{"id":5337,"date":"2024-09-26T10:42:18","date_gmt":"2024-09-26T15:42:18","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/smallbusiness\/starting-a-business\/how-to-start-a-house-flipping-business-in-five-steps0.html"},"modified":"2025-06-26T13:05:00","modified_gmt":"2025-06-26T18:05:00","slug":"how-to-start-a-house-flipping-business-in-five-steps0","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/how-to-start-a-house-flipping-business-in-five-steps0.html","title":{"rendered":"How To Start a House Flipping Business in Five Steps"},"content":{"rendered":"\n<section data-testid=\"fl-simple-hero\"  class=\"fl-simple-hero\">\n    <div class=\"fl-simple-hero-container fl-container fl-flex fl-items-center\">\n                <div class=\"fl-simple-hero-title\" data-testid=\"fl-simple-hero-title\">How To Start a House Flipping Business in Five Steps<\/div>\n            <\/div>\n<\/section>\n    <div class=\"fl-container\">\n        <div class=\"updated-breadcrumb-list\">\n            <ol data-testid=\"fl-breadcrumb-list\">\n                        <li data-testid=\"fl-breadcrumb-list-item\">\n                <a href=\"https:\/\/www.findlaw.com\" data-testid=\"fl-breadcrumb-link\">FindLaw <\/a>\n                <span class=\"breadcrumb-separator\" aria-hidden=\"true\">\/<\/span>\n            <\/li>\n                                <li data-testid=\"fl-breadcrumb-list-item\"><span aria-current=\"page\" data-testid=\"fl-breadcrumb-link-current-page\">How To Start a House Flipping Business in Five Steps<\/span><\/li>\n            <\/ol>\n\n        <\/div>\n    <\/div>\n\n\n\n<div class=\"fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30  wp-container-core-columns-is-layout-28f84493 fl-sectionWithSidebar fl-container fl-flex fl-flex-wrap fl-gap30\">\n<div class=\"fl-section-main fl-page-articles fl-section-main fl-section-main-full-width\"><h1 class=\"fl-no-margin-top\">How To Start a House Flipping Business in Five Steps<\/h1>\n\n\n<figure class=\"wp-block-image fl-no-margin\"><img decoding=\"async\" src=\"https://www.findlaw.com/static/c/images\/image\/upload\/ability-law\/wp-prod\/content-original-images-home_for_sale_soldTS.jpg\" alt=\"\"\/><\/figure>\n\n\n<section class=\"fl-gutenberg-byline\">\n    <div class=\"fl-gutenberg-byline-content\">\n                    By <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/catherine-hodder-esq\/\">Catherine Hodder, Esq.<\/a> | Legally reviewed by <a\n                href=\"https:\/\/www.findlaw.com\/company\/our-team\/madison-hess-j-d\/\">Madison Hess, J.D.<\/a>\n                | Last updated\n        <time>\n                            June 26, 2025\n                    <\/time>\n    <\/div>\n\n            <div class=\"fl-gutenberg-byline-editorial-note fl-text-sm\">\n            <p>Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n        <\/div>\n    \n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-legally-reviewed\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Legally Reviewed\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>This article has been written and reviewed for legal accuracy, clarity, and style by <a href=\"https:\/\/www.findlaw.com\/company\/our-team.html\">FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with <a href=\"https:\/\/www.findlaw.com\/company\/company-history\/editorial-policy.html\">our editorial standards<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n\n    <details class=\"fl-gutenberg-byline-toggle fl-gutenberg-byline-fast-checked\">\n        <summary>\n            <i class=\"fl-gutenberg-byline-icon\" aria-hidden=\"true\"><\/i>\n            Fact-Checked\n        <\/summary>\n\n        <div class=\"fl-gutenberg-byline-toggle-content\">\n            <p><em>The last updated date refers to the last time this article was reviewed by FindLaw or one of our <a href=\"https:\/\/www.findlaw.com\/company\/our-team\/contributing-authors.html\">contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please <a href=\"https:\/\/lawyers.findlaw.com\/?fli=bylinelink\" target=\"_blank\" rel=\"noopener\">contact an attorney in your area<\/a>.