House Flip Profit Calculator

A house flip's real profitability is almost always overstated by investors who compare only purchase price against sale price and ignore the financing, holding, and transaction costs that accumulate over the project's life. This calculator builds total project cost from six components: purchase price, rehab budget, buy-side closing costs, holding costs accrued monthly over the projected timeline, hard money points charged upfront on the loan, and hard money interest accrued over the holding period on the combined purchase-plus-rehab loan amount.

Hard money points are calculated as a percentage of the loan amount, typically the purchase price plus rehab budget, charged once at closing regardless of how long the loan is outstanding. Interest is calculated as an annual rate applied to that same loan amount, prorated for the number of months the loan is expected to be outstanding, which is why extending the holding period by even one or two months materially increases financing cost on a flip funded with hard money.

Selling costs are calculated as a percentage of the resale price, combining sell-side closing costs, which typically run 1% to 2% of sale price for title, escrow, and transfer taxes depending on the state, with real estate agent commission, which has historically run 5% to 6% combined for both sides but has been trending toward a more negotiated 4% to 6% range following changes in industry commission practices since 2024.

Net profit is the resale price minus total project cost minus selling costs. ROI divides net profit by total project cost, and annualized ROI scales that figure to a twelve-month basis by multiplying by twelve divided by the number of months the property was actually held, which allows fair comparison between a fast three-month flip and a slower nine-month renovation even when their raw ROI percentages look similar.

An investor purchases a dated three-bedroom ranch for $180,000 and budgets $50,000 for a full cosmetic renovation plus kitchen and bathroom updates. Buy-side closing costs run $3,500. The project is expected to take six months from purchase to closed sale, with monthly holding costs of $1,200 covering the loan's own separately-tracked costs are excluded here, property taxes, insurance, utilities, and a HOA fee where applicable.

The investor finances the $230,000 combined purchase-and-rehab amount with a hard money loan at 11% interest and 2 points. Points cost $4,600 upfront. Interest over a six-month holding period is $230,000 times 11% times 0.5, or $12,650. Holding costs over six months total $7,200. Total project cost is $180,000 plus $50,000 plus $3,500 plus $7,200 plus $4,600 plus $12,650, which equals $257,950.

The property is projected to resell at an ARV of $320,000. Selling costs at a combined 6.5% (1.5% closing plus 5% commission) equal $20,800. Net profit is $320,000 minus $257,950 minus $20,800, or $41,250. ROI is $41,250 divided by $257,950, roughly 16.0%. Annualized over the six-month hold, that becomes approximately 32.0%, a strong but realistic result for a well-executed suburban flip in a healthy resale market.

If the same project slips to nine months due to permitting delays, interest rises to $230,000 times 11% times 0.75, or $18,975, and holding costs rise to $10,800, pushing total project cost to about $267,875 and net profit down to roughly $31,325, an ROI of 11.7% but an annualized ROI of only about 15.6% once the longer timeline is factored in, illustrating how sensitive flip returns are to holding-period discipline.

The 70% rule is a quick acquisition screen used widely by flippers and wholesalers in the United States: Maximum Allowable Offer equals 70% of the after-repair value minus the estimated rehab cost. On a property with a $320,000 ARV and a $50,000 rehab budget, the rule yields a maximum offer of $320,000 times 0.70 minus $50,000, or $174,000, meaning the $180,000 purchase price in the example above is slightly above the conservative 70% threshold.

The remaining 30% of ARV is intended to cover holding costs, financing costs, selling costs, and target profit margin all at once, which is why the rule is a screening heuristic rather than a substitute for the detailed line-item calculation this calculator performs. In lower-cost markets or with cheap, fast financing, some experienced flippers use 75% instead of 70%; in high-cost or slow-moving markets, or with more expensive financing, some use 65% for extra margin.

