House Flipping Calculator: Profit, ROI and 70% Rule
Is this flip worth buying? Enter the after-repair value, your purchase price and your costs to see the profit, the return on cash invested and the maximum offer from the 70% rule.
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Formula
selling costs = ARV × selling cost % ÷ 100cash invested = purchase price + rehab + holding costsprofit = ARV − cash invested − selling costsROI = profit ÷ cash invested × 100maximum offer = ARV × rule % ÷ 100 − rehab(never below zero)
The 70% rule is a rule of thumb, not a guarantee. Change the rule percentage to suit your market. Financing costs and taxes are not included unless you add them to holding costs.
Worked example
ARV 250,000, purchase 140,000, rehab 30,000, holding costs 8,000, selling costs 8%:
- Selling costs are 20,000 and cash invested is 178,000.
- Profit is 250,000 − 178,000 − 20,000 = 52,000, an ROI of 52,000 ÷ 178,000 = 29.21%.
- The 70% rule maximum offer is 0.70 × 250,000 − 30,000 = 145,000.
When to use it
Use this page to test a flip before you make an offer. It starts from the resale value and works back. If you plan to keep and rent the property instead, use the cap rate or rental property cash flow calculators. For a home you will live in and then sell, the home sale proceeds calculator is the better fit.
Second example
ARV 300,000, purchase 165,000, rehab 40,000, holding costs 10,000, selling costs 8%:
- Cash invested: 215,000; selling costs 24,000.
- Profit: 300,000 - 215,000 - 24,000 = 61,000.
- ROI: 61,000 ÷ 215,000 = 28.37%.
Common mistakes
- Estimating ARV from asking prices instead of recent sales.
- Underestimating rehab and the months you will hold the property.
- Leaving financing and taxes out of holding costs.
- Confusing the maximum offer with a price you should pay.
Frequently asked questions
What is the 70% rule in house flipping?
It is a rule of thumb: pay no more than 70% of the after-repair value minus the rehab cost. With an ARV of 250,000 and 30,000 of repairs the maximum offer is 0.70 × 250,000 − 30,000 = 145,000.
How is flip profit calculated?
Profit is the resale value minus the purchase price, rehab, holding costs and selling costs. Buying at 140,000, spending 30,000 and 8,000, and selling at 250,000 with 8% selling costs (20,000) leaves 52,000.
How is ROI calculated here?
ROI is profit divided by the cash invested (purchase, rehab and holding costs), not the resale price. 52,000 ÷ 178,000 = 29.21%. It does not account for financing, taxes or how long the project takes.
What are holding costs?
Costs of owning the property until it sells: loan interest, property tax, insurance, utilities and upkeep. They grow with every extra month on the market.
How do I calculate the maximum allowable offer for a flip?
Multiply the after-repair value by the rule percentage and subtract the rehab cost. With an ARV of 300,000 and 40,000 of repairs, the 70% rule gives 0.70 × 300,000 - 40,000 = 170,000.
Is the 70% rule realistic in expensive markets?
It is a rule of thumb, not a guarantee, and it may be too strict where prices are high and too loose where costs are. Changing the rule to 80% on the default 250,000 ARV and 30,000 of rehab gives a maximum offer of 170,000 instead of 145,000.
What is a good profit on a flip?
Investors usually want a profit that covers their time and risk, often judged against the money tied up. On a 300,000 ARV, a 165,000 purchase, 40,000 of rehab and 10,000 of holding costs, profit is 61,000 on 215,000 invested, an ROI of 28.37%.