A 2025 Guide to Flipping Houses in California: 5 Cities to Consider

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If you’re considering flipping houses in California, it’s likely you’re researching what it takes and watching market conditions. You may be asking questions like: Is now a good time to flip a house? Will it be profitable? What challenges might I face?

The California Association of Realtors (CAR) expects buyers and sellers to become more active in the market in 2025, driving up both home sales and prices. Existing, single-family home sales are forecasted to increase by 10.5% from 2024’s projected pace.

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“An increase in homes for sale, along with lower borrowing costs, is expected to entice more buyers and sellers to enter the market in 2025,” CAR President Melanie Barker explains in the report.

“Demand will grow as we start the year with the lowest interest rates in more than two years, particularly for first-time buyers. Meanwhile, would-be home sellers, held back by the “lock-in effect,” will have more flexibility to pursue a home that better suits their needs as mortgage rates continue to decline.”

Daniel Donate, a top real estate agent in Oakland who specializes in California investment properties, says that “flipping houses in the state can be profitable,” it just takes a different strategy than it may have in the past. “You’re probably going to try to be very conservative now,” he says, especially if you are a first-time flipper.

Ready to figure out how to start flipping houses in California? Let’s get into the details of where and how you can become an experienced real estate investor in the Golden State.

DISCLAIMER: This article is meant for educational purposes only and is not intended to be financial or legal advice. If you are considering flipping houses in California, HomeLight always encourages you to reach out to an advisor regarding your own situation.

What is house flipping?

House flippers buy homes, hold them for a couple of months, and then sell them for a profit (that’s the flip part). Typically, they buy distressed properties, such as short sales, foreclosures, or homes that need significant work, fix them up, and sell them for a profit. Sometimes flippers buy and sell homes to wholesalers without making any repairs or updates.

The goal is to buy low and sell for a high profit, covering the home’s initial cost and any improvements.

“I would say the best advice would probably be to start off working with or helping another investor that already has experience so that you can actually learn from them,” says Donate. He also recommends hiring a seasoned real estate agent familiar with house flipping.

Is house flipping profitable in California?

House flipping is most certainly an attractive form of income for many professional real estate investors and side hustlers alike. However, making a profit on a flip isn’t as easy as it looks. It takes research, planning, and effort.

Analyzing the most recent metrics, real estate data firm ATTOM reports that home flipping activity nationwide decreased in the second quarter of 2024, but profits consistently improved.

These transactions accounted for 7.5% of all home sales, equating to one out of every 13 sales. Investors earned a 30.4% profit before expenses on homes sold during the second quarter, the fourth time in five quarters that margins increased.

Donate says that flippers can adjust to any type of housing market to be able to make a profit. “I think there’s always an opportunity, especially right now. You just have to adjust to the current market that there is,” he says.

How much do California flippers make?

According to ATTOM, return on investment (ROI) improved “slightly from both the first quarter of 2024 and from a low point over the past decade of about 25 percent in the first quarter of last year.”

Nationally, the gross profit on typical flip transactions increased to $73,500. While it’s a decrease from $81,000 in 2022, it’s an uptick from $70,000 in the first quarter of 2024 and more than $12,000 above 2023’s low point.

California’s average flipping gross profit was $95,000 per transaction, with an ROI of around 16%.

Gross profits are calculated from the difference between the median purchase price paid by investors and the median resale price. Median home prices in the U.S. is around $420,400 in Q3 2024. California’s median home price is around $868,150 as of September. CAR predicts California’s median home price will climb to $909,400 in 2025.

It’s important to note that your investment results can vary. Profits can also vary greatly from county to county, and even from city to city. Do your research on several areas before deciding on the best area to look for properties to flip.

Best places in California to flip a house

Fresno

Many cities in California have median home values that are on the higher end. However, Fresno home values aren’t quite so high, so this is a great city to look for homes to flip if your budget isn’t quite so big.

