Fix & Flip Calculator

What Is a Fix and Flip?

A fix and flip is a real estate investment strategy where an investor purchases a property below market value, renovates it to increase its worth, and then sells it for a profit — typically within 6 to 12 months. Unlike rental property investing, which generates ongoing passive income, fix and flip investing is a short-term, active strategy focused on capturing equity through value-add improvements.

The strategy works best in markets where distressed properties are available at a discount, renovation costs are predictable, and buyer demand is strong enough to support a quick resale. Successful flippers combine skills in deal sourcing, construction management, and market timing to generate consistent returns.

How to Calculate Fix and Flip Profit

Fix and flip profit is calculated by subtracting all project costs from the net proceeds of the sale. The key cost categories are:

Purchase costs include the acquisition price plus buyer closing costs (typically 1–3% of the purchase price). Renovation costs include the full rehab budget plus a contingency reserve of 10–15% for unexpected expenses — a line item that many beginners skip and later regret. Holding costs are the monthly carrying costs multiplied by the number of months you own the property: property taxes, insurance, utilities, HOA fees, and loan interest. Selling costs include agent commissions (typically 5–6%) and closing costs on the sale side (transfer taxes, title, escrow).

Once you have total project costs, subtract them from your estimated net sale proceeds (ARV minus selling costs) to arrive at net profit. Divide net profit by total cash invested to get your cash-on-cash ROI.

What Is ARV (After Repair Value)?

After Repair Value (ARV) is the estimated market value of a property after all planned renovations are completed. It is the single most important number in any fix and flip analysis because it determines your potential profit, your maximum purchase price, and whether the deal makes financial sense at all.

ARV is determined by analyzing comparable sales — recently sold properties of similar size, condition, and location in the same neighborhood. For example, if three similar renovated homes in the area sold for $520,000, $540,000, and $560,000, a reasonable ARV estimate might be $540,000. Lenders, appraisers, and experienced investors all use comps to establish ARV before committing to a deal.

Overestimating ARV is one of the most common and costly mistakes in house flipping. A conservative ARV estimate with a healthy profit margin is always preferable to an optimistic one that leaves no room for error.

The 70% Rule in House Flipping

The 70% rule is a quick heuristic used by real estate investors to determine the maximum price they should pay for a fix and flip property. The formula is simple:

MAO = (ARV × 70%) − Renovation Costs

The 30% buffer is designed to cover all holding costs, financing costs, selling costs, and still leave a profit margin. For example, if a property's ARV is $400,000 and it needs $60,000 in renovations, the MAO would be ($400,000 × 70%) − $60,000 = $220,000. Paying more than $220,000 for this property would compress margins to the point where the deal may not be worth the risk.

The 70% rule is a starting point, not a hard rule. In competitive markets with lower renovation costs, investors may stretch to 75–80%. In riskier markets or on complex projects, staying at 65% or below provides additional protection. Always run a full analysis — like this calculator — to validate any deal before making an offer.

Example Fix and Flip Deal

Here is a realistic example of a fix and flip deal analysis:

This deal generates approximately $42,000 in net profit on roughly $150,000 in cash invested — a solid return for a 7-month project. The MAO for this deal would be ($440,000 × 70%) − $55,000 = $253,000, meaning the $285,000 purchase price is above the strict 70% rule threshold. However, the full analysis confirms the deal still works because of the strong ARV and manageable holding costs.