What this calculator does
A house flip's profit is what is left of the after-repair value once every cost of buying, renovating, holding and selling the property has been subtracted. Return on investment then expresses that profit against the actual cash put into the deal, which is usually far less than the property's full price once financing is involved.
The costs that get underestimated most often are holding costs and selling costs, not the rehab budget. Loan interest, property taxes, insurance and utilities accumulate every month the project runs, and agent commissions plus closing costs at sale commonly take a sizeable bite out of the after-repair value before any of it reaches the investor.
The formula
Subtract purchase price, rehab cost, holding costs and selling costs from the after-repair value to get profit. Divide that profit by the total cash actually invested in the deal, then express it as a percentage.
| Term | Meaning |
|---|---|
| After-repair value (ARV) | The estimated market value of the property once renovation is complete. |
| Rehab cost | The total cost of renovation and repair work. |
| Holding costs | Loan interest, property taxes, insurance and utilities accrued while the project is in progress. |
| Selling costs | Agent commissions, closing costs and other expenses incurred when the finished property is sold. |
| Cash invested | The investor's own cash actually put into the deal, as distinct from any amount financed. |
The inputs explained
| Field | What to enter |
|---|---|
| After-repair value (ARV) ($) | The estimated resale value of the property once fully renovated. |
| Purchase price ($) | The price paid to acquire the property before renovation. |
| Rehab / renovation cost ($) | The total budget for renovation and repair work. |
| Holding costs (loan interest, taxes, insurance, utilities) ($) | Interest, taxes, insurance and utilities for the period the property is held during the project. |
| Selling costs (agent fees, closing costs) ($) | Agent commissions and closing costs expected when the finished property sells. |
| Total cash invested ($) | The investor's own cash invested in the deal, not the full purchase price if part of it was financed. |
When to use it
Underwriting a flip before making an offer
Running an estimated ARV and cost breakdown through this calculation, before an offer is made, shows whether the likely margin justifies the risk and effort involved.
Comparing two potential projects
Two properties can have similar purchase prices but very different projected ROI once rehab scope, holding time and selling costs are factored in separately for each.
Checking sensitivity to a cost overrun
Re-running the numbers with a higher rehab or holding cost figure shows how much margin for error a project actually has before it stops being worthwhile.
Worked examples
Every figure in the tables below is produced by this page’s own calculator at build time, so the numbers and the tool always agree. Select any row to load that scenario.
How profit and ROI change as rehab cost increases at a fixed ARV
A fixed ARV and purchase price, with holding and selling costs unchanged, against a range of rehab budgets.
| Rehab cost | Profit | ROI on cash invested |
|---|---|---|
| $25,000 | $65,600.00 | 82.0% |
| $35,000 | $55,600.00 | 69.5% |
| $45,000 | $45,600.00 | 57.0% |
| $55,000 | $35,600.00 | 44.5% |
| $65,000 | $25,600.00 | 32.0% |
| $75,000 | $15,600.00 | 19.5% |
How profit and ROI change as after-repair value increases
A fixed purchase price and rehab budget, against a range of after-repair values.
| After-repair value | Profit | ROI on cash invested |
|---|---|---|
| $300,000 | $5,600.00 | 7.00% |
| $320,000 | $25,600.00 | 32.0% |
| $340,000 | $45,600.00 | 57.0% |
| $360,000 | $65,600.00 | 82.0% |
| $380,000 | $85,600.00 | 107.0% |
| $400,000 | $105,600.00 | 132.0% |
Questions
What counts as "cash invested" if the flip is financed?
Usually the down payment, plus any rehab costs, holding costs and closing costs paid out of pocket rather than covered by the loan. It is deliberately smaller than the full purchase price whenever financing is used, which is what makes leveraged ROI figures look higher than an all-cash deal.
What is a good ROI for a house flip?
Target returns vary widely by market, project size and risk tolerance, and there is no universal benchmark. Many investors weigh a target return against the time the project ties up cash and the risk of an inaccurate ARV or cost overrun, rather than a fixed percentage.
What costs get missed most often in these calculations?
Holding costs and selling costs are the two most commonly underestimated, since they depend on how long the project actually takes and on commission rates that are easy to overlook when focused on the rehab budget.
How does this differ from the BRRRR calculation?
A flip assumes the property is sold at the end for a lump-sum profit; the BRRRR calculator assumes the property is refinanced and kept as a rental, measuring an ongoing cash-on-cash return instead of a one-off profit.
For the version of this strategy where the property is refinanced and kept instead of sold, see the BRRRR return calculator.