Flipping a house isn’t just about buying low and selling high. It’s about knowing what not to buy, and when to walk away, even if the deal looks good on paper.

This article breaks down the profit-killing red flags you must spot before closing. Ignore them, and your timeline stretches, costs balloon, and that “great” flip turns into a money pit.

Red Flag #1: The Rehab Scope Is Vague or Undisclosed

If you can’t clearly identify the rehab scope before you buy, you’re flying blind.

Common signs:

• Sellers say “just cosmetic,” but you spot signs of structural issues

• No inspection report is available (or they won’t share it)

• You can’t walk the property or see inside before making an offer

Why it matters: Every unknown = potential $10K–$30K in missed costs. If you don’t know what you’re walking into, you can’t price accurately or protect your profit.

Red Flag #2: Sketchy or Unpermitted Additions

Unpermitted work can seem like a bonus (“more square footage!”), but it’s often a liability.

What to look for:

• Enclosed garages

• Added bathrooms or kitchens

• Converted basements or attics

• Electrical or plumbing that doesn’t match the original house

Why it kills profit:
Unpermitted work can trigger:

• City violations

• Insurance denials

• Forced tear-downs

• Appraisal problems

Always verify permits, or build the risk of remediation into your offer.

Red Flag #3: Unrealistic ARV Assumptions

Flippers lose money when they overestimate what the property will sell for.

Danger signs:

• Comps are from totally different neighborhoods

• You're stretching the square footage or bedroom/bath count

• You assume top-of-market pricing in a down market

Your fix:

Always:

• Pull comps from within 0.5 miles

• Use only solds from the last 3–6 months

• Match condition, style, layout, and location

• Be conservative if the market is softening

Red Flag #4: Foundation or Structural Issues

It’s hard to make a flip look good when the house is sinking or cracking in half.

Spot this early if you see:

• Large cracks in slab or brick

• Uneven floors

• Doors/windows that won’t close

• Evidence of water intrusion or past flooding

Fixes are expensive: Foundation repairs can eat $20K–$80K and still leave buyers nervous, even if fully permitted.

Rule of thumb: Walk away unless the spread is massive and you’ve done this before.

Red Flag #5: Flood Zones or Environmental Hazards

Some of the “cheapest” houses come with expensive location risks.

Watch out for:

• FEMA flood zones (check maps)

• Past mold or fire damage

• Proximity to power lines, freeways, or toxic sites

• High-risk insurance zones

Why this matters: These can shrink your buyer pool, raise holding costs, or slow the sale, all eating into your profits.

Red Flag #6: A Seller Who’s Hiding Something

When a seller (or wholesaler) avoids direct questions, you should pay attention.

Examples:

• “I don’t know much about the property” (but they’ve owned it for years)

• “You don’t need an inspection, it’s in great shape”

• They rush you to sign, but dodge your due diligence requests

Remember: Motivation is good, desperation with missing info is not.

Red Flag #7: The Neighborhood Doesn’t Support the ARV

Even a perfect flip can flop if the neighborhood won’t support the price.

What to check:

• Days on market (DOM) over 60? Bad sign.

• Other flips nearby sitting unsold? Worrying.

• Owner-occupancy low and rentals high? Risky.

• Crime rates or school quality below average? Hard resale.

If you’re unsure: Pull data from PropStream or Redfin on nearby listings and sales velocity.

Red Flag #8: Holding Costs Aren’t Accounted For

Many flippers only budget for rehab, but forget that time is money, too.

Typical holding costs:

• Mortgage or hard money interest

• Property taxes

• Utilities

• Insurance

• HOA fees

If a flip takes 6 months instead of 3, your profit can shrink by $10K–$20K just from holding.

Solution: Always plug in time scenarios and overestimate your timeline by 25–50%.

Red Flag #9: The Deal Breaks the 70% Rule (and There’s No Cushion)

Even though the 70% rule isn’t gospel, it’s still a good sanity check:

70% of ARV, rehab = MAO (maximum allowable offer)

If your numbers look like:

• 85% of ARV

• Minimal spread after holding/realtor costs

• No room for surprise expenses

…you’re betting on everything going right. It won’t.

Red Flag #10: The Rehab Timeline Is Unrealistic

Rushed estimates kill flips. Every week of delay costs money.

If the scope includes:

• Foundation

• Roof

• Plumbing

• Electrical

• Kitchen and bath

• Permits and inspections

You’re not finishing in 30 days. You’re probably looking at 60–90+, minimum.

Mistakes to avoid:

• Assuming contractors will start immediately

• Ignoring local permit timelines

• Believing wholesalers who say “light rehab”

Bonus: Red Flags in the Seller Story

Sometimes the numbers look okay, but the seller story doesn’t add up.

• “I inherited it last week”, but the title says otherwise

• “Tenant just moved out”, but the place is trashed

• “It’s worth $300K easy”, but they won’t show you real comps

• “It needs $10K tops”, and there’s a tarp on the roof

Use gut + data. If their story is inconsistent or overly optimistic, back it up with hard numbers, or walk.

How to Systematically Avoid These Pitfalls

Great flippers don’t just rely on instinct; they use a deal filter.

Here’s a sample list of questions to apply before any offer:

• What’s the ARV, and how did I calculate it?

• What’s the real scope of work (line-by-line)?

• What’s the neighborhood resale velocity?

• What’s my all-in number vs. projected resale?

• What are my backups if I can’t sell in 90 days?

• What’s my max time and budget cushion?

If you can't answer these, you’re not ready to close.

The Real Cost of Missing a Red Flag

Let’s say you buy a flip with $50K in expected profit.

But you miss:

• A hidden $12K foundation repair

• 2-month permit delay costing $6K in holding

• A faulty ARV estimate that’s $20K too high

• A saturated neighborhood that adds 45 days to DOM

That $50K shrinks to $5K, or worse, becomes negative.

One overlooked red flag can destroy your margin. Two or three? You’re in the red.

Know What to Kill Before It Kills Your Deal

The best flips aren’t just the ones you close. They’re also the bad ones you walk away from.

Train yourself to spot red flags early:

• In the numbers

• In the neighborhood

• In the seller's story

• In the rehab scope

Profit in flipping doesn’t come from risk; it comes from controlling risk. Know what’s fixable, what’s risky, and what’s a deal-breaker.

And if you ever feel unsure?

Run the numbers again. Trust the data. And don’t be afraid to say no.