Don't fall into this trap-if the numbers don't work, be prepared to walk away. Understanding tax implications, including deductions and capital gains taxes, can help investors maximize profits and avoid unexpected liabilities. Major firms, including global investment company KKR, have begun funding flip-loan markets, making it even more challenging for individual investors to secure the best deals.
However, investors with less experience often take longer, especially if they encounter delays with renovations, permitting, or market fluctuations. However, this doesn't mean that profitable flips are impossible-it simply requires greater precision in financial planning, cost management, and market analysis. Many people look to real estate experts like Danny Johnson Real Estate Investor in San Antonio, Texas.
While the MLS is a great resource, some of the best deals are found off-market.
San Antonio Real Estate - Condominium
Real estate investing
Investment
Property
The goal is to identify homes that are undervalued-whether due to foreclosure, distress, or market inefficiencies-renovate them to increase their value, and then sell them at a higher price.
This is often one of the most nerve-wracking parts of the process, but with preparation, it becomes much easier. By remaining patient and sticking to a solid investment strategy, opportunities often present themselves.
Property Types, Popular Features, and Styles
Flipping houses is not a casual hobby-it is a business that can have a significant financial impact, either positive or negative. Properties with an ADU are in high demand because homebuyers can use the extra unit to house family members, accommodate guests, or even rent it out for passive income. All investment opportunities are available directly on our website under the "Invest" tab.
ADUs are often referred to as guest homes, in-law suites, or casitas. However, if you lack construction experience and need to outsource all renovation work, your expenses will rise, making it harder to achieve a profitable return.
The first step is deciding to move forward with absolute determination. However, if it's currently listed at $275,000, you can immediately rule it out.
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Real estate agent
The listing agent represents the seller and has a legal obligation to get them the highest possible price-this creates a conflict of interest. It's crucial to explore your financing options to determine the best approach for your investment strategy.
Teaching is one of the best ways to internalize knowledge. However, one of the biggest mistakes beginners make is working directly with the listing agent of a property they're interested in. This uncertainty underscores the importance of adaptability and conservative financial forecasting.
Aside from reviewing online listings, physically touring properties is invaluable. The real estate market saw median profits of approximately $73,500 per property in 2024-though inexperienced investors often earned below that amount."
Success in flipping starts with purchasing at the right price. To capitalize on this demand, a key part of our proven house flipping strategy often involves building an ADU on the property.
Before diving into the search for properties, it's essential to refine your investment criteria. Here are the rewritten paragraphs with the requested changes:Single-family house flips provide the opportunity to enter and exit a deal quickly with a relatively low minimum investment and the potential for high returns.
First time homebuyers
Instead, you should hire a buyer’s agent who works solely in your best interest. In some areas, a $300,000 home is considered affordable, while in others, it is a luxury property. At its core, house flipping is a form of real estate investing where an investor purchases a property, makes strategic improvements, and quickly resells it for a profit.
Mastering the financial side of flipping is non-negotiable. Keep an open mind when evaluating opportunities.
This knowledge is transferable to other investment strategies, such as rental property investing, real estate notes, and multifamily property investments.
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This is one of the reasons we are able to add so much value to a property in such a short timeframe.
This is why experienced flippers focus on efficiency rather than squeezing out every possible dollar of profit—prolonged carrying costs can quickly erode potential gains. If an investor completes a flip every three months, they could potentially earn six figures.
House flipping isn't about finding any deal-it's about finding the right deal. For example, let's say your analysis determines that a property would be a great deal at $150,000. Investors must also be familiar with local zoning regulations, tax laws, and market trends to avoid costly mistakes.
Like any major endeavor, house flipping requires full commitment. An ADU (Accessory Dwelling Unit) is an additional living space built on a single-family property alongside the main house.
Even after successfully navigating the financial hurdles of purchasing and renovating a home, investors must account for capital gains taxes, which can significantly impact overall profits. Resources such as *Publication 5307: Tax Reform Basics for Individuals and Families* provide essential guidance on tax considerations for real estate investors.
Finding the right property can take months, and once acquired, renovations can consume even more time-especially when dealing with unexpected repairs, permitting delays, or contractor scheduling issues. However, in reality, flipping houses is far more challenging than television suggests.
REAL LOCAL PEOPLE KNOW REAL ESTATE BEST.
This appeals to buyers looking to offset their mortgage with rental income. However, after several months of price reductions, they might be able to secure the same property for an even better price—say $45,000. Institutional investors and private equity firms have also entered the house flipping market, increasing competition for properties.
