How To Flip Houses In Arizona: Step By Step (2024)

The Arizona real estate market has been the poster child for opportunistic investors ever since The Great Recession took hold about 15 years ago. The sheer volume of foreclosures facilitated an entire investor movement that is alive and well to this day. While the market dynamics are slightly different, the fact remains that learning how to flip houses in Arizona can be a great career choice.

Arizona continues to be a great place to invest in real estate, and institutional investors are more than aware of the opportunities within the state. According to ATTOM Data Solutions’ latest Home Sales Report, 7.3% of all home sales went to institutional investors, making Arizona the fifth largest contributor to institutional investors in the country.

Institutional investors see potential in The Grand Canyon State, and it’s time you did too. Whether you are new to investing or already have a flipping business, this guide will teach you everything you need to know about how to flip houses in Arizona, including:

• What Is Flipping Houses?
• Arizona House Flipping Statistics
• How To Flip Houses In Arizona (7 Steps)
• How To Find Houses To Flip In Arizona
• Do You Need A License To Flip Houses In Arizona?
• How To Flip A House In Arizona With No Money
• Best Cities To Flip Houses In Arizona
• Final Thoughts On Flipping Homes In Arizona

*Before we begin our guide, we also invite you to view our video on How To FLIP A HOUSE For Beginners (Step-by-Step). Host and CEO of Real Estate Skills, Alex Martinez, & Stan Gendlin share how to flip a house from start to finish as a beginner! 

Together, Alex & Stan have completed over 1,000+ house flips. What you learn in this video will give you the confidence and guidance to successfully complete your fix-and-flip project!

What Is Flipping Houses?

House flipping is quickly becoming one of the most popular investment strategies across every industry. If for nothing else, flipping houses can be done in any market during any real estate cycle. Even more importantly, however, house flipping has developed a reputation for building wealth for successful investors.

According to ATTOM Data Solutions’ year-end 2022 U.S. Home Flipping Report, “407,417 single-family homes and condos in the United States were flipped in 2022. That was up 14 percent from 357,666 in 2021, and up 58 percent from 2020, to the highest point since at least 2005.”

As recently as last year, the average flip generated a gross profit of $67,900 nationwide. There’s no doubt about it; learning how to flip houses in Arizona can help investors realize significant potential. Returns are incredibly attractive, which begs the question: What is flipping houses?

Flipping houses is a real estate investing strategy that involves buying, rehabbing, and selling homes for a profit. Upon closer inspection, however, each step is optimized to increase profit margins and mitigate risk. Investors who can create a synergy between all three steps stand to realize a nice profit, but doing so will require a lot of work and a mind for due diligence.

As a result, learning how to flip houses in Arizona starts with investors educating themselves on the local market.

Arizona House Flipping Statistics

Investors must familiarize themselves with local market dynamics to learn how to flip houses in Arizona. Here’s a look at some of the most crucial house-flipping statics for investors to know:

• Average Home Value: $414,262
• Median Sale Price: $436,100
• 1-Year Appreciation Rate: -5.0%
• Median Days To Pending Sale: 24
• Median Days On Market: 47
• Homes For Sale: 31,450
• Homes Sold: 10,341
• New Listings: 9,656
• Months Of Supply: 2
• Foreclosure Rate: One in every 6,704 households
• Population: 7,359,197
• Median Household Income: $65,913
• Unemployment Rate: 4%

*All Arizona housing market statistics are as of the second quarter of 2023.

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How To Flip Houses In Arizona (7 Steps)

Investors who want to learn how to flip houses in Arizona should start by following the seven steps outlined below:

1. Find A House-Flipping Mentor
2. Research The Local Housing Market
3. Find & Analyze Distressed Properties
4. Raise Capital To Fund The Deal
5. Close On The House
6. Renovate The Property
7. Resell The House

1. Find A House-Flipping Mentor

While new investors can flip houses without receiving any help from anyone, there are many reasons why they should consider seeking the guidance of a mentor. Aspiring investors can significantly benefit from asking for help. By collaborating with an experienced home flipper who has already succeeded in the industry, new investors will tap into invaluable experience and knowledge that cannot be obtained from books alone.

Having a seasoned mentor by their side enables new investors to reduce risks, streamline operations, and increase their chances of success. Additionally, a mentor can instill confidence, giving new investors the boost they need to get off the sidelines and start investing. That said, working with a mentor may be the most important step when learning how to flip houses in Arizona.

Ready to start house-flipping in Arizona? Join Alex Martinez at his FREE training to learn how to get started with house-flipping and wholesaling!