<\/em><\/p>\n\n        <\/div>\n    <\/details>\n<\/section>\n\n\n<div class=\"fl-key-takeaways fl-mb30\" data-testid=\"fl-key-takeaways\">\n    <div class=\"fl-card-content\">\n        <div class=\"fl-card-body fl-card-bg-teal fl-flex fl-flex-column\">\n                            <h2 class=\"fl-card-title fl-h2 fl-no-margin\">Key Takeaways<\/h2>\n                        <p>The key steps to starting a <span data-action=\"click-&gt;dropdown#toggle\" data-dropdown-menu-id-param=\"menu_report_term_40365760\" data-dropdown-placement-param=\"top\" data-dropdown-disable-toggle-aria-param=\"true\" data-term-id=\"40365760\">house flipping<\/span><span data-action=\"click-&gt;dropdown#toggle\" data-dropdown-menu-id-param=\"menu_report_term_40365760\" data-dropdown-placement-param=\"top\" data-dropdown-disable-toggle-aria-param=\"true\" data-term-id=\"40365760\"> business<\/span> are making a <span data-action=\"click-&gt;dropdown#toggle\" data-dropdown-menu-id-param=\"menu_report_term_40365770\" data-dropdown-placement-param=\"top\" data-dropdown-disable-toggle-aria-param=\"true\" data-term-id=\"40365770\">business plan<\/span>, choosing a name and business structure, applying for necessary business licenses and permits, and finding the <span data-action=\"click-&gt;dropdown#toggle\" data-dropdown-menu-id-param=\"menu_report_term_40365788\" data-dropdown-placement-param=\"top\" data-dropdown-disable-toggle-aria-param=\"true\" data-term-id=\"40365788\">right property<\/span> to flip.<\/p>\n\n        <\/div>\n    <\/div>\n<\/div>\n\n<div class=\"fl-rich-text\">\n<p><b><i>Ready to form your LLC with confidence?&nbsp;<a rel=\"sponsored noopener\" href=\"https:\/\/legalzoomcominc.pxf.io\/c\/4851649\/2115288\/26746?subId1=how-to-start-house-flipping-business-in-content\" target=\"_blank\">Our trusted partner LegalZoom has packages starting at $0 + filing fees.<\/a><\/i><\/b><\/p>\n<\/div>\n\n<div class=\"tableOfContent\">\n    <div class=\"table-of-contents\">\n        <span role=\"heading\" aria-level=\"2\" class=\"table-of-contents__title\">5 Steps To Start a House Flipping Business<\/span>\n                <ul class=\"table-of-contents__list\">\n                        <li><a href=\"#Plan\" title=\"1. Make a Business Plan\">1. Make a Business Plan<\/a><\/li>\n                        <li><a href=\"#Structure\" title=\"2. Choose a Business Structure\">2. Choose a Business Structure<\/a><\/li>\n                        <li><a href=\"#EIN\" title=\"3. Apply for an EIN and Open a Business Bank Account\">3. Apply for an EIN and Open a Business Bank Account<\/a><\/li>\n                        <li><a href=\"#License\" title=\"4. Apply for Business Licenses and Permits\">4. Apply for Business Licenses and Permits<\/a><\/li>\n                        <li><a href=\"#Find\" title=\"5. Find the Right Property at the Right Price\">5. Find the Right Property at the Right Price<\/a><\/li>\n                    <\/ul>\n            <\/div>\n<\/div>\n\n<div class=\"fl-rich-text\">\n<p>If you are a seasoned real estate investor, you may know a lot about house flipping as a short-term way to profit from a property. But if you are a beginner, there is a lot to learn about buying a property, making renovations, and selling it quickly.<\/p>\n<p>While real estate investing can be lucrative, there is more to the house flipping business than just hard work. Not only should you have an in-depth knowledge of the real estate market in your area and renovation skills, but you should also understand the legal and financial aspects of running a small business.<\/p>\n<p>Follow this step-by-step guide to start the house flipping process the right way.<\/p>\n<\/div>\n\n<div class=\"fl-rich-text\">\n<h2>5 Steps To Start a House Flipping Business<\/h2>\n<\/div>\n\n<div class=\"general-step-component\">\n    <div class=\"steps-container\">\n                    <div class=\"steps-container-item\">\n                <div class=\"category-overview category-overview-item-steps\">\n                    <div class=\"category-overview-heading category-overview-heading-steps\">\n                        <div class=\"category-overview-steps\">\n                            1\n                        <\/div>\n                        <h2 class=\"category-overview-steps-title\" id=\"Plan\">Make a Business Plan<\/h2>\n                    <\/div>\n                    <div class=\"category-overview-content-steps\">\n                        <p>The first step a house flipper should take is to\u00a0<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/how-to-write-a-business-plan.html\">create a business plan<\/a>\u00a0outlining their goals and what they need to establish a successful house flipping business.