A 2026 Guide to Flipping Houses in California: 5 Cities to Consider

What is house flipping?

House flippers purchase properties intending to resell them quickly for a profit, often within a few months. They typically target distressed homes, such as short sales, foreclosures, or properties needing major repairs, renovate them, and then sell at a higher price. 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.

According to ATTOM’s Q3 2025 home flipping data, returns on house flipping continued their decade-long decline as home prices hit record highs nationwide. In the third quarter, the typical profit margin for a flip fell to 23.1%, down from 26.5% in the previous quarter and 29.8% in the same quarter last year.

Across the U.S., flipping margins hadn’t dropped below 25% since the second quarter of 2008, during the recession caused by the mortgage crisis. Gross profits also declined nationwide: the median flip was purchased for $260,000 and sold for $320,000, yielding $60,000, compared with $68,000 the previous quarter and $73,554 a year earlier.

In California, the slowdown was also evident but played out at higher price points. In Q2 2025, the state saw 6,455 homes flipped, representing a 7.5% flipping rate. The average gross flipping profit fell to $112,000, down from $125,000 a year earlier, while gross flipping ROI declined to 17.7% from 20.8% year over year. Despite the slowdown, home flipping remains a significant part of California’s real estate market.

Despite the dip in profits, flipping homes can still be a smart move for investors who know what they’re doing. The key is finding the right property, keeping renovation costs under control, and selling at the right time. By focusing on undervalued or fixer-upper homes and staying tuned to local market trends, flippers can still turn a solid profit even in a softer market.

Best places in California to flip a house

California’s housing scene is full of opportunities for flipping, whether you’re looking at bustling cities or up-and-coming neighborhoods. With strong demand and tight inventory, some areas can give flippers a real edge. Here are some of the best spots in California to tackle your next house flip:

Fresno

Fresno sits in California’s Central Valley, surrounded by farmland with the Sierra Nevada as a distant backdrop. Its culture is rooted in agriculture, shaped by diversity, and marked by a practical, family-oriented lifestyle. The city has a relaxed, work-driven atmosphere that feels slower than coastal metros. Buyers flock to this area for its relatively affordable home prices, larger lots, and overall sense of value within California.

Year-over-year population growth: 0.52%

Median home value: $387,500

Year-over-year home value growth: Up 0.4%

Irvine

Irvine is a master-planned city in Orange County, known for its clean streets, open green spaces, and proximity to the coast. Its culture is polished and family-focused, shaped by top-ranked schools, diverse communities, and an emphasis on safety and organization. 

The atmosphere feels orderly, modern, and fast-paced, supported by a strong economy anchored by technology, education, healthcare, and corporate headquarters. Together, these qualities draw buyers to Irvine’s real estate market for its long-term stability, high-quality neighborhoods, and strong demand despite higher home prices.

Year-over-year population growth: 1.15%

Median home value: $1,928,000

Year-over-year home value growth: Down 26.5%

Los Angeles

From beaches and palm-lined boulevards to nearby mountains and desert landscapes, Los Angeles offers striking natural variety alongside a diverse, trend-setting culture. Its economy is powered by entertainment, technology, and tourism, creating a deep buyer pool that continues to attract residents and investors alike. 

Long regarded as a global hub for entertainment, creativity, and cultural influence, Los Angeles’ appeal shows no signs of fading. Although home prices are high, the city’s constant demand and fast-moving market can make well-executed flips especially rewarding.

Year-over-year population growth: 0.81%

Median home value: $1,250,000

Year-over-year home value growth: Up 17.1%

Ventura

Ventura is a picturesque coastal city where palm-lined beaches meet historic downtown streets, creating a relaxed yet vibrant atmosphere. Its scenic ocean views, charming neighborhoods, and easy access to outdoor recreation attract buyers seeking both beauty and lifestyle. 

The city’s strong surf culture, local art scene, and lively farmers’ markets give it a unique, welcoming vibe that draws people from across Southern California and beyond. This combination of natural appeal and cultural richness keeps demand for homes steady, often driving competition in the real estate market.

Year-over-year population growth: 0.33%

Median home value: $885,000

Year-over-year home value growth: 0.9%

San Diego

San Diego offers a wide range of neighborhoods, abundant sunshine, and easy access to some of Southern California’s most scenic beaches. Known for its relaxed coastal atmosphere, the city blends outdoor living with a strong sense of community and a laid-back cultural vibe. 

Its economy is bolstered by tourism, telecommunications, and technology, supporting a steady flow of jobs and long-term housing demand. This combination of lifestyle appeal and economic stability continues to draw both homebuyers and real estate investors.

Year-over-year population growth: 0.71%

Median home value: $1,160,000

Year-over-year home value growth: 4.5%

Step-by-step guide to flipping houses in California

Flipping houses in California can be exciting and profitable if you plan it right. This step-by-step guide will help you navigate the process with confidence.

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. 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 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 $160,000 to acquire the property. If all went well, you’d still have $90,000 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.

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

Estimating renovation costs

Planning a successful flip starts with knowing exactly what your renovation will cost. Underestimating expenses can quickly eat into profits, while overestimating can make a deal seem less attractive. This section breaks down how to accurately estimate costs, work with contractors, and plan upgrades that maximize resale value.

• Determine structural work vs cosmetic updates: Structural work includes foundation, roof, plumbing, and other critical repairs, usually higher cost but essential for safety and resale. Cosmetic updates include painting, flooring, fixtures, and other visual improvements. This comes with a much lower cost but helps boost appeal.
• Work with contractors to get realistic bids: Request detailed quotes that break down labor, materials, and timelines. Compare multiple proposals to ensure accuracy and identify potential savings.
• Consider trending upgrades that impact resale value: Energy-efficient appliances, smart-home features, and updated kitchens or bathrooms are highly desirable. These upgrades can justify higher asking prices and make the property more competitive in the California market.

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 $75,000 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 (ROI) 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. In recent years, the state’s population has begun growing again after pandemic‑era declines, with more residents added in multiple consecutive years, though growth remains modest compared with past decades and varies across regions.

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 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 [who] know 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 113% ROI, while a deck addition will help you recover about 95% of the costs.

Most Realtors advise enhancing curb appeal before selling, focusing on landscape maintenance, lawn care, and tree care. 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 the monthly mortgage payment, homeowner’s 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 being realistic 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 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.

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.

Header Image Source: (Clayton Cardinalli / Unsplash)

Editor’s note: This article is for educational purposes only and does not constitute financial or legal advice. If you’re considering flipping houses in California, HomeLight recommends consulting an advisor about your specific situation.