Flipping Houses: Due Diligence Checklist for Every State

Due diligence as the profit-protection system

Flipping houses still attracts plenty of attention, but the math has changed. Typical flipping ROI has fallen into the low‑20% range in 2025 (before expenses) Flipping Houses, which means there’s less cushion for surprises and less room for “it’ll probably be fine”.

At the same time, rates have stayed elevated, making holding costs more sensitive to delays, rework, and permit slowdowns. In this environment, a due diligence checklist isn’t paperwork – it’s the primary profit‑protection system. Start with a disciplined property search so you’re not underwriting off a listing description or a seller’s memory. In states like Pennsylvania, Arizona, and Michigan, where address data can be inconsistent across counties and municipalities, a reverse address lookup helps standardize the location before you start pulling records. From there, a reverse address lookup can confirm you’re evaluating the right parcel and not a similarly named street or neighboring lot. When information conflicts across portals – owner name formatting, sale dates, or parcel IDs – a reverse address search helps reconcile mismatches before they turn into bad assumptions. And when you need more context on how the property has changed hands or been encumbered over time, a reverse property search provides a clearer paper trail to review.

This guide shares general information, not legal, tax, or financial advice. The core idea is simple: the best flips are built on verification, not confidence. And because state-by-state differences can quietly change disclosures, permitting, contractor rules, taxes, and closing timelines, a deal that pencils in one market can stall or shrink in another if those differences are ignored.

Above-the-fold: the 15-minute “should this flip be pursued?” screen

Deal-killer red flags

Most blowups are predictable. They usually start with uncertainty around title issues, water and foundation risks, unpermitted work, or an exit price that only works if everything goes perfectly. That’s a thin ledge to build a project on-especially when typical gross profit in Q3 2025 was around 60,000 before expenses, meaning one “surprise” can erase the entire deal.

Look for these flip red flags early:

Signs of chronic water intrusion: staining, musty smell, repeated patching, efflorescence
Major foundation movement cues: stair-step cracks, sloped floors, sticking doors everywhere
Roof at end-of-life plus active leaks (not “old roof,” but leaking roof)
Electrical panel concerns: outdated panels, overheating signs, unsafe DIY wiring
Obvious unpermitted conversions (garage-to-bedroom, basement units, added baths)
Boundary/driveway ambiguity: shared access, unclear lot lines, “everyone uses it” situations
Neighborhood resale mismatch: over-improving past local comp ceilings
Underwriting that “needs top-of-market ARV” to make the numbers work

Quick numbers sanity check

Most bad flips are bad math. A quick underwriting screen prevents expensive inspections, bids, and title work on a deal that was doomed from the start. This doesn’t need a complex model; it needs conservative ranges.

Minimum house flipping numbers to run:

Conservative ARV estimate range (low/base/high, not one perfect number)
Rehab budget range (plus a clear “unknowns” bucket)
Holding costs: financing, property taxes, utilities, insurance, lawn/snow/maintenance
Selling costs: agent fees, closing costs, concessions, staging, buyer credits
Contingency line (because reality doesn’t respect spreadsheets)

Published ROI figures are typically before financing, repairs, and holding costs. That’s not a technicality-it’s the whole game. Conservative underwriting is the difference between a manageable project and a slow-motion loss.

The universal due diligence checklist (usable in every state)

Property condition diligence

Scope certainty is the core of flipping success, and it starts with systems and water-not finishes. Many investor mistakes happen when the project is evaluated like a retail buyer evaluates it: countertops first, structure later. A practical inspection checklist for investors should prioritize the “big 5”: roof, foundation, electrical, plumbing, and HVAC.

Actions that catch the big problems early include walking the exterior drainage and grading (where does water go during a storm?), checking attic and crawlspace conditions, looking for repeated patch patterns that hint at recurring issues, confirming electrical panel capacity for the intended load, and evaluating windows and insulation at a high level. None of this requires being an engineer. It requires being consistent. Cosmetic upgrades are controllable; hidden system failures are where budgets break.

