Fix and Flip Calculator — ARV, Profit, ROI & 70% Rule

How to Use the Fix and Flip Calculator

1. Enter the purchase price — what you're paying to acquire the distressed property.
2. Add your purchase closing costs (title, escrow, attorney fees, inspection — typically 1–3% of purchase price).
3. Enter the estimated rehab cost — total renovation budget including materials and labor.
4. Input the After Repair Value (ARV) — the market value of the property after all renovations are complete, based on comparable sales.
5. Set the hold period in months (time from purchase to sale closing) and your estimated monthly holding cost (taxes, insurance, utilities, HOA, loan payments on a separate residence).
6. Enter sale costs as a percentage of ARV — agent commission (typically 5–6%) plus seller closing costs (1–2%).
7. Choose Cash or Hard Money financing. If using hard money, enter loan amount (or LTV), interest rate, term, and origination points.
8. Review results: 70% Rule compliance, net profit, ROI, annualized ROI, and the color-coded Deal Verdict.

Understanding Fix and Flip Real Estate

Fix and flip is a real estate investment strategy where an investor purchases a distressed or undervalued property, renovates it to increase its market value, and then sells it for a profit — typically within 6 to 12 months. Success depends on accurately estimating the After Repair Value (ARV), controlling rehab costs, and managing holding costs while keeping the project on schedule.

After Repair Value (ARV) is the single most important number in a fix and flip. ARV is the estimated market value of the property once all repairs and renovations are complete. It is determined by analyzing comparable recently sold properties (comps) in the same neighborhood with similar size, age, features, and condition. Getting ARV right is critical — overstating ARV is the most common mistake that turns a profitable flip into a loss. Experienced investors typically build in a 5–10% safety margin below their estimated ARV.

The 70% Rule is the most widely used guideline in the fix and flip industry. It states that an investor should pay no more than 70% of the ARV minus the estimated repair costs: Max Offer = ARV × 0.70 − Rehab Cost. The remaining 30% covers all costs (closing, holding, agent commissions, financing) and leaves room for profit. If a property's purchase price is above the 70% rule maximum offer, the deal is considered risky unless you have a compelling reason to deviate — such as unusually low holding costs or a below-average commission arrangement.

Rehab / Renovation Costs include all materials and labor required to bring the property to sellable condition: roofing, HVAC, plumbing, electrical, flooring, kitchen, bathrooms, painting, landscaping, and unexpected surprises. Professional flippers maintain a contingency reserve of 10–20% on top of the estimated rehab budget for hidden issues discovered once work begins. Accurate rehab estimation comes from detailed contractor bids, not rough guesses — budget overruns are a leading cause of failed flips.

Holding Costs accumulate every month the property sits unsold. They include property taxes (prorated), insurance, utilities (electricity, water, gas), HOA fees, lawn maintenance, and any hard money loan payments. A 6-month hold at $1,500/month adds $9,000 to your cost basis — money that comes directly out of profit. Keeping the rehab on schedule and pricing competitively at listing significantly reduces holding cost exposure.

Hard Money Loans are short-term, asset-based loans commonly used by fix and flip investors who need fast closing and flexible underwriting. Unlike conventional mortgages, hard money lenders focus primarily on the property's ARV and the borrower's experience, not their income or credit score in the traditional sense. Hard money typically features higher interest rates (10–15% annually), short terms (6–18 months), and origination fees of 1–4 points (1 point = 1% of the loan amount). The total financing cost — interest paid during the hold period plus points — must be factored into every deal analysis.

ROI and Annualized ROI are the key performance metrics for evaluating flip profitability. ROI = Net Profit / Cash Invested. But since flips vary in hold time, annualized ROI normalizes returns to a 12-month basis: Annualized ROI = ROI × (12 / Hold Months). This lets you compare a 4-month flip returning 20% ROI against a 10-month flip returning 22% ROI on an apples-to-apples basis. The 4-month deal wins: 60% annualized vs. 26.4% annualized.

Frequently Asked Questions

• What is the 70% rule in real estate flipping?
  The 70% rule is a quick underwriting guideline: purchase price should be no more than 70% of ARV minus estimated rehab costs. For example, a home with an ARV of $280,000 and $40,000 in needed rehab would have a max offer of $280,000 × 0.70 − $40,000 = $156,000. The 30% cushion is intended to cover all project costs (holding, closing, commissions) and provide a profit margin. It is a rule of thumb, not a guarantee — deals in high-cost markets or with unusually low commissions may pencil at higher purchase prices.
• How do I determine ARV?
  ARV is estimated by pulling comparable sales (comps) of similar properties that have sold within the past 3–6 months in the same neighborhood. Look for homes with similar square footage (within 10–15%), bedroom/bathroom count, lot size, age, and condition after renovation. Ideally, find 3–5 comps within a half-mile radius. Your local MLS, Zillow, Redfin, or a real estate agent can help. Be conservative — experienced investors often use 90–95% of their estimated ARV to build in a margin of safety.
• What is a good ROI for a fix and flip?
  Most experienced flippers target a minimum net profit of $25,000–$30,000 per deal (to justify the risk and effort) and a minimum ROI of 15–20% on cash invested. Annualized ROI of 25–50%+ is considered solid for a well-managed flip. Deals with less than 10% margin on ARV are generally considered risky — thin margins leave little room for cost overruns or market shifts.
• What are typical hard money loan terms?
  Hard money loans for fix and flip projects typically offer: 65–75% loan-to-ARV, interest rates of 9–15% per year (depending on lender, experience, and market), loan terms of 6–18 months, origination fees of 1–4 points (paid at closing), and closing timelines as fast as 5–10 business days. Interest is usually paid monthly (interest-only), with the full principal due at maturity. Leading hard money lenders include Kiavi (formerly LendingHome), Lima One Capital, RCN Capital, and many local/regional private lenders.
• What holding costs should I budget for?
  Monthly holding costs typically include: property taxes (annual tax / 12), hazard insurance (annual premium / 12), utilities — electric, gas, water (often $150–300/month), HOA fees if applicable, lawn and exterior maintenance, and hard money loan interest payments. For a property with $5,000/year in taxes, $1,200/year in insurance, $200/month in utilities, and a $140,000 hard money loan at 12%, monthly holding costs would be approximately $417 + $100 + $200 + $1,400 = $2,117/month. Always budget for at least 10–20% more than you expect.
• What are typical sale costs when flipping?
  Selling costs typically include: buyer's agent commission (2.5–3% of sale price), listing agent commission (2.5–3%, though this is negotiable post-NAR settlement), seller's transfer taxes and recording fees (varies by state, typically 0.1–2%), and miscellaneous closing costs — title insurance, escrow fees, attorney fees (0.5–1%). In total, expect 6–8% of the sale price to go to transaction costs. Reducing commission by selling direct or negotiating lower rates can significantly improve net profit on lower-margin deals.