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Flipping houses can be one of the most exciting paths in real estate-but it’s not always the right move for every investor or every property. In this episode of the LFG Lending podcast, we dive into when it actually makes sense to flip and when it might be smarter to pivot to a buy-and-hold strategy instead.
We also share a breakdown of the math behind a successful fix-and-flip and how to know if a property is worth the time, effort, and capital it requires.
Key Questions to Ask Before Flipping a Property
Do You Have a Solid Team?
Flipping a house isn’t a solo sport. You’ll need a network of trusted professionals:
- Contractor
- Realtor
- Property manager (if needed)
- Lender (👋 hey, that’s us)
Start by attending local Real Estate Investment Association (REIA) meetups to connect with others in your market. A good team will help you analyze deals, understand rehab costs, and determine exit strategies.
Do You Understand the 70% Rule?
The 70% Rule is a quick way to estimate if a flip is financially viable.
Formula:
(Purchase Price + Rehab Budget) ÷ ARV (After Repair Value) = Percentage
If this percentage is 70% or less, the flip may be worth pursuing.
Example:
- Purchase Price: $100,000
- Rehab: $20,000
- ARV: $170,000
- Total Investment: $120,000
- 120,000 ÷ 170,000 = 70.5%
Close call-but probably doable depending on other costs like holding and closing fees.
Do You Have a Backup Plan?
The truth is: flipping isn’t always the final outcome. You may plan to sell, but end up keeping the property due to:
- Market changes
- Unforeseen rehab issues (foundation, termites, etc.)
- Higher-than-expected costs
That’s why it’s smart to analyze every flip as if you might need to refinance and hold it.
LFG Lending Tip: Ask yourself, “Would this work as a rental if the flip doesn’t go as planned?”
How Refinancing Math Helps Guide Flip Decisions
Sometimes, it makes more sense to keep the property and refinance instead of selling. Here’s how to think through that:
Example Scenario:
- Purchase Price: $100,000
- Rehab: $50,000
- ARV: $200,000
- Total Investment: $150,000
If a lender offers a 75% loan-to-value refinance:
- $200,000 x 0.75 = $150,000
- You could refinance the full $150,000
- If your actual expenses came in lower (say $130,000 total), you could even pull cash out!
This is how you recycle your capital and use it for the next deal.
When Should You Flip Instead of Holding?
Flipping might be the better move when:
- You can’t refinance enough to get your cash back
- Your rehab budget went over
- The property is in an area that’s not ideal for long-term rentals
- You’d rather cash out and move on to a new deal
Sometimes you don’t know the right path until the rehab is done. That’s okay. The key is knowing how to pivot.
Work With a Lending Partner Who Can Help You Adapt
At LFG Lending, we know that plans change-especially in the world of real estate. That’s why we’re here to walk you through all of your options. Whether you:
- Start with a flip but decide to keep the property
- Plan to BRRRR but realize a flip makes more sense
- Need help calculating the true refinance numbers
We’re in your corner with financing solutions that work either way.
Thinking About Flipping a Property? Let’s Run the Numbers Together.
We’ll help you evaluate your deal based on purchase price, rehab budget, and market comps-and show you what’s possible on the flip or refinance side.
Book a Free Strategy Call with LFG Lending