The Real First Question Every House Flipper Should Ask

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Successful house flippers prioritize risk assessment over profit calculations, focusing first on how much they can afford to lose rather than potential gains. This crucial mindset shift separates profitable investors from those who face financial disaster.

• Calculate your maximum loss scenario before looking at properties
• Use the "Murphy's Law Calculator" to stress test every potential deal
• Add 30% to rehab costs, 50% to timeline, and multiply holding costs by 1.5
• Pass on deals that don't remain profitable after worst-case scenario analysis
• Be honest about your skill level and avoid projects beyond your expertise
• Focus on protecting your downside rather than chasing maximum profits
• Real example: A deal with projected $45,000 profit became a $31,000 loss

Calculate your maximum loss limit right now, then share this episode with someone who's still chasing those shiny profit numbers. Trust me, you'll save them a fortune.

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Episode Transcript

Speaker 1 (00:00):
If this deal goes completely sideways?
Market shifts, major structuralissues, contractor disappears.
Can I absorb that hit and stillsleep at night?
Ever sat in your car scrollingthrough Zillow and thought, man,
if I just knew where to start Icould flip one of these?
Yeah, we've been there too.
Most people who want to fliphouses never even start, not

(00:21):
because they're lazy, butbecause they don't have the
blueprint.
Well, that changes today.
If you give us five minutes,we'll give you real world
flipping strategies thatactually work.
No fluff, no theories, nogatekeeping, just real how-to
information for you to applytoday.
How much money can I makeflipping houses?
I get this question at leastfive times a week and every

(00:43):
single time I know I'm talkingto someone who's about to lose
their shirt.
End of last year, a guy calledme up super excited about a slam
dunk deal.
He'd already calculated his$47,000 profit before he even
knew what neighborhood the housewas in.
I asked him some of the hardquestions we're going to talk
about today and he didn't wantto hear it.
Three months later, he wasasking his in-laws for a loan to

(01:06):
cover the carrying costs.
Here's the thing.
That question isn't just wrong,it's dangerous.
Today I'm going to show you thereal question every successful
flipper asks first, and why.
This single mindset shift willsave you more money than any
rehab shortcut ever could.
Rehab shortcut never could.
Look, I get it.

(01:26):
You see those Instagram postswith six-figure profit checks
and your brain goes straight toI want that.
But here's what separates thepros from the casualties.
We never ask how much can Imake?
First.
The right question how much canI afford to lose completely?
I'm dead serious.
On my very first flip, I onlymade $18,000.
I got lucky.
I should have lost $23,000.
Not because the market crashedor the house burned down, but

(01:49):
because I didn't know what Ididn't know and I made a couple
of epically stupid mistakes.
And that close call it waseducational tuition.
That's still paying dividendstoday.
Here's what I do now and whatyou should do.
Before you even look at aproperty, I calculate my maximum
loss scenario If this deal goescompletely sideways market
shifts, major structural issues,contractor disappears can I

(02:13):
absorb that hit and still sleepat night?
Once you know your loss limit,then you ask the second question
what's the worst case scenariofor this specific property?
Not the best case, not even therealistic case, the absolute
worst case.
It's called stress testing yourdeal.
I plan for mushroom clouds onthe horizon.
I figure out how to weather thestorm if it comes and determine

(02:34):
if the deal can survive it.
If we get a green light fromour analysis, then we make the
offer and get the deal done.
Here's how it works.
I use what I call the Murphy'sLaw Calculator.
Take your estimated rehab costsand add 30%.
Take your timeline and add 50%.
Take your holding costs andmultiply by 1.5.
Now can you still make a littlebit of money.

(02:55):
If not, pass.
Here's a real example.
I looked at a house last yearhere in Middlesex County.
Purchase price $180,000.
Estimated rehab $40,000.
$280,000.
Looks like a $45,000 profit.
Right Wrong, I ran my Murphy'sLaw numbers $52,000.

(03:15):
Rehab eight months instead offive.
Extra $12,000 in carrying costs.
Suddenly I'm looking at lessthan $15,000 profit if
everything goes smoothly.
After that Hard pass theinvestor who got that house he
hit septic issues month two.
The contractor walked monthfour and it sat on the market
for three months because heover-improved for the

(03:37):
neighborhood, trying to get hismoney back.
Final numbers a $31,000 loss.
Ouch.
The third question and this iscrucial Do I have the skills to
execute this flip or am I justhoping I'll figure it out along
the way.
Be brutally honest withyourself.
If you've never managed a majorelectrical job, don't buy the

(03:58):
house that needs rewiring.
Get those stars out of youreyes.
Stop asking how much can I makeand start asking how much can I
lose, what's the worst case andcan I actually execute this?
Profitable flipping isn't aboutfinding the biggest potential
profits.
It's about finding the dealswhere your downside is protected
.
Here's your homework Calculateyour maximum loss limit right

(04:19):
now.
Then share this episode withsomeone who's still chasing
those shiny profit numbers.
Trust me, you'll save them afortune.