House Flip Analysis
Input Values
Understanding House Flip Metrics
70% Rule
The 70% rule states that an investor should pay no more than 70% of the After Repair Value (ARV) minus repair costs. This provides a margin of safety for unexpected costs and market changes.
Formula: Maximum Purchase Price = (ARV × 0.70) – Repair Costs
Total Investment
Includes all costs involved in the flip:
- Purchase price
- Repair and renovation costs
- Holding costs (mortgage, utilities, taxes, insurance)
ROI (Return on Investment)
Measures the profitability of your investment as a percentage of total costs.
Formula: (Profit ÷ Total Investment) × 100
Important Considerations
- Always include a contingency budget for unexpected repairs
- Consider market conditions and average time to sell
- Account for closing costs and realtor fees
- Verify repair estimates with contractors
Note: This calculator provides estimates for initial analysis. Detailed due diligence is recommended.
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