2. Research The Local Housing Market

Flipping houses in Arizona requires an in-depth knowledge of the local market. For the best information regarding the state’s housing sector, investors should get to know these sites:

• Zillow Housing Data Research
• Zillow’s Arizona Market Overview
• Redfin’s Arizona Housing Market Overview
• Arizona Realtors Association Market Data
• Realtor.com’s Arizona Market Overview
• ATTOM DataSolutions’ Arizona Real Estate & Property Data
• SoFi’s State Foreclosure Data
• U.S. Census Bureau’s Arizona Data
• Bureau Of Labor Statistics’ Arizona Economic Data

Read Also: How To Find Off-Market Properties In Arizona

3. Find & Analyze Distressed Properties

While it’s not the most comprehensive way to analyze a potential deal, the 70% rule allows new investors to use their limited expertise to determine an impending deal’s viability.

Investors must determine the subject property’s after-repair value (ARV) to get the ball rolling. As its name suggests, the ARV is how much the home is expected to be worth after the necessary repairs are completed; in other words, it’s how much the investor can sell it for once it's restored to its desired condition.

The best way to calculate the ARV of a property is to look at nearby comps. Similar homes within close proximity to the deal will give investors a good idea of how much the home can be worth if it’s brought up to the same condition as the houses it’s going to be compared to.

Next, multiply the ARV by 70% (or 0.70) and subtract the estimated rehab costs. The resulting number represents the maximum allowable offer (MAO), serving as the threshold investors must not exceed when making an offer on a deal. By adhering to the MAO, investors can create adequate profit margins that yield a compelling return on investment.

Here is the formula:

ARV - Fixed Cost - Rehab Costs - Desired Profit = Maximum Allowable Offer (MAO)

4. Raise Capital To Fund The Deal

The next step in learning how to flip houses in Arizona starts with funding the deal. Specifically, investors must take proactive steps to secure funding and buy the deal they just analyzed. While it’s easy to assume investors may need to come up with the cash, the truth is that it’s better to borrow money to fund a flip.

First and foremost, obtaining external funding enables investors to preserve their savings and avoid financial constraints. Secondly, leveraging external capital empowers investors to expand their business in ways that would otherwise be challenging if they solely relied on their resources.

Rather than utilizing their capital, investors should explore private or hard money loans. Despite typically carrying higher interest rates, these funding sources give investors quick and efficient access to capital. Therein lies the most significant benefit of working with private and hard money; the speed of implementation is second to none and can often mean the difference between landing a deal and not.

5. Close On The House

Since Arizona is an escrow state, closing on a house will require investors to follow the steps below:

• The buyer and seller will come to an agreement and put the terms in a contract. This legally binding contract outlines crucial details such as the purchase price, contingencies, closing date, and other significant milestones.
• As an escrow state, the next step involves a neutral third party—an escrow agent or title company. Specifically, the buyer or agent will establish an escrow arrangement to facilitate the impending transaction.
• The buyer conducts due diligence with a thorough inspection of the investment property, performing a title search, obtaining appraisals, addressing contingencies, and taking necessary measures to safeguard their interests in the deal.
• Handling all the essential documents and ensuring their accuracy for the transaction lies with the escrow agent or title company.
• All parties involved in the transaction convene to review and sign the requisite documents.
• Once the documents are signed, the buyer places the funds in escrow, where they remain until the agreed-upon prerequisites are met. Once the escrow terms are fulfilled, the funds are disbursed to the seller, and the buyer receives the keys to the property.
• Following the closing, the local Recorder's Office documents the title transfer to reflect the transaction's completion.

6. Renovate The Property

To maximize their investment potential, investors must prioritize cost-effective renovations that make the property attractive to home buyers. The more buyers that are attracted to the home, the more competition there will be to close on it, which inherently drives up the price.

At the same time, investors must exercise constraints and avoid unnecessary spending. The key is concentrating on projects with the highest return on investment (ROI). By carefully selecting renovations, investors should be able to increase their margins and the property's value.

According to Remodeling Magazine, the renovations that return the most money to investors at the time of a sale in Arizona (and the rest of the Mountain region) are:

• Electric HVAC Conversion: Recoups 114.5% of the original cost
• Fiber-Cement Siding Replacement: Recoups 107.4% of the original cost
• Garage Door Replacement: Recoups 99.7% of the original cost
• Manufactured Stone Veneer: Recoups 96.7% of the original cost
• Vinyl Siding Replacement: Recoups 92.9% of the original cost

Savvy investors will notice that even the best renovations barely recoup their original costs; that’s true, but what they lack in returns, they make up for in demand. Any addition or remodeling endeavor that enhances a home's appeal contributes an inherent value that should not be underestimated. The more desirable a home is, the more competition it will create. The more competition, the more likely there will be a bidding war.