The city has seen some significant value growth in a year when many other areas have lost value. Additionally, price growth is predicted to stabilize, so buying to flip can mean significant profits for savvy investors.

Year-over-year population growth: Up 1.01%
Median home value: $390,000
Year-over-year home value growth: Down 2.5%

Irvine

A planned community in Orange County, Irvine has lots of potential for real estate investors. With a healthy economy and low unemployment rates, the city sees continued population growth. Plus, home values have increased steadily over the past few years, which is a good sign for flippers.

Year-over-year population growth: Up 0.15%
Median home value: $1.56 million
Year-over-year home value growth: Up 20.8%

Los Angeles

Los Angeles is by far the largest city in California by population, hosting approximately 3.8 million people. Known for being the hotspot for fame, music, and movies, this city’s popularity isn’t going anywhere. Home prices are fairly high, but flips in this city also have a higher potential for profit.

Year-over-year population growth: Up 0.51%
Median home value: $1.2 million
Year-over-year home value growth: Down 2.1%

Ventura

Looking for a lower median price point in California with even higher potential profit margins? Look no further than Ventura. This coastal town boasts various attractions and amenities, including pristine beaches and cozy cafes that attract buyers from all around.

Year-over-year population growth: Down 0.4%
Median home value: $965,000
Year-over-year home value growth: Up 5.5%

San Diego

San Diego has a lot to offer, including a wide variety of neighborhood options, plenty of sunshine, and easy beach access. The city’s thriving economy is supported by the vibrant tourism, telecommunications, and technology industries, providing several job opportunities to residents.

Year-over-year population growth: Up 0.78%
Median home value: $1 million
Year-over-year home value growth: Up 8.0%

I wouldn’t get too involved in the actual remodel yourself. If you really want to get bigger in flipping, you have to be using your time and your resources to go out and look for the next project, instead of trying to save a few bucks and trying to do the work yourself.

Daniel Donate Real Estate Agent
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Daniel Donate Real Estate Agent at Cal Bay Realty
Years of Experience 7

Transactions 262

Average Price Point $986k

Single Family Homes 208

Step-by-step guide to flipping houses in California

1. Create your network and evaluate your skills

Unless you’re a licensed contractor, you’ll need a network of professionals to help you flip. Even if you’re handy around the house, evaluate your skills honestly. For some projects, particularly electrical and plumbing, you’ll need an expert.

Keep in mind that buyers may be wary of purchasing a flipped home if they can’t verify that permits were pulled, and the work was done by licensed professionals.

Put together a network of experienced, licensed professionals before you start scouting houses. In addition to people performing the remodeling work, you’ll need an agent to find homes, a stager to help sell them, and possibly a lawyer to draw up legal documents.

“It’s not really worth you trying to take on more work yourself when you can be out there looking for another opportunity to flip,” says Donate. He recommends finding a team of experts to do the work so that you can spend most of your time looking for those opportunities.

He adds, “I wouldn’t get too involved in the actual remodel yourself. If you really want to get bigger in flipping, you have to use your time and resources to go out and look for the next project instead of trying to save a few bucks and doing the work yourself.”

2. Develop your budget

A budget that takes into account all repairs, fees, and the unexpected is a key piece to successfully flipping a home. But, how do you account for the unexpected? Since flippers don’t have a crystal ball to see the future, the industry has developed the 70% rule.

This rule states that you should never pay more than 70% of the after-repair-value or “ARV” of a property, less any repairs, that you’re flipping. The ARV is your estimate of the home’s worth after all repairs have been done.

For example, if the ARV of your flip is $300,000, and it needs $50,000 in repairs, you shouldn’t pay more than $175,000 to acquire the property. If all went well, you’d still have $75,000 in profit to cover other expenses (such as agent and stager fees). Even if something went wrong, you likely wouldn’t end up losing money.

