How to Get Started Flipping Houses: A Connecticut Investor's Guide

I run a mortgage company, and I also buy and own real estate in Connecticut. So I see flips from both sides of the table: the investor running the numbers at midnight, and the lender deciding whether those numbers hold up.

This guide is how I'd tell a friend to get started flipping houses in Connecticut. No guru course, no HGTV version. Just the steps, the math, and how the money works.

What house flipping is

House flipping means buying a property below what it will be worth once it's fixed, renovating it, and selling it for a profit. Most flips are distressed houses: estate sales, tired homes that haven't been updated in 30 years, foreclosures, or properties the owner just wants gone.

The profit comes from three places: buying right, renovating to what the market will pay for, and keeping your hold time short. Miss on any one of those and the deal gets thin fast.

Step 1: Treat it like a business from day one

A flip is not a hobby. It's a short-term business with real money at risk, so set it up like one before you make an offer.

• Form an entity. Most investors buy in an LLC. Talk to your attorney and CPA about how to set it up and how flip profits are taxed. Flip income is usually taxed as ordinary income, not long-term capital gains, so plan for it.
• Separate your money. Open a business bank account. Every receipt for the rehab goes through it.
• Know your cash. Decide how much you can put into a deal and how much you can lose without it changing your life. Financing covers a lot, but not everything. More on that below.
• Pick your market. Pick a few Connecticut towns you know well. Learn what sells there, at what price, and how fast. A three-bed colonial in one town and a two-family in the next town over are completely different businesses.

Step 2: Build your team before you need it

You'll move faster and make fewer expensive mistakes with these people lined up first:

• An investor-friendly real estate agent who pulls comps, finds off-market leads, and will list the finished house.
• A real estate attorney. Every Connecticut closing goes through an attorney, on the buy and on the sale.
• A general contractor you've checked out: license, insurance, references, and photos of finished jobs. Get at least two bids on every job.
• A lender who does fix and flip loans and understands rehab draws.
• An insurance agent who writes coverage for vacant properties under renovation.
• A CPA who works with real estate investors.

Step 3: Find deals

The houses that work as flips rarely look good on the listing photos. Where Connecticut investors find them:

• The MLS. Look for long days on market, price drops, "as-is," "estate," "needs TLC," and cash-only listings. Have your agent set alerts.
• Off-market. Driving for dollars, direct mail to absentee owners, probate and estate leads, and simply telling everyone you know that you buy houses.
• Wholesalers. Fine to use, but verify every number they give you. A wholesaler's ARV and repair estimate are a sales pitch, not a valuation.
• Auctions and foreclosures. Can work, but you often can't get inside first, and you need your financing ready before auction day.

Look in neighborhoods where finished homes sell quickly. A great buy in a slow area can sit on the market long enough to eat your profit.

Step 4: Run the numbers

The math decides everything: what you can pay, how much to put into the rehab, and what you'll walk away with. Don't make an offer until you've done it.

ARV (after-repair value)

ARV is what the house will sell for once the work is done. Base it on recent sales of comparable renovated homes nearby: similar size, bed and bath count, lot, and condition. Use sold prices, not list prices. If the comps are all over the place, use the low end.

ARV matters twice: it sets your sale price, and it's what your fix and flip loan is sized against.

Rehab budget

Walk the house with your contractor and build a line-item scope of work: roof, mechanicals, electrical, plumbing, kitchen, baths, floors, paint, exterior, permits. Then add a contingency. Older Connecticut housing stock hides things: knob-and-tube wiring, oil tanks, old septic systems, rot behind the siding. Something will come up.

The 70% rule (a rule of thumb, not a law)

The classic screening formula:

Maximum purchase price = (ARV x 70%) minus rehab cost

On a house with a $400,000 ARV and a $40,000 rehab, that's $400,000 x 70% = $280,000, minus $40,000 = $240,000.

Use it to screen deals fast. Don't use it as your final answer. It doesn't know your financing costs, your hold time, or Connecticut's selling costs. Run the full math below on every deal that passes the screen.

Holding costs

Every month you own the house costs money:

• Loan interest
• Property taxes
• Insurance (vacant / builder's risk)
• Utilities
• Snow removal and lawn care

The longer the rehab and the sale take, the more these add up. Build your budget around a realistic timeline, then add a month or two.

Buying and selling costs

On the buy: attorney and title, recording, lender points, inspections. On the sale: agent commission, your attorney, and Connecticut's conveyance tax, which comes out of your proceeds at closing. First-time flippers forget the selling side more than anything else.

Step 5: Finance the flip

This is where most new investors get stuck, and it's the part I can speak to most directly.