Rehab scope and contractor diligence

A written scope of work, priced by trade, reduces overruns and prevents change-order chaos. The goal is to replace “we’ll figure it out” with a plan that can be bid, scheduled, and inspected. A real scope includes:

Demo notes (what gets removed, what gets protected)
Framing and structural changes
MEP: mechanical, electrical, plumbing
Insulation and air sealing (as applicable)
Drywall and paint prep standards
Flooring plan and transitions
Cabinets, counters, and appliance allowances
Fixtures (lighting, plumbing trim, hardware)
Exterior work (roofing, siding, gutters, windows as needed)
Landscaping and drainage touches
Punch list standards (what “done” means)

For contractor bids, insist on 2-3 trade bids for critical items, use unit pricing for unknowns (example: per linear foot, per fixture, per square), document allowances for finishes so comparisons are fair, and include a contingency line. The contingency isn’t pessimism; it’s professionalism.

Title, liens, and occupancy diligence

Title and possession issues can destroy timelines, and timelines are money. This diligence should happen early, not when the resale buyer’s lender starts asking questions. A process-driven check includes:

Confirm legal owner and vesting (who can actually sign)
Check liens and judgments that could attach to the property
Confirm HOA liens, if applicable, and any unpaid dues
Verify occupancy status and any tenant rights or lease claims
Confirm access and easements (utilities, shared driveways, ingress/egress)
Verify utilities can be turned on for inspection and construction

Even a great rehab can’t outrun a title problem or an occupancy delay. Getting clarity up front protects the schedule and the exit.

The state-by-state layer: what changes and how to verify it

What varies by state (and why flippers miss it)

The categories in a house flipping checklist are consistent, but the rules underneath them vary by location. That’s where hidden risk shows up-often mid-project, when reversing course is expensive. These are the state-variant categories that should be verified locally:

Seller disclosure expectations and required forms
Permit requirements and inspection cadence
Contractor licensing/registration and lien rules
Transfer taxes or documentary stamp-style fees
Closing norms (confirm whether attorney involvement is customary/required vs escrow-style)
Local code variations and resale compliance triggers

The right mindset is “verify locally.” Memorizing 50 rulebooks isn’t realistic, and it’s not the best use of time anyway.

The verification method professionals use

A repeatable due diligence process beats trying to remember what’s true everywhere. A simple investor workflow is a “three-call rule,” documented in the deal tracker:

First, confirm the title and closing process with a local title or closing professional (timelines, common issues, what typically delays closings). Second, confirm the permit path with the local building department-what triggers permits, how long reviews take, and inspection scheduling realities. Third, confirm contractor licensing and lien basics with the state licensing authority or equivalent. Names, dates, and answers should be recorded. It sounds small, but it prevents big mistakes.

State index: checklist prompts for all 50 states

How to use this state index

This state index is a prompt list, not legal guidance. It helps a team remember what to verify locally in each state before committing capital. For any state, the same four verifications should be confirmed with local professionals and current state and local rules: disclosures, permit path, contractor licensing, and closing/title norms.

The 50-state prompt list

Alabama: storm/water management.
Alaska: remote trade timelines.
Arizona: heat/roof HVAC load.
Arkansas: drainage and soil.
California: strict code timelines.
Colorado: wildfire/insurance quoting.
Connecticut: older housing systems.
Delaware: flood/coastal exposure.
Florida: wind/flood insurance.
Georgia: termite/moisture checks.
Hawaii: material lead times.
Idaho: septic/well prevalence.
Illinois: municipal inspection rules.
Indiana: older foundation types.
Iowa: freeze/thaw exterior wear.
Kansas: storms and drainage.
Kentucky: hillside water control.
Louisiana: flood elevation factors.
Maine: heating system norms.
Maryland: septic/well diligence.
Massachusetts: older wiring risks.
Michigan: basement water issues.
Minnesota: winter timeline risk.
Mississippi: moisture and termites.
Missouri: foundation/soil variance.
Montana: rural utilities access.
Nebraska: storms and roof wear.
Nevada: water and HVAC strain.
New Hampshire: septic/well checks.
New Jersey: municipal requirements.
New Mexico: adobe/unique materials.
New York: co-op/condo rules.
North Carolina: moisture and crawlspaces.
North Dakota: winter build schedule.
Ohio: older housing stock.
Oklahoma: storms and roofing.
Oregon: permitting lead times.
Pennsylvania: older systems diligence.
Rhode Island: coastal exposure.
South Carolina: humidity and termites.
South Dakota: winter impacts.
Tennessee: hillside drainage.
Texas: foundation movement risk.
Utah: radon/soil considerations.
Vermont: heating and weatherization.
Virginia: older septic regions.
Washington: moisture/mold control.
West Virginia: slope stability.
Wisconsin: freeze/thaw durability.
Wyoming: rural contractor availability.

