The Basic Profit Formula
At its core, house flip profit comes down to one equation:
Profit = ARV − Purchase Price − Rehab Costs − Holding Costs − Financing Costs − Agent Fees & Closing Costs
ARV (after-repair value) is the estimated resale value once renovations are done, based on comparable sales of similarly renovated homes nearby. Every other term in the formula is a cost that eats into the gap between ARV and purchase price.
House Flip Profit Calculator
Adjust ARV, purchase price, rehab budget and holding period below. Toggle the fee model and financing type to see how each choice moves your net profit.
Illustrative only. Holding costs assume ~1.4% of purchase price per month (tax, insurance, utilities). Closing costs assume roughly 1% of purchase price plus 1.5% of ARV combined for escrow, title and transfer tax. Actual figures vary by property, county and financing terms.
Where the 70% Rule Fits In
Before running the full calculation on every property, most flippers screen deals with the 70% rule: maximum purchase price should not exceed 70% of ARV minus estimated rehab costs. The calculator above updates its "70% Rule Max Offer" figure live as you move the ARV and rehab sliders — on the default $650,000 ARV with a $75,000 rehab budget, that ceiling sits near $380,000, well under the $500,000 purchase price also shown by default, which is why that combination's margin is thinner than a rule-compliant deal would produce.
The 70% rule is a filter, not a final answer — it doesn't account for financing structure, actual holding time, or which agent fee model you're using on either side of the deal. Run the full formula before committing capital.
Modeling your next flip? Use the flat fee numbers above instead of a percentage commission to get a more accurate profit estimate before you bid.
See the Investor ProgramWhat Counts as a Healthy Profit Margin
The "profit margin (% of ARV)" line in the calculator above is the number worth watching more closely than the raw dollar profit, since a $30,000 profit means something very different on a $300,000 flip than on a $900,000 one.
| Margin (% of ARV) | What It Usually Means |
|---|---|
| Under 10% | Thin. A single rehab overrun, rate move, or extra month on market can erase the profit entirely. |
| 10–15% | Workable but tight. Fine for an experienced flipper with a well-scoped rehab and short timeline. |
| 15–20% | The range most active flippers target as a baseline before committing capital. |
| 20%+ | Strong margin, often found on off-market, probate, or distressed acquisitions rather than MLS-competitive listings. |
Two inputs move that margin more than any other in the calculator: financing cost and agent fee model. Switching from cash to hard money on the default $650,000 ARV / $500,000 purchase example above cuts several points off the margin once points and interest are added in; switching from a flat fee to a traditional 2.5% commission on both sides removes another meaningful slice, since that fee model roughly doubles the combined buy-side and sell-side agent cost on a typical Southern California purchase price.
Neither of those two levers changes the property or the rehab — they're structural choices made before the first nail is pulled, which is exactly why it's worth running both toggles above before finalizing an offer, rather than after the deal has already closed.