What This Calculator Does
This page helps you estimate the net profit from a fix-and-flip project before you commit capital. It takes the after-repair value (ARV) and subtracts the major costs most flippers face: purchase price, renovation budget, carrying costs while you own the property, and expenses to sell it. The result is a rough dollar amount you could pocket—if the numbers are accurate.
Use this tool to test different scenarios, compare neighborhoods, or see how changes to your rehab budget or timeline affect your bottom line. It is not a substitute for a formal appraisal, a lender’s underwriting, or a detailed title search.
How to Use the Calculator
1. Enter the purchase price – What you expect to pay for the property.
2. Enter the rehab budget – Estimated cost to repair and update the home.
3. Enter the holding cost – Taxes, insurance, utilities, and loan interest for the time you own it.
4. Enter the selling cost – Agent commissions, closing fees, and transfer taxes.
5. Enter the ARV – Your estimate of the home’s value after repairs are complete.
The calculator subtracts the sum of all four costs from the ARV. The number that remains is your estimated gross profit. If the result is negative, the project would lose money at those numbers.
Input Definitions
| Input | What It Means | Typical Range |
|---|---|---|
| Purchase price | The amount you pay the seller. | 60%–70% of ARV for distressed homes. |
| Rehab cost | Materials and labor to make the home sellable. | $20–$50 per square foot, depending on scope. |
| Holding cost | Ongoing expenses while the property is in your name. | Property taxes, landlord insurance, utilities, and loan interest if financed. |
| Selling cost | Fees paid to transfer ownership to the buyer. | Typically 8%–10% of sale price (agent commission + closing costs). |
| ARV | After-Repair Value – what the home will sell for finished. | Based on comparable sales in the same area. |
Reading the Result
- Positive number – The project may generate a profit, assuming your estimates are correct and no unexpected costs arise.
- Zero or near-zero – You would break even. This often signals that the deal is too thin to risk capital.
- Negative number – The project would lose money. Revisit your purchase price or rehab budget.
Remember: this is a screening tool. Real-world expenses—permits, mold remediation, HOA fees, or delays—can shift the result.
Worked Example (Hypothetical)
Example: You find a property listed at $120,000. You budget $30,000 for repairs. You estimate six months of holding costs at $3,500 per month. You expect to sell the home for $220,000, and you estimate selling costs at 9% of the sale price.
| Input | Amount |
|---|---|
| Purchase price | $120,000 |
| Rehab budget | $30,000 |
| Holding cost (6 months × $3,500) | $21,000 |
| Selling cost (9% of $220,000) | $19,800 |
| ARV | $220,000 |
Calculation:
Profit = ARV − (Purchase + Rehab + Holding + Selling)
Profit = $220,000 − ($120,000 + $30,000 + $21,000 + $19,800)
Profit = $220,000 − $190,800
Profit = $29,200
In this example, the project leaves you with roughly $29,200 before taxes and financing fees. Change any input—such as a longer hold time or a higher commission—and the profit number shifts.
Common Mistakes
- Underestimating rehab costs. First-time flippers often forget drywall, permits, or unexpected structural issues. Add a 10%–15% contingency to your budget.
- Overestimating ARV. Comparing your property to foreclosed or short-sale comps can inflate the ARV. Use recent sales of fully renovated homes.
- Ignoring holding costs. If the project runs two months longer than planned, interest and utilities add up quickly.
- Forgetting selling costs. A 6% commission on a $200,000 sale is $12,000. Many beginners omit this line item.
- Using retail comps for distressed properties. The ARV should reflect what a buyer would pay for a move-in ready home, not what you could get today in “as-is” condition.
The 70% Rule (Guideline)
A common rule of thumb in wholesaling and flipping is the 70% rule: Offer price = (ARV × 0.70) − Rehab cost. This formula builds in a margin for holding and selling costs. For example, if the ARV is $250,000 and rehab is $30,000, the maximum offer would be $145,000 ($250,000 × 0.70 − $30,000). Use this as a starting point, not a rigid rule. Your actual holding and selling costs may differ.
Financing: Hard Money and Private Money
If you are not paying cash, the loan terms change the math. Hard money loans typically carry higher interest rates (often 10%–15% APR) and shorter terms (6–18 months). Points (upfront fees) of 2%–4% of the loan amount are also common.
When using financed money, your holding cost input should include:
- Monthly interest based on the loan amount.
- Origination points paid at closing.
- Any monthly servicing fees.
Factor these into the calculator before you commit. A project that looks profitable on paper can become a loss if interest accrues during delays.
Permits, Local Rules, and Taxes
- Permits. Most cities require building permits for structural, electrical, or plumbing work. Permit fees vary by municipality and can range from a few hundred to several thousand dollars. Include them in your rehab budget.
- Local rules. Zoning codes, short-term rental restrictions, and historic district guidelines can affect what you can do and how long the project takes.
- Taxes on profit. Profits from flipping are generally taxed as ordinary income, not capital gains, if you flip frequently. Consult a tax professional about your specific situation. This calculator does not estimate tax liability.
When to Talk to a Lender
Before you sign a purchase agreement, get pre-qualified or pre-approved if you plan to finance. A lender can tell you:
- How much they will lend based on the ARV or purchase price.
- The interest rate and points you qualify for.
- Whether the loan covers rehab draws or holds funds back until inspections are complete.
- The timeline for funding and repayment.
Talking to a lender early helps you avoid losing a deal to a cash buyer or discovering mid-project that you cannot afford the carry costs.
FAQ
What is a good profit margin on a fix-and-flip?
A net profit of 10%–20% of the ARV is commonly considered healthy for a single flip. Some investors target higher margins, but higher margins usually come with higher risk or more work. Your target should cover your time, risk, and opportunity cost.
What costs do first-time flippers most often forget?
- Permit fees.
- Carrying costs during delays (utilities, insurance, loan interest).
- Staging or photography costs for marketing.
- Unexpected repairs (mold, foundation issues, outdated wiring).
- Recording fees and title insurance for the sale.
How does hard-money financing change the math?
Hard money loans add monthly interest and upfront points to your costs. These expenses reduce your net profit. Always calculate the total cost of the loan (interest + points) and include it in your holding cost input.
Do I need a real estate agent to sell?
You can sell without an agent (FSBO), but most flippers use an agent to reach a broader buyer pool and handle contract paperwork. Agent commissions typically run 5%–6% of the sale price, plus closing costs.
Who pays for the owner’s title policy?
Customs vary by region. In some areas the seller pays, in others the buyer pays, or the cost is split. Check with a local title company or your real estate attorney.
Is this financial, legal, or tax advice?
No. This calculator and page are for educational purposes only. They do not constitute financial, legal, or tax advice. Consult qualified professionals before making investment decisions.