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Although making $1 million is not as impressive as it used to be thanks to inflation, it is still an impressive amount to make in a single year. I have flipped close to 200 houses now, and people ask me if you can make $1 million flipping houses in a year or if I have done it.

First, I have not made $1 million flipping houses in a single year. Second, it is possible, but tough to do because of the team it takes to flip enough houses, the expenses that come with flipping houses and the difficulty of finding deals that leave enough profit to make that much money. So how could someone make $1 million in a single year flipping houses?

How many houses would you need to flip?

The number of houses you would need to flip depends on what type of houses you are flipping and how much profit you are making on each one. We will talk about the profit soon, but here are some basic profit numbers to get you to $1 million flipping houses.

• Flip one house with $1,000,000 profit.

• Flip five houses with $250,000 profit each.

• Flip 10 houses with $100,000 profit each.

• Flip 20 houses with $50,000 profit each.

• Flip 33 houses with $33,333 profit each.

• Flip 50 houses with $20,000 profit each.

That is simple math and a simple calculation, but flipping houses is far from simple.

What is the profit on each flip?

There is some information going around that says the average profit on a house flip is $60,000. That is technically true if there are no expenses when flipping houses. The data reporting is actually very clear that these profit figures for flipping are simply the buy price minus the sell price. If there were no repairs, closing costs, selling costs or financing costs, the average flip profit would be $60,000. But if you flip houses, you know that number is not representative of actual flips.

Here are what the numbers might look like on one of my house flips:

• Purchase price: $200,000.

• Repairs: $40,000.

• Carrying costs: $4,000.

• Financing costs: $8,000.

• Selling costs: $12,000.

• Sell for $300,000.

Profit: $36,000

Many people forget about these costs. The carrying costs consist of utilities, insurance, property taxes, HOAs, maintenance, etc. Most flippers are not using cash no matter what you see on TV. The selling costs can add up as well after paying real estate agents (being an agent myself, I am able to avoid this cost), title companies and closing companies.

Of course, flippers usually run into some kind of problem that reduces that profit by $5,000 to $10,000. Maybe there is an unexpected repair, or the contract falls apart when we are selling, etc. In our case, the average profit is around $30,000 without considering the essential support team: I have a project manager, bookkeeper and CFO. There are also the marketing costs of finding deals. If I had to guess, I would say my average profit is $25,000, which means I would have to flip 40 houses a year to make $1 million. To put that into perspective, I flipped 26 houses in each of the last two years.

Why don’t I just flip 40 houses a year to make $1 million?

Truthfully, it is really hard to flip 26 houses. It is hard to find deals on homes, to finance them and to repair them. In fact, you might be better off flipping fewer houses, rather than have houses sitting around waiting for contractors to free up. It also takes time to manage all those properties, and it is expensive to pay for all the costs. Flipping 40 houses in one year takes significant energy and work that may not be truly worth it in the end.

How would you make $1 million a year flipping?

I am not saying it is impossible to make that much money with this model, but it is tough. It would be far easier to make that much money flipping higher-dollar houses. That comes with more risk and more exposure to the market. I know a few investors who flip multimillion-dollar homes and may make $1 million on one deal. However, it may take them longer than one year to finish the project.

I recently saw a house that was bought for $895,000 and sold for $3.1 million. They made $2 million! Well, not really: They made less than $1 million after all the costs. The flippers spent $1.1 million on the rehab and paid out carrying costs for the 14-month project, financing costs, selling costs and more. The financing costs alone could be close to $200,000 on that deal. The selling costs could be more than $200,000. The carrying costs could be $50,000 or more. Now it’s suddenly a deal worth $600,000 — which is terrific, but it’s not $1 million.

Conclusion

You could make $1 million a year flipping houses, but it is not as simple as it may seem. To run an operation large enough to flip low-margin houses, you will need a team and a lot of help. There are many costs involved that eat into that profit. It may be easier to hit that number with high-dollar homes, but if the market turns, you could be severely exposed, as high-dollar homes typically take longer to sell and may see the biggest price drops. Flipping is an awesome business, and it provides a lot of capital for investors to sink into their real estate or other endeavors, but it is difficult to scale on massive levels.