If you've ever switched on a home improvement channel, you probably know about house flipping. Investors buy a home, renovate it and then sell it for a profit – at least that's the goal. It's particularly common in Las Vegas, a city where HGTV recently launched a show putting house flipping in the spotlight.

"It's a huge part of the market at this point," says Alan Hays, owner and corporate broker at Realty Executives of Southern Nevada. "Because the market is extremely aggressive right now, it seems like everyone and their brother is trying to become a house-flipper." When done correctly, flipping homes can be a great business, but he says when things go wrong, investors can lose large amounts of money.

[Read: 5 Ways to Prepare to Sell Your Las Vegas House This Spring.]

To better understand the market for flipping homes in Las Vegas, U.S. News spoke with some of Las Vegas' top real estate agents. Here are three things they think are important for potential flippers to know.

Inspect, times four.

Before you purchase a home to flip, you want to know everything about the property so that you can budget accordingly. On television, flippers often buy homes at auction, but Mary Baca, broker and owner of Desert Lights Realty, warns that auctions can be tricky. "There are often liens on the title of auction homes, and with an auction property, you're not able to perform home inspections because often you can't gain interior access. It's very risky."

Instead of buying at auction, look for bank-owned or foreclosed homes available for purchase on the open market. According to Baca, who specializes in bank-owned homes, banks must resolve any lien issues before turning over the title to a new owner. Plus, you're able to inspect homes on the open market. Baca recommends four types of inspections: heating, ventilating and air conditioning; roof; electrical; and plumbing. "This can be as cheap as $150 per inspection, and it helps rule out any unforeseen repairs after purchase. A $600 investment could save you tens of thousands of dollars," Baca says.

Keep the sales price below $300,000.

Experts agree that the most common buyer for a home that has been renovated is a first-time homeowner with a Federal Housing Administration loan, so affordability is important. "The best property to flip is a single-family home with a final sales price under $300,000," Hays says. He explains that this is because, for 2017, the maximum loan amount for an FHA loan in Clark County is $287,500.

[Read: 4 Tips for Buying a Home in Downtown Las Vegas.]

To keep the price right, you'll have to do the math ahead of time. "Anybody doing a flip needs to know the cost to repair and the after-market value," Hays says. He advises that a would-be flipper estimate the purchase price, renovation cost, hold-time cost (the cost to hold the property until it's ready to sell) and the cost to sell the property. "After all that, there needs to be a profit margin that you are comfortable with."

When estimating hold-time costs, keep in mind that to qualify for an FHA loan, a home must have been held by the current owner for 90 days, so you should probably wait three months before listing. Baca says, "The most popular vehicle for financing for first-time buyers is FHA, so if you list before 90 days, you eliminate your most popular buying pool."

Decide whether to rent or sell.

Once you have the property, the decision to rent or sell should be based on your return on investment, or ROI. "An investor looking to flip will have no long-term gain, so they should make decisions based on numbers that are currently recorded and not speculate about what the future is going to bring," Hays says.

[Read: 5 Real Estate Trends to Know Before You Sell Your Las Vegas Home.]

If you're not comfortable with the profit margin, consider renting. Baca says, "If you're not going to make 10 to 15 percent, then entertain renting the property. Rents are very strong right now."

While Baca and Hays agree that the market for rehabbed homes is strong across the Valley, flipping is not a guaranteed success. Hays notes that the most successful flippers are often contractors or agents – in other words, experts in real estate. "A layman off the street is taking a large gamble," Hays says. "It's not like the TV shows; it's a business. You have to know your numbers and have plenty of reserves so when something goes south, you're not getting into trouble. It's a tougher business than you'd think it would be."

Looking for a real estate agent in Las Vegas? U.S. News' Find an Agent tool can match you with the person who's most qualified for the job.

Tags: Las Vegas, real estate, housing market, home prices, existing home sales


Misti Yang is a freelance writer in Las Vegas. Yang writes for several local publications and previously wrote the city's weekly Yelp newsletter. While she most often pens stories about food and travel, Yang also covers real estate and the tech economy. You can visit her website and connect with her on Twitter.

Recommended Articles

What to Know About Moving to California

Devon Thorsby | Jan. 15, 2020

No other state offers such a variety of places to live and job opportunities, but expect to pay more.

Which Home Is the Best Layout for You?

Devon Thorsby | Jan. 10, 2020

Before you buy or build a home, consider how the footprint and floor plan fit with your lifestyle.

Why You Should Sell Your Home in 2020

Devon Thorsby | Jan. 8, 2020

The housing market may not be as hot as in previous years, but selling now could be your best bet.

What to Know Before Renovating a Garage

Deanna Haas | Jan. 6, 2020

A garage renovation can add value to your home – here's what you should keep in mind before starting the project.

Best Interior Design Instagram Accounts

Devon Thorsby | Jan. 3, 2020

These interior design Instagram accounts offer advice, inspiration and resources to elevate your home design.

Is an Open House Necessary?

Wendy Arriz | Jan. 3, 2020

The traditional open house format is still popular, but whether it's effective in helping sell your home may depend on the type of property.

Hygge Decor Ideas for Your Home

Devon Thorsby | Dec. 27, 2019

Achieve the cozy feeling that embodies Danish hygge in your home design.

What to Know About Moving to Dallas

Devon Thorsby | Dec. 26, 2019

Before you decide to move to Dallas, explore all your options in this expansive metro area.

Options When You Can't Pay Your Mortgage

Lisa Larson | Dec. 24, 2019

Financial difficulty can leave you unable to pay your mortgage, but that doesn't always mean you're facing foreclosure.

What to Know Before Moving to Colorado

Devon Thorsby | Dec. 20, 2019

Get your hiking boots – and your wallet – ready for a new life in Colorado.

What Is the Cost of Living in Boston?

Dima Williams | Dec. 20, 2019

Here is what it takes to afford to buy, rent and live in the capital of Massachusetts.

Best Places to Live With Climate Change

Devon Thorsby | Dec. 18, 2019

See which metro areas are more resilient to changing climate conditions.

Housing Market Expectations in 2020

Devon Thorsby | Dec. 13, 2019

Low mortgage rates will help homebuyers afford property, while sellers won't see much reason to move.

Best and Worst Design Trends of the '10s

Robin Kencel | Dec. 13, 2019

Take a look at the 2010s fads that have transformed into staples, and others that are best left in the past.

What Is the Cost of Living in Seattle?

Devon Thorsby | Dec. 11, 2019

Here's a breakdown of what you need to be able to afford living in and around Seattle.

Is a Condo, Townhouse or Co-Op Best?

Steven Gottlieb | Dec. 11, 2019

Different forms of ownership have pros and cons, depending on how you plan to use the property.

Design Trends to Look Out for in 2020

Devon Thorsby | Dec. 6, 2019

Which design trends are on their way in, and which ones should you ditch in 2020?

What to Know About Moving to Nashville

Devon Thorsby | Dec. 4, 2019

Examine the details that can help you decide if you should move to Nashville, and what to expect when you get there.

Issues to Spot in a Final Walk-Through

Deanna Haas | Nov. 25, 2019

Both buyers and sellers should be aware of the issues that can arise during a final home walk-through.

Should You Buy a House With Cash?

Devon Thorsby | Nov. 22, 2019

Before you go all-in with your money, consider these caveats to paying for a home with cash.