Fix and Flip Profit Calculator: How to Know If a Flip Will Make Money

The Fix and Flip Profit Formula

Every successful flipper runs this calculation before making an offer:

Profit = ARV - Purchase Price - Rehab Costs - Holding Costs - Selling Costs

If the result isn't at least $25,000-$30,000 on a standard flip (or 15%+ ROI), most experienced investors pass. The margins need to account for surprises, market shifts, and the inevitable "oh no" moments during rehab.

Breaking Down Each Cost

After Repair Value (ARV)

Your ARV estimate is the most important number in the entire analysis. Get it wrong and nothing else matters.

How to find it:

• Pull 3-5 comparable sales within 0.5 miles, sold in last 90 days
• Match property type, bed/bath count, and square footage (within 20%)
• Adjust for location, lot size, and finish quality differences
• Use the median, not the highest comp

Purchase Price

For flips to work, you need to buy at a discount. The 70% Rule is the industry standard:

Maximum Purchase = ARV x 0.70 - Rehab Costs

This gives you a 30% spread to cover holding costs, selling costs, and profit.

Rehab Costs

The rehab budget breaks into two categories:

Cosmetic Rehab ($15-25/sqft): Paint, flooring, fixtures, landscaping, light kitchen/bath updates. Timeline: 4-8 weeks.

Full Rehab ($40-75/sqft): Structural work, new roof, HVAC replacement, plumbing/electrical, full kitchen & bath remodel. Timeline: 3-6 months.

Detailed breakdown:

Always add 10-15% contingency. The question isn't whether something unexpected will happen -- it's what.

Holding Costs

These are the costs you pay every month while the property is being rehabbed and listed:

• Mortgage/Hard money interest: Typically 10-14% annual rate
• Insurance: $100-200/month
• Utilities: $150-300/month
• Property taxes: Varies by location
• HOA (if applicable): Varies

For a $150,000 purchase with hard money at 12%: that's $1,500/month in interest alone. A 5-month project = $7,500 in interest.

Selling Costs

• Agent commission: 5-6% of sale price
• Closing costs: 1-2% of sale price
• Staging: $1,500-3,000
• Buyer concessions: 0-3% (market dependent)

On a $250,000 sale: approximately $15,000-$20,000 in selling costs.

Real Flip Example

Property: 4BR/2BA, 1,800 sqft ranch

This deal passes the test. The $39,800 profit provides enough margin for surprises while still delivering a solid return.

Let's Check the 70% Rule:

Max Purchase = $280,000 x 0.70 - $45,000 = $151,000

We're buying at $165,000, which is above the 70% rule target. This means slightly thinner margins, but the deal still works because:

• ARV is well-supported by comps
• Rehab scope is mostly cosmetic
• Market has low DOM (days on market)

Experienced flippers often go to 75% in strong markets where properties sell fast.

Red Flags to Walk Away

Pass on any flip where:

• Profit margin is under $20,000 -- Not enough buffer for surprises
• Rehab timeline exceeds 6 months -- Holding costs eat your profit
• ARV relies on one outlier comp -- You need 3+ to validate
• Foundation, mold, or environmental issues -- Costs are unpredictable
• Market DOM is 60+ days -- You'll hold longer than planned
• Zoning or permitting issues -- Delays are expensive

The Speed Advantage

Competitive markets reward speed. The investor who can analyze a deal in 5 minutes and make an offer the same day wins over the investor who takes a week to "run the numbers."

What a fast analysis workflow looks like:

1. Get a lead (agent MLS alert, driving for dollars, wholesaler)
2. Pull comps instantly (auto-comp search by address)
3. Input purchase price and rehab estimate into a calculator
4. See profit, ROI, and holding costs immediately
5. Make an offer or pass -- within the hour

This is where tools like REI AI Toolkit's Fix & Flip Analyzer save hours per week. Input your numbers, get a full profit projection with holding costs and selling costs calculated automatically.

Key Takeaways

1. Always start with a conservative ARV based on 3-5 solid comps
2. The 70% Rule is your guardrail: ARV x 0.70 - Rehab = Max Purchase
3. Budget 10-15% contingency on every rehab -- no exceptions
4. Holding costs are the silent profit killer -- shorter timelines = more profit
5. Pass on thin deals. The market will always bring more opportunities.
6. Speed of analysis = competitive advantage. Automate where you can.