Key takeaways
- Profit = after-repair value (ARV) − every cost: purchase, rehab, holding, financing, and selling.
- The 70% rule sets a safe maximum offer.
- Holding and selling costs (8–15% of ARV) are what sink first-time flips.
- An accurate ARV and a padded rehab budget protect the margin.
How flip profit works
Flip profit is the resale value minus every cost to buy, fix, hold, finance, and sell. The two costs beginners forget — holding (interest, taxes, insurance, utilities while you renovate) and selling (agent commissions and closing) — can together eat 8–15% of the sale price. The fix & flip calculator totals all of it into a net profit and ROI.
Set your offer with the 70% rule
Before you fall in love with a property, screen the price. The 70% rule says pay no more than 70% of the ARV minus repairs. The 30% you leave on the table is your cushion for costs and profit — it's why disciplined flippers walk away from "almost" deals.
Financing a flip
Most flippers use short-term hard money loans — fast, asset-based, and interest-only, but expensive (points plus 10–14% interest). The cost of that money is a real line item; price it before committing, because a long rehab quietly compounds it.
Where flips go wrong
- Inflated ARV — the #1 way to lose money. Use real comps of finished homes.
- Rehab overruns — pad the budget 10–20% for surprises behind the walls.
- Slow timelines — every extra month is more interest, taxes, and insurance.
Frequently asked questions
How much money do you need to flip a house?
Purchase + rehab, plus holding, financing (often hard money), and 7–9% selling costs. Beginners usually underestimate the cash to carry it to sale.
What is the 70% rule?
Pay no more than 70% of ARV minus repairs; the buffer covers holding, financing, and selling costs plus profit.
Is flipping profitable?
It can be, but margins are thinner than TV suggests. Profit hinges on an accurate ARV, a controlled rehab, and a fast timeline.