How to finance a house flip

Your main options:

• All cash. Simplest, but it ties up all your money in one house.
• A conventional mortgage. Usually doesn't fit. Banks generally won't lend on homes in rough condition, and they won't fund your rehab.
• A HELOC or home equity loan on your own home. Can work for the down payment, but now your house is on the line for the flip.
• Private money from people you know. Friends, family, or an investment group. Put everything in writing and have an attorney paper it.
• A fix and flip (hard money) loan. A short-term, business-purpose loan built for this. It's based mainly on the property and the deal, it can fund the rehab, and it's designed to be paid off when you sell or refinance.

For most people starting out, a fix and flip loan is the tool that fits. Here's how it works at AFC.

AFC fix and flip terms

AFC Mortgage Group is a direct lender. On fix and flip loans, we lend our own money, so the decision is made by our Approval Team, not passed along to someone else.

• Purchase: Up to 80% of the purchase price
• Rehab: Up to 100% of the rehab budget
• Cap: Total loan capped at 65% of ARV
• Points: 2 points
• Rate: 10% to 12%
• Term: 6 to 18 months
• Credit: 620+
• Speed: Funded in as few as 10 business days after approval

Loan terms are illustrative, not a commitment to lend. AFC Mortgage Group, LLC · NMLS #2801 · Equal Housing Lender.

The 65% of ARV cap is the number to watch. On a strong deal, 80% of purchase plus 100% of rehab fits under it easily. On a thinner deal, the cap kicks in and you bring more cash. Either way, it's a useful gut check: if the cap is cutting your loan, the deal may be priced too high.

More detail: AFC fix and flip loans, private money loans, and how ARV, draws, and points work together on a CT flip. If you're new to the loan type, start with what a hard money loan is and why investors use one.

How rehab draws work

Rehab money doesn't land in your account at closing. It's held back and released in stages, called draws, as the work gets done and is inspected. That means:

• You need cash to start the work before the first draw comes back.
• Your contractor has to work on a schedule, not just give you a low bid.
• A clear, line-item scope of work makes draws go smoothly.

Ask any lender, including us, how many draws your budget splits into and how interest is charged on money that hasn't been drawn yet.

Get your financing lined up before you make offers

Sellers of distressed houses want certainty. Know your terms, your cash requirement, and your timeline before you write an offer. AFC fix and flip loans can be funded in as few as 10 business days after approval. Read how fast a hard money loan can fund in Connecticut for what actually drives the timeline.

A worked example (illustrative)

This is an illustration, not a real deal or a quote. AFC loan terms come from the table above. Everything else (taxes, insurance, commission, closing costs) is a round-number assumption so you can see how the pieces fit. Use your own numbers.

The deal

• Purchase price: $235,000
• Rehab budget: $40,000
• ARV: $400,000
• 70% rule check: $400,000 x 70% minus $40,000 = $240,000. The $235,000 price passes.

The loan

• 80% of purchase: $188,000
• 100% of rehab: $40,000
• Total loan: $228,000
• 65% of ARV cap: $400,000 x 65% = $260,000. The $228,000 loan fits under the cap.
• 2 points: $4,560
• Interest at 11% (inside the 10% to 12% range) for a 6-month hold, charged on the full $228,000 to keep the math simple: $12,540. Your real interest depends on your draw schedule and final terms.

All-in costs

• Purchase price: $235,000
• Rehab: $40,000
• Rehab contingency (10%, your cash): $4,000
• Points (2): $4,560
• Interest (6 months): $12,540
• Buyer closing costs (attorney, title, recording), assumed: $5,000
• Insurance, 6 months, assumed: $1,500
• Property taxes, 6 months, assumed: $2,500
• Utilities, $200/month x 6, assumed: $1,200
• Agent commission, assumed 5% of sale: $20,000
• Seller attorney and CT conveyance tax, assumed: $6,000
• Total cost: $332,300

Result

• Sale at ARV: $400,000
• Total cost: $332,300
• Estimated profit before income tax: $67,700

Cash you need on hand (assuming you pay carrying costs as you go): $47,000 down (the 20% of purchase the loan doesn't cover) + $4,560 points + $5,000 buyer closing costs + $4,000 contingency + about $17,740 in interest, insurance, taxes, and utilities = about $78,300.

Two lessons from this example:

1. The 70% rule said $125,000 of "spread." The real number is about $67,700. Financing, holding, and selling costs ate almost half of it. That's normal. It's why you run the full math.
2. Time is the swing factor. Every extra month in this example costs roughly $2,090 in interest alone, plus taxes, insurance, and utilities.

What if the ARV came in at $340,000 instead? The 65% cap becomes $221,000, so the loan drops from $228,000 to $221,000 and you bring $7,000 more cash. And most of your profit disappears: on the same cost assumptions you'd net roughly $11,000. That's why your ARV comps need to be conservative.

Loan terms are illustrative, not a commitment to lend. AFC Mortgage Group, LLC · NMLS #2801 · Equal Housing Lender.