Here are the important budget elements you must pay attention to:

Down payment and lender fees
Home inspection fees
Closing costs
Mortgage payment, property taxes, and insurance fees for every month you’ll own the property
Contractor fees
Permit fees
Utilities while you own
Marketing fees, such as a stager and professional photographer
Real estate agent fees to sell the property

Donate recommends that you definitely use the 70% rule, and these days, “If [the percentage] can be lower, make it lower,” he says.

3. Pick a financing option for your flip

Purchasing a home to flip with cash is almost always going to be in your best interest. However, not all investors have that kind of funding. If you need to finance the home with a mortgage, there are a few options you should consider:

Hard money loans: These hard money loans from private lenders are offered for short periods of time. They can come with higher interest rates and can be risky for inexperienced investors.
Fannie Mae’s HomeStyle Renovation loan: This type of loan finances the purchase of the property as well as the costs of the renovations, all wrapped up into one mortgage.
FHA 203K Mortgage: This option allows homeowners to finance up to $35,000 in repairs identified by an FHA home appraiser or inspector. This option, however, requires the homeowner to occupy the home as their primary residence after purchasing, so it may not be the right choice for many house flippers.

Seek expert advice: There are benefits and drawbacks to each financing option. HomeLight always recommends that you work with a financial advisor to find the best financing option for you.

4. Research your selected market

One of the biggest factors that will affect your return on investment is the market conditions in the area where you are looking to flip homes. Flipping houses requires a delicate balance among key factors: the availability of homes at discounted prices, cost-effective renovations, and buyer demand when you go to sell.

Here are some signs that a particular area in California will yield opportunities for profitable house flipping:

Economic growth

A strong job market and an increasing population generally translate to increased demand for housing.

California has low unemployment rates by historical standards. But when it comes to population growth, the Public Policy Institute of California reports that the state is undergoing a demographic phase, experiencing its first population decline in recorded history. Residents are moving away from the coastal towns toward more inland regions, presenting opportunities in the housing markets there.

As an investor, look into areas of the state with recent influxes of residents and low unemployment rates.

Steady home value appreciation

One of the keys to maximizing return on real estate investments is paying attention to home value appreciation in the areas in which you are investing. Steady home price growth over the last few years can help you predict how much your investment might appreciate in value when you go to sell — this can also help inform your strategy.

Donate says flippers making plans should analyze where things could potentially stand in six months, explaining that investors should ask: “What if the prices drop ten percent, fifteen percent, and if that number still gives you profit, then that’s probably going to be a deal that you would want to take on.”

5. Partner with a top California agent

A seasoned, local real estate agent can help with identifying trends and popular home upgrades. When it’s time to sell your flip, they’ll sell and market it. But they can also help you find houses to flip.

On working with an experienced agent, Donate says, “It’s very important because they’re the ones that know the activity of what’s going on.”

He adds, “Maybe, nobody is showing up to open houses now. Maybe you’re getting two or three groups into open houses instead of the 100 groups over a weekend that you were getting six months ago. You’re not gonna know that information unless you were working with a real estate agent.”

6. Find a home to flip

Once you have an agent keeping an eye out for you, alerts set up on real estate websites, and the multiple listing service (MLS) being monitored, it’s time to find a home to flip. It could take several months, and you might have to make several offers on available homes before you’re successful. Be patient.

“I would say the best opportunities will be the well-maintained, outdated homes because those may require the least amount of work or budget to be put into the home remodel,” says Donate.

Once you win your bid, it’s absolutely crucial that you get a home inspection and an appraisal. When you walked through the home, you could probably tell you’d need to remodel the bathroom to sell. But a home inspection will reveal any hidden issues beneath the surface, such as a rotted subfloor in that bathroom, which you might have to replace to safely and successfully flip the home.

An appraisal is an estimate of the home’s current market value. If you’re using hard money or a mortgage to finance the flip, the lender will likely require it. The appraisal tells you what the home is worth now — which is valuable information if you’re concerned that you’re paying too much.

7. Estimate renovation time

Line up the contractors, plumbers, electricians, and anyone else you might need to begin work the day after the closing. Check licenses and references before signing any contracts. Once the property is yours, there’s no time to waste.

