How Much Profit Should You Make on a Flip?
The quick answer: experienced flippers target 10% to 20% net profit as a percentage of the after-repair value (ARV). On a $300,000 ARV property, that means a net profit target of $30,000 to $60,000 after all costs are paid.
But getting to that number requires understanding every cost that sits between purchase and sale. Most new flippers overestimate their profit because they underestimate holding costs, closing costs, and cost overruns.
The full flip profit formula
Net Profit = Sale Price − Purchase Price − Rehab Costs − Holding Costs − Buying Closing Costs − Selling Closing Costs − Financing Costs
Here is a realistic example on a $300K ARV property:
| Line Item | Amount | Notes |
|---|---|---|
| Sale price (ARV) | $300,000 | Based on comparable sales |
| Purchase price | ($165,000) | 55% of ARV |
| Rehab costs | ($50,000) | Moderate rehab, $30/SF on 1,700 SF |
| Holding costs (5 months) | ($12,500) | Taxes, insurance, utilities, lawn, HOA |
| Buying closing costs | ($3,000) | Title, recording, inspection |
| Selling closing costs | ($21,000) | Agent commission (6%), title, transfer tax |
| Financing costs | ($12,000) | Hard money: 3 points + 12% interest |
| Net profit | $36,500 | 12.2% of ARV |
That $36,500 is real money, but notice how far it is from the naive calculation of $300K minus $165K minus $50K = $85K. The $48,500 difference comes from costs that new flippers often forget: holding, closing, and financing.
Profit margins by experience level
| Experience | Target Net Margin | Typical Reality |
|---|---|---|
| First flip | 15-20% | 5-10% (overruns eat the margin) |
| Experienced (5-10 flips) | 12-18% | 10-15% (better cost control) |
| Professional (20+ flips) | 10-15% | 10-15% (reliable systems, volume makes up for tighter margins) |
Professional flippers often accept thinner margins because they have reliable contractor crews, established financing relationships, and efficient processes that minimize surprises. They make their money on volume: five flips at $30K each equals $150K, which beats one flip at $50K.
The 70% rule and why it works
The 70% rule exists to protect flip profit margins:
Maximum purchase price = ARV × 70% − Repairs
That 30% gap between ARV and purchase-plus-repairs covers closing costs (buy and sell), holding costs, financing costs, and profit. It is a rough guideline, not a formula. In practice:
- Hot markets with fast sales: Some flippers accept 75% because holding costs are low (properties sell in 30 days)
- Slow markets: Flippers may demand 65% because properties sit for 90+ days, racking up holding costs
- Cash buyers: No financing costs, so they can pay slightly more
- First-time flippers: Should stick to 65-70% to build in a margin of safety for mistakes
Costs that kill flip profits
Holding costs
Every month a flip takes longer than planned costs $1,500 to $3,000 in mortgage payments, taxes, insurance, and utilities. A flip planned for 4 months that takes 7 months loses $4,500 to $9,000 in extra holding costs. This is the most common profit killer.
Use a holding cost calculator to estimate these accurately before purchasing.
Rehab overruns
Rehab projects exceed budget 70-80% of the time. The typical overrun is 10-20% on moderate rehabs and 20-30% on heavy rehabs. A $50,000 budget that becomes $60,000 just took $10,000 straight off your profit. Always build in a contingency of at least 10%.
Market shifts
If the market softens during your rehab period, your ARV drops and your profit evaporates. A 5% market decline on a $300K ARV property is $15,000 less than planned. Flips in appreciating markets are forgiving. Flips in flat or declining markets require wider margins.
Selling costs
Agent commissions alone are typically 5-6% of the sale price. On a $300K sale, that is $15,000 to $18,000. Add title insurance, transfer taxes, and buyer concessions, and selling costs reach 8-10% of the sale price. This is the single largest cost category after the purchase and rehab.
Flipping with cash vs financing
Cash flippers eliminate financing costs entirely, which adds 3-6% to their net margin. On a $300K ARV flip, that is $9,000 to $18,000 in savings compared to using hard money.
However, most flippers use leverage because it allows them to do more deals simultaneously. Two financed flips earning $30K each ($60K total) beats one cash flip earning $45K, even though the per-deal margin is lower.
What wholesalers should know about flip profits
As a wholesaler, understanding flip profits helps you price deals correctly. If your buyer expects to make $40,000 on a flip but you have left them only $20,000 in margin, they will not buy from you.
When presenting a deal to flipper buyers, show them the full picture:
- Your asking price and the contract price (or just the asking price if double closing)
- Estimated repair costs by category
- Estimated holding costs for a realistic timeline
- The ARV based on comps
- Projected net profit and ROI
Buyers who can see the math are buyers who move fast. A professional deal package that lays out the flip economics will outsell a listing with just an address and asking price every time.
Minimum profit to be worth it
Most experienced flippers will not take on a project for less than $20,000 to $25,000 in expected net profit. Below that threshold, the risk-adjusted return does not justify the time, capital, and stress involved. A $15,000 profit on a six-month project that could go sideways is not compelling when the same capital could earn more passively.
This minimum threshold matters for wholesalers because it sets a floor on the margin you need to leave in the deal. If the total spread between contract price and ARV-minus-repairs does not support at least $20,000 in buyer profit plus your assignment fee, the deal probably will not sell to a flipper.
Bottom line
Flippers target 10-20% net profit on ARV, with the national average around $30,000 to $60,000 per flip. Real profit is determined by rehab accuracy, holding time, selling costs, and financing costs. As a wholesaler, understanding these economics helps you price deals that actually sell because you are leaving your buyer enough room to profit.