How to calculate the profit on a house flip
A flip makes money only if the sale price covers every cost of buying, renovating, holding, financing and selling the property, with something left over. The calculation itself is simple:
net profit = after-repair value − total project cost
The hard part is the total project cost. Simple calculators often subtract only the purchase price and rehab budget from the sale price, which leaves out thousands in closing costs, months of carrying costs, loan charges and agent commissions. A projection is only as good as the costs it includes.
Using the flipping calculator
- Enter the after-repair value (ARV), the purchase price and the rehab budget. These three are required; the rehab budget can be 0.
- Add a contingency percentage for rehab overruns, if you use one.
- Enter buying and closing costs as a percentage of the purchase price, a fixed amount, or both.
- Enter the holding period in months and your monthly holding costs.
- Enter selling costs as a percentage of the sale price, a fixed amount, or both.
- Choose Cash or Loan. For a loan, enter the loan amount, annual interest rate, points and any other loan fees.
- Optionally enter a desired profit to see the most you could pay and still reach it.
Blank optional costs count as zero, and the currency setting changes only the symbol shown. Everything is calculated in your browser.
What costs belong in a flip analysis
A complete house-flip estimate has six cost groups:
| Cost group | What it covers |
|---|---|
| Purchase price | What you pay the seller |
| Rehab | Renovation budget plus a contingency for surprises |
| Buying costs | Closing costs, title, inspections and other acquisition fees |
| Holding costs | Taxes, insurance, utilities, HOA dues and upkeep while you own it |
| Financing costs | Loan interest, points and lender fees |
| Selling costs | Agent commissions, seller closing costs, staging and concessions |
The calculator doesn't assume amounts for any of these. Costs vary widely by location, property, lender and agent, so use quotes and your own figures wherever you can.
After-repair value (ARV)
The after-repair value is the price you expect the property to sell for once the work is finished. It is the revenue side of the whole calculation, so an optimistic ARV can make a weak deal look strong. ARV usually comes from recent sales of comparable renovated homes nearby, or from an appraisal. It is worth testing a lower ARV to see how much room the deal has.
Rehab costs and contingency
The rehab budget covers materials, labor, permits and anything else needed to bring the property to its selling condition. Renovations often uncover problems that weren't visible at purchase, which is why many flippers add a contingency. The calculator adds your contingency percentage to the rehab budget and uses the total everywhere, including in the 70% rule.
Buying and closing costs
Buying costs include lender and title charges, recording fees, inspections and similar costs of acquiring the property. Some scale with the price, some are flat, so the calculator accepts a percentage of the purchase price, a fixed amount, or both, and adds them together.
Holding costs
Holding costs are what you pay to own the property while it is being renovated and sold: property taxes, insurance, utilities, HOA dues, security and routine upkeep. The calculator multiplies your monthly figure by the holding period. Include the time it takes to sell, not just the renovation: the property costs money until it closes.
Financing costs
When a flip is financed, the loan's cost is a project expense, but the loan itself is not. The calculator counts:
- Interest:
loan amount × annual rate × months ÷ 12, simple interest over the holding period - Points:
loan amount × points %, paid upfront - Other loan fees, as entered
The loan principal isn't added to the costs. It pays for part of the purchase and rehab, which are already counted once, and is repaid from the sale proceeds. Counting it again would understate the profit.
Selling costs
Selling costs usually include agent commissions and the seller's closing costs, and may include staging, repairs after inspection or concessions to the buyer. Enter them as a percentage of the sale price, a fixed amount, or both.
House flipping profit formula
Putting the costs together:
total project cost = purchase + rehab (with contingency) + buying + holding + financing + sellingnet profit = ARV − total project costprofit margin = net profit ÷ ARV
Profit margin shows how much of the sale price you keep. A thin margin leaves little room for a lower sale price or a cost overrun.
How return on cost is calculated
"ROI" is used loosely for flips, with different denominators. To avoid confusion, the calculator labels each measure by what it divides by:
- Return on cost =
net profit ÷ total project cost: profit relative to everything the project costs. - Return on cash invested (loan mode only) =
net profit ÷ (total project cost − loan amount): profit relative to the money that isn't borrowed, assuming the loan pays for project costs.
