How flip profit is calculated
The profit on a fix-and-flip is the after-repair value (ARV) — what the renovated home sells for — minus every cost of getting there. Those costs are the purchase price, the rehab budget, holding costs while you own it, and selling costs at the end. Selling costs are usually a percentage of the sale price, commonly around 8% once you include agent commissions, transfer taxes, title and closing fees. This calculator applies your selling-cost percentage to the ARV, adds it to your other costs, and subtracts the total from the ARV to give net profit and the return on the money you put in.
Getting the ARV right
Everything in a flip hangs on the after-repair value, so this is the number to nail down first. ARV is what the home will realistically sell for once renovated, based on recent sales of comparable, updated homes in the same neighbourhood — not asking prices, and not optimistic guesses. Overestimating ARV by even 5% can wipe out the whole profit margin, because it is the top line the entire deal subtracts from. Pull several genuine comparables, be conservative, and if the numbers only work with an aggressive ARV, treat that as a warning sign rather than a reason to proceed.
Don't forget holding and selling costs
New flippers often budget the purchase and rehab but underestimate holding and selling costs, and that gap is where profits vanish. Holding costs run every month you own the property: loan interest or hard-money points, property taxes, insurance, utilities and any HOA dues. The longer the rehab drags, the more they eat. Selling costs then take a further slice at the finish line — agent commissions alone are often 5–6%, plus closing costs and transfer taxes. Padding these estimates and adding a contingency for overruns keeps the projected profit honest and protects you if the timeline slips.
Judging the return
Profit alone doesn't tell you if a flip is worthwhile — the return on investment does. ROI here is net profit divided by total cash and cost committed. Experienced flippers often want a healthy margin, frequently targeting an ARV that leaves them buying at no more than about 70% of ARV minus rehab, precisely to protect that return against surprises. Compare the projected ROI against the time, effort and risk involved, and stress-test it with a lower ARV and a longer timeline before you commit. These tools use standard, published real-estate formulas and the figures you enter. They are estimates for planning and comparison, not financial, investment or tax advice — run your own numbers and speak to a qualified professional before you buy.
Frequently asked questions
How do you calculate fix-and-flip profit?
Profit = ARV − (purchase price + rehab + holding costs + selling costs), where selling costs = ARV × selling-cost %. This calculator also returns your ROI and total investment.
What is the 70% rule in flipping?
A common guideline: pay no more than 70% of the ARV minus rehab costs. It builds in a margin for holding costs, selling costs and surprises, protecting your profit if things don't go perfectly.
What are typical selling costs on a flip?
Often around 6–8% of the sale price, covering agent commissions (usually 5–6%), transfer taxes, title and closing fees. This calculator defaults to 8% of ARV, which you can adjust.
Why does the after-repair value matter so much?
ARV is the top line the whole deal subtracts from, so overestimating it can erase your entire margin. Base ARV on recent sales of comparable renovated homes and stay conservative.