House Flipping Calculator: Profit, ROI & 70% Rule

Estimate a fix-and-flip deal's net profit, cash needed, ROI and annualized ROI, and test the price against the 70% rule maximum offer.

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Results will appear here once you enter your values.

Check financing before making an offer

Explore construction or home equity loan payments alongside your project's renovation and holding costs.

How flip profit is calculated

Net profit = after repair value − (purchase price + buying closing costs + rehab with contingency + holding costs + loan points + interest + lender fees + selling costs).

Every one of those lines is paid whether the house sells at the ARV or not, so the calculator totals them before comparing with the sale price.

Profit is shown before income tax.

Profits from buying and reselling houses as a business are usually ordinary income, and often self-employment income, rather than long-term capital gains.

Worked example

Buy at $200,000 with an after repair value of $320,000 and a $50,000 rehab plus a 10% contingency ($55,000).

A hard money lender funds 90% of the price and all of the rehab, a 230,000 loan, at 11% interest-only with 2 points and1,500 of fees.

Over six months interest is $12,650 and points are $4,600.

Add $4,000 of buying costs, $5,400 of holding costs and 20,800 of selling costs at 6.5% of ARV.

Total project cost is303,950 and profit is $16,050.

The investor funds $53,150 before the sale, for a 30.2% ROI, or about 69.5% annualized.

The price is also $26,000 over the 70% rule maximum offer of $174,000.

The 70% rule

Maximum allowable offer = ARV × 70% − estimated repairs.

The 30% haircut is meant to cover closing, holding, financing and selling costs plus a profit margin, which is why a deal that breaks the rule can still show a thin profit while leaving no room for a mistake.

In the example above, dropping the price to $170,000 passes the rule and raises profit to about $48,700.

Investors in high-priced markets sometimes use 75% or 80% because transaction costs are a smaller share of a larger ARV; adjust the rule percentage to match your market and lender.

Why annualized ROI matters

A 30% return in six months and a 30% return in eighteen months are very different deals.

Annualized ROI compounds the return over the holding period: (1 + ROI)^(12 ÷ months) − 1.

Short flips produce large annualized figures, so use it to compare deals of different lengths, not as a promise.

Every extra month adds holding costs and interest; the stress test shows what a three-month delay does to your profit.

Financing costs flippers underestimate

Hard money and fix-and-flip loans are usually interest-only, charge 1 to 3 points at closing, and add draw inspection fees each time rehab funds are released. This calculator assumes the whole loan is outstanding for the entire hold, which is conservative if rehab money is drawn over time. Also plan for resale timing: FHA rules at 24 CFR 203.37a restrict FHA financing on homes resold within 90 days of acquisition, which can shrink the buyer pool for very fast flips.

Estimating ARV and rehab honestly. Base ARV on recently sold, renovated comparables within the same neighborhood, not list prices or automated estimates. Price rehab from contractor bids for the actual scope, then keep a 10% to 20% contingency for problems hidden behind walls, such as wiring, plumbing and foundation work. Run the stress test: if a 10% lower ARV or a 20% rehab overrun wipes out the profit, the deal depends on everything going right.

Frequently Asked Questions

Common questions about the House Flipping Calculator: Profit, ROI & 70% Rule

Subtract every cost from the sale price: purchase price, buying closing costs, rehab and contingency, holding costs, loan points, interest, lender fees, and selling costs such as commissions and transfer taxes. What remains is pre-tax profit.

Sources & References

eCFR 24 CFR 203.37a: Sale of property (FHA 90-day resale restriction)

FHA restriction on insuring mortgages for homes resold within 90 days of acquisition.
→Source: Electronic Code of Federal Regulations

IRS Topic No. 409: Capital gains and losses

Capital gains rules and the distinction from property held for sale to customers.
→Source: Internal Revenue Service

Investopedia: House Flipping

House flipping costs, the 70% rule and the risks of rehab and holding-period overruns.
→Source: Investopedia

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