The fundamental thing you need to know about house-flipping is how equity in a home works. Equity basically is the difference between the outstanding balance of the mortgage and how much the property is worth on the market.

 

How much you spend on the home in repairs and upgrades will determine how much equity the home needs to have for it to be a profitable business decision for you.

Successful house-flippers are excellent numbers-crunchers, so do the math. If the home doesn't have any equity in it then you can create equity. First, get a good deal on the sales price of the house. For instance, if a home's fair market value is $100,000 then buying it for $80,000 will instantly create $20,000 in equity. Of course, you'll need a motivated seller who is desperate to get rid of the property.