Flip Calculator: How to Estimate House Flipping Profits
A flip calculator is the single most important tool in a house flipper's decision-making process. Before you make an offer on any property, you need to know your projected profit with reasonable accuracy. The math is straightforward, but getting the inputs right separates profitable flippers from those who lose money.
This guide walks through every component of a flip calculation, with worked examples and common mistakes to avoid.
The basic flip formula
Every flip calculation reduces to this:
Profit = ARV − Purchase Price − Repair Costs − Holding Costs − Buying Closing Costs − Selling Closing Costs
Each of these variables needs a realistic estimate. Underestimating any one of them can turn a profitable flip into a loss. Let us break down each component.
After Repair Value (ARV)
ARV is what the property will sell for after renovations are complete. This is the most important number in your calculation because every other decision flows from it. Overestimate ARV and you overpay for the property. Underestimate and you pass on good deals.
To estimate ARV, pull comparable sales of recently renovated properties within a half mile that are similar in size, age, and style. You need at least three solid comps. Adjust for differences in square footage, lot size, finishes, and location. The adjusted average of your comps is your ARV estimate.
Use Deal Run's ARV calculator to pull comps automatically and see how different adjustments affect your estimate.
Repair costs
Repair costs include everything needed to bring the property to the condition reflected in your ARV estimate. This means matching the finishes, condition, and features of your comparable sales.
Break repairs into categories:
- Structural: Foundation, framing, roof ($5,000 to $30,000+)
- Systems: Electrical, plumbing, HVAC ($3,000 to $20,000)
- Exterior: Siding, windows, doors, landscaping ($2,000 to $15,000)
- Interior finishes: Kitchen, bathrooms, flooring, paint ($10,000 to $50,000)
A common mistake is estimating repairs as a single lump sum. Break it down by category and get contractor bids on the major items before making an offer. For quick estimates, use a rehab cost estimator.
Holding costs
Holding costs are the expenses you incur every month you own the property. These add up fast, especially if your renovation takes longer than planned. Use a holding cost calculator to project these accurately.
Typical monthly holding costs include:
- Loan interest (hard money at 10-14% annually)
- Property taxes (prorated monthly)
- Insurance (builder's risk or vacant property policy)
- Utilities (electric, water, gas during renovation)
- HOA fees (if applicable)
- Loan points (amortized over the hold period)
Example: On a $200,000 purchase with a hard money loan at 12% interest, your monthly interest alone is $2,000. Add $300 for taxes, $150 for insurance, and $100 for utilities, and you are at $2,550/month. A 6-month project costs $15,300 in holding costs before you sell a single thing.
Closing costs (buying and selling)
You pay closing costs twice: once when you buy and once when you sell. Buying closing costs typically run 1% to 2% of purchase price and include title insurance, escrow fees, recording fees, and any lender fees.
Selling closing costs are higher, typically 7% to 10% of the sale price. The big items are:
- Real estate agent commissions: 5% to 6%
- Title insurance and escrow: 1% to 1.5%
- Transfer taxes (varies by state): 0% to 2%
- Seller concessions (buyer closing cost credits): 0% to 3%
The 70% rule
The 70% rule is a quick screening formula used by flippers to determine maximum purchase price:
Maximum Purchase Price = ARV × 70% − Repair Costs
The 30% cushion covers holding costs, closing costs, and your profit margin. It is a rough guideline, not a precise calculation. In competitive markets, flippers sometimes work with tighter margins (75% or even 80% of ARV), but this increases risk. In buyer-friendly markets, you may be able to buy at 65% of ARV minus repairs.
Example: ARV is $300,000. Repairs estimated at $40,000.
Maximum purchase = $300,000 × 0.70 − $40,000 = $170,000.
If you can buy at $170,000 or less, the deal likely works. If the seller wants $200,000, the margin is too thin.
Putting it all together: full flip calculation
Full example:
ARV: $300,000
Purchase price: $170,000
Repairs: $40,000
Holding costs (6 months): $15,000
Buying closing costs (1.5%): $2,550
Selling closing costs (8%): $24,000
Total costs: $170,000 + $40,000 + $15,000 + $2,550 + $24,000 = $251,550
Projected profit: $300,000 − $251,550 = $48,450
ROI: $48,450 / $212,550 (cash invested) = 22.8%
Common flip calculator mistakes
- Optimistic ARV. Using the highest comp instead of the adjusted average. Be conservative.
- Underestimating repairs by 20-30%. Always add a 10-15% contingency for unknowns.
- Forgetting holding costs. A 2-month timeline overrun at $2,500/month costs $5,000.
- Ignoring selling costs. Agent commissions alone eat 5-6% of ARV.
- Not accounting for market shifts. If it takes 3 months to sell after renovation, the market may have shifted.
When to use the flip calculator
Run the calculator before making every offer. The numbers should drive your offer price, not the other way around. Start with your ARV estimate, subtract all costs, subtract your minimum acceptable profit, and the result is your maximum offer. If the seller will not accept that number, move on to the next deal. For beginners, our complete house flipping guide covers the full process from finding deals to closing.