How to Flip a House in Los Angeles, CA, in 6 Steps

$95,000 gross profit! That’s how much you could earn on every house you flip in the Golden State— a whopping 16.0% ROI! And that’s not all. The median resale price for flipped homes in California is $578,060.

Los Angeles is buzzing with positive net migration, making it prime time for house flipping. Additionally, given the gradual increase in mortgage rates, now is the perfect time to buy your next flip.

What Does Flipping Houses in Los Angeles Mean?

House flipping is an investment strategy in which you fix and flip properties. You can purchase a low-cost property to renovate and then liquidate it for a better market price.

Home flippers in Los Angeles usually adopt these two practices:

• They Buy Properties at a Discount: Most home flippers go for distressed properties such as probate homes and foreclosures. You can find these homes for sale at a lower cost than the local market value.
• They Sell For Sale By Owner: House flippers list on the MLS for a small flat fee and sell FSBO. This saves thousands of dollars in Realtor commissions.

How to Flip a House in Los Angeles in 6 Steps

Here’s how you can start flipping houses in Los Angeles:

1. Buy an Investment Property to Flip

Opt for a distressed or foreclosed property, short sale, or fixer-upper investment. Additionally, before you buy a house in Los Angeles to fix and flip, accurately calculate the renovation costs. This will help you avoid heavy expenses in the future and increase your profits.

2. Stick to the Home Flipper’s 70% Rule

When you buy a distressed property, you shouldn’t pay more than 70% of its after-repair value (ARV). Follow this practice to ensure you profitably flip a house.

For e.g., if the renovation cost estimate is $30,000. How much should you pay for a home worth $500,000?

Your Purchase Price = ($500,000 – $30,000) * 70% = $329,000

» Property Value Estimator: Find your home’s value within a minute.

3. Finance Your Flip

To earn more profit on your flip, you should opt for hard money loans. They provide you with quick capital but at higher interest rates. Individual investors or companies are the main sources to avail of hard money loans.

You can also look for traditional mortgages from banks. While they come with lower interest rates, they do have stringent rules.

4. Choose the Best Location

A growing employment market and increasing net migration in Los Angeles indicate a rising demand for housing. Los Angeles is the most searched-for destinations among homebuyers.

5. Conduct an Inspection

Neglecting a home inspection can lead to costly renovations. 86% of buyers found at least one issue during a home inspection.

Opt for a certified home inspector in Los Angeles. They can help you identify issues with the foundation, electrical systems, plumbing, roofing, HVAC, etc. Well-executed renovations will increase the chances of selling your house for a higher price.

6. Sell Your Flipped House

When you’re done flipping your house in Los Angeles, you should list it on the MLS to sell it. This will give your house maximum exposure. If you opt for a flat fee listing service, you can get the benefit of the MLS without the 3% listing agent fee.

Houzeo’s Gold plan provides you with virtual Realtor services for a flat fee. You also get pricing assistance and help with real estate forms, all while saving thousands of dollars in agent commissions.

Pros and Cons of Flipping Houses

Consider these pros and cons of flipping houses in Los Angeles:

✅ Pros of Flipping Houses

• Significant Profits: In 2023, investors made a 27.5% profit on the houses they flipped. For instance, if you invest $300,000 into a flip, you may earn up to $82,500 in profits.
• Boost in Home Sales: Reviving a distressed property helps improve the area. If you play your cards right, you may increase the region’s home sale prices.

❌ Cons of Flipping Houses

• Your Flip Could Turn Into a Money-Pit: Unidentified structural issues, water damage, holding costs like taxes, maintenance, and HVAC problems could significantly increase renovation costs.
• Pricey Labor Costs: The average labor cost is between $20 and $150. However, structural jobs, plumbing tasks, and roofing repairs can exceed $1,000.

» Pros and Cons of Flipping Houses: Find out why the benefits of flipping outweigh the cons!

How Much Does It Cost to Flip a House?

The average ballpark figure for flipping houses in Los Angeles is between $20,000 and $70,000. This includes the subsequent costs to renovate, market, and hold the property.

The main cost of house flipping is acquiring the property. The renovation costs can go up to $49,987. Other expenses include:

• Holding Costs: These expenses include property management, maintenance fees, HOA, and utility bills.
• Rehab Costs: These include labor and material expenses, home inspection costs, and necessary permit expenses.
• Marketing Costs: You will have to pay to market the house, list it on the MLS, create flyers, and more. 
• Closing Costs: Typically, closing costs are 5% to 8% of your sale price. It includes appraisal, title search, lender fees, attorney fees, etc.
• Property Taxes: State property taxes range from 0.28% to 2.49% of the home’s assessed value.

Can I Flip Houses With No Money?

Yes, you can flip houses with no money.

Some mortgage lenders in Los Angeles provide loans for real estate investing. If you wish to fund your first flip without money, consider these options:

1. Private Money Lenders: These lenders loan money to potential flippers at an interest rate of 8% to 10%. Companies like WeLendLLC have packages for first-time borrowers.
2. Hard Money Lenders: These lenders provide hard money loans for a high interest of 12% – 18%. This loan is available for a short period. Most lenders prefer experienced flippers, but companies like Lima One Capital allow first-time flippers too.

Can I Sell Flipped Homes in Los Angeles on the MLS?

Yes, you can start flipping houses in Los Angeles and selling them on the MLS.

If you have used hard money to finance the house, you’ll have to think about selling it fast, or you have to refinance to hold it. Listing on the MLS will help you quickly sell the house. Your flip gets the maximum exposure, and you can save thousands on the seller’s agent commission.

Houzeo gets your house on the MLS within 24 hours. You can get expert advice on repairs and sell your house quickly if you list via Flat Fee MLS Los Angeles companies.

Common Mistakes to Avoid in House Flipping

• Never Underestimate Renovation Costs: Avoid cost overruns and get accurate quotes from contractors to estimate costs.
• Don’t Avoid Permits: Neglecting the required permits for renovations leads to legal consequences. Comply with local building codes and regulations.
• Never Forget Projected Risk: If you are a first-time house flipper, anticipate risks and create a detailed plan that includes everything from a budget to the project timeline.
• Not Having Enough Money: Unexpected expenses are inevitable during the renovation process. So, ensure you have sufficient funds to cover these unforeseen costs.
• Don’t Avoid a House Inspection: A distressed property with severe issues will burn a hole in your pocket. Professional evaluation before the purchase will help identify and address potential issues.

Is Flipping Houses Worth It?

Yes, home flipping is becoming increasingly popular. In 2023, 8% of home sales were flipped, up from 5.7% in 2016. The average gross profit was $66,000.

With numbers like these, it’s clear: flipping houses is a lucrative investment opportunity.

But here’s the kicker: you should check the suitable properties on the MLS. Houzeo covers all the states and lists all types of properties. With the current market conditions, there’s never been a better time to flip houses for massive returns!

Know How to List on the Houzeo MLS in 5 Easy Steps

We’ve got you covered. Check out how you can list your home on the MLS with Houzeo.

Frequently Asked Questions

• California
• Flipping Houses
• Los Angeles