Question 1

How do you calculate profit on a house flip?

Accepted Answer

Profit = After-Repair Value (ARV) minus purchase price, minus rehab costs, minus holding costs, minus selling costs. Selling costs include agent commissions (5-6%) and closing costs (1-2%). Do not forget holding costs like loan payments, insurance, and utilities during renovation.

Question 2

What is the 70% rule in house flipping?

Accepted Answer

The 70% rule says you should pay no more than 70% of the ARV minus rehab costs. If ARV is $300,000 and rehab costs $50,000, your maximum purchase price is $160,000 ($300,000 x 0.70 - $50,000). It is a quick screening tool, not a substitute for full analysis.

Question 3

How do you estimate rehab costs?

Accepted Answer

Get contractor bids for major items (roof, HVAC, kitchen, bathrooms). Use per-square-foot estimates for cosmetic work. Always add a 10-20% contingency for unexpected issues. Walk the property with a contractor before making an offer.

Question 4

What is a good return on a flip?

Accepted Answer

Most experienced flippers target a minimum net profit of $25,000 or 10-15% return on total investment. Deals with thin margins leave no room for surprises. Factor in your time as a cost if you are managing the project yourself.

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