippers who pivot to BRRRR or buy-and-hold and need to manage a growing rental portfolio.
- Painting Business - The single highest-return rehab trade and a far cheaper way into real estate work. Many flippers learn to paint first to control the biggest visible line in a cosmetic rehab.
Frequently Asked Questions
How much does it cost to start a house flipping business?
Plan for $50,000 to $250,000 in cash, and remember this is the money to control and rehab one deal, not the price of the house. The low end is a hard-money flip in a lower-cost market or a wholesale assignment, where your cash covers the down payment, points, holding costs, and a reserve. The high end is a self-funded cash purchase with a heavy rehab. Wholesalers can start for under $2,000 because they never close on the property.
How much do house flippers make?
A successful flip clears $20,000 to $80,000 in profit, and experienced flippers running several deals a year can earn well into six figures. The income is lumpy and per-deal, not a steady monthly salary, and one bad deal can wipe out the gains from two or three good ones. Net profit depends on buying at or below the 70% ARV price, controlling the rehab, and selling fast.
What is the 70% rule in house flipping?
The 70% ARV rule says never pay more than 70% of a property's after-repair value, minus the rehab budget. On a house worth $300,000 fixed up that needs $50,000 of work, the maximum buy is $160,000 ($300,000 times 0.70, then minus $50,000). The 30% cushion absorbs financing, holding, closing, and selling costs plus surprises, and still leaves a profit. It is the core discipline that keeps a flip from losing money.
Do I need cash to flip houses, or can I use a loan?
Both. Most flippers borrow 80% to 90% of the purchase and often 100% of rehab from a hard-money or private lender at 10% to 12% interest plus 2 to 3 points, then bring the down payment, points, and holding costs in cash. You still need real cash, typically $30,000 to $40,000 to control a $200,000 deal, because the lender funds rehab in draws and reimburses you after the work is done.
Do I need a license to flip houses?
No license is required to buy and resell a property you own, though you do need a business license and should hold each flip in an LLC for liability protection. A real estate license is optional but valuable: it lets you find deals on the MLS first and list your own flips without paying a listing agent, saving 2.5% to 3% per sale. Renovation work itself may require permits and licensed trades depending on local code.
How long does it take to flip a house?
Plan for 3 to 9 months per deal. Funding setup and finding the right property take two to eight weeks, the rehab runs six to sixteen weeks, and listing and selling adds four to twelve weeks. Holding costs of $1,200 to $4,000 a month run the entire time, so speed through the rehab and a fast sale directly protect your profit.