House Flipping Checklist: Fundamentals and Process

House Flipping Checklist

Table of Contents

Residential real estate investors need to position their financial standing for growth with two things: a business plan and a checklist of necessary items to complete a deal. While the business plan manages an investor’s approach from the 10,000-foot level, a checklist will keep the investor focused on the step-by-step process at the ground level.

This article will discuss and explain each item of Amplend’s proposed house flipping checklist for its clients, existing and future, for their use in creating a path to a successful investment. There is a complete checklist created from the contents of this article near the end.

This checklist is to be used for each transaction contemplated by the investor.

Key Takeaways

  • The growth of an investor’s wealth will depend upon a business plan and a checklist for the fix-and-flip process.
  • An investor must create a team of professionals for a successful investment.
  • When an investor submits an offer to a seller, the offer must be based upon a full analysis of the fix-and-flip process.
  • An investor must scrutinize offers based on price, contingencies, and the buyer’s ability to close.
  • The checklist provided at the end of this article should be used for each investment opportunity.

Defined Terms

After-Repair Value – the forward calculation of the value created by the renovation scope.

Business Plan – the strategies and the framework devised by an investor to reach their investment goals.

HUD-1 Settlement Statement (or closing statement) – the illustration of the sources and the uses of the borrowed funds and the buyer’s equity allocated over the purchase price and the disbursements.

The checklist can be used by the novice and the experienced investor. A novice investor will have a visual of all the necessary steps of the house flipping process. An experienced investor will be able to organize their thoughts and know where they are in each transaction.

The steps in the house flipping process are:

  1. Recognizing an Opportunity
  2. Submit the Offers
  3. Secure Financing
  4. The Property Inspections
  5. The Simultaneous Closing
  6. The Renovation Scope
  7. The Renovation
  8. List the Property on the Market
  9. Review Offers
  10. The Sale

These items are explained below.

Recognizing an Opportunity

Opportunities will be different for each investor as they follow their business plan. A well-prepared plan will name the market area, asset class, and the team of professionals to achieve the investment goal.

Investors can find opportunities from other sources than in-market deals or through the MLS. Investment properties are found through:

  • Foreclosure sales,
  • Tax lien or tax deed auctions,
  • Off-market opportunities through a Realtor, and
  • Wholesalers

An important step in this early stage is to obtain a pre-approval letter from a first-choice private lender named in the business plan. This pre-approval will enable the investor to know the parameters of the loan program to which the investor will qualify and the amount of required equity.

The information contained in the pre-approval letter will narrow the investor’s search for qualified properties.

Submit the Offers

Experienced investors understand the numbers game. Multiple offers must be given on multiple properties for one to be accepted. There is always competition regardless of the market conditions.

In a buyer’s market, sellers are competing with other sellers to attract buyers. In a seller’s market, buyers are competing against other buyers given the limited inventory for sale.

Investors know that each offer must be based on a preliminary proforma. This proforma and the assumptions within are derived from the full property tour. The Realtor or the contractor should be present at the tour. This way, the investor will gain input as to the scope and the costs of the renovations and an estimate of the after-repair value.

An investor does not want to mar its reputation by submitting a slew of offers hoping “one sticks.” All investors must protect their reputation and brand by extending offers that make sense and conform with the parameters of the pre-approval letter and the business plan.

Every opportunity will have a price range, and this range is derived from the preliminary proforma. An investor will have confidence in their negotiations if there is confidence in the offer.

A seller will gain confidence in an offer if it is accompanied by a pre-approval letter.

Secure Financing

All offers should include contingencies, one of which should be financing. Even though an investor may have a pre-approval letter, it is always best to include a finance contingency to give the investor breathing room and time to seek other commitments in case there is an issue with the appraisal or an inspection report.

The pre-approval letter is not a representation to a seller of the lender’s identity. Rather, it is a representation of the investor’s ability to qualify. There must be enough time allotted to seek and evaluate competing loan programs.

The Property Inspections

In this context, “property inspections” are not limited to the investigations of the structure. Inspections also refer to the condition of the title and the results of the appraisal. Private lenders will “inspect” the assessment report, title commitment, and appraisal, and these are the crux of underwriting.

These inspections must take place within the contingency period.

The results of the appraisal will allow the Realtor to analyze the values against the comps identified by the appraiser. The results of the assessment report will aid the contractor to refine the scope and the budget for the renovations. The title commitment will enable the investor’s attorney to examine the conditions upon which a seller can deliver marketable title.

Should any issues arise in any of these inspection reports, then the investor should be able to cancel the offer and receive back the earnest money deposit. This will happen only if the language governing the contingency period is properly drafted.

The Simultaneous Closing

When all contingencies have been met, it is then time to move toward closing. Documents are drafted and exchanged between the appropriate parties. The closings of the acquisition and the loan will be simultaneous.

This is also a good time to focus on the renovation scope and budget.

The investor should have the opportunity to review the HUD-1 settlement statement. This statement is the consolidation of the closings for the acquisition and the mortgage loan. The statement itemizes all of the closing costs and calculates the net loan proceeds and the required equity.

The loan documents and the title company will set forth the procedures for the investor to access the funds held back for the construction draws.

After the closing, the investor should leave with the signed documents and the key(s) to the property. The net order of business is to change the locks at the house and install a lockbox.

The Renovation Scope

The scope of work for the renovations should be put into action immediately after the closing. The common components for the start of work are:

  • Turning on the power and other utilities in the name of the new owner,
  • Finalizing the contract with the contractor and other vendors,
  • Completing and submitting the permit application, and
  • Ensuring all insurance policies are in place.

The final scope of work is based on the assessment report, the contractor’s final budget, and the Realtor’s advice on the market value of the renovations.

