House Flip Calculator

How to Use the House Flip Calculator

Enter the property purchase price, estimated renovation costs, and the expected After Repair Value (ARV) to see your projected profit and ROI. Adjust the holding period, monthly holding costs, and closing cost percentages to model different scenarios. The calculator also computes the maximum purchase price according to the 70% rule, a widely used guideline in real estate investing that helps ensure a profitable flip.

Accurate inputs are essential for meaningful results. Get renovation estimates from multiple contractors, research comparable sales for your ARV estimate, and include all holding costs such as mortgage payments, taxes, insurance, and utilities. Underestimating costs is the most common mistake new flippers make.

Key Concepts in House Flipping

House flipping involves purchasing a property below market value, renovating it to increase its value, and selling it for a profit. Success depends on buying at the right price, controlling renovation costs, completing the project quickly, and selling at or above your ARV estimate. The 70% rule is a quick screening tool: multiply the ARV by 0.70 and subtract renovation costs to find the maximum you should pay. This builds in a margin for profit and unexpected expenses.

Understanding All the Costs

Total costs include more than just the purchase price and renovation budget. Buyer closing costs (1-3%) cover title insurance, inspections, and loan origination fees. Seller closing costs (5-8%) include real estate agent commissions, transfer taxes, and title fees. Monthly holding costs for mortgage, taxes, insurance, and utilities accumulate for every month you own the property. Hard money loans, commonly used by flippers, carry higher interest rates (8-15%) that add significantly to holding costs.

Maximizing Your Flip Profit

Focus renovations on the kitchen, bathrooms, curb appeal, and flooring as these deliver the highest return on investment. Avoid over-improving the property beyond what comparable homes in the neighborhood support. Build a reliable team of contractors, inspectors, and real estate agents who understand the local market. Speed matters: every additional month of holding costs directly reduces your profit. Aim to complete renovation and sale within 3-6 months for optimal returns.

Frequently Asked Questions

What is the 70% rule in house flipping?

The 70% rule states that you should pay no more than 70% of the After Repair Value (ARV) minus renovation costs. For example, if a home's ARV is $300,000 and repairs cost $50,000, the maximum purchase price should be $300,000 x 0.70 - $50,000 = $160,000. This rule builds in a profit margin and a buffer for unexpected costs.

What are typical closing costs when flipping a house?

Buyer closing costs are typically 1-3% of the purchase price and include title insurance, inspections, and loan fees. Seller closing costs are higher at 5-8% of the sale price, primarily due to real estate agent commissions (typically 5-6%) plus transfer taxes and title fees.

How do I calculate ARV (After Repair Value)?

ARV is estimated by analyzing comparable recently sold properties (comps) in the same neighborhood that are similar in size, condition, and features to what your property will look like after renovation. Look at 3-5 comps that sold within the past 3-6 months and are within a half mile.

What is a good ROI for a house flip?

Most experienced flippers aim for a minimum ROI of 10-20% after all costs. Factoring in the time investment, risk, and capital tied up, many professionals will not pursue a flip unless the projected profit is at least $25,000-$50,000 or the ROI exceeds 15%.

What holding costs should I budget for when flipping?

Monthly holding costs include mortgage payments (or hard money loan payments), property taxes, insurance, utilities, HOA fees if applicable, and any loan interest. These costs accumulate every month you own the property, so faster renovations and sales directly improve profitability.