House Flip Profit Calculator
Calculate house flip net profit from purchase price, renovation budget, holding costs, and selling expenses.
Returns ROI and after-repair value (ARV).
House flip profit calculation must account for every cost category: acquisition, renovation, holding, selling costs, and taxes. Ignoring any one of these can turn a seemingly profitable deal into a loss.
The Formula:
Net Profit = After Repair Value (ARV) − Purchase price − Renovation costs − Holding costs − Selling costs − Taxes
Cost Category Breakdown:
| Category | Typical Percentage of ARV |
|---|---|
| Purchase price (using 70% rule) | ≤ 70% of ARV |
| Renovation costs | 15–25% of ARV |
| Holding costs (6 months) | 3–5% of ARV |
| Selling costs | 6–8% of ARV |
| Target profit | 10–20% of ARV |
The 70% Rule:
Maximum purchase price = ARV × 70% − Renovation costs
Worked Example:
ARV (expected sale price): $350,000
Max purchase price = $350,000 × 70% − $55,000 renovation = $245,000 − $55,000 = $190,000
Holding costs (6 months): loan interest + insurance + taxes + utilities = $15,000
Selling costs: 6% agent commissions + 2% closing costs = $28,000
Net profit before tax: $350,000 − $190,000 − $55,000 − $15,000 − $28,000 = $62,000
Return on investment: $62,000 ÷ $260,000 = 23.8% over six months
That denominator matters, and it is where most flip arithmetic goes wrong. Divide by the $190,000 purchase price alone and you get a flattering 32.6%. But the purchase price is not what you put at risk. You also spent $55,000 on the renovation and $15,000 carrying the property, so $260,000 of cash was tied up. Return on investment means return on the money invested, and all $260,000 of it was invested.
Annualised, a 23.8% return over six months is roughly 47% a year, which is why people flip houses. It is also why they stop when a project runs twelve months instead of six.
Then the tax bill arrives
A flip held under a year is a short-term capital gain, taxed as ordinary income rather than at the long-term capital gains rate. Federal brackets put most flippers between 22% and 37%, and state income tax comes on top of that. On the example above, 30% of $62,000 is $18,600, leaving $43,400 and dropping the return to 16.7%.
The calculator takes a tax rate as an input for exactly this reason. Leave it blank and you are looking at a pre-tax number, which is the number that has talked more first-time flippers into a marginal deal than any other.
Practical Tips:
- Always add 15–20% contingency to the renovation budget. Something behind a wall will surprise you.
- The 70% rule is a starting point, not a law. Adjust it for your market, the renovation risk, and the return you need.
- Partner with a licensed contractor on the first flip. Estimation errors cost far more than the contractor does.
- Holding costs are the silent killer. At $2,500 a month, a project that slips from six months to ten quietly eats $10,000 of profit while you wait.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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