House Flipping Profit Calculator 2025 – Renovation ROI & Costs

Introduction

House flipping can generate $20,000-$80,000 profit per deal—or massive losses if you miscalculate. The difference between success and failure is accurate cost estimation and understanding After Repair Value (ARV).

The House Flipping Profit Calculator helps you analyze deals before buying, accounting for purchase price, renovation costs, holding expenses, selling costs, and taxes.

The Flipping Profit Formula

Profit = ARV - (Purchase + Renovation + Holding + Selling Costs + Taxes)

Key Metrics

ARV (After Repair Value): What property sells for after renovations ROI: Profit / Total Investment × 100 ROE (Return on Equity): Profit / Cash Invested (if using leverage)

The 70% Rule

Max Purchase Price = (ARV × 0.70) - Renovation Costs

Example:

• ARV: $400,000
• Estimated Renovation: $60,000
• Max Offer: ($400k × 0.70) - $60k = $220,000

Why 70%? Leaves 30% margin for profit, selling costs, holding, and unexpected overruns.

Cost Breakdown

Purchase Costs (3-5% of price)

• Earnest money
• Inspection
• Appraisal
• Title/escrow fees
• Closing costs

Example: $200k purchase = $6k-$10k in acquisition costs

Renovation Costs

Item	Budget/Low	Mid-Range	High-End
Kitchen Remodel	$5k-$15k	$25k-$40k	$50k+
Bathroom	$3k-$8k	$12k-$20k	$25k+
Flooring (whole house)	$3k-$8k	$10k-$18k	$25k+
Paint (interior/exterior)	$2k-$5k	$6k-$10k	$15k+
HVAC Replacement	$5k-$8k	$10k-$15k	$20k+
Roof	$8k-$15k	$18k-$30k	$40k+

Contingency: Add 15-25% for unexpected issues

Holding Costs (monthly)

• Mortgage payment
• Property tax
• Insurance
• Utilities
• HOA fees

Typical: $1,500-$3,000/month

Timeline Impact: 6-month flip vs. 3-month = $4,500-$9,000 difference

Selling Costs (8-10% of ARV)

• Realtor commission: 5-6%
• Staging: $2k-$5k
• Photos/marketing: $500-$1,500
• Closing costs: 1-2%
• Concessions/repairs: 0.5-2%

Example: $400k sale = $32k-$40k selling costs

Tax Implications

Short-Term Capital Gains (hold \u003c1 year):

• Taxed as ordinary income (10-37%)
• PLUS self-employment tax (15.3%) if you flip regularly

Example:

• Profit: $50,000
• Tax Bracket: 24%
• SE Tax: 15.3%
• Total Tax: ~$19,650 (39.3%)
• Net: $30,350

Strategies:

• S-Corp election (pay yourself W-2, take remaining as dividend)
• 1031 exchange (if held as rental first)
• Hold \u003e1 year for long-term cap gains (15-20%)

Example Deal Analysis

Deal 1: Profitable Flip

Purchase: $180,000 ARV: $320,000 Renovation Budget: $50,000 Timeline: 4 months

Costs:

• Purchase: $180k
• Acquisition costs: $7k
• Renovation: $50k
• Holding (4 months): $10k
• Selling costs (9% of ARV): $28,800
• Total Investment: $275,800

Profit: $320,000 - $275,800 = $44,200 ROI: 16% (before tax) After-Tax (39.3%): $26,830

Deal 2: Marginal Deal (PASS)

Purchase: $240,000 ARV: $350,000 Renovation: $65,000

70% Rule Check: ($350k × 0.70) - $65k = $180k max offer Current Offer: $240k ❌

Even with perfect execution, profit is too thin.

Common Flipping Mistakes

Mistake 1: Overestimating ARV

Reality: Your ARV is HOPES. Actual sale price is REALITY.

Fix: Use 3+ recent comps within 0.25 miles, sold \u003c90 days, similar sq ft/beds/baths.

Mistake 2: Underestimating Renovation

Budget: $40k Actual: $63k (discovery of mold, roof leak, permit issues)

Fix: Always add 20-25% contingency. If you can't afford the buffer, don't do the deal.

Mistake 3: Slow Timeline

Every extra month = $1,500-$3,000 in holding costs + opportunity cost

Solution: Have contractor lined up, start day 1, project manage daily.

Mistake 4: Over-Improving

Don't install $80/sf quartz countertops in a neighborhood selling for $200/sf.

Match the market: Budget finishes for target buyer.

When to Walk Away

❌ Red Flags:

• Can't meet 70% rule
• Major structural issues (foundation, framing)
• Permit/zoning problems
• Area with declining values
• Can't sell in 6 months worst-case

FAQ

Q: How much profit should I target per flip? A: Minimum $25k-$30k to justify risk and effort. Ideal: $40k-$80k.

Q: Should I use cash or financing? A: Hard money loans (10-15% interest) are common. Higher interest but keeps your cash working on multiple deals.

Q: What's a realistic timeline? A: 3-6 months total (1 month buying, 2-3 months reno, 1-2 months selling). Longer = profit erosion.

Q: Do I need an LLC? A: Recommended for liability protection and professional image.

Q: Can I flip houses part-time? A: Difficult. Requires daily oversight. Better as full-time or with a partner managing construction.

Related Calculators

• Rental Property ROI: /calculator/097-rental-property-roi-calculator-2025
• Home Equity Calculator: /calculator/102-home-equity-ltv-calculator-2025
• Mortgage Calculator: /calculator/04-mortgage-calculator

Conclusion

House flipping is NOT passive income—it's an active business requiring skill, speed, and accurate analysis. Use the 70% Rule religiously, budget conservatively, and move fast.

Run every deal through the House Flipping Profit Calculator BEFORE making an offer. If the numbers don't work at 70%, walk away. There will always be another deal.