House Flip Profit Calculator
Thinking about flipping a house? This calculator helps you estimate potential profits (or losses!) by factoring in key costs associated with buying, renovating, holding, and selling a property. Remember, these are estimates – always do thorough due diligence!
Understanding Your Flip Numbers
House flipping can be lucrative, but it’s all about the numbers. Here’s a quick rundown of what this calculator estimates:
- Purchase Price: What you pay for the property.
- Repair Costs: Your budget for renovations. Be realistic and add a contingency!
- After Repair Value (ARV): The estimated market value of the house *after* you’ve fixed it up. Crucial for determining potential profit.
- Holding Costs: These are expenses you incur while you own the property before selling. Think mortgage interest (if any), property taxes, insurance, utilities, HOA fees.
- Selling Costs: Typically include real estate agent commissions, seller closing costs (like title insurance, escrow fees, transfer taxes). This is often 5-10% of the sale price.
Key Metrics for Flippers:
Gross Profit: This is your ARV minus the Purchase Price and Repair Costs. It doesn’t account for holding or selling expenses yet.
Net Profit: This is the big one – what you actually pocket. It’s Gross Profit minus Total Holding Costs and Total Selling Costs.
Return on Investment (ROI): Calculated here as (Net Profit / (Purchase Price + Repair Costs)) * 100. It shows the percentage return on your initial cash outlay for acquisition and rehab.
The 70% Rule – A Quick Sanity Check
Many experienced flippers use the “70% Rule” as a guideline. It states that you should pay no more than 70% of the ARV, *minus* repair costs.
Max Offer = (ARV * 0.70) – Repair Costs
The remaining 30% is intended to cover holding costs, selling costs, financing costs, and your desired profit. This rule is a starting point, not a guarantee, and market conditions can heavily influence its applicability.
Disclaimer: This calculator is for estimation purposes only and should not be considered financial advice. Real estate investing involves risks. Consult with financial and real estate professionals before making any investment decisions.