House Flip ARV Calculator

Fix-and-flip real estate investing involves purchasing a property at a discount, renovating it to increase its market value, and selling it for a profit. The difference between what you pay (and spend) and what the property sells for determines whether the deal succeeds. Because renovation timelines extend over months and financing costs accumulate daily, accurately estimating every cost component before making an offer is essential.

The after-repair value (ARV) is the foundation of flip analysis. ARV is the estimated market price the property will command after all planned renovations are complete. It is typically determined by comparing the subject property to recently sold comparable homes in the same neighborhood with similar size, condition, and features. Accurate ARV estimation requires current, hyperlocal data — an ARV based on outdated or geographically mismatched comparables will produce unreliable results.

The 70% Rule Explained

The 70% rule is a widely used guideline in house flipping: the maximum amount an investor should pay for a property is 70% of the after-repair value minus the estimated repair costs. In formula terms: Max Purchase Price = ARV x 0.70 - Repair Costs.

The 30% margin built into the rule is intended to cover selling costs (agent commissions, transfer taxes, closing costs), holding costs (mortgage interest, property taxes, insurance, utilities during renovation), and a profit margin. If ARV is $300,000 and repair costs are $40,000, the 70% rule suggests a maximum purchase price of $170,000.

The 70% threshold is a heuristic, not a guarantee. In highly competitive markets with thin inventory, investors sometimes use higher thresholds (75-80%) while accepting lower margins. In markets with uncertain ARVs or high carrying costs, a more conservative threshold (65%) may be appropriate. The rule is most useful as a quick screening tool to identify whether a deal deserves further analysis.

Repair Cost Estimation

Repair cost accuracy is the most significant variable in flip profitability. Underestimating renovation costs is the most common reason flips fail to achieve projected profits. Experienced investors typically obtain contractor bids before making offers, or apply detailed cost-per-square-foot estimates based on the scope of work required.

Repair scope varies widely. A cosmetic flip involving new paint, flooring, fixtures, and landscaping typically costs far less than a full gut renovation involving structural repairs, foundation work, or systems replacement (HVAC, plumbing, electrical). Properties requiring code compliance updates, lead paint remediation, or asbestos abatement carry additional costs that are difficult to estimate without professional inspections.

Standard practice is to build a contingency reserve of 10-20% above the base repair estimate. Unexpected issues discovered during renovation — hidden water damage, outdated wiring, inadequate insulation — are common, and the contingency fund prevents cost overruns from eliminating the profit margin entirely.

Holding Costs and Their Impact

Holding costs are the ongoing expenses incurred between purchase and sale: financing costs (mortgage interest or hard money loan interest), property taxes, hazard insurance, utilities, and any homeowners association fees. These costs accumulate for every month the property is held, making the renovation timeline a critical profitability driver.

Hard money loans — short-term bridge loans commonly used by flippers — carry interest rates significantly higher than conventional mortgages, often 8-15% annually, plus origination points. A $200,000 hard money loan at 12% annual interest costs $2,000 per month in interest alone. For a six-month flip, that is $12,000 in financing costs before any other holding expense is counted.

Delays in renovation completion extend holding costs and compress profit margins. Weather delays, contractor scheduling conflicts, permit processing times, and supply chain disruptions are common sources of schedule slippage. Building time contingencies into projections and working with contractors who have demonstrated reliability helps manage this risk.

Selling Costs

Selling a property involves transaction costs that directly reduce net proceeds. In the United States, seller-side costs typically include the buyer's and seller's agent commissions (totaling 5-6% of the sale price), transfer taxes, title insurance, escrow fees, and prorated property taxes. Combined, these costs often total 7-10% of the sale price.

This calculator uses a selling costs percentage applied to ARV. The default value of 8% approximates a typical combined transaction cost. Investors in markets with higher transfer taxes or where the seller covers a larger share of closing costs should adjust this figure accordingly.

Evaluating Flip Profitability

Gross profit is the spread between the ARV and total investment (purchase price plus repair costs plus holding costs). Net profit subtracts selling costs from gross profit, providing a more realistic measure of what the investor retains.

ROI (return on investment) expresses net profit as a percentage of total capital deployed. A flip that generates $30,000 net profit on $200,000 invested produces a 15% ROI. Because flips are typically completed in 6-12 months, the annualized ROI can be substantially higher than a comparable percentage earned over multiple years.

Profit per month is a useful metric for comparing deals of different durations. A flip yielding $24,000 profit in four months ($6,000/month) may be preferable to one yielding $30,000 in nine months ($3,333/month), because the shorter deal allows capital to be redeployed sooner.

Results from this calculator are estimates based on inputs you provide. They are intended for preliminary analysis and planning purposes. Consult a qualified real estate professional, contractor, and financial advisor before making investment decisions.

Common Mistakes in Flip Analysis

Overestimating ARV is a frequent error, particularly when investors use comparables from a different neighborhood, different market cycle, or properties with significantly different features. ARV should be based on sold prices of comparable homes, not list prices.

Underestimating repair costs leads to budget overruns that erode or eliminate projected profits. Novice investors often miss hidden costs such as permit fees, engineering reports, dumpster rentals, temporary utilities, and cleanup.

Ignoring carrying costs during the analysis phase is another common pitfall. Investors focused on the spread between purchase price and ARV sometimes overlook that months of holding costs can consume a significant portion of that spread.

Failing to account for selling costs causes investors to overstate net proceeds. Assuming a sale at ARV without deducting 7-10% in transaction costs overstates actual cash received by a material amount.