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
| Field | Description | Tips |
|---|---|---|
| Purchase Price | Acquisition cost | Negotiate hard—profits are made at purchase |
| ARV | After Repair Value | Get 3+ sold comps from last 90 days |
| Square Footage | Property size | Helps calculate $/sqft metrics |
| Holding Period | Months to complete | Be 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
| Field | Description | Typical Values |
|---|---|---|
| First Mortgage | Hard money or private loan | 70-80% of purchase + rehab |
| Points | Upfront loan fee | 2-4 points |
| Interest Rate | Annual rate | 10-14% for hard money |
| Second Mortgage (optional) | HELOC or additional financing | Your cost of capital |
Holding Costs
Monthly costs during the project:
| Field | Description |
|---|---|
| Property Taxes | Monthly property tax |
| Insurance | Builder's risk/vacant policy |
| HOA | If applicable |
| Utilities | Electric, water, gas during rehab |
| Miscellaneous | Storage, 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
| Metric | Formula |
|---|---|
| Gross Profit | ARV - (Purchase + Rehab + All Costs) |
| Net Profit | Gross Profit - Interest Paid |
| Out of Pocket | Your cash required |
Return Metrics
| Metric | What It Measures | Good Target |
|---|---|---|
| ROI | Net Profit ÷ Out of Pocket | 20%+ |
| Annualized ROI | ROI adjusted to yearly rate | Compare 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)
| Input | Value |
|---|---|
| Purchase Price | $175,000 |
| ARV | $280,000 |
| Rehab Budget | $45,000 |
| Holding Period | 5 months |
| Hard Money | 80% @ 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
- Overestimating ARV - Use sold comps only, not active listings
- Underestimating rehab - Always add 15-20% contingency
- Ignoring holding costs - Every month eats into profit
- Underpricing selling costs - Commissions, taxes, and closing add up
- 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
- Know your market - Average days on market, buyer preferences
- Build your team - Reliable contractors, agents, lenders
- Create a scope of work - Detailed before closing
- Visit frequently - Catch issues early
- Stage to sell - First impressions matter
- Price right - Overpricing costs more than underpricing
Related Guides
- BRRRR Calculator - Keep properties as rentals
- Glossary - ARV, MAO, ROI explained
- Deal Pipeline - Track flip progress