Flipping still works in 2026, but the margin has moved. Money costs more than it did a few years ago, buyers are more selective, and the gap between a good flip and a break-even one is usually decided on the day you buy, not the day you list. These are the strategies we see working for the investors we finance, with the numbers behind them.
Buy right: the 70% rule, applied properly
The 70% rule says the purchase price plus the renovation should not exceed 70% of the after repair value. The other 30% has to cover financing, holding, selling costs and your profit.
On a house that will be worth $800,000 finished, 70% is $560,000. With a $120,000 renovation, the most you should pay is $440,000. If the seller wants $475,000, the rule is telling you one of three things: the renovation has to cost less, the finished value has to be higher, or this is someone else’s deal.
The rule is a screen, not a guarantee. Where finished values are high and holding periods short, some investors work to 75%. In a slower market, or on a scope with real unknowns, 65% is the safer number. Pick your percentage before you look at the listing, not after you like the house.
Verify the after repair value like the lender will
Every number in a flip hangs off the finished value, so build it the way an appraiser will. Use closed sales, not listings. Use renovated homes of similar size, bed and bath count and lot, sold recently and close by. Throw out the one outlier sale that makes your deal work.
If you would not show those comps to a lender, do not rely on them yourself. We size the loan off the value we can support, and so will the buyer’s appraiser when you sell.
Finance the deal, not just the purchase
A fix and flip loan funds two things: the purchase at closing and the renovation over time. Our fix and flip program publishes these limits:
- Up to 85% of the purchase price
- Up to 100% of the rehab budget, released through draws
- Total loan up to 75% of the after repair value
- Rates from 9.99% to 12.00%, terms of 6 to 18 months
- Loan amounts from $250,000 to $10,000,000
- 620 minimum credit score, first time flippers allowed, no prepayment penalty
On the example above: 85% of the $440,000 purchase is $374,000, and 100% of the $120,000 rehab brings the loan to $494,000. The cap is 75% of $800,000, which is $600,000, so the loan fits under it. Your cash at closing is the other 15% of the purchase, $66,000, plus closing costs, plus the interest you will carry while the work is done.
The three limits interact, and the lowest result always wins. Our post on LTV, LTC and ARV shows how they combine, and how much money you need to flip a house totals the cash side line by line.
Spend the rehab where buyers pay for it
The best flips are not the ones with the most work. They are the ones where every dollar of scope shows up in the sale price.
- Kitchens, bathrooms and the first impression carry the most weight with buyers: layout, light, finishes and curb appeal.
- Systems buyers do not see (roof, electrical, plumbing, foundation) do not add value, but a failed inspection subtracts it. Budget them first and honestly.
- Structural changes and additions can add real value, but they bring permits, engineering and time. Price the time as well as the construction.
- A contingency of 10% to 15% of the budget is not pessimism. It is the difference between a flip that absorbs a surprise and one that stalls.
Write the budget line by line. It is what the draws are released against, so a vague budget becomes a slow draw. Our guide to rehab draws and holdbacks covers how the money moves.
Treat the calendar as a cost
Every month you hold the property costs interest, insurance, taxes and utilities. A four month plan that becomes seven months can erase the margin on its own.
Build the schedule before you close. Line up the contractor, order materials with long lead times early, and know which permits you need and how long your city takes to issue them. In California that last item alone can decide the timeline, especially on anything structural. Choose a loan term longer than your plan, because an extension is always more expensive than time you already have.
Decide the exit before you buy
There are two exits, and a good flip works under both.
Sell. The classic flip. Price it from the comps you used to buy it, not from the best sale on the street.
Hold. If the market softens or the rent is strong, refinance into a long-term rental loan and keep the property. Our rental property loans qualify on the property’s rent, up to 80% LTV, with 30 and 40 year fixed terms. Run that math before you buy, so the fallback is real. Our post on the hard money exit strategy walks through both.
Build a team you can call on a Friday
The lender, the contractor, the agent and the inspector decide your timeline as much as you do. A lender who funds draws on schedule, a contractor who shows up, an agent who knows what renovated homes sell for in that neighborhood, and an inspector who finds the problem before you close. When you interview lenders, ask the questions in our post on how to choose a hard money lender, and check the mistakes flippers make before you make them.
Start with the numbers
Send us the address, the purchase price, the rehab budget and your after repair value, and we will tell you what the loan looks like and what you will need in cash. Start with the fix and flip program or, for a flip in our home county, San Diego fix and flip loans, submit a loan request or call (619) 617-2797.