<\/p>\n<p>A business plan helps secure financing options. Lenders will want to see the business plan before extending credit. Among other things, they will want to know:<\/p>\n<ul>\n<li>Who is running the business? Will you be doing this full-time?<\/li>\n<li>What are your costs and projected revenue? What profit margins will you have?<\/li>\n<li>What is your experience in project management or construction? Do you understand the business?<\/li>\n<\/ul>\n<p>You can develop your own business plan or seek help drafting one from the\u00a0<a href=\"http:\/\/www.sba.gov\/\" target=\"_blank\" rel=\"noopener\">U.S. Small Business Administration (SBA)<\/a>.<\/p>\n<p>If banks are not interested in lending money, consider a hard money loan. This type of loan is a short-term loan, secured by real property, and more expensive than a traditional bank loan. The hard money lenders may be individuals or companies using your real estate as collateral.<\/p>\n<p>You should also assemble a team for your business. Can you handle the renovations yourself, or do you need to hire contractors? Are you a licensed real estate agent, or do you need to work with a realtor? A real estate agent can be helpful in understanding property values and the housing market in your area. You should also <a href=\"https:\/\/lawyers.findlaw.com\/\" target=\"_blank\" rel=\"noopener\">develop a relationship with a real estate attorney<\/a>\u00a0to help with purchases, sales, and zoning issues.<\/p>\n\n                    <\/div>\n                <\/div>\n            <\/div>\n                    <div class=\"steps-container-item\">\n                <div class=\"category-overview category-overview-item-steps\">\n                    <div class=\"category-overview-heading category-overview-heading-steps\">\n                        <div class=\"category-overview-steps\">\n                            2\n                        <\/div>\n                        <h2 class=\"category-overview-steps-title\" id=\"Structure\">Choose a Business Structure<\/h2>\n                    <\/div>\n                    <div class=\"category-overview-content-steps\">\n                        <p>You may be a first-time house flipper or part of a group. You should first think about how to separate the debts and liabilities of your real estate business from your personal assets. If a homeowner were to sue you for an injury, you don\u2019t want them going after your home, car, and personal property. Many entrepreneurs form a business entity such as a corporation, limited partnership, or limited liability company (LLC) to keep their personal assets shielded from their business activities.<\/p>\n<p>LLCs are very popular with single business owners or partners because they provide protection from liability and allow the members of the <a href=\"https:\/\/legalzoomcominc.pxf.io\/c\/4851649\/2115288\/26746?subId1=how-to-start-a-house-flipping-business-in-five-steps0&#038;auto-aff-llc\" class=\"diy-biz-affiliate\" rel=\"sponsored noopener\" data-cta=\"Biz Auto LZ - LATL Txt\" data-cta-url=\"legalzoom.com\" target=\"_blank\">LLC<\/a> to report their share of business profits or losses on their personal income tax returns.<\/p>\n\n                    <\/div>\n                <\/div>\n            <\/div>\n                    <div class=\"steps-container-item\">\n                <div class=\"category-overview category-overview-item-steps\">\n                    <div class=\"category-overview-heading category-overview-heading-steps\">\n                        <div class=\"category-overview-steps\">\n                            3\n                        <\/div>\n                        <h2 class=\"category-overview-steps-title\" id=\"EIN\">Apply for an EIN and Open a Business Bank Account<\/h2>\n                    <\/div>\n                    <div class=\"category-overview-content-steps\">\n                        <p>You should run all your house flipping transactions through a business bank account. Once you set up your business, you can\u00a0<a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/apply-for-an-employer-identification-number-ein-online\" target=\"_blank\" rel=\"noopener\">apply for an Employment Identification Number<\/a>\u00a0(EIN) with the IRS and open a bank account in your business name.