House flip profit estimator

House flip profit — every line item that eats your margin

House flipping looks simple: buy low, rehab, sell high. The reality is a long list of costs that first-time flippers underestimate — and that even experienced flippers sometimes forget to update in their pro forma. This calculator walks you through each cost bucket so you can underwrite a deal the way an experienced flipper does.

The 70% rule — and why it exists

The most-quoted rule in flipping is: max offer = (ARV × 70%) − rehab. The 30% buffer between all-in cost and ARV is supposed to absorb:

• Holding costs (property tax, insurance, utilities, HOA)
• Financing costs (hard-money interest and points)
• Buy-side closing costs (1–2% of purchase)
• Sell-side closing costs (1–1.5% of ARV)
• Agent commission (5–6% of ARV)
• Profit — typically 10–15% of ARV

If you pay above the 70% line, you're cutting into the profit cushion. In hot markets, many flippers accept 75–80% just to win the bid — but that leaves razor-thin margins that vanish the first time a surprise appears.

Buying the deal

The "all-in" purchase cost is more than the price on the contract:

• Purchase price — the accepted offer amount.
• Closing costs (buy-side) — typically 1–2% of price. Lower than owner-occupied because no PMI escrow and minimal prepaids.
• Lender points — hard money lenders charge 1–3 points at origination. On a $200,000 loan, that's $2,000–$6,000 up front.
• Down payment — typically 10–20% of loan-to-cost. Lenders who fund 100% of rehab usually require 20% down on purchase.

Rehab — the variable that blows up deals

Rehab budgets go over for predictable reasons:

• Walls open up and reveal unpermitted work, knob-and-tube wiring, or water damage that inspection missed
• Subflooring under old carpet or tile requires replacement
• Permits required (electrical, plumbing, HVAC) add cost and time
• Contractor pricing changes between quote and execution, especially on longer projects
• Scope creep — "as long as we're opening that wall..." is the most expensive sentence in flipping

Experienced flippers pad rehab estimates 15–25% before funding the deal. A $40,000 quote gets underwritten as a $50,000 cost. If the rehab comes in under the padded number, that's bonus profit. If it comes in at or above, the deal still pencils.

Holding costs — the silent killer

Every month a flip is on the market is a month of costs. On a $200k property:

• Property tax: $300–$500/mo depending on state
• Vacant-property insurance: $100–$250/mo (3–5× owner-occupied)
• Utilities: $100–$300/mo (power, water, gas to keep the house from freezing and to run tools)
• HOA fees: $0–$400/mo if applicable
• Hard money interest: $1,500–$2,500/mo on a $200k loan at 11%

A realistic all-in monthly holding cost is $2,000–$4,000. A flip planned at 4 months that takes 8 months eats $16,000+ of profit before the sale.

Selling — the exit friction

Selling costs are often underestimated:

• Agent commission — 5–6% of sale price, paid to buyer's and seller's agents at close.
• Seller closing costs — 1–2% of sale price. Transfer tax, title company fee, prorated taxes, attorney fee.
• Concessions — in slower markets, buyers often ask for 1–3% toward closing, effectively a price reduction.
• Home warranty — offered to buyers as closing incentive, $400–$900.
• Repairs after inspection — buyer's inspection often turns up $1,000–$5,000 of small fixes that sellers agree to.

Total exit friction is usually 7–9% of sale price — meaning your "sale price" and your "net to flipper" are very different numbers.

ROI vs annualized ROI

A common mistake: reporting a 20% ROI on a 6-month flip and comparing it to a 20%/year S&P return. The flip isannualized 40%+ because the capital was only deployed for 6 months. On the other hand, flipping requires active work, carries much higher risk, and can't be done at stock-market scale — the annualized figure overstates the comparison.