Fix and Flip Calculator
House-flip analysis: the 70% rule maximum offer, acquisition, rehab with contingency, hard-money interest and points, holding and selling costs, gross and after-tax profit, return on cash, annualised return and break-even sale price.
| 70% rule maximum offer | — |
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| Acquisition | — |
| Rehab with contingency | — |
| Financing cost | — |
| Holding costs | — |
| Selling costs | — |
| Total cost | — |
| Gross profit | — |
| Cash invested and return on cash | — |
| Annualised return | — |
| Estimated tax (ordinary income + self-employment tax) | — |
| After-tax profit | — |
| Break-even sale price | — |
In short
The 70% rule says pay no more than 70% of the after-repair value minus repair costs, leaving ~30% for financing, holding, selling costs and profit. A typical flip loses 12–18% of ARV to those costs — hard-money interest at 10–13% plus points, 6–8% selling costs, taxes and utilities while you hold — and the profit is taxed as ordinary income plus 15.3% self-employment tax for regular flippers, not as capital gains.
Who this is for: US house flippers and wholesalers pricing a rehab deal.
Flip economics
- Costs beyond the rehab: buying closing costs (1–3%), hard-money interest (10–13%) and points (1–3), holding costs (taxes, insurance, utilities, lawn, security), and selling costs of 6–8% of the sale price. Together they typically consume 12–18% of ARV — which is where the 70% rule comes from.
- Return on cash is high because hard-money lenders fund 80–90% of purchase and rehab; the price is interest at roughly double a conventional rate.
- Timing: a 6-month flip is typical; 9–12 months on a bigger rehab can halve the annualised return.
- Taxes: ordinary income rates plus self-employment tax for regular flippers — budget 30–45% of profit. Holding a year for long-term rates only works for occasional investors, not dealers.
- Sensitivity: run the ARV 5% lower and the rehab 15% higher before you commit — if the deal still works, it is a deal.
See also: Rental Property Calculator.
Assumptions
- Rehab × (1 + contingency); loan = (price + rehab) × loan %; interest simple for the months held; points on the loan.
- Profit = ARV − price − buying costs − rehab − financing − holding − selling; cash = everything not funded by the loan.
- Tax = 15.3% SE on 92.35% of profit + income tax at the entered rate on profit less half the SE tax.
Worked example
70% rule maximum offer: $294,000 − $55,000 = $239,000 — the $260,000 price is $21,000 above it. Costs: $265,200 acquisition + $60,500 rehab + $20,432 financing ($14,983 interest + $5,448 points) + $4,200 holding + $29,400 selling = $379,732. Gross profit $40,268 (9.6% of ARV). Cash in: about $77,900 → 51.7% in six months (~130% annualised). Tax roughly $5,690 SE + $8,980 income = $14,670, leaving about $25,600 after tax. Break-even sale price about $376,700, 10.3% below ARV.
Frequently asked questions
What is the 70% rule in house flipping?
Pay no more than 70% of the after-repair value minus repair costs. It leaves ~30% of ARV for financing, holding, selling costs and profit.
How are flipping profits taxed?
As ordinary income (plus 15.3% self-employment tax for people who flip regularly), not capital gains — even if you hold the house over a year, dealers do not get long-term rates.
How much profit should a flip make?
Experienced flippers target 10–20% of ARV, or $25,000–50,000+ per project; under 10% leaves too little cushion for overruns.
What do hard-money loans cost?
Typically 10–13% interest plus 1–3 points, funding 80–90% of purchase and rehab for 6–12 months.
What is a good ARV estimate?
Three to five comparable sales within 0.5 miles in the last 90 days, adjusted for condition and size — and verified by your agent and lender's appraiser.
Can I live in a flip to avoid tax?
If you live in it 2 of the last 5 years the §121 exclusion applies, but that is a residence, not a flip, and most lenders require owner occupancy for that long.
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