House Flipping Profit Calculator
Quickly estimate the net profit from a house flip by accounting for purchase price, renovation costs, selling price, and closing fees. Ideal for real estate investors evaluating whether a deal meets their return targets before committing capital.
About this calculator
House flipping profit is determined by subtracting all costs from the final selling price. The formula is: Profit = Selling Price − Purchase Price − Renovation Costs − Other Costs. 'Other Costs' typically includes real estate agent commissions (often 5–6%), closing costs on both the buy and sell sides, holding costs like mortgage interest and property taxes, and any permits or inspections. A positive result means you made money; a negative result indicates a loss. Experienced investors also calculate their return on investment (ROI) by dividing profit by total cash invested and expressing it as a percentage. A common rule of thumb in house flipping is the 70% rule: do not pay more than 70% of the after-repair value (ARV) minus renovation costs.
How to use
Imagine you purchase a distressed property for $150,000, spend $40,000 on renovations, and sell it for $230,000. You also incur $18,000 in agent commissions, closing costs, and holding costs. Enter: Selling Price = $230,000, Purchase Price = $150,000, Renovation Costs = $40,000, Other Costs = $18,000. The calculator computes: $230,000 − $150,000 − $40,000 − $18,000 = $22,000 net profit. Your profit margin is $22,000 / $230,000 ≈ 9.6%, and your ROI on cash invested is $22,000 / $208,000 ≈ 10.6%.
Frequently asked questions
What costs are typically included when calculating house flipping profit?
Beyond the purchase price and renovation costs, successful flippers account for buying closing costs (1–3% of purchase price), selling agent commissions (5–6% of sale price), title insurance, transfer taxes, and holding costs such as loan interest, property taxes, utilities, and insurance during the renovation period. Overlooking these costs is one of the most common mistakes new investors make, turning what looks like a profitable deal into a break-even or losing one. A conservative estimate of all expenses before purchasing is essential.
What is the 70% rule in house flipping and how does it relate to profit?
The 70% rule is a quick filter used by real estate investors to determine the maximum price to pay for a flip. It states that you should pay no more than 70% of the after-repair value (ARV) minus renovation costs. For example, if a home's ARV is $250,000 and renovations cost $40,000, the maximum purchase price would be ($250,000 × 0.70) − $40,000 = $135,000. This 30% buffer is designed to cover transaction costs, holding costs, and still leave room for profit. It is a guideline, not a guarantee, and markets with thin margins may require stricter thresholds.
How do taxes affect house flipping profit and what should I know?
House flipping profits are generally taxed as ordinary income if you hold the property for less than one year, which can result in a significantly higher tax bill than long-term capital gains rates. If you flip properties regularly, the IRS may classify you as a dealer, subjecting profits to self-employment tax as well. Holding a property for more than one year before selling qualifies it for long-term capital gains treatment, which is taxed at lower rates. Consulting a tax professional who specializes in real estate is strongly recommended to structure deals tax-efficiently.