Step 6: Make the offer and close

• Write offers based on your maximum price from the math, not the asking price.
• Get inside before you commit: inspection, contractor walk-through, and a look at the mechanicals, roof, and foundation.
• Ask your attorney about the contract terms and contingencies that protect you.
• Get your insurance bound before closing.
• Have your scope of work and contractor contract ready to sign so work starts the week you close.

Step 7: Manage the rehab

• Start fast. Every week the house sits idle costs money.
• Pull permits. Unpermitted work can kill your sale when the buyer's attorney or inspector finds it.
• Visit the site often. Weekly at a minimum.
• Track every dollar against your line-item budget.
• Renovate to the neighborhood. Match what comparable finished homes have. Over-improving doesn't come back to you at sale.
• Don't skimp on what buyers see and inspect: roof, mechanicals, kitchen, baths, curb appeal.
• Finish with a punch list before photos and listing.

Step 8: Exit: sell it or keep it

Plan your exit before you buy. You have two main options.

Sell

List with your agent, price it off the same comps you used for ARV, and stage it if the house calls for it. When it sells, your fix and flip loan is paid off at closing from the proceeds.

Refinance into a DSCR loan and keep it as a rental

If the numbers work as a rental, you can keep the house and refinance the short-term loan into a long-term DSCR loan. A DSCR loan qualifies the property on its rent, not your tax returns.

AFC DSCR basics:

• 660+ minimum credit
• 20% to 25% down on a purchase
• Cash-out refinance up to 70% to 75% loan-to-value
• Minimum DSCR of 0.75 (rent covers at least 75% of the monthly payment including principal, interest, taxes, insurance, and any HOA)
• No seasoning requirement on the BRRRR cash-out refinance, so you don't have to wait months after the rehab to refinance

In the example above, 70% to 75% of a $400,000 value is $280,000 to $300,000, which would cover the $228,000 flip loan payoff if the property qualifies. Learn more: DSCR loans, DSCR loan requirements in Connecticut, refinancing a hard money loan into a DSCR loan, and the BRRRR method with real Connecticut numbers.

Loan terms are illustrative, not a commitment to lend. AFC Mortgage Group, LLC · NMLS #2801 · Equal Housing Lender.

Mistakes that kill first flips

• Trusting a rosy ARV. Use sold comps of finished homes, and lean low.
• Skipping the contingency. Old Connecticut houses always have a surprise.
• Underestimating hold time. Permits, contractor schedules, draws, and the sale all take longer than you think.
• Forgetting selling costs. Commission, attorney, and conveyance tax come off the top.
• No financing lined up. You lose the deal to the buyer who had it ready.
• Starting too big. Your first flip should be a house you understand in a town you know, at a price point that sells fast.

Ready to run a deal?

Send us the address, purchase price, rehab budget, and what you think it's worth finished. Our team will tell you how the loan sizes up, what cash you'll need, and whether the numbers work. Call or text (203) 452-9899, or start at AFC fix and flip loans.

FAQ

Can you flip a house with a regular mortgage?

Usually not. A conventional mortgage generally needs the house to be in livable condition and won't fund your renovation. Most flippers use a short-term fix and flip loan instead. At AFC, that loan covers up to 80% of the purchase and 100% of the rehab, capped at 65% of ARV.

How much money do I need to start flipping houses?

Enough for the part of the purchase the loan doesn't cover, plus points, closing costs, carrying costs, and a rehab contingency. With an AFC fix and flip loan covering up to 80% of the purchase, you bring at least 20% of the purchase price plus those costs. In the illustrative example above, that came to about $78,300 on a $235,000 house.

What credit score do I need for a fix and flip loan?

AFC fix and flip loans start at a 620 credit score. If you plan to keep the property and refinance into a DSCR loan, that program requires 660+.

How fast can I get a fix and flip loan funded?

AFC fix and flip loans can be funded in as few as 10 business days after approval. Having your purchase contract, scope of work, and entity documents ready keeps things moving.

Are real estate flippers always in debt with the bank?

Many flippers use financing, but it's usually a short-term business-purpose loan, not a long-term bank mortgage. AFC fix and flip terms run 6 to 18 months, and the loan is paid off when the house sells or is refinanced into a long-term DSCR loan.

Can I keep the house as a rental instead of selling it?

Yes. You can refinance the fix and flip loan into a DSCR loan. AFC DSCR loans allow cash-out up to 70% to 75% LTV with a minimum DSCR of 0.75, and there is no seasoning requirement on the BRRRR cash-out refinance.

Related reading

• Fix and flip financing at AFC
• What is a hard money loan and why use one?
• How fast can a hard money loan close in Connecticut?
• DSCR loans to hold the finished property

Written by Gaetano Ciambriello, CEO of AFC Mortgage Group (NMLS #1783508). AFC Mortgage Group LLC | NMLS #2801 | Monroe, CT | Equal Housing Lender. Fix and flip and DSCR loans are business-purpose loans for non-owner-occupied investment properties. This article is educational and is not a commitment to lend. All loans are subject to credit approval and program guidelines.