Fix and Flip Profit Calculator
Analyze your real estate investment potential and ROI
How to Use the Fix and Flip Profit Calculator
Successful real estate investing requires more than just finding a "distressed property." It requires precise financial modeling. This Fix and Flip Profit Calculator helps investors estimate their bottom-line net profit by accounting for every expense associated with a flip, from the initial purchase to the final closing table.
To get started, enter your After Repair Value (ARV)—this is the most critical number, representing what the home will sell for once it is fully renovated based on local market comparables.
Understanding Flip Expenses
- Rehab Costs: This includes materials, labor, permits, and a contingency fund for unexpected repairs.
- Holding Costs: Even while the house is empty, you are paying property taxes, insurance, water, electricity, and potentially interest if you used a hard money loan.
- Selling Costs: Usually the largest expense after rehab, this includes real estate agent commissions (typically 5-6%) and seller-paid closing costs.
The 70% Rule in Real Estate
The "70% Rule" is a classic industry guideline. It suggests that an investor should pay no more than 70% of the ARV of a property, minus the cost of repairs. Our calculator automatically generates this figure to help you determine if your "Purchase Price" is a good deal.
Formula: (ARV × 0.70) − Rehab Costs = Maximum Allowable Offer (MAO).
Example Calculation
Imagine you find a property with an ARV of $300,000. Your contractor estimates rehab at $50,000. Using the 70% rule, your max offer would be ($300,000 * 0.7) – $50,000 = $160,000.
If you purchase at $160k, spend $50k on rehab, $5k on buying costs, and $5k on holding costs, your total investment is $220k. If you sell for $300k and pay 6% in selling costs ($18k), your net profit is approximately $62,000, resulting in a 28% ROI.
Key Strategies for Higher ROI
To maximize your return on investment, focus on "high-value" renovations like kitchens and bathrooms. Additionally, minimizing the Holding Period is vital; every month the property sits on the market or under construction, your profit erodes through holding costs.