How to Evaluate a Flip: A Complete Guide for Real Estate Investors

When it comes to flipping houses, success depends on making smart buying decisions. Here's our proven framework for evaluating potential flip properties.

## The 70% Rule

The most fundamental rule in flipping is the 70% rule. You should pay no more than 70% of the After Repair Value (ARV) minus renovation costs.

**Formula: Maximum Purchase Price = (ARV × 0.70) - Renovation Costs**

## Key Factors to Evaluate

### 1. Location Analysis
- Neighborhood trends
- School district quality
- Crime rates
- Future development plans

### 2. Property Condition
- Structural integrity
- Electrical and plumbing systems
- HVAC condition
- Roof and foundation

### 3. Market Comparables
- Recent sales in the area
- Days on market
- Price per square foot
- Buyer preferences

## Common Mistakes to Avoid

1. Underestimating renovation costs
2. Ignoring permit requirements
3. Over-improving for the neighborhood
4. Poor project timeline management

At J.D. Higgins LLC, we've successfully flipped over 150 properties using these principles. Our experience in the Michigan market gives us unique insights into what works.