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Example inputs; replace them with your own. The financing cost default comes from the hard money loan calculator example. Nothing you type is sent anywhere.
Where the money goes in a flip
| Line | Example |
|---|---|
| Purchase price | $200,000 |
| Rehab | $50,000 |
| Buying closing costs | $4,000 |
| Holding costs (6 months at $900) | $5,400 |
| Selling costs (8% of $330,000) | $26,400 |
| Financing (interest, points and fees) | $18,750 |
| All-in cost | $304,550 |
| Sale price (ARV) | $330,000 |
| Profit | $25,450 |
On this example the profit is 7.7% of the sale price. With a hard money loan you put in about $48,150 of your own cash (down payment, points and fees, buying costs, holding costs and six months of interest), so the return on that cash is 52.9% over six months (105.7% annualized). Bought for cash with no loan, the profit rises to $44,200, but the return on the much larger cash outlay falls to 17.0%.
The 70% rule
A common rule of thumb among flippers: pay no more than 70% of the after-repair value, minus the rehab cost. Here that is 70% of $330,000 minus $50,000, or $181,000. The example price of $200,000 is above it, which is why the margin is thin. The rule is a quick screen, not a law of finance: it leaves room for holding, selling and financing costs that the calculator above counts exactly.
Costs people forget
- Holding costs run every month the property is not sold: taxes, insurance, utilities and loan interest.
- Selling costs include agent commissions and seller closing costs; enter them as a percent of the sale price.
- Delays. Add two or three months to your timeline and rerun the numbers; a deal that only works on schedule is a risky one.
- A rehab overrun. Try the rehab budget 10% to 20% higher and see whether the profit survives.
Financing the flip? Compare lenders on the fix and flip loans page.
How the deal works step by step: what is fix and flip?
Frequently asked questions
How do you calculate profit on a fix and flip?
Sale price minus everything you spend: purchase price, rehab, buying closing costs, holding costs, selling costs and financing costs. In the example, $330,000 minus $304,550 is $25,450.
What is the 70% rule in house flipping?
A rule of thumb: the most you should pay is 70% of the after-repair value minus the rehab cost. For a $330,000 ARV and a $50,000 rehab, that is $181,000.
What is a good ROI on a flip?
There is no fixed number. Compare the return on the cash you put in, annualized for how long your money is tied up, against the risk and against what that cash could earn elsewhere.
Should I include loan costs in a flip calculator?
Yes. Interest, points and lender fees often run to thousands of dollars and can be the difference between a profit and a loss.