How do I calculate profit on a house flip?

ARV (after-repair value) minus purchase price, rehab costs, holding costs (loan interest, utilities, insurance), and selling costs (agent commission, closing costs) equals profit.

What is the 70% rule for flipping houses?

Maximum purchase price = (ARV × 70%) - rehab costs. This builds in profit margin and cushion for unexpected costs. Example: $300K ARV × 70% = $210K - $50K rehab = $160K max purchase.

What is a good profit margin for flipping houses?

Target 10-15% of ARV as net profit, or $30K+ minimum per flip. Lower margins don't justify the risk and effort involved.

How long should a house flip take?

Most flips target 3-6 months from purchase to sale. Longer timelines eat into profits through holding costs. Budget 1-3 months for rehab and 1-3 months to sell.

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Transaction Costs

Buying Costs ($)

Closing costs, inspection, etc.

Selling Costs (%)

Agent commission + closing costs

Fix and Flip Guide

The 70% Rule

A quick way to determine maximum purchase price:

Max Offer = (ARV × 70%) - Repair Costs

This leaves room for 30% to cover closing costs, holding costs, and profit.

Common Rehab Cost Ranges

Light cosmetic: $10-20/sq ft (paint, flooring, fixtures)
Medium renovation: $25-50/sq ft (kitchen, baths, some structural)
Heavy gut rehab: $75-150/sq ft (full renovation, foundation work)

Typical Holding Costs

Hard money loan payments: 10-14% annual interest
Property taxes: Varies by location
Insurance: $100-300/month
Utilities: $150-400/month
HOA fees: If applicable

Profit Targets

Most successful flippers aim for:

Minimum profit: $25,000 per flip
Target ROI: 15-25% of total investment
Annualized ROI: 40%+ when accounting for holding period

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Purchase & Sale

Renovation Costs

Holding Costs