Rehab execution diligence: permits, draws, and quality control

Permitting and inspection cadence

Permits protect resale and insurance, and missing permits often show up at the worst time-when a buyer’s inspection, appraisal, or insurance underwriting starts asking questions. Work that commonly triggers renovation permits includes structural changes, electrical service upgrades, plumbing relocation, HVAC replacements, and additions or conversions. The practical move is to schedule the permit and inspection cadence into the project calendar from day one. Inspections shouldn’t be treated as interruptions; they’re milestones. When inspections are planned, crews don’t sit idle, and timelines stay closer to reality.

Contractor controls that prevent overruns

Payment structure and documentation reduce conflict and keep schedules real. A few simple controls prevent most “it got out of hand” projects:

Milestone-based draw schedule tied to completed work
Written change order process (scope, price, time impact, sign-off)
Weekly site check cadence with notes, even if brief
Photo documentation for progress and hidden work before close-up
Material lead-time list to avoid last-minute substitutions
Collecting lien releases or waivers as appropriate with each draw

These steps aren’t about distrust. They’re about clarity. Clarity keeps budgets intact.

Exit diligence: making sure the flip is sellable

Resale readiness checklist

The best flip is the one buyers can finance, insure, and close on without drama. Resale diligence is the quiet work that makes the exit smooth:

Confirm permits are closed and inspections passed
Keep receipts and a clear spec list for materials and systems
Prep appraisal support: before/after photos and a scope summary
Ensure functional systems: HVAC performance, plumbing pressure, electrical safety
Address safety items that inspectors always flag
Align finishes to neighborhood comps, not personal taste

When the product fits the neighborhood and the file is clean, negotiations stay calmer.

Disclosure and documentation discipline

Clear documentation reduces post-contract renegotiation and protects reputation. Known material facts should be disclosed as required, and a simple renovation summary should be available: what was changed, by whom, and when. A clean file-permits, invoices, warranties, and inspection results-keeps the transaction from turning into a trust test in the final week.

Templates and workflow: how professionals keep diligence repeatable

The flip due diligence tracker

A due diligence tracker turns a flip checklist template into execution across multiple deals and states. A practical project dashboard can be organized into tabs or sections such as:

Lead intake (address, seller type, photos, initial notes)
Underwriting (ARV range, rehab range, holding costs, exit plan)
Inspections (scheduled, completed, issues, follow-ups)
Title/closing (vesting, liens, access, timeline)
Permits (triggers, submissions, inspection dates)
Contractor bids (trade bids, allowances, change orders)
Budget vs actual (by trade, by week)
Timeline (milestones, blockers)
Exit prep (documentation, staging, listing checklist)

Status labels keep it readable: unverified, in progress, verified, blocked, decision needed.

Conclusion: in a low-margin era, diligence is the edge

The next step: run the checklist before the offer, not after

In a lower-margin market, the edge comes from process. A standardized 15-minute screen keeps time and money from leaking into weak deals, while state-aware verification prevents the “rule surprise” that stalls projects midstream. The next step is straightforward: set up the tracker, make the quick screen a habit, and build a local verification routine for each state and county before committing capital. Typical ROI metrics are before expenses-so conservatism wins, again and again.

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