I’ve flipped houses before — three times in LA, actually — but always with a partner who handled everything on the ground. I showed up, put in money, and waited for a check. Which means I learned almost nothing about how the process actually works.
Now I’m in Philadelphia, looking at doing this on my own, and I’ve had to basically start from scratch on the operational side. What happens after you find a good deal? Who do you call? How does the money move? What does closing actually look like when you’re using hard money?
This is the guide I wish existed when I started asking these questions. No fluff, no theory — just the actual process, step by step.
Step 1: You Found a Deal That Makes Sense — Now What?
Let’s say you’ve been running numbers on Zillow or the MLS and something looks promising. The purchase price is low enough, the ARV seems solid, and your gut says this could work.
First thing: don’t fall in love with it yet. Before you call anyone, run the numbers one more time.
The basic formula for a flip:
- ARV (what it’ll sell for after repairs) × 70% = maximum all-in cost
- Maximum all-in cost − estimated renovation = maximum purchase price
So if the ARV is $280k, your max all-in is $196k. If renovation is going to run $60k, you shouldn’t pay more than $136k for the property. If it’s listed at $160k, the deal doesn’t work — move on.
If the numbers hold up, now you call a realtor.
Step 2: Contacting a Realtor — What to Actually Say
A lot of beginners don’t realize there are two different realtors in every transaction: the listing agent (represents the seller) and the buyer’s agent (represents you). You want your own buyer’s agent — someone whose job is to get you the best deal, not protect the seller’s price.
When you reach out to a buyer’s agent for the first time, be upfront: tell them you’re an investor looking for fix-and-flip opportunities, you’re working with hard money financing, and you can close quickly. Investors who can close fast are attractive to sellers — that’s your leverage.
Your agent will set up showings, pull comps to verify your ARV estimate, and help you figure out a realistic offer price. Listen to them on the comps — they know the local market better than Zillow does.
When you go see the property, you’re not just looking at how bad it is. You’re looking at the bones: foundation issues, roof condition, signs of water damage, the layout. Cosmetic problems are fine and cheap. Structural problems eat your margin alive.
Step 3: Making an Offer
Your agent will draft the offer. A few things to know:
Earnest money — when your offer is accepted, you put down a deposit (usually 1-2% of the purchase price) to show you’re serious. This goes into escrow and gets applied toward your purchase at closing. If you back out without a valid reason, you lose it. So don’t make offers on deals you’re not serious about.
Contingencies — these are your exit ramps. The two most common:
- Inspection contingency: if the inspection reveals major problems, you can renegotiate or walk away
- Financing contingency: if your financing falls through, you can exit without losing your deposit
With hard money, the financing contingency is a little different — hard money lenders move faster than banks, but you still want some protection built in.
Negotiation — the listed price is almost never the final price, especially on distressed properties. Your agent will advise on how aggressive to be. On a property that’s been sitting for 60+ days, you have more room. On something that just listed in a hot neighborhood, less so.
When the seller accepts — or you agree on a counter — you’re officially under contract. Clock starts ticking.
Step 4: Under Contract — Time to Lock in Your Hard Money
This is where a lot of first-timers freeze up. You’re under contract, which feels terrifying, and now you need to actually secure the money.
Hard money lenders move fast — that’s the whole point. Most can close in 2-3 weeks, sometimes faster. But you need to have a lender you’ve already talked to before you get under contract. Don’t wait until you have a deal to start shopping for lenders.
What hard money lenders look at:
- The deal itself — ARV, purchase price, renovation estimate
- Your experience (helpful but not always required for first deals)
- The property — they’ll do their own appraisal or BPO (broker price opinion)
What they’ll fund: Most hard money lenders will lend up to 70% of ARV. So on that $280k ARV property, they’ll lend up to $196k total — covering both the purchase and renovation costs, disbursed in draws as work is completed.
What you need to bring: The gap between what they’ll lend and the total cost comes out of your pocket. Plus closing costs, plus points (usually 2-4% of the loan amount as an origination fee), plus monthly interest (typically 10-15% annualized) while you’re renovating.
This is why the math has to work before you ever make an offer.
Documents you’ll typically need to submit:
- Purchase contract
- Renovation scope of work and budget
- Property photos
- Your ID and basic financial info
- Sometimes: proof of funds for your down payment
The lender will order their own valuation of the property. Once they’re satisfied with the numbers, they issue a commitment letter and you’re good to move toward closing.
Step 5: Closing — How the Money Actually Moves
Closing is where escrow comes in, and this confuses a lot of people.
Escrow is a neutral third party — usually a title company or escrow company — that holds funds and makes sure everyone does what they’re supposed to before money changes hands. Think of them as the referee.
Here’s how the money flows at closing:
- Your hard money lender wires the loan funds to escrow
- You wire your down payment and closing costs to escrow
- Escrow verifies everything is in order — title is clear, all documents are signed
- Escrow wires the purchase price to the seller
- Title transfers to you
- You get the keys
You don’t hand a check to the seller. You don’t see most of this money directly. It all moves through escrow, which protects everyone involved.
Closing costs on the buy side typically run 2-5% of the purchase price and include title insurance, escrow fees, recording fees, and your hard money lender’s origination points. Budget for this — it’s real money on top of your down payment.
And then the property is yours. Your name is on the deed. The clock on your hard money loan starts ticking.
What’s Next
Part 2 covers everything that happens after you own the property: finding and hiring a General Contractor, understanding exactly what a GC does and doesn’t do, how to structure payments so you don’t get burned, and what your actual day-to-day role looks like during a renovation.
Because owning the property is just the beginning.
Want to run the numbers before you make an offer? Use the calculator below — plug in your purchase price, renovation budget, and target ARV to see if the deal actually pencils out.