Fix-and-Flip ROI Calculator
Project the total profit and ROI on a house flip, accounting for purchase price, rehab, holding costs, financing, and selling expenses.
The 70% Rule Explained
The classic fix-and-flip screening rule: Max Purchase Price = (ARV × 0.70) − Rehab Cost. The 30% buffer covers selling costs (~8%), holding costs (~5-7%), buying closing costs (~2%), and reasonable profit (~13-15%). If you can't acquire at or below this price, the deal mathematically can't produce target returns even with perfect execution.
The 70% rule is a starting filter — not a final analyzer. Hot markets with rapid appreciation sometimes justify 75% or 80% rule. Cold or unfamiliar markets warrant 65%. Always pair the 70% rule with detailed line-item budgeting like this calculator. Source: BiggerPockets community standards, Real Estate Investar 2026 benchmarks. Last updated: May 2026.
Holding Cost Reality Check
The single biggest mistake new flippers make: underestimating holding cost. A typical flip carries: hard-money loan interest at $1,800-$2,500/month, property taxes ($150-$400/mo), insurance ($150-$250/mo), utilities ($100-$200/mo), HOA if applicable ($50-$300/mo). Total: $2,250-$3,650/month for a typical $200K-$400K flip.
If your flip plan says 4 months but it takes 7 months (rehab delays + market days on market), that's an extra $7,000-$11,000 in holding cost — easily wiping out half the projected profit. Always model 1.5× your expected timeline.
Where Flips Most Often Lose Money
(1) Rehab budget overruns — average flip exceeds initial budget by 22% (J Scott data). Pad your budget 20% before financing. (2) ARV optimism — comparable sales must be within 0.5 miles, sold in last 90 days, similar sq ft and finish level. (3) Market timing — rising-rate environments cool buyer demand 30-50% within 6 months. (4) Hard money cost — 10-13% interest plus 2-4 points adds up fast. (5) Capital gains tax — short-term gains (under 1 year) are taxed at ordinary income rates 22-37%. Source: BiggerPockets 2025-2026 flipper survey.
When BRRRR Beats Flip
The Buy-Rehab-Rent-Refinance-Repeat strategy delivers similar gross profit potential to flips but defers capital gains tax (you never sell) and produces ongoing cash flow. BRRRR makes sense when (1) the property cash flows positively at projected rent, (2) you can refinance at 75% LTV on ARV to recover most of your cash, and (3) you want passive income instead of active labor cycles. Run both analyses before locking strategy.
Frequently Asked Questions
What is the 70% rule in house flipping?
Max purchase price = ARV \u00d7 0.70 \u2212 rehab cost. The formula reserves 30% of ARV for all transaction costs and profit. Example: $300K ARV, $40K rehab \u2192 max purchase $170,000. Pay more, and the math gets uncomfortably tight even with perfect execution.
How long does a typical house flip take?
5-7 months total in 2026 markets: 30-45 days to close on purchase, 60-120 days for rehab, 30-60 days for sale and closing. New flippers often miss timeline by 30-60%. Always model holding cost on 1.5\u00d7 projected timeline for safety.
What is a realistic ROI for fix-and-flip?
Healthy flips deliver 20-35% cash-on-cash ROI per project. With 2-3 flips per year, that compounds to 50-100% annual return on flipper capital. Sub-15% per-project ROI is too thin \u2014 minor surprises wipe out profit. Source: BiggerPockets 2026 flipper income survey.
Should I use hard money or my own cash for flipping?
Most successful flippers use hard money to maximize cash-on-cash ROI and project velocity. Hard money costs 10-13% interest plus 2-4 points but lets you do 3-5 flips simultaneously with the same capital. Pure cash flippers do 1-2 flips/year for lower IRR but zero financing risk.
What are capital gains taxes on flipped houses?
Property held less than 1 year before sale = short-term capital gains, taxed as ordinary income (22-37% federal + state). Property held over 1 year = long-term gains, taxed 0%/15%/20% federal. Most flippers never reach long-term status \u2014 plan for ordinary-income tax rates. Source: IRS Section 1221.
What's the most common reason flips lose money?
Three biggest causes: (1) ARV was overestimated by $20K-$50K (bad comps), (2) Rehab budget overrun 20-40% (unexpected structural/code issues), (3) Holding period extended 50-100% (rehab delays + market days on market). All three are budgeting/scope issues, not market issues \u2014 they're under your control.