The Renovations

Prior to the start of actual construction, the contractor must have a complete understanding of the lender’s requirements to access the funds held back for the draws. The schedule for the estimated draws should be a part of the loan documents.

The draw procedures and the necessary forms will be within the loan documents, but the contractor is not privy to these unless advised. It is always best for the contractor to know the process well before the first draw request.

The contractor should be aware of the anticipated inspections required by the lender. These inspections will be in addition to the inspections by the local government relative to the building permit.

As the renovation scope progresses, this is the time to involve the Realtor to inspect the construction work and prepare for the listing of the renovated home.

List the Property on the Market

It is common for a flip property to be listed for sale prior to the end of the renovation scope. The timing for this depends upon the Realtor’s advice, market conditions, and the scope of the renovations. The Realtor should arrange for a professional photographer when the property is cleaned to the point to photograph well.

Often, an investor will discuss with the Realtor the option of purchasing a home warranty package to set the property apart from other investment opportunities on the market. Home warranty packages cover repairs and replacements to the home’s mechanical system and appliances.

The purchase of a warranty package will depend upon whether the renovation scope includes new systems and appliances. If new systems and/or appliances were installed, then the manufacturer’s warranties can be transferred to the new owner. However, if the systems and appliances were not replaced, a warranty package should satisfy a new owner when the investor is not in a position to make any representations as to their working condition.

Review Offers

While an investor may not be able to make any representations relative to the systems or appliances, the investor is certainly in a position to defend the list price and the quality of the workmanship of the renovations.

All submitted offers should be scrutinized as to:

  • Price, 
  • Concessions and offsets, 
  • Liquidity, and 
  • Access to capital

Offers should not be accepted on price alone. The last two bullet points above will be evidence of a buyer’s ability to close.

The quality and integrity of a buyer will be evident from their offer. An experienced investor and Realtor will be able to tell whether an offer is based on a full analysis or just to see “if it will stick.”

The last thing an investor and the Realtor want is for the property to be removed from the market only to miss legitimate opportunities because of an unqualified offer.

The Sale

The Realtor will handle monitoring the progress of the closing agent. There will be communications between the buyer, its lender, and the closing agent. During this time, an investor is usually looking for the next opportunity.

Be sure to carefully review the HUD-1 settlement statement for correct debits and credits according to the contract and confirm the amount of the net sales proceeds. The closing agent will need a photo ID and instructions for disbursing the funds.

Then, the house flipping process repeats.

The best front-end position for an investor is to obtain a pre-approval letter from their first-choice private lender. As stated earlier, this letter will not confirm the identity of the lender, but it will provide evidence that the investor qualifies for a loan under certain parameters. There should be sufficient time allotted in the contingency period to seek term sheets from the first-choice and other private lenders for an informed decision on a favorable loan program.

As promised, below is the completed checklist for the fix-and-flip process taken from the contents of this article.


  1. Recognizing an Opportunity
    1. Select a strategy from the business plan
    2. Tour opportune properties
    3. Contact the first-choice private lender for a pre-approval letter
    4. Hold meetings with team members, i.e., Realtor and contractor
  2. Submit the Offers
    1. Begin building the preliminary proforma
    2. Determine all estimated closing costs, the hold period, and the potential profit
    3. Review the preliminary scope and budget for the renovations
    4. Determine the price range for each property
    5. Determine the appropriate contingencies and time periods
    6. Prepare and submit the offers
    7. Negotiate
      1. Be prepared to rescind an offer if the seller will not accept a price lower than the ceiling
  3. Secure Financing
    1. Obtain term sheets from 3-4 private lenders
      1. Provide all required documents
  4. The Property Inspections
    1. Schedule a home inspection
    2. Secure legal representation for the acquisition and the loan
      1. Review results of all reports (inspection, title commitment, appraisal)
    3. Determine the status of the contract
      1. Close or not?
    4. Finalize the contract(s) with the contractor/vendors
  5. The Simultaneous Closing
    1. Schedule and confirm the closing date
    2. Review the HUD-1
    3. Determine and bring all necessary documentation to the closing
    4. Wire funds to title agent or bring certified funds to the closing
    5. Leave with all appropriate documents and the house keys
      1. Change locks
      2. Install lockbox
    6. Work with the contractor on the permit package
  6. The Renovation Scope
    1. Attend to the utility accounts
    2. Determine the timing of permit issuance
      1. Per-permit work?
    3. Capture “Before” photos
  7. The Renovation
    1. Schedule visits to the job site
    2. Attend to draw requests
    3. Receive updates from contractors re-permit inspections
  8. Coordinate efforts with the contractor re-punch list items
    1. Begin discussions with Realtor re-listing for sale
    2. Final walk-through with the contractor, Realtor, lender, etc.
  9. Listing Property on the Market
    1. Schedule a professional cleaning
    2. Finalize listing agreement
    3. Arrange for the “After” photos
    4. Make a decision re-home warranty package
  10. Review Offers
    1. Evaluate all offers for price, contingencies, and pre-approvals
    2. Negotiate, as appropriate
    3. Acceptance
      1. Determine closing date
      2. Respond to issues regarding re-inspection reports
  11. The Sale
    1. Keep apprised of the closing process
    2. Review final HUD-1
    3. Furnish title company with instructions for disbursement of sale proceeds
    4. Delivery keys and any necessary documents at closing

The checklist is a template for an investor’s use with every opportunity, and items can be added or stricken to accommodate the transaction.

This checklist is the best method for a novice investor to visualize the process, and for the experienced investor to organize their thoughts and to have one point of reference for a deal’s progress.

The process of house flipping is layered and can become a juggling of issues. We hope the checklist helps.

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