Fix-and-Flip ROI Calculator

Calculate fix-and-flip ROI from purchase price, renovation cost, holding costs, selling price, and transaction fees. Links: ROI calculator, Real Estate ROI, Marketing ROI, net profit, What Is ROI?.

Flip ROI Formula

Total Investment = Purchase + Renovation + Holding + Transaction Fees

Gross Profit = Selling Price − Total Investment. ROI = (Gross Profit / Total Investment) × 100. Profit Margin = (Gross Profit / Selling Price) × 100. See ROI formula and net profit for definitions.

Hidden Costs

Renovation often runs over budget. Include soft costs: loan fees, insurance during hold, utilities, staging, permits. Transaction fees cover commissions (typically 5–6%), title, transfer tax. Omitting any of these inflates ROI. Build 10–20% buffer on renovation estimates.

Timeline Sensitivity

Longer holds increase carrying costs—loan interest, taxes, insurance, utilities. A 6-month flip versus 12 months can materially change profit. Model best, expected, and worst-case timelines. Delays from permits, contractor availability, or market slowdowns are common.

Market Risk

Sale price depends on market conditions at listing time. Valuations based on comparable sales can shift. Down markets compress margins; over-improvement for the neighborhood may not recoup. See ROI limitations.

Example Flip Breakdown

Purchase $150,000, renovation $40,000, holding $5,000, transaction fees $12,000. Total investment = $207,000. Sale $265,000. Gross profit = $58,000. ROI = 28%. Profit margin = 22%. If renovation runs to $50,000, profit drops to $48,000 and ROI to 23%.

Mistakes Flippers Make

• Underestimating renovation and holding costs
• Overvaluing after-repair value based on optimistic comps
• Ignoring transaction fees and loan costs
• Failing to model extended hold periods
• Over-improving for the neighborhood

Loan and Financing Impact

If you finance the purchase and renovation, interest during the hold period belongs in holding costs. Hard money and bridge loans carry higher rates and shorter terms; a few months of interest can materially affect profit. Include all loan fees—origination, points, inspection—in your total investment. For accurate ROI, treat borrowed funds as part of your cost basis; the return is measured against what you actually put in, including financing expenses.

After-Repair Value (ARV) Accuracy

ARV drives the selling price assumption. Use recent comparable sales in the same neighborhood; adjust for condition, size, and timing. Avoid relying on listings or optimistic agent opinions. In declining markets, comps from six months ago may overstate current value. Build a range: best case, expected, and worst case. The 70% rule (purchase + renovation ≤ 70% of ARV minus holding) is a heuristic, not a guarantee—your actual costs may exceed that margin.

Frequently Asked Questions