House Flipping Calculator
Apply the 70% rule to find your maximum offer, then prove why the 30% buffer is not profit — it is consumed by financing, holding and selling costs before you see a penny.
House Flipping Calculator
Results recalculate instantly on every keystroke. Nothing you type is transmitted.
What this result does not account for
- Buying and carrying cost percentages are planning assumptions, not quotes for your market.
- Simple interest on the financing; a drawn rehab facility accrues differently.
- Excludes income tax, which treats flip profit as ordinary income in many jurisdictions.
In short: The 70% rule caps your offer at 70% of after-repair value minus repairs. On a 280,000 ARV needing 45,000 of work that is 151,000. The 84,000 buffer is not margin: costs take 37,383 of it, leaving about 46,617 of actual profit.
Formula
MAO = ARV × rule% − repairs
profit = ARV − (purchase + repairs + buying + interest + carrying + selling)
[('ARV', 'after-repair value, what it sells for finished'), ('MAO', 'maximum allowable offer under the rule'), ('buffer', 'ARV less the rule percentage — costs, then profit'), ('carrying', 'taxes, insurance and utilities during the hold')]
Worked Example
- Establish the after-repair value from closed comparable sales, not from listings.
- Budget the repairs, then add a contingency — twenty per cent is not pessimistic.
- Apply the rule percentage to find your maximum offer.
- Itemise financing, carrying and selling costs against the buffer.
- Check the margin on ARV, and re-run with a 5% lower ARV before committing.
A 280,000 ARV needing 45,000 of repairs gives a maximum offer of 151,000 at the 70% rule. The buffer is 84,000, but 3,020 of buying costs, 9,163 of interest over six months, 2,800 of taxes and insurance and 22,400 of selling costs take 37,383 of it. Actual profit is 46,617 — a 16.65% margin on ARV and a 143.79% return on the 32,420 of cash in the deal. If the ARV comes in 5% low, profit falls to 33,737.
Strengths & Limits Of This Model
Where this engine is strong
- Itemises what the 30% buffer actually pays for
- Shows the cost of a 5% ARV miss and a 20% repair overrun
- Separates margin on ARV from return on cash
Where it stops
- Assumed cost percentages
- Pre-tax
Practical Use Cases
Screening a distressed listing
Finding the ceiling offer in seconds before doing any real work.
Testing an offer already made
Checking whether the price agreed still leaves a margin.
Budgeting a contingency
Seeing what a twenty per cent repair overrun does to the profit.
Choosing a rule percentage
Comparing 65%, 70% and 75% against the same deal.
Pricing hard-money financing
Quantifying what six months of interest costs the margin.
Methodology & Editorial Standards
The maximum allowable offer applies the rule percentage to after-repair value and deducts repairs, which is the standard formulation. Profit is then computed independently from the actual offer with every cost itemised, so the page can demonstrate the gap between the buffer and the margin rather than asserting it. Buying costs are taken at two per cent of the purchase and carrying costs at two per cent of ARV annually, both common planning assumptions; financing interest is simple interest on the financed share over the hold.
Computation runs in IEEE-754 double precision at full internal precision; rounding to two decimal places occurs strictly at the display layer, so no cumulative drift enters the result. All monetary outputs use accounting presentation — grouped thousands, two decimals, negatives in parentheses — so figures can be transcribed directly into a model or working paper. Division-by-zero and out-of-domain inputs return an em-dash rather than a misleading number.
This engine was reconciled against an independent reference implementation and hand-verified for the worked example above before release. Our full five-stage review process is published on the About Us page.
Disclaimer. This calculator is provided for informational and modelling purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Verify all figures with a qualified professional before acting on them.
House Flipping Calculator — 10 Expert FAQs
10 analyst-written answers to the questions practitioners actually ask — optimised for voice and answer-engine retrieval.
What is the 70% rule?
Pay no more than seventy per cent of after-repair value minus the repair budget. On a 280,000 ARV needing 45,000 of work the ceiling is 151,000. It is a screening filter designed to reject bad deals quickly, not a profit calculation.
Is the 30% buffer my profit?
No, and assuming so is the classic beginner's error. The buffer pays buying closing costs, financing interest, taxes and insurance during the hold, and agent commission on the sale. Profit is whatever survives. On a typical six-month flip the costs take roughly forty per cent of the buffer.
Should I use 65%, 70% or 75%?
Seventy is the default for a standard flip in a balanced market. Drop to sixty-five when wholesaling, when the market is slowing, or when the property carries unusual risk. Stretch to seventy-five only in a fast market where your ARV is conservative and your repair estimate is firm.
How accurate does the ARV need to be?
Very. A five per cent error costs far more than five per cent of the profit, because it hits both the sale price and the commission calculated on it. Use closed sales of genuinely comparable finished properties, not active listings, which reflect what sellers hope for rather than what buyers paid.
What repair contingency should I carry?
Twenty per cent above the visible scope is a common and defensible allowance, more on older properties or anything involving structure, roof or systems. Nearly every renovation discovers something once the walls are open, and the budget that has no contingency simply moves the overrun into the profit line.
Does the rule work in expensive markets?
Less well. Fixed costs consume a smaller share of a large ARV, so a strict seventy per cent can be unnecessarily conservative on a high-value property, while on cheap properties it is often too generous because those same fixed costs loom larger. Adjust the percentage rather than abandoning the discipline.
How long should I budget for the hold?
Longer than the renovation. Financing interest, taxes, insurance and utilities all run until completion, and the listing period is frequently underestimated. Six months is a reasonable planning assumption for a straightforward cosmetic flip; add for permits, structural work or a slow market.
What margin should I target?
At least ten to fifteen per cent of after-repair value. That margin is not greed — it is the buffer that absorbs a repair overrun, a slow sale or a price reduction. A flip underwritten to a five per cent margin has no capacity to survive ordinary bad luck.
Is hard money worth the rate?
Often, because speed wins distressed deals and the interest is a cost of the project rather than a long-term burden. Six months at eleven per cent on a modest balance is a manageable figure. The danger is not the rate but the hold: interest accrues every month the property fails to sell.
What is the difference between this and BRRRR?
The exit. A flip sells the finished property and realises the profit as cash. BRRRR refinances instead and keeps the asset as a rental, recovering capital through the new loan rather than a sale. The acquisition arithmetic is nearly identical; the tax treatment and the risk profile are not.