The 70% rule tends to break down at the extremes of the price spectrum. On a $1,000,000 ARV luxury flip, 30% of ARV is $300,000, which is far more cushion than a typical high-end renovation and selling-cost structure actually requires, so applying the rule literally there would price the investor out of otherwise profitable deals. On a $100,000 ARV property in a low-cost market, 30% is only $30,000, which can be too thin once fixed minimum selling and closing costs are subtracted, since those costs do not scale down proportionally with a lower sale price.

The most reliable use of the 70% rule is as a fast initial filter to decide whether a property is worth running through the full total-project-cost calculation at all, not as the final word on whether to make an offer. Any deal that clears the 70% screen should still be run through the detailed calculator with actual financing terms, actual local closing cost percentages, and a realistic contractor bid before an offer is submitted.

Break-even resale price is the sale price at which net profit is exactly zero after backing out selling costs that scale with price, calculated as total project cost divided by one minus the combined selling-cost percentage. In the worked example, total project cost of $257,950 divided by (1 minus 0.065) equals approximately $275,882, meaning the property would need to sell for at least that amount for the investor to avoid a loss, well below the $320,000 projected ARV, leaving roughly $44,000 of margin against an ARV miss.

This margin of safety is the single most useful output for stress-testing a flip before committing capital. If the market softens and the property ultimately sells for 10% below the original ARV estimate, at $288,000 in this example, the deal still clears the $275,882 break-even point and returns a modest profit rather than a loss, which is the sign of a well-underwritten deal rather than one that only works if every assumption holds exactly.

Flippers should calculate break-even resale price against at least two ARV scenarios: the primary comparable-sales-based estimate and a downside case 10% to 15% lower, reflecting the risk that market conditions shift or that comparable sales used at acquisition do not fully materialize by the time the renovated property lists six to nine months later. A deal whose downside-case sale price still clears break-even has real underwriting margin; a deal that only breaks even at the optimistic ARV is effectively speculating on the market rather than executing a value-add renovation.

Extending the holding period erodes this margin steadily, since every additional month adds another round of holding costs and additional prorated interest without adding to the sale price, which is why experienced flippers track their actual timeline against the underwritten timeline from the day of purchase and treat schedule slippage as a direct, quantifiable threat to the deal's margin of safety rather than a minor inconvenience.

Hard money and private money remain the dominant financing tools for house flips in the United States because conventional mortgage underwriting timelines and owner-occupancy restrictions make traditional financing impractical for a property being bought, renovated, and resold within months. As of the mid-2020s, hard money rates for experienced flippers with a track record commonly range from 9% to 12% with one to two points, while less experienced borrowers or higher-risk properties can see rates of 12% to 14% with two to three points.

Underestimating rehab costs is the most common cause of a flip that underperforms its projected return, and industry data consistently shows actual renovation costs running 10% to 20% over initial contractor bids on older housing stock once unexpected structural, electrical, plumbing, or code-compliance issues surface after walls are opened. Building a contingency line of at least 10% to 15% directly into the rehab budget input, rather than treating a single contractor bid as fixed, produces a far more reliable total project cost.

Overestimating after-repair value by relying on optimistic, non-comparable sales, particularly homes with materially larger square footage, superior lots, or renovations completed to a higher finish level, is the second major driver of underperforming flips. ARV should be built from at least three closed comparable sales within roughly a half-mile and 90 days, adjusted conservatively downward for any material differences rather than upward.

Underestimating time is the third recurring mistake, since permitting delays, contractor scheduling conflicts, inspection issues, and a slower-than-expected resale market can each add weeks or months to a project that was underwritten on an optimistic three or four month timeline. Because holding costs and financing interest both accrue monthly, a flip underwritten at four months that actually takes seven months can see its interest and holding-cost line items increase by 75%, which frequently erases what looked like a comfortable profit margin at the outset.

Finally, flippers frequently ignore capital gains tax exposure when comparing a flip's return to a buy-and-hold strategy. Profit from a flip held less than a year is generally taxed as ordinary income, and profits from flipping conducted as a regular business activity can also trigger self-employment tax, both of which reduce the after-tax return well below the pre-tax ROI this calculator produces, so the figures here should be treated as a pre-tax operating analysis rather than a final after-tax return.