7. Resell The House

Investors must attempt to sell the house immediately after it is restored to its desired condition. The sooner the home is sold, in fact, the larger the profit margins are. The longer it takes, the more costs will start to pile up. Everything from property taxes and holding costs to opportunity costs and repair costs will eat into an investor’s profits the longer they own the property.

Equally as important as selling the home fast is selling it for a profit. The main objective is to sell the property at a price exceeding the total investment. If the property was acquired at a significantly lower price than its fair market value and the renovations have substantially increased its worth, the investor should be in a favorable position to profit.

Although it may involve higher upfront costs, investors should consider collaborating with a real estate professional such as a Realtor or an agent. While their fees may be substantial, a genuinely skilled agent should be capable of selling the home faster and at a higher price that more than compensates for the added cost.

How To Find Houses To Flip In Arizona

Finding a house to flip in Arizona may be as simple as turning to one of the following strategies:

• Tap into local real estate agents' extensive market knowledge and expertise; they possess valuable knowledge on all deals, both on-market and off-market assets.
• Become a licensed agent or work with an agent to gain access to the Multiple Listing Service (MLS). As the most comprehensive database of real estate listings, the MLS is a great source to reference.
• Take part in foreclosure auctions conducted by banking institutions. These auctions provide a prime opportunity for proactive investors to secure properties below their market value, as banks sell them to relieve the burden of non-performing loans.
• Visit the local Recorder's Office to identify Arizona homes at risk of foreclosure. With publicly available foreclosure records, diligent investors can pinpoint distressed homeowners by recognizing the indicators to look for.
• Launch a targeted direct mail campaign. While not all recipients will respond, even a single lead can make the entire campaign worthwhile.
• Explore neighborhoods by driving around and identifying neglected properties. Although not always the case, neglected homes may indicate owners more inclined to sell, presenting potential opportunities for investors.

Check out our in-depth video on "How to Gain Access to the MLS Without a License." We cover key insights and practical tips to unlock potential property opportunities you might have been missing out on!

Read Also: How To Find Distressed Properties To Buy

Do You Need A License To Flip Houses In Arizona?

Flipping houses in Arizona does not require a real estate license. In fact, anyone who learns how to flip houses in Arizona can do so.

That said, a real estate license can award investors several benefits, including a nationwide network of real estate professionals and access to the MLS.

Read Also: How To Get MLS Access: The (Ultimate) Guide

How To Flip A House In Arizona With No Money?

Investors in Arizona have the advantage of not needing to rely on their funds when flipping houses. Instead, they can utilize the resources of private and hard money lenders. This eliminates the hassle of dealing with traditional banks, undergoing credit checks, and enduring lengthy approval processes. By leveraging private and hard money loans, investors gain immediate access to cash, which expedites the entire process.

Even investors who haven’t learned how to flip houses in Arizona can still invest with no money. Wholesaling, in particular, allows investors to invest in the real estate market without using their own money. Instead, wholesalers collect a fee for connecting sellers to buyers. The transaction is funded by the end buyer, who also pays the fee to the wholesaler for their services.

You can also check our video on "How To Get Into Real Estate With NO MONEY!", which outlines strategies and insights on navigating the real estate world without hefty bank account withdrawals.

Read Also: Private Money Lenders: The (ULTIMATE) Guide

Best Cities To Flip Houses In Arizona

The Arizona real estate market is full of opportunities, but the following cities may be the best places to flip real estate:

• Prescot: Real estate investors already find plenty of opportunities to take advantage of in Presct. In fact, only Burlington, VT saw a bigger increase in year-over-year flipped real estate deals than Prescot (up 183.1%), according to the previously mentioned ATTOM Data Solutions’ year-end 2022 U.S. Home Flipping Report.
• Phoenix: With an average gross profit margin of 10.6% on flipped homes, Phoenix Investors have been forced to work with rapid appreciation rates. However, appreciation rates can also lead to higher returns for opportunistic investors.
• Tucson: While Mesa, Peoria, Scottsdale, and Tempe were all considerations, Tucson makes the final spot on the list. With a median home value well below the state average, Tucson represents an affordable market with plenty of demand.

Final Thoughts On Flipping Homes In Arizona

There may be no better time to learn how to flip houses in Arizona than now. As home prices rise across the country, real estate in Arizona is attracting a lot of attention from its neighboring states, especially California residents looking to trade the expensive confines of San Francisco and Los Angels for more affordable living arrangements. The influx of prospective buyers should serve local house flippers well, especially those who can rehab with a proven system.

At Real Estate Skills, our team of experts is ready to provide you with the tools you need for flipping houses in Arizona. We're committed to providing the knowledge, resources, and support you need to successfully navigate an Arizona property flip. So avoid common mistakes and maximize your returns by leveraging our expertise.