Prioritize renovations that offer the best ROI. A mid-range kitchen remodel offers 96.1% ROI, while a deck addition will help you recover about 82.9% of the costs.

92% of realtors advise enhancing curb appeal before selling, with top recommendations being landscape maintenance (74%), lawn care (53%), and tree care (44%).

Still, it’s important to consult your agent about which renovations are popular in the area where you’re flipping properties.

“I would probably avoid going too detailed in areas where the value of the home doesn’t really support it,” says Donate. “There is going to be a cap in certain neighborhoods on what people are willing to pay to live in the area. And if you try to go way too out in these certain neighborhoods or cities, you’re probably not gonna get your money back.”

All of these projects have the added benefit of improving the home’s appearance and potential appeal to buyers. Remember that whatever you can do yourself — whether it’s a fresh coat of paint or scraping popcorn from the ceiling — builds sweat equity that will make you money when you sell.

8. Choose to rent or sell

Once the work is done, flippers have a choice. You can either rent the home and become a landlord, or sell it. If you used hard money to finance your purchase, you’ll have to refinance to hold the property long-term and rent.

How much should the home rent for?

There are a variety of different ways investors use to determine a monthly rent on their investment properties depending on their financing needs, fair market value, and comps in their market. Here are some methods to consider when getting ready to rent out your property:

Use an online calculator to plug in your property’s information and determine a monthly rent.
Research comparable properties and set a monthly rent based on your findings.
Calculate based on your financial needs: Taking into consideration a monthly mortgage payment, homeowners insurance, property taxes, and a monthly maintenance budget.
Work with your real estate agent to evaluate rental listings and tap into the MLS.
Consider working with a rental company to handle the listing process. They will likely set the rent for you. Keep in mind that these companies will charge a fee to manage the property, about 10% to 20% of the monthly rent.

How much should the home sell for?

This is where your top agent can come in handy once again. Crafting a listing that highlights the improvements made while not being unrealistic on price is a delicate balancing act.

Work with your real estate agent to evaluate comps in the area and set a competitive price. List too high, and it might sit on the market for too long, too low, and you could be leaving money on the table.

“Today, I would be slightly below your goal, your transparent price. I would be a little bit under because you don’t know if you’re even going to get to where the comps are at.

“Be at an attractive price where people are still going to show up. If the house has value and if it’s really nice, people are going to pay. You’re going to get multiple offers still if the house has the value,” advises Donate.

What can go wrong with a house flip in California?

Seasoned California house flippers price out home repairs before purchasing a property and typically leave themselves a cushion for the unexpected. However, given the new administration’s trade policy changes, supply chain disruptions, and inflationary pressures, material costs are set to increase.

Higher construction costs could eat away at your flip’s profit, or put you in the red. A delay in getting permits or having materials delivered would also decrease profits due to increased holding costs. The longer you own the house before flipping it, the tighter the profit margin.

“What can really get you in trouble is not knowing the condition of the home. It could be a foundation issue. It could be that the deck is completely wrong.

“With how materials are nowadays, the cost of that and the cost of labor, just trying to do a repair could suck up 25 percent of your budget on the house remodel, and now you just did a repair that doesn’t really improve the look of the home,” says Donate.

Looking To Start Your House Flipping Journey?

House flipping is a complicated process that requires a serious balancing act of expenses and profit. This is where a real estate agent comes in handy, HomeLight analyzes over 27 million transactions to find you a top agent with experience with home investors. You’ll need an agent to both find your perfect flip, and sell it for you after you’ve made repairs. Connect with a top agent today to get started.

Key takeaways

While California is a fairly expensive place to purchase a property compared to some other regions in the U.S., the state still offers profitable flipping opportunities. It’s important to know your numbers and stick to a formula if you want to flip homes in California. Do your research and partner with experts in areas where you don’t have as much experience.

Finding an experienced agent is one important part of a successful flipping venture. HomeLight can connect you with top agents experienced in the California housing market.

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