<\/p>\n\n                    <\/div>\n                <\/div>\n            <\/div>\n                    <div class=\"steps-container-item\">\n                <div class=\"category-overview category-overview-item-steps\">\n                    <div class=\"category-overview-heading category-overview-heading-steps\">\n                        <div class=\"category-overview-steps\">\n                            4\n                        <\/div>\n                        <h2 class=\"category-overview-steps-title\" id=\"License\">Apply for Business Licenses and Permits<\/h2>\n                    <\/div>\n                    <div class=\"category-overview-content-steps\">\n                        <p>Your business should have the&nbsp;<a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/business-licenses-and-permits.html\">necessary licenses and permits<\/a>&nbsp;to operate. Since you are renovating a property, special permits may be required. Contact your state and local jurisdictions to find out the licenses and permits needed for your business.<\/p>\n<p>It is a good idea to also look into what <a href=\"https:\/\/www.findlaw.com\/smallbusiness\/starting-a-business\/what-is-business-insurance-.html?fli=latl_biz_howto:diy_biz_ins:txt\">business insurance you need<\/a> to protect your investment.<\/p>\n\n                    <\/div>\n                <\/div>\n            <\/div>\n                    <div class=\"steps-container-item\">\n                <div class=\"category-overview category-overview-item-steps\">\n                    <div class=\"category-overview-heading category-overview-heading-steps\">\n                        <div class=\"category-overview-steps\">\n                            5\n                        <\/div>\n                        <h2 class=\"category-overview-steps-title\" id=\"Find\">Find the Right Property at the Right Price<\/h2>\n                    <\/div>\n                    <div class=\"category-overview-content-steps\">\n                        <p>If you have already identified a property, estimate how much money you need for a down payment and factor in the interest rate of the loan or the home equity line of credit (HELOC) in your costs. Once you have enough cash flow, you can flip properties and purchase new ones with cash.<\/p>\n<p>Estimate the renovation costs for each property, factoring in whether you have to hire a general contractor or other tradespeople.<\/p>\n<p>The \u201cbuy low, sell high\u201d strategy holds true for investment properties, but there is a special 70% rule to determine a purchase price. The rule is that you should not pay more than 70% of the after-repair value (ARV) of the home. For example, you may identify a property that could sell for $400,000 after the renovations, and you estimate a renovation cost of $70,000. You first calculate that 70% of $400,000 is $280,000. You then deduct the renovation costs from the ARV, arriving at $210,000. You should not pay more than $210,000 for the property. While foreclosures are a popular way to find low-cost homes, ensure that the renovation costs and upgrades won\u2019t cause you to exceed your budget.<\/p>\n\n                    <\/div>\n                <\/div>\n            <\/div>\n            <\/div>\n<\/div>\n\n\n<div class=\"fl-rich-text\">\n<p>Ready to start flipping homes? Make sure you plan for your business and protect yourself from personal liability. A <a href=\"https:\/\/lawyers.findlaw.com\/\" target=\"_blank\" rel=\"noopener\">local business attorney<\/a> can assist you with zoning and permit issues as well as contracts.<\/p>\n<p>If you are ready to start your business, you can let our\u00a0<a rel=\"sponsored noopener\" href=\"https:\/\/legalzoomcominc.pxf.io\/c\/4851649\/2115288\/26746?subId1=how-to-start-house-flipping-business-custom-content\" target=\"_blank\">trusted partner LegalZoom<\/a>\u00a0handle your business formation filing for $99 plus filing fees.<\/p>\n<\/div>\n\n<div class=\"was-this-helpful\">\n    <div\n            class=\"was-this-helpful__question-container\"\n            aria-labelledby=\"was-this-helpful__question\"\n            role=\"group\"\n    >\n        <span\n                id=\"was-this-helpful__question\"\n                class=\"was-this-helpful__question fl-text-lg-bold\"\n        >Was this helpful?<\/span>\n        <button\n                class=\"was-this-helpful__button fl-text-sm\"\n        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