House flippers can famously earn lots of money (even 6 figures on a single flip), but really what is the the average salary for a house flipper per year?
Earning a living flipping houses isn’t easy. As a real estate investor, you’re heavily reliant on good market conditions, fast turnarounds, and low acquisition costs; all of which are difficult to get on their own, never mind all at the same time.
But you need to start somewhere, and it’s always good to have a goal in mind for what sort of money you should work towards earning. If you’re wondering what is the average salary for a house flipper, I’ve got you covered.
The average salary of a house flipper is $117,372. We calculated this number by looking at the 2020 average reported income of house flippers across the entire United States.
With Do Hard Money, our average borrower made $39,714 net profit per deal.
If that number shocks you, either because it’s really high or really low, don’t worry. I’ve broken down all of the factors that can affect your earning potential below. Plus, I’ve also got a few tips for what you can do if you feel like you’re just not earning enough. Let’s dive in.
How to Determine What Your Salary Should Be Flipping Houses
In the interest of being transparent, I want to say this before going further: We’ve calculated the average salary to be $117,372 based on salaries listed per all 50 states. ZipRecruiter, however, dove further into the nitty gritty to find that if you’re calculating based on every city that had flippers reporting salaries, the average goes way down to $68,693.
Both numbers are good data, but I didn’t go by ZipRecruiter’s number because it’s skewed to find an average based on what flippers are reporting in specific cities. If there wasn’t a flipper that reported income, there wasn’t any data to use. Our calculation, however, looks at the country as a whole. It’s up to you which number you find is more reasonable, but I wanted to give you the full picture of what data is out there.
What is the Average Salary for a House Flipper?
|State||Average Yearly Salary (2020)|
That’s a wide range of salaries! And remember, this is only for investors who identify fix & flips as their primary job. This doesn’t include the millions of people trying to break into the industry that have yet to flip or have only have 1-2 flips under their belt.
The Factors that Affect Your Salary as a House Flipper
The salary of a real estate investor is more dynamic than your typical 8-5 office job. There will be some months where you’re flush with cash and others that can make you stress out or feel desperate for money. The best way to mitigate that is by understanding what factors will affect how much money you’ll be able to bring in.
If you do business in a low cost of living area, then you’ll probably feel like it’s a double-edged sword to flip real estate. On the one hand, it’s much easier to get your bills paid without having to worry about insanely high expenses, and on slow months, you may be able to ride it out on savings alone. The downside, of course, is that it’s much harder to get those properties that generate hundreds of thousands of dollars in profit you see on reality TV shows.
The high cost of living areas come with their own set of problems. While high-ticket asking prices can be the norm, that doesn’t mean they’re any more profitable than a low cost of living zip code. When looking at how your location affects your income, take a step back to see what cost-of-living expectations you should have.
Carrying costs are the expenses you’ll pay while holding onto a property before it sells. These include things like homeowners insurance, HOA fees, utility bills, and so on. The average length of time a flipper carries a house is six months, so it’s important to factor that into your salary projections. If you can shorten that, you can expect your profits (and therefore, salary) to increase. The longer you hold it, the less profit you’ll have to work with when it comes to paying your salary.
The real estate market is rarely static, so it’s difficult to estimate just how much you’ll be able to earn on each home. Buyer’s markets mean there’s more inventory than interested buyers, so you should expect to receive lower offers. However, seller’s markets mean there are more buyers than inventory, so the bids you receive will get more competitive and might even result in a bidding war. When making your salary projections, look at the comps to see if you notice any patterns that might predict how hot the market will be when you’re ready to sell.
Your Business Costs
Business costs are a critical factor that affects the amount of your take-home pay. Be sure to account for all of the overhead you’ll need to pay so that you’re not cutting your salary just to make ends meet. Your business costs can include:
- Liability Insurance
- Legal Fees
- Professional Services (Accountants, Real Estate Agents, etc.)
- Office Rent and Utilities
- Gas and Mileage
- Marketing and Advertising
- Office Supplies
- Contractor Fees
- Employee Wages
How Can I Make More Money Flipping Houses?
If you’re feeling like you’re not making the salary you want, there are ways to tweak your business to create new opportunities for more revenue.
