House Flipping Calculator — Profit, ROI & the 70% Rule

How to Calculate Fix and Flip Profit

Calculating profit on a fix and flip is deceptively simple in concept but easy to get wrong in practice. The core formula is:

Net Profit = After Repair Value − (Purchase Price + Closing Costs + Rehab + Holding Costs + Financing Costs + Selling Costs)

Most beginners underestimate costs on three fronts: rehab overruns, holding costs that accumulate every month you own the property, and selling costs that typically run 7–10% of the sale price once you account for agent commissions, title, transfer taxes, and buyer concessions.

Here is a step-by-step breakdown of each cost category:

1. Purchase price — the price you pay at acquisition. This is your biggest lever: overpaying here is the most common reason flips fail.
2. Buying closing costs — typically 1–3% for cash purchases; add origination points if you are using hard money. Includes title insurance, escrow fees, attorney fees, and recording costs.
3. Rehab cost — your construction and materials budget. Add a 10–20% contingency buffer because something always surfaces once walls are open.
4. Holding costs — property taxes, insurance, utilities, and any loan interest you pay while you own the property. A five-month flip at $1,200/month adds $6,000 in holding costs alone.
5. Financing costs — hard money interest accrues monthly, plus origination points paid upfront. A $135,000 hard money loan at 12% for five months costs $6,750 in interest, and two origination points add another $2,700.
6. Selling costs — budget 7–9% of ARV. Typical split: 5–6% real estate agent commissions, 1–2% seller closing costs, plus any repair credits or price reductions that come out of inspection negotiations.

Subtract the sum of all costs from your ARV and you have your net profit. Run the numbers in this calculator before making any offer so you know the exact margin you are working with.

The 70% Rule Explained

The 70% rule is the most widely used quick-filter in fix and flip investing. The formula is:

Max Allowable Offer = (ARV × 0.70) − Estimated Rehab Cost

The 30% buffer is intended to cover all your selling costs, holding costs, financing costs, and leave a profit margin. If the market requires paying more than the max allowable offer to win the deal, the 70% rule says to walk away.

Example: ARV is $250,000 and estimated rehab is $40,000. Max allowable offer = ($250,000 × 0.70) − $40,000 = $175,000 − $40,000 = $135,000. If you can buy the house for $135,000 or less, the deal passes the 70% rule screen.

The rule is a quick screen, not a precise profit forecast. In high-cost markets where ARVs are strong and competition is fierce, many successful flippers stretch to 72–75% and still profit because their rehab costs are lean and they sell quickly. In slower markets or with higher financing costs, staying at 65–68% gives more cushion. Always run the full numbers in the calculator above after the 70% rule check passes.

This calculator's 70% Rule widget shows your max allowable offer in real time and flags a PASS or FAIL badge based on whether your entered purchase price is within that threshold.

Understanding ARV (After Repair Value)

After Repair Value is the estimated market value of the property once all renovations are complete and the home is in fully sellable condition. ARV is the single most important number in any fix and flip analysis — it drives every percentage-based calculation including the 70% rule, your selling costs, and your expected profit.

Getting ARV right requires comparable sales analysis (comps). Look for homes that:

• Sold within the last 3–6 months (6–12 months maximum in slower markets)
• Are within 0.5–1 mile of your subject property
• Have similar square footage (within 10–15%)
• Are similar in style, age, and bedroom/bathroom count
• Are in fully renovated condition comparable to your planned finish level

A conservative ARV uses the lower end of the comp range. An aggressive ARV uses the top. Most experienced flippers underwrite to a conservative ARV and let any upside be a bonus. If your deal only works at the top of the market, it probably does not work at all.

For a precise ARV estimate, consider hiring a licensed appraiser to do a "subject to completion" appraisal before you close on the purchase. Many hard money lenders require this anyway, and it costs $400–600 — money well spent before committing to a six-figure rehab.

This calculator pairs directly with our cap rate calculator if you are considering holding the property as a rental after rehab instead of selling.

Hard Money Loans for House Flipping

Most residential fix and flip deals are financed with hard money loans — short-term, asset-based loans from private lenders designed specifically for investment property acquisitions and rehabs. Understanding how they are priced is essential for accurate profit modeling.

How Hard Money is Priced

Hard money lenders typically charge two cost components:

• Interest rate — usually 10–14% annually, charged only on the outstanding loan balance. Interest accrues monthly for as long as you hold the loan, which is why speed matters.
• Origination points — upfront fees of 1–4% of the loan amount, paid at closing. Two points on a $135,000 loan = $2,700 due at settlement.

Lenders typically lend 65–90% of the purchase price (LTV) and sometimes offer rehab draws that release funds in stages as work is completed and inspected. The cash you need out of pocket is the difference between the purchase price and the loan amount, plus your closing costs and rehab budget.

Why Every Month Costs You Money

On a $135,000 hard money loan at 12% annually, you pay $1,350 in interest every single month the loan is outstanding. A three-month delay in your rehab schedule costs an extra $4,050 — directly out of your profit. This is why professional flippers are obsessive about project timelines: speed is profit. Every week saved on construction is money in your pocket.

When to Consider Conventional Financing

If you already own the property or have substantial equity elsewhere, a HELOC or portfolio loan may be cheaper than hard money. However, hard money closes fast (often 5–10 days) which is a competitive advantage when acquiring distressed properties from motivated sellers who need to close quickly.

Common Fix and Flip Mistakes to Avoid

The most profitable flippers are not the ones with the best taste in finishes — they are the ones who model deals accurately and stick to their numbers. Here are the mistakes that kill flip profits most often:

Frequently Asked Questions