Unlike traditional real estate investing, where properties are bought and rented for passive income, flippers aim to buy, renovate, and sell properties as quickly as possible to maximize profits and minimize holding costs. Investing is simple!
Given the financial risks and time commitments involved, many potential investors find that house flipping is not the right fit for them. Even highly skilled investors need a reliable team.
Single-family flips are our fastest projects, typically taking between 10 and 14 months. Turning a profit in house flipping has become more challenging than in previous years.
The Benefits of Investing in House Flips
S. housing markets in 2025 will be in the South, including Boston-Cambridge-Newton, Massachusetts-New Hampshire, and San Antonio-New Braunfels, Texas. Before selecting a location to flip, investors should analyze local trends and ask critical questions. Those who succeed in flipping houses are the ones who commit to continuous education, strategic planning, and disciplined execution.
Every property has a price point where it becomes a great deal, and your job is to identify that sweet spot. This type of project is ideal for investors seeking a short-term investment opportunity.
These properties often provide higher profit margins, significant transformation potential, and strong buyer demand. The best part?
House flipping involves purchasing properties, renovating them, and reselling them quickly. Once you've made the commitment, the next step is to start gathering knowledge and developing a clear investment strategy.
About Real estate investing
Buying and selling real estate for profit
Real estate makes up the largest asset class in the world. Much larger than bonds and stocks, which respectively rank second and third by total market cap.
Real estate investing involves the purchase, management and sale or rental of real estate for profit. Someone who actively or passively invests in real estate is called a real estate entrepreneur or a real estate investor. In contrast, real estate development is building, improving or renovating real estate.
During the 1980s, real estate investment funds became increasingly involved in international real estate development. This shift led to real estate becoming a global asset class. Investing in real estate in foreign countries often requires specialized knowledge of the real estate market in that country. As international real estate investment became increasingly common in the early 21st century, the availability and quality of information regarding international real estate markets increased.[1] Real estate is one of the primary areas of investment in China, where an estimated 70% of household wealth is invested in real estate.[2]
Real estate investing can be divided according to level of financial risk into core, value-added, and opportunistic.[3] Real estate is divided into several broad categories, including residential property, commercial property and industrial property.[4]
Real estate markets in most countries are not as organized or efficient as markets for other, more liquid investment instruments. Individual properties are unique to themselves and not directly interchangeable, which makes evaluating investments less certain. Unlike other investments, real estate is fixed in a specific location and derives much of its value from that location. With residential real estate, the perceived safety of a neighbourhood and the number of services or amenities nearby can increase the value of a property. For this reason, the economic and social situation in an area is often a major factor in determining the value of its real estate.[5]
Property valuation is often the preliminary step taken during a real estate investment. Information asymmetry is commonplace in real estate markets, where one party may have more accurate information regarding the actual value of the property. Real estate investors typically use a variety of real estate appraisal techniques to determine the value of properties before purchase. This typically includes gathering documents and information about the property, inspecting the physical property, and comparing it to the market value of similar properties.[6] A common method of valuing real estate is by dividing its net operating income by its capitalization rate, or CAP rate.[7]
Investment properties are often purchased from a variety of sources, including market listings, real estate agents or brokers, banks, government entities such as Fannie Mae, public auctions, sales by owners, and real estate investment trusts.
Real estate assets are typically expensive, and investors will generally not pay the entire amount of the purchase price of a property in cash. Usually, a large portion of the purchase price will be financed using some sort of financial instrument or debt, such as a mortgage loan collateralized by the property itself. The amount of the purchase price financed by debt is referred to as leverage. The amount financed by the investor's own capital, through cash or other asset transfers, is referred to as equity. The ratio of leverage to total appraised value (often referred to as "LTV", or loan to value for a conventional mortgage) is one mathematical measure of the risk an investor is taking by using leverage to finance the purchase of a property. Investors usually seek to decrease their equity requirements and increase their leverage, so that their return on investment is maximized. Lenders and other financial institutions usually have minimum equity requirements for real estate investments they are being asked to finance, typically on the order of 20% of appraised value. Investors seeking low equity requirements may explore alternate financing arrangements as part of the purchase of a property (for instance, seller financing, seller subordination, private equity sources, etc.)
If the property requires substantial repair, traditional lenders like banks will often not lend on a property and the investor may be required to borrow from a private lender using a short-term bridge loan like a hard money loan. Hard money loans are usually short-term loans where the lender charges a much higher interest rate because of the higher-risk nature of the loan. Hard money loans are typically at a much lower loan-to-value ratio than conventional mortgages.
