House Flip Calculator
Free house flip profit calculator.
House Flip Calculator
Profit, ROI & 70% Rule
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Estimated Net Profit
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House Flip Calculator: ARV, Renovation Budget & Cash-on-Cash ROI
Fix-and-flip real estate investing demands precise quantitative underwriting. Between short-term hard money financing points, carrying costs, unexpected structural repairs, and transaction fees on both the acquisition and disposition legs, even an aesthetically stunning renovation can result in financial loss if underwriting margins are too thin.
Worked Example: Full Flip Pro Forma Breakdown
The table below models a real-world single-family cosmetic and systems rehabilitation completed over a 6-month holding cycle.
| Financial Component | Itemized Cost / Value | Underwriting Calculation Notes |
|---|---|---|
| Target After Repair Value (ARV) | $425,000 | Based on 3 renovated neighborhood comps sold within 90 days. |
| Purchase Price | $245,000 | Satisfies the 70% rule: ($425k × 0.70) − $52.5k = $245,000. |
| Acquisition Closing Costs | $6,500 | Title search, lender fees, legal, recording. |
| Rehabilitation & Materials | $45,000 | Kitchen, two baths, flooring, paint, roof patch. |
| 15% Rehab Contingency Reserve | $6,750 | Buffers plumbing and electrical surprises. |
| Financing Costs (Hard Money 11%, 2 Pts) | $17,400 | $5,000 origination points + $12,400 interest (6 months). |
| Holding Costs (6 Months) | $4,800 | Property taxes ($2,400), insurance ($1,200), utilities ($1,200). |
| Selling Costs & Commissions (8%) | $34,000 | 5% Realtor commissions + 3% closing/transfer fees. |
| Total Project Cost Outlay | $359,450 | Sum of acquisition, rehab, financing, holding, and disposition. |
| Net Cash Profit | $65,550 | ARV ($425,000) − Total Costs ($359,450). |
| Total Cash Invested (Out of Pocket) | $95,000 | Down payment + points + out-of-pocket holding. |
| Cash-on-Cash (CoC) ROI | 69.0% (Annualized: 138%) | Net Profit ($65,550) ÷ Cash Invested ($95,000). |
Three Critical Rules for Avoiding Flipping Pitfalls
- Never Over-Improve for the Neighborhood: Installing $15,000 commercial-grade kitchen ranges in a starter-home neighborhood will not return dollar-for-dollar equity. Tailor finishes strictly to median buyer expectations within a half-mile radius.
- Minimize Holding Time Aggressively: Every additional month a property sits under renovation or on the market bleeds interest, utilities, and tax expenses. Every 30-day delay on a $300,000 hard money loan erodes approximately $2,750 to $3,200 in net profit.
- Establish Clear Staging and Photography Budgets: Professionally staged vacant homes sell 73% faster and for 3% to 5% more than empty properties, frequently generating a 400% return on the $2,000 staging expenditure.
How to Use This Calculator
Formula:
Net Flip Profit = ARV − (Purchase Price + Renovation Costs + Financing/Holding Costs + Buying/Selling Closing Costs) | 70% Rule: Maximum Purchase Price = (ARV × 0.70) − Estimated Repair Costs
- Enter the anticipated After Repair Value (ARV) supported by recent verified comps of fully renovated homes within 0.5 miles.
- Input the contract purchase price and estimated buying closing costs (typically 2% to 4% of purchase).
- Specify the detailed renovation and rehabilitation budget, including materials, labor, municipal permits, and a mandatory 15% contingency reserve.
- Set project holding duration (e.g., 6 months) and input ongoing carrying costs: hard money loan points/interest, property taxes, builder's risk insurance, and utilities.
- Inspect your estimated net dollar profit, total return on investment (ROI), Cash-on-Cash return, and maximum purchase price under the real estate 70% Rule.
Frequently Asked Questions
The 70% rule is a foundational real estate underwriting guideline that dictates the maximum purchase price an investor should pay for a distressed property. The formula states: Maximum Purchase Price = (After Repair Value × 0.70) − Repair Costs. The 30% margin is designed to absorb financing interest, title fees, transfer taxes, Realtor commissions (5%-6%), holding costs, and a target 10% to 15% net profit margin.
Hard money loans are short-term, asset-based financing tools provided by private lenders rather than traditional banks. They typically fund 70% to 90% of the purchase price and 100% of the renovation budget via escrow draws. Interest rates range from 9.5% to 13.5% with 1 to 3 origination points, requiring interest-only monthly payments over a 6 to 12-month term.
Selling costs typically total 7% to 10% of the final sales price (ARV). This includes listing and buyer agent commissions (5% to 6%), transfer taxes, title insurance, attorney fees, recording fees, and potential buyer closing cost concessions (1% to 3%). Failing to budget for selling transaction costs is the leading cause of investor losses.
Because most flips are purchased, renovated, and sold in under 365 days, profits do not qualify for preferential long-term capital gains tax rates. Furthermore, if you flip homes regularly, the IRS classifies you as a 'dealer' rather than an investor. Dealer profits are treated as active ordinary income subject to standard federal and state income tax rates (up to 37%) plus the 15.3% self-employment tax (FICA).
Distressed properties frequently conceal latent defects behind drywall—such as galvanized plumbing leaks, outdated knob-and-tube electrical wiring, termite damage, or foundation settling. Professional flippers maintain a mandatory 15% to 20% contingency line item above contractor bids to prevent unexpected budget overruns from wiping out profitability.
Most professional house flippers target a minimum net profit of $30,000 to $40,000 per deal or a Cash-on-Cash (CoC) return of 20% to 30% on total out-of-pocket capital invested (down payment, closing costs, points, and carrying cash). Lower returns fail to adequately compensate for the execution risk and labor involved.