5 Red Flags to Watch Out for in a Fix and Flip Deal

Alvear Ventures
Jun 17
2 min read

Flipping houses can be exciting and profitable, but it's also full of potential pitfalls—especially if you're new to the game. If you're eyeing your next (or first) deal, here are five red flags to watch out for before you commit.

1. The Numbers Don’t Add Up

You know that gut feeling when something seems off? If the profit margin feels too tight or too good to be true, it probably is.

Is the ARV (After Repair Value) realistic?
Are you being too optimistic about renovation costs?
Did you factor in holding costs, loan interest, and closing fees?

Run the numbers twice. Maybe three times. Overestimating your resale value or underestimating costs is the fastest way to lose money.

2. Hidden or Unpermitted Work

Uncovering a hidden mold problem is bad. Discovering a previous owner DIY-ed the electrical without a permit? Worse.

Always get a thorough inspection and check permit history with the city. What you can't see can definitely hurt you—and your resale value.

3. A Sketchy or Unmotivated Seller

If the seller is dodgy about access, won’t answer basic questions, or is rushing you to close, take a step back.

Sometimes it just means they’re in a hurry. But sometimes it means they know something you don’t. Dig deeper or be ready to walk.

4. The Neighborhood is Declining

Even a great rehab won’t sell if buyers don’t want to live there. Look for:

Rising crime stats
Lots of boarded-up homes
Businesses closing or relocating

If the area has potential, great. But if it’s clearly in decline, your money might be better used elsewhere.

5. Your Contractor is a Gamble

The contractor can make or break your flip. If they’re vague on timelines, require full payment up front, or don’t have references, hit pause.

Interview more than one. Check licenses. Get a written scope of work. A bad contractor can blow your budget and timeline fast.

Final Thoughts

Fix and flips can absolutely be worth it—but only when you walk in with eyes wide open. Look for these red flags, trust your gut, and do your homework.

Need help lining up financing for your next flip? Alvear Lending can help you get the funding you need to move fast, stay flexible, and protect your profit.

Book a call with us today and let's make your next flip your best one yet.