Some real estate investment organizations, such as real estate investment trusts (REITs) and some pension funds and hedge funds, have large enough capital reserves and investment strategies to allow 100% equity in the properties that they purchase. This minimizes the risk which comes from leverage but also limits potential return on investment.
By leveraging the purchase of an investment property, the required periodic payments to service the debt create an ongoing (and sometimes large) negative cash flow beginning from the time of purchase. This is sometimes referred to as the carry cost or "carry" of the investment. To be successful, real estate investors must manage their cash flows to create enough positive income from the property to at least offset the carry costs.[citation needed]
In the United States, with the signing of the JOBS Act in April 2012 by President Obama, there was an easing on investment solicitations. A newer method of raising equity in smaller amounts is through real estate crowdfunding which can pool accredited and non-accredited investors together in a special purpose vehicle for all or part of the equity capital needed for the acquisition. Fundrise was the first company to crowdfund a real estate investment in the United States.[8][9]
Real estate properties may generate revenue through a number of means, including net operating income, tax shelter offsets, equity build-up, and capital appreciation. Net operating income is the sum of all profits from rents and other sources of ordinary income generated by a property, minus the sum of ongoing expenses, such as maintenance, utilities, fees, taxes, and other expenses. Rent is one of the main sources of revenue in commercial real estate investment. Tenants pay an agreed upon sum to landlords in exchange for the use of real property, and may also pay a portion of upkeep or operating expenses on the property.[10]
Tax shelter offsets occur in one of three ways: depreciation (which may sometimes be accelerated), tax credits, and carryover losses which reduce tax liability charged against income from other sources for a period of 27.5 years. Some tax shelter benefits can be transferable, depending on the laws governing tax liability in the jurisdiction where the property is located. These can be sold to others for a cash return or other benefits.
Equity build-up is the increase in the investor's equity ratio as the portion of debt service payments devoted to principal accrue over time. Equity build-up counts as positive cash flow from the asset where the debt service payment is made out of income from the property, rather than from independent income sources.
Capital appreciation is the increase in the market value of the asset over time, realized as a cash flow when the property is sold. Capital appreciation can be very unpredictable unless it is part of a development and improvement strategy. The purchase of a property for which the majority of the projected cash flows are expected from capital appreciation (prices going up) rather than other sources is considered speculation rather than investment. Research results that found that real estate firms are more likely to take a smaller stake in larger assets when investing abroad (Mauck & Price, 2017).
Some individuals and companies focus their investment strategy on purchasing properties that are in some stage of foreclosure. A property is considered in pre-foreclosure when the homeowner has defaulted on their mortgage loan. Formal foreclosure processes vary by state and may be judicial or non-judicial, which affects the length of time the property is in the pre-foreclosure phase. Once the formal foreclosure processes are underway, these properties can be purchased at a public sale, usually called a foreclosure auction or sheriff's sale. If the property does not sell at the public auction, then ownership of the property is returned to the lender.[11] Properties at this phase are called Real Estate Owned, or REOs.
Once a property is sold at the foreclosure auction or as an REO, the lender may keep the proceeds to satisfy their mortgage and any legal costs that they incurred minus the costs of the sale and any outstanding tax obligations.
The foreclosing bank or lending institution has the right to continue to honor tenant leases (if there are tenants in the property) during the REO phase but usually, the bank wants the property vacant to sell it more easily.[12]
Buy, rehab, rent, refinance (BRRR)[13] is a real estate investment strategy, used by real estate investors who have experience renovating or rehabbing properties to "flip" houses.[14] BRRR is different from "flipping" houses. Flipping houses implies buying a property and quickly selling it for a profit, with or without repairs. BRRR is a long-term investment strategy that involves renting out a property and letting it appreciate in value before selling it. Renting out a BRRR property provides a stable passive income source that is used to cover mortgage payments while home price appreciation increases future capital gains.[15]
The phrase was slightly updated in a 2022 Bloomberg News article noting that BiggerPockets added "Repeat" to the end, making it "BRRRR" to describe a real estate investing strategy of Buy, Rehab, Rent, Refinance, Repeat.[16]
According to Lima et al. (2022), in Ireland, the financialization of rental housing, which includes the entry of institutional investors into urban rental housing markets, contributed to structural factors that create homelessness directly by worsening affordability and security in the private rental market, and indirectly by influencing state policy.[17][18] It was found that the history, politics, and geography of the REITs cause the collapse of Irelands market (Waldron, 2018).
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MacGregor, Bryan D.; Schulz, Rainer; Green, Richard K. (7 December 2018). Routledge Companion to Real Estate Investment. Routledge. ISBN9781317687856.
