Fix & Flip Real Estate Calculator

What is the 70% rule in house flipping and when does it apply?

The 70% rule is the foundational deal-screening heuristic in fix-and-flip investing. The formula:

Maximum Offer = ARV × 70% − Renovation Budget

For a property with an ARV of $350,000 and $65,000 in renovation costs: maximum offer = $350,000 × 0.70 − $65,000 = $180,000.

The 30% retained from ARV is designed to absorb three categories of cost: purchase and selling closing costs (roughly 3–4% each), holding costs during the renovation and marketing period (taxes, insurance, utilities, interest on any financing), and profit (typically 10–15% of ARV for investors who hold to this rule consistently).

The 70% rule is a screening filter, not a profitability guarantee. It tells you whether a deal is worth detailed analysis — not whether it will definitely be profitable. A deal that fails the 70% rule in a high-cost market might still generate acceptable returns; a deal that passes it in a slow market with extended holding times might still disappoint.

In the default scenario, the $185,000 purchase price is $5,000 above the 70% rule maximum of $180,000. Net profit is still $64,550. This is the honest version of how real deals work: the rule is a conservative guideline calibrated for typical holding costs and market conditions, and many profitable flips fall modestly outside it. The calculator shows both the 70% rule output and the actual profit analysis so you can make your own judgment about the gap.

How do I calculate the profit on a house flip? (Step-by-step)

House flip profit follows one formula: Sale Price − All Costs = Net Profit. The discipline is in accounting for all costs before any money changes hands. Here is the full calculation using the default scenario.

Step 1: Acquisition costs.

• Purchase price: $185,000
• Buying closing costs (2%): $3,700
• Subtotal: $188,700

Step 2: Renovation and holding costs.

• Renovation budget: $65,000
• Holding costs (5 months × $1,800/month): $9,000
• Subtotal: $74,000

Step 3: Total project cost.

$188,700 + $74,000 = $262,700. This is the total capital deployed before the property sells — every dollar you have at risk.

Step 4: Selling costs.

Agent commission (5%) + closing costs (1.5%) = 6.5% of the sale price. At an ARV of $350,000: $22,750.

Step 5: Net profit.

$350,000 − $262,700 − $22,750 = $64,550

Step 6: Read the derivative metrics.

• ROI on total cost: $64,550 ÷ $262,700 = 24.6% — return on all capital deployed
• Annualized ROI: (1 + 0.246)^(12÷5) − 1 = 69.4% — same deal expressed as an annual rate
• Break-even sale price: $262,700 ÷ (1 − 0.065) = $280,963 — minimum acceptable sale
• ARV buffer: ($350,000 − $280,963) ÷ $350,000 = 19.7% — ARV can fall this much before the deal breaks even

The break-even sale price is the risk metric most first-time flippers skip. If comps weaken after you've committed to the renovation, $280,963 is the floor — anything below that is a loss.

What is a good ROI for a house flip?

Benchmarks from national data on residential fix-and-flip returns:

ATTOM data consistently shows median gross flipping profits in the 25–30% range nationally, though returns vary significantly by market. Markets with fast appreciation and strong buyer demand produce higher ARVs and shorter hold times; slower markets produce lower ARVs and longer holds that eat into returns through carrying costs.

The flat ROI percentage is only half the picture. A 25% ROI in 3 months is 112% annualized. A 25% ROI in 12 months is 25% annualized. These deals are economically very different for a capital-constrained investor who needs to decide how to deploy a fixed pool of money. The annualized ROI is the metric that should drive deal comparison and capital allocation — most free flip calculators do not compute it.

At the defaults in this calculator: 24.6% flat ROI, 69.4% annualized, over a 5-month hold. That annualized figure means the same capital, if deployed in two consecutive 5-month flips with similar returns, would produce roughly a 70% annual return on invested capital — significantly better than a single 12-month deal at the same flat ROI.

What costs do first-time house flippers most often underestimate?

Four cost categories consistently surprise new investors:

Holding costs. Every month you own the property, cash leaves your account regardless of what is happening on the job site. Taxes, insurance, utilities, and interest on any hard money financing typically run $1,500–$3,000 per month depending on the market and loan structure. A renovation that runs three months over schedule is $4,500–$9,000 in unplanned holding costs before accounting for the delay in proceeds. The $1,800/month default in this calculator is conservative; it can double quickly on financed deals.

Selling costs. Agent commissions and closing costs on the sell side typically consume 6–7% of your sale price before you see a dollar. On a $350,000 sale, that is $22,750 — roughly a third of the net profit in this scenario. Many investors budget accurately for purchase costs and forget that selling is nearly as expensive.

Renovation overruns. A $65,000 rehab estimate is an estimate, not a fixed cost. Industry experience puts average renovation overruns at 15–25% above initial budgets, driven by scope creep, material costs, undiscovered structural issues, and permit delays. An investor who budgets $65,000 and spends $80,000 turns a $64,550 profit into $49,550 — still positive, but meaningfully below expectations.

ARV optimism. The single most common reason flips underperform is an inflated ARV assumption at the start. The break-even sale price output exists for this reason: if you model a $350,000 ARV and the home sells for $300,000, you need to know in advance that $280,963 is your floor — and that $300,000 is still $19,037 above it.

What is the difference between ROI and annualized ROI, and which should I use?

ROI measures the total profit as a percentage of total capital invested, regardless of how long the investment took. It answers: "how much did I make relative to what I put in?" Annualized ROI converts that flat return into what you would earn if the same rate compounded for a full year. It answers: "how does this deal compare to any other investment on an apples-to-apples basis?"

Annualized ROI = (1 + flat ROI)^(12 ÷ holding months) − 1

The two metrics diverge dramatically for short-hold projects:

Same deal. Same profit. Radically different annualized returns depending on how long the capital was deployed.

This matters for two practical decisions. First, comparing deals: a deal that offers 20% ROI in 4 months is objectively better capital utilization than a deal that offers 22% ROI in 10 months — but flat ROI comparisons will make the slower deal look superior. Second, opportunity cost: capital tied up in an 8-month flip cannot be deployed to the next deal. Every additional month of holding time has a cost that flat ROI invisibly absorbs.

Nearly every free fix-and-flip calculator shows flat ROI only. This calculator shows both — and shows how they diverge with the holding period as the lever. The annualized figure is the one to anchor your minimum acceptable return threshold, and the flat ROI is what you report to partners or lenders who expect the more familiar metric.