A key first step to profiting from a flip is not to pay too much for a house. When deciding how much to pay, estimate the amount you can reasonably sell the house for after fixing it up, and then subtract your expected costs, which include the following:
- Purchase price
- Cost of repairs and renovations
- Any back taxes due on the property
- Holding costs (property taxes, utilities, insurance, interest payments, homeowner association fees, and so on for the time you expect it will take to buy, fix, and sell the house)
- Any agent commissions and closing costs when selling the house
