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House Flipping Calculator Guide: How to Know If a Property Is Worth Buying Before You Make an Offer

Blog › Finance · 11 min read · Published 2026-05-06

Learn the 70% rule, how to estimate ARV, and the hidden costs that turn 'profitable' flips into break-even projects.

Why Most New Flippers Lose Money

Flipping looks simple in TV form: buy ugly, fix pretty, sell expensive. In reality, ATTOM Data shows the average gross flip profit was $66,000 in 2024 — and that's before holding costs, agent commissions, capital gains and the inevitable surprise repairs. Net profit after true costs is typically half of the headline number.

The fastest way to avoid a money-losing flip is to model the whole deal before you make an offer. The House Flipping Profit Calculator does it in under a minute.

The 70% Rule, Explained

Maximum Allowable Offer (MAO) = ARV × 0.70 − Repair Costs. The 30% gap is the cushion that pays for buying costs, holding costs, selling costs and your profit. Pay above MAO and you are eating into one of those four buckets — usually your profit.

Worked example: If ARV is $320,000 and estimated repairs are $40,000, MAO = (320,000 × 0.70) − 40,000 = $184,000. Pay $200,000 and you've burned $16,000 of margin before swinging a hammer.

How to Estimate ARV (Without Fooling Yourself)

  1. Pull 3–6 sold comps within 0.5 miles, sold in the last 90 days.
  2. Match bed/bath count, square footage within 15%, and finish quality.
  3. Average price per square foot of comps, multiply by your subject square footage.
  4. Adjust for lot, view, condition and any premium/discount features.

Never use Zillow's Zestimate as ARV. It is an algorithm trained on past listings, not the post-renovation product you intend to deliver.

Costs Flippers Forget

  • Holding costs: mortgage, property tax, insurance, utilities, lawn care. Easily $1,500/month on a $200k property.
  • Selling costs: 5–6% agent commission, 1–2% closing costs, $1,000–3,000 staging. Together typically 8% of ARV.
  • Buying costs: 1–3% closing, inspection, appraisal.
  • Hard money costs: 9–14% interest plus 1–3 points up front.
  • Permits, dump fees, utility transfers — small line items that add up.

Calculating ROI vs Annualised ROI

Net profit ÷ cash invested = ROI. A $33,000 profit on $190,000 cash invested is 17%. But if the project took 6 months, your annualised ROI is 34%. Annualised ROI is the right metric to compare flips against other deals or against a passive index fund.

Red Flags Before You Buy

  1. Foundation cracks wider than a pencil.
  2. Galvanized plumbing or knob-and-tube wiring throughout.
  3. Roof under 5 years of remaining life with no permits on file.
  4. Comps with extended days-on-market — soft demand kills exit speed.
  5. HOA or municipal liens (cures eat margin and time).

Worked Full-Deal Example

Purchase $200,000, reno $40,000, 6 months hold at $1,500/mo = $9,000, buying 2% = $4,000, selling 8% on $320k ARV = $25,600. Total cost: $278,600. Profit: $41,400. ROI on $253,000 cash invested ≈ 16% (32% annualised). Run the same deal in the calculator with hard money at 12% and the profit collapses by $14,000.

Should You Use a Mortgage or Hard Money?

Hard money is fast and asset-based but expensive. Use the Mortgage Calculator to compare conventional terms when you have time and credit. For long-term holds, run the numbers in the Cap Rate Calculator and the Real Estate ROI Calculator instead.

The Final Filter

If a deal needs everything to go right to make money, walk away. Profitable flips are robust to a 10% comp slip, a 4-week timeline overrun and a 15% reno overage. Build the model, test the assumptions, and let the calculator save you from the deals you wanted to do for the wrong reasons.

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