Leverage can raise the return on cash while lowering the profit, because financing costs come out of the profit.
The 70% rule
The 70% rule is a quick screening rule of thumb: maximum offer = ARV × 70% − rehab costs. The other 30% is meant to cover buying, holding, financing and selling costs plus profit. It is useful for screening many properties quickly, but it isn't a valuation standard or a guarantee: it ignores the specific costs of each deal, and the right percentage depends on the market, the property and your financing.
Maximum purchase price
The calculator also works backwards from your own costs. It finds the purchase price at which the projected profit would be exactly zero (the break-even price) and, if you enter a desired profit, the most you could pay and still reach it.
Because a percentage buying cost grows with the price, the price is solved exactly rather than estimated:
maximum price = (ARV − rehab − fixed buying costs − holding − financing − selling − desired profit) ÷ (1 + buying %)
Holding and financing costs are kept as entered, so if a lower price would also mean a smaller loan, rerun the calculation with the new loan amount.
Worked house-flip examples
These examples use one illustrative deal. The percentages are assumptions for the example, not market averages.
Cash flip
ARV $300,000, purchase price $180,000, rehab $40,000 plus a 10% contingency, buying costs of 2% of the purchase price, 6 months of holding at $1,500 a month, and selling costs of 8% of the ARV.
| Item | Amount |
|---|---|
| Purchase price | $180,000 |
| Rehab with contingency | $44,000 |
| Buying costs | $3,600 |
| Holding costs | $9,000 |
| Selling costs | $24,000 |
| Total project cost | $260,600 |
| Projected net profit | $39,400 |
The profit margin is 13.1% and the return on cost is 15.1%. The 70% rule gives a maximum offer of $166,000. With these costs, the break-even purchase price is $218,627, and the most you could pay for a $30,000 profit is $189,216.
Financed flip
The same deal with a $176,000 loan at 11% a year, 2 points and $1,500 of other loan fees. Interest for 6 months is $9,680 and points are $3,520, so financing costs total $14,700. The total project cost rises to $275,300 and the projected profit falls to $24,700, a return on cost of 9.0%. Because only $99,300 of the project cost isn't borrowed, the return on cash invested is 24.9%.
When the project takes longer
If the same financed flip takes 9 months instead of 6, holding costs rise to $13,500 and interest to $14,520. The projected profit drops to $15,360, $9,340 less, from time alone.
Projected loss
If the cash flip sells for $240,000 instead of $300,000, the total project cost is $255,800 (selling costs fall with the lower price) and the projection is a loss of $15,800. The calculator shows this as a projected loss, along with the break-even purchase price of $164,510 at that ARV.
What can change your projected profit
- The sale price. ARV is an estimate; a lower sale price reduces profit almost one-for-one.
- Rehab overruns. Hidden damage, code requirements and price changes can exceed the budget and the contingency.
- Time. Every extra month adds holding costs and, with a loan, interest.
- Financing terms. Rates, points, fees and draw schedules all change the cost of borrowing.
- Selling costs. Commissions, concessions and repairs requested by buyers.
Testing a lower ARV, a higher rehab budget and a longer holding period shows how much room a deal has before it turns into a loss.
Limitations of a house flipping estimate
This home flipping calculator projects profit from the figures you enter. It doesn't value the property, estimate renovation costs, or know local taxes, fees or lending terms. It doesn't calculate income taxes or other taxes on the profit, which depend on your situation. Interest is simple interest on the full loan amount for the whole holding period; loans that are drawn down in stages or compound monthly will differ.
The result is a planning estimate, not a forecast of what you will earn, and not investment, lending, legal or tax advice. Confirm costs with contractors, lenders, agents and tax professionals before committing to a purchase.
Methodology
Every amount is calculated at full precision and rounded to whole currency units only for display. Our methodology explains how calculators are built and tested, and the calculator disclaimer explains their limits.