Diversify Your Business Strategy
Flipping is a complex game that can take its toll on any investor. The longer you’re in this, the more you’ll realize that having multiple streams of revenue helps reduce your risk. Consider taking on a few rental properties or even start dabbling into wholesaling. You can also get your real estate agent license and start working as an agent on the side. You’ll still be working in the real estate business and expanding your network while also shielding your income from unexpected market crashes or inventory that’s just not moving.
Expand Your Inventory
This one seems like a no-brainer, but it can be tricky. While more inventory means more potential for profits, it can also mean more costs. If you think expanding your investment portfolio would be a good idea, start slowly. If you average five house flips a year, consider expanding to six or seven. Don’t go crazy and try to double your inventory in one year because that’s a risky move that rarely pans out. Make sure you’re able to adequately account for the time and money involved in expanding your real estate empire before you close on that next property.
Invest in Education
The best way to expand your earning potential is by investing in yourself. Here are a few small things you can invest in now that will pay off later.
- Take classes that teach you more about business, accounting, and real estate law.
- Start learning how to do house repairs yourself without needing a contractor. YouTube has thousands of videos that show everything from basic carpentry to advanced house renovations. Don’t try to learn it all at once; focus on one area that creates the most expenses for you and master the basics. Even knowing how to fix a leak on your own can save you thousands over the lifespan of your business.
- Head to industry conferences to expand your network. Start looking for industry professionals, but also start making “investor buddies.” I’ve found the real estate investing industry to be incredibly welcoming to newbies, so don’t feel like you have to go at this alone. Expanding your network with other investors can give you access to new contractors, tips on doing things better, and more.
- Look for a business mentor or coach to help you set goals and stay accountable.
Change Your Location
If the cost of living where your business is located just isn’t feasible for your quality of life, then it’s time to start looking elsewhere. I wouldn’t base where you move solely on how hot the real estate market is, as that can change at any time. Instead, look for untapped markets that have lots of potential. Ten years ago, who knew that Pittsburgh, PA would be one of the places with a return rate on purchase price of 225.6%, the highest for house flippers around the entire country?
How Can I Lower My Costs to Make More Money?
Reducing your costs can help relax the pinch you’re feeling on payday. Here are a few things you can do to help reduce your expenses to increase your salary.
Stop Buying Houses that are Listed on the MLS
The problem with buying houses on the MLS is that you’re competing against everyone else looking at the MLS that day. What I like to do instead is find off-market properties that no one else has thought to look at. I do this through what I like to call Driving for Dollars and would recommend it for anyone, no matter the type of market they’re dealing with.
Get a Second Opinion Every Time
It doesn’t matter if you’re dealing with general contractors, electricians, plumbers, or any other type of home improvement professional – get a second opinion. Not only will you be able to see if you’re getting a reasonable rate, but you’ll also have a backup in case your first choice ghosts you in the middle of a project.
Leave Some Room for Your Buyers to Be Creative
Flipping budgets are especially susceptible to budget creep, which is where small, incremental purchases start pushing you well above your projected expenses. I’ve noticed budget creep happens most when flippers start trying to make a home as turnkey-ready as possible, which isn’t necessary. Remember that your aesthetic may not be the same as your buyers’, so try to keep your design choices neutral. While you might feel that an industrial-style kitchen is worth the cost of those iron fixtures and Edison light chandeliers, you could be designing yourself into a corner that the end buyer might not like or could feel would be too much of a hassle to redo.
That’s not to say you should make the home bare-bones, far from it. Give the home the value-adds it needs to become a more desirable property, but don’t let yourself waste money on things that might not stay the same after closing.
Become a Better Negotiator
The better you are at getting a lower purchase price, the more money you’ll have to work with, so work on perfecting your negotiation abilities. I like to position myself not as some condescending real estate investor but as a small business owner who’s also a problem solver. Becoming a better negotiator when you’re buying or selling property is a numbers game that will take some time, so don’t worry if it feels strange in the beginning. I’ve got a few tips for how you can better negotiate the sales price of a property here.
Calculating the salary, you’ll earn from house flipping isn’t an easy thing to do. Don’t feel bad if you’re not yet at the average rate flippers claim to make because none of them got that on their first flip. Stay conservative with your finances and take things slowly. The more dedicated you stay towards becoming successful, the higher likelihood that you’ll blow past that average salary in no time.