What is a good profit on a house flip?

Net profit of $30,000–$60,000 is typical for a medium renovation flip. Many experienced flippers target a minimum of 15–20% ROI on total cash invested, or a minimum $25,000–$35,000 net profit as a floor for the effort involved.

What is the 70% rule in house flipping?

Max Purchase Price = ARV × 70% − Rehab Costs. This formula ensures there's room for ~6% selling costs, ~4–6% holding/financing costs, and ~18–20% profit. For expensive markets or high financing costs, use 65% instead of 70%.

How much does it cost to flip a house?

Total costs vary widely by property condition and location. A typical mid-range flip might total $180,000–$250,000 in all costs (purchase, rehab, holding, selling, financing). Rehab alone ranges from $20,000 (cosmetic) to $80,000+ (full renovation). Always add 10–20% contingency to rehab budgets.

How do holding costs affect flip profit?

Holding costs (taxes, insurance, utilities, loan interest) typically run $1,000–$3,000 per month. A project that runs 2 months over schedule adds $2,000–$6,000 in costs, directly reducing profit. Hard money loan interest at 12% annualized on a $200,000 loan costs $2,000/month — timeline management directly impacts ROI.

What type of financing do house flippers use?

Hard money loans are most common for flippers — asset-based lending at 10–14% annual interest with 2–4 origination points. They close in 1–2 weeks (vs. 30–45 days for conventional loans) and can fund the purchase plus rehab. Private money from individual investors is another option. Experienced flippers with multiple deals often use lines of credit or portfolio lenders.

House Flipping Calculator: How to Calculate Profit Before You Buy

Calculate house flip profit with all costs included: purchase, rehab, holding, selling, and financing. Understand the 70% rule, what margins look like by market, and common mistakes.

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Why Flip Profit Is Determined at Purchase

The number-one rule in house flipping: profit is made when you buy, not when you sell. Every cost is predictable before closing — overpaying at acquisition is the most common reason flips fail.

Complete Flip Profit Formula

Net Profit = Sale Price − (Purchase Price + Rehab + Holding Costs + Selling Costs + Financing Costs)

1. Purchase Price — what you pay for the property, including acquisition closing costs (1–2% of purchase price).

2. Rehab Costs — labor and materials for all repairs and improvements. Add a 10–20% contingency for surprises.

3. Holding Costs — expenses while you own the property before selling: - Property taxes (prorated) - Insurance - Utilities (electricity, water, heat during construction) - Loan interest payments

4. Selling Costs: - Real estate agent commission: 5–6% of sale price (total, both sides) - Transfer taxes and title insurance: 0.5–1.5% of sale price (varies by state) - Staging and professional photography - Concessions to buyer (if any)

5. Financing Costs: - Hard money loan: typically 10–14% annualized interest rate + 2–4 points - Private money: negotiated (often 8–12% annualized) - Conventional renovation loan: 7–9% annualized (slower to close)

Worked Example: A 4-Month Flip

Cost Item	Amount
Purchase price	$165,000
Acquisition closing costs (1.5%)	$2,475
Rehab budget	$45,000
Rehab contingency (15%)	$6,750
Holding costs (4 months)	$4,200
Hard money loan (12% on $170K, 4 months)	$6,800
Loan points (2%)	$3,400
Total Costs	$233,625
After Repair Value (sale price)	$285,000
Agent commission (5.5%)	−$15,675
Transfer taxes and title	−$2,500
Net Sale Proceeds	$266,825
Net Profit	$33,200
ROI on cash invested	~20% on $90K cash used

The 70% Rule

The 70% rule is the quick filter flippers use to evaluate deals:

Maximum Purchase Price = ARV × 70% − Rehab Costs

For a property with $285,000 ARV and $50,000 in rehab: Max Price = ($285,000 × 0.70) − $50,000 = $199,500 − $50,000 = $149,500

The 70% figure leaves 30% to cover selling costs (~6%), holding/financing costs (~4–6%), and profit (~18–20%). Some investors use 65% in slow markets or when carrying high financing costs.

Typical Flip Profit Margins

Flip Type	Average Net Profit	Notes
Light cosmetic flip	$15,000–$35,000	Low risk, fast timeline
Medium renovation flip	$30,000–$60,000	3–6 months, more variables
Full gut rehab	$50,000–$100,000+	Higher risk, longer timeline
Luxury flip	$80,000–$200,000+	Expensive to fund, slower market

ROI percentages typically range 15–35% on cash invested for well-executed flips. Flips with hard money financing can generate strong ROI on less capital, but interest costs eat margins quickly if the project runs long.

Common Flip Mistakes That Kill Margins

Underestimating rehab: New flippers consistently underestimate by 20–40%. Get licensed contractor bids, not ballpark estimates.

Ignoring holding costs: Every month the property is held costs money. A 6-month rehab that becomes 9 months adds three more months of interest, taxes, and utilities.

Over-improving: Granite countertops in a $180,000 sale neighborhood don't produce $1-for-$1 return. Match finish quality to the buyer profile and neighborhood.

Wrong ARV: After Repair Value must be based on comparable properties that have actually sold (closed), not listed. Adjust for bedroom count, condition, lot size, and proximity.

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Frequently Asked Questions

What is a good profit on a house flip?: Net profit of $30,000–$60,000 is typical for a medium renovation flip. Many experienced flippers target a minimum of 15–20% ROI on total cash invested, or a minimum $25,000–$35,000 net profit as a floor for the effort involved.
What is the 70% rule in house flipping?: Max Purchase Price = ARV × 70% − Rehab Costs. This formula ensures there's room for ~6% selling costs, ~4–6% holding/financing costs, and ~18–20% profit. For expensive markets or high financing costs, use 65% instead of 70%.
How much does it cost to flip a house?: Total costs vary widely by property condition and location. A typical mid-range flip might total $180,000–$250,000 in all costs (purchase, rehab, holding, selling, financing). Rehab alone ranges from $20,000 (cosmetic) to $80,000+ (full renovation). Always add 10–20% contingency to rehab budgets.
How do holding costs affect flip profit?: Holding costs (taxes, insurance, utilities, loan interest) typically run $1,000–$3,000 per month. A project that runs 2 months over schedule adds $2,000–$6,000 in costs, directly reducing profit. Hard money loan interest at 12% annualized on a $200,000 loan costs $2,000/month — timeline management directly impacts ROI.
What type of financing do house flippers use?: Hard money loans are most common for flippers — asset-based lending at 10–14% annual interest with 2–4 origination points. They close in 1–2 weeks (vs. 30–45 days for conventional loans) and can fund the purchase plus rehab. Private money from individual investors is another option. Experienced flippers with multiple deals often use lines of credit or portfolio lenders.

Last updated 7/28/2026