Fix & Flip Calculator Guide

The Fix & Flip calculator helps you analyze house flipping projects by calculating profit, ROI, and the maximum you should pay to hit your target returns.

What is House Flipping?

House flipping involves buying distressed properties, renovating them, and selling for a profit. Unlike rental strategies, flipping focuses on:

  • Short-term gains - 3-9 month projects typical
  • Active investment - Requires hands-on project management
  • Higher risk/reward - Bigger potential profits but more variables
  • Capital recycling - Reinvest profits into next flip

Key Input Fields

Property Details

FieldDescriptionTips
Purchase PriceAcquisition costNegotiate hard—profits are made at purchase
ARVAfter Repair ValueGet 3+ sold comps from last 90 days
Square FootageProperty sizeHelps calculate $/sqft metrics
Holding PeriodMonths to completeBe realistic—add buffer

Rehab Budget

Choose your input method:

  • Lump Sum: Quick estimate for experienced flippers
  • Tier Selection: Economy, Standard, or Luxury finish levels
  • Detailed Breakdown: Line-item costs with quantities

The calculator adds 10% contingency automatically.

Financing

FieldDescriptionTypical Values
First MortgageHard money or private loan70-80% of purchase + rehab
PointsUpfront loan fee2-4 points
Interest RateAnnual rate10-14% for hard money
Second Mortgage (optional)HELOC or additional financingYour cost of capital

Holding Costs

Monthly costs during the project:

FieldDescription
Property TaxesMonthly property tax
InsuranceBuilder's risk/vacant policy
HOAIf applicable
UtilitiesElectric, water, gas during rehab
MiscellaneousStorage, dumpsters, etc.

Transaction Costs

Buying Costs:

  • Escrow & title fees
  • Recording fees
  • Inspection costs

Selling Costs:

  • Realtor commission (5-6%)
  • Seller closing costs
  • Staging (optional)
  • Marketing costs
  • Home warranty (optional)
  • Excise/transfer tax

Understanding Results

Quick Metrics

  • 70% MAO: ARV × 70% - Rehab Cost (quick rule of thumb)
  • Spread: ARV - Purchase Price (gross margin)
  • Cost per SqFt: Total costs ÷ Square footage

Profit Analysis

MetricFormula
Gross ProfitARV - (Purchase + Rehab + All Costs)
Net ProfitGross Profit - Interest Paid
Out of PocketYour cash required

Return Metrics

MetricWhat It MeasuresGood Target
ROINet Profit ÷ Out of Pocket20%+
Annualized ROIROI adjusted to yearly rateCompare to other investments

The 70% Rule

The classic flipper's rule for maximum purchase price:

MAO = ARV × 70% - Rehab Cost

Example:

  • ARV: $300,000
  • Rehab: $50,000
  • MAO: $300,000 × 0.70 - $50,000 = $160,000

Why 70%? This leaves ~30% margin for:

  • Rehab costs (~15-20%)
  • Holding costs (~3-5%)
  • Transaction costs (~7-10%)
  • Profit (~10-15%)

Adjusting the rule:

  • Hot market: May need 75-80% (lower margins)
  • Slow market: Target 65-70% (higher risk buffer)

ROI vs Annualized ROI

These measure different things:

ROI (Return on Investment)

  • Total profit as % of cash invested
  • Doesn't account for time
  • Formula: Net Profit ÷ Out of Pocket × 100

Annualized ROI

  • ROI converted to yearly rate
  • Allows comparison across holding periods
  • Formula: (1 + ROI)^(12/months) - 1

Example:

  • Net Profit: $30,000
  • Out of Pocket: $60,000
  • Holding Period: 5 months
  • ROI: 50%
  • Annualized ROI: 176%

A 50% return in 5 months = 176% annual rate!

Deal Quality Assessment

🟢 Great Flip

  • Net profit ≥ $40,000
  • ROI ≥ 25%
  • Strong comps support ARV

🟡 Good Flip

  • Net profit $25,000-$40,000
  • ROI 15-25%
  • Solid fundamentals

🟠 Marginal Flip

  • Net profit $15,000-$25,000
  • Thin margins
  • One mishap could erase profit

🔴 Pass

  • Net profit < $15,000
  • Negative ROI
  • ARV not supported by comps

Example Analysis

Property: Distressed 3BR/2BA (1,400 sqft)

InputValue
Purchase Price$175,000
ARV$280,000
Rehab Budget$45,000
Holding Period5 months
Hard Money80% @ 12% + 3 points

Costs Breakdown:

  • Purchase: $175,000
  • Rehab: $45,000 + $4,500 contingency = $49,500
  • Financing: $5,250 points + $5,600 interest = $10,850
  • Holding (5 mo): $3,500
  • Buying Costs: $2,500
  • Selling Costs: $19,600 (7% of ARV)
  • Total Costs: $261,000

Results:

  • Gross Profit: $280,000 - $261,000 = $19,000
  • Out of Pocket: $38,500
  • ROI: 49%
  • Annualized ROI: 176%

70% Rule Check: $280,000 × 70% - $49,500 = $146,500 MAO

At $175,000 purchase, you're paying above MAO. Consider negotiating to $155,000 for better margins.

Common Flip Mistakes

  1. Overestimating ARV - Use sold comps only, not active listings
  2. Underestimating rehab - Always add 15-20% contingency
  3. Ignoring holding costs - Every month eats into profit
  4. Underpricing selling costs - Commissions, taxes, and closing add up
  5. Rushing the timeline - Delayed sales or budget overruns kill profits

Financing Options

Hard Money Loans

  • Pros: Fast approval, flexible terms
  • Cons: High interest (10-14%), points, short term
  • Best for: Quick flips, no existing capital

Private Money

  • Pros: Negotiable terms, relationship-based
  • Cons: Need network, may want equity
  • Best for: Experienced flippers with connections

HELOC (Home Equity Line)

  • Pros: Lower interest, no points
  • Cons: Ties up your home equity, approval time
  • Best for: Part of capital stack, lower cost

Cash

  • Pros: Fastest close, no interest costs
  • Cons: Capital intensive, opportunity cost
  • Best for: Maximum profit, competitive markets

Tips for Flip Success

  1. Know your market - Average days on market, buyer preferences
  2. Build your team - Reliable contractors, agents, lenders
  3. Create a scope of work - Detailed before closing
  4. Visit frequently - Catch issues early
  5. Stage to sell - First impressions matter
  6. Price right - Overpricing costs more than underpricing

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