Phoenix is one of the best markets for fix-and-flip investors. But how do you know if a property is worth the investment? Not every distressed home will turn into a profitable flip. Smart investors look at key factors before making a move.
Here’s what to watch for when hunting for your next flip deal in Phoenix.
1. After-Repair Value (ARV) – Know Your Potential Profit
The After-Repair Value (ARV) is the estimated market value of a home after renovations. This number is critical because it determines your potential profit.
How to calculate ARV:
- Look at recent sales (comps) of similar renovated homes in the same area.
- Compare features like square footage, number of bedrooms/bathrooms, and lot size.
- Use online tools like Zillow or Redfin, or work with a local real estate expert.
A good rule of thumb: Flippers should aim to buy a property at no more than 70% of the ARV, minus repair costs.
2. Repair Estimates – Avoid Surprises
Before purchasing, get an accurate estimate of the renovation costs. Underestimating repairs can eat into your profits.
Key areas to inspect:
- Foundation & Roof: Expensive fixes that can impact your budget.
- Plumbing & Electrical: Outdated systems can be costly to replace.
- Cosmetic Updates: Flooring, paint, kitchens, and bathrooms make a big impact on resale value.
- Permits & Codes: Some renovations require permits, which add time and costs.
Pro tip: Get quotes from multiple contractors before making an offer.
3. Location – The Right Neighborhood Matters
Even the best renovation won’t sell if the location isn’t desirable. Look for neighborhoods where homes sell fast and at a good price.
Ideal areas for flips in Phoenix:
- Growing neighborhoods with new businesses, schools, or amenities.
- High-demand zip codes where homes sell quickly.
- Low crime rates and strong community appeal.
Check local trends and talk to real estate agents to find hot spots.
4. Days on Market (DOM) – Speed Sells
A profitable flip depends on how fast you can sell. Look at the average Days on Market (DOM) in your target area.
- Under 30 days: Strong demand, fast sales.
- 30-60 days: Decent market, but be cautious.
- Over 60 days: May be harder to sell, impacting your profit timeline.
Faster sales mean lower holding costs, like property taxes, utilities, and loan interest.
5. Off-Market Deals – The Best Profits Are Hidden
The best fix-and-flip opportunities are often off-market properties. These deals are not listed on the MLS, meaning less competition and better prices.
Why off-market deals?
- Sellers are often motivated, leading to better price negotiations.
- Less competition from other investors.
- Faster closings and higher profit margins.
Finding these deals takes connections. That’s where we come in.
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