House-flipping Calculator: Analyze Your Fix & Flip Property
Tricia has nearly two decades of experience in commercial and federal government lending. Her expertise is highlighted throughout small business loan content on Fit Small Business.
Gina is a licensed real estate salesperson, experienced trainer, and former high school educator of 1,000+ learners. She writes for Fit Small Business with a focus on real estate content.
The house-flipping calculator is a tool to determine your total spend, return on investment (ROI), and profits from a fix-and-flip project. To arrive at these projections, flippers must input the costs of acquisition, rehab and renovation, carrying, and closing, as well as the estimated after-repair value of the property. Flippers should always use these calculations to evaluate a potential project and ensure they earn money for each flip.
Use our fix-and-flip calculator below to get estimates on your property profitability. In this article, we’ll also dive into a breakdown of each component and how they contribute to your fix-and-flip projects:
How the House-flipping Calculator Works
Our calculator does the time-consuming house-flipping calculations for you. After inputting your property costs and other items like budget and timeline, the house-flipping cost calculator will compute the numbers to determine the ROI, profits, and total spend of one fix-and-flip project. Keep in mind that this is an estimate and should be used in conjunction with your own research.
These numbers will allow investors to plan for current and future projects so you can support a lucrative house-flipping business. If you’re debating on a property purchase, the flip cost estimator will tell you if the property is worth purchasing based on the after-repair value. Also, the fix-and-flip calculator is helpful when deciding how many projects you want to take on each year, and you can anticipate future potential earnings based on what your return on investment will be.
Who Can Benefit From a House-flipping Calculator?
A house-flipping calculator is right for you whether you’re a fix-and-flip beginner or a more experienced flipper. For those just starting out, it can be used to decide whether or not you should purchase a property or show roughly what amount you should pay for the property, how quickly you need to sell it, and how much you need to sell it for. It is also right for flippers who are trying to determine their budget for one specific property flip.
For more experienced flippers who have completed these calculations before, it can serve as a double-check of your own calculations. It is also a valuable tool for monitoring how much money is being spent on the project and whether it is concentrated in one area. Your expected ROI will be met if you stay within your budget, and your fix-and-flip project should turn a profit as well.
The calculator is not right for individuals just starting to explore the costs associated with flipping a house. If that sounds like you, visit our article How Much Does It Cost to Flip a House? 4 Factors to Consider to get a detailed breakdown of these costs, then return to this article when you’re ready to determine calculations.
House-flip Calculator Inputs
When using our free house-flipping calculator, you will be prompted to input costs associated with fixing and flipping a property. There are several major fix-and-flip cost categories, which include your acquisition costs, rehab costs, and sales and marketing costs. These inputs are needed in order to calculate items such as your profit per fix-and-flip project and your ROI.
Acquisition Costs of a Fix & Flip Property
- Purchase price of property
- Closing costs
The acquisition costs, also known as the cost to purchase the property, are the first inputs you’ll be adding to your house-flipping calculator. These are the costs like the purchase price and closing costs. The closing costs will include loan origination fees if you’re financing, title company fees, appraisals, or attorneys, and are usually about 2% to 6% of the purchase price.
If you are paying for a home in all cash, your closing costs will not include anything loan-related like loan origination fees, credit score reporting, and appraisal fees. These acquisition costs will be the foundation of your calculations and will determine how much your rehab budget will be so you can make a lucrative profit and return on investment (ROI).
Zillow search results
If you are still looking for properties to flip, explore real estate listing websites like Zillow. Search by property type, price, square footage, or other filter options to find the right fixer-upper for your business. Evaluate each property based on pictures and video or other metrics like taxes and past property sales history. You can also use Zillow to determine the after-repair cost by choosing comparable property listings from its database and creating a comparative market analysis (CMA) report.
For other listing website options to search for properties fit for flipping, read our article How to Find Houses to Flip.
Renovations & Rehab Costs
- Labor
- Materials
The rehab costs for your fix-and-flip project are some of the most important inputs of your real estate flip calculator because they can make or break your budget, and ultimately affect your profits and ROI. These costs will include labor, people working on the project (such as contractors, electricians, and plumbers), and materials like wood, drywall, and concrete. Generally, you can estimate about 10% of the purchase price as your rehab costs.
Flippers need to determine what renovations are necessary to appeal to buyers and make a profit, as well as how much money they are willing to spend on those renovations. The rehab can be cosmetic, moderate, or extensive, depending on the condition of the property and the flipping budget. This can range from painting and refinishing the floors to an entire gut renovation of the home.
The type of home you purchase will be a big determining factor in how much money you’ll spend on renovations and rehab. If you choose a property in good condition, it may only need minor renovations like repainting, landscaping, and new appliances to make a profit. However, if you choose a distressed property like a foreclosure listing, you’ll need to do more extensive renovations like roofing and redoing the bathrooms and kitchen in order to make a profit.
Powered by Foreclosure.com
Although foreclosures require more work for flippers, they often yield a higher profit. If you’re looking for the challenge of a foreclosure listing, take a look at the properties on Foreclosure.com. Search for properties in your area and get information about the home valuation, rental history, and the stage of the foreclosure process the property is in. Use the Foreclosure.com widget above to get started.
Carrying Costs
- Financing
- Loan term
- Taxes
- Insurance
- Utilities
- Timeline
Carrying costs are directly related to the timeline of your project. The longer you are “carrying” the property as a flip project, the more money you’ll be spending per month on costs associated with owning the property. All flippers will be responsible for paying taxes, insurance, and utilities on the property for the duration of ownership. If you paid for the property with an all-cash offer, that’s all the carrying costs you will incur.
However, individuals who took out an investment loan to purchase the property will be paying monthly mortgage payments in addition to the abovementioned costs. The goal for all flippers should be to complete renovations as timely as possible to minimize the carrying costs and maximize profits. These inputs are extremely important in evaluating your purchase and impacting your bottom line.
To learn more about your financing options when purchasing an investment property, read through our article Investment Property Financing & Requirements.
Closing Costs
- Marketing and advertising costs
- Real estate agent commission
- Selling costs
- After-repair value (ARV)
Your final input to the flipping calculator will be the closing costs of selling the property to new ownership after it has been fixed. There are two avenues you can take for doing this, either working with a real estate agent or doing for sale by owner (FSBO). If you are working with an agent, the marketing efforts and costs will be covered by the agent. However, you will also be responsible for paying a real estate commission, which is typically around 6% of the sale price.
If you are not using professional services to sell the home, you will be responsible for marketing fees yourself, but you will not have to pay commission fees. Costs can vary depending on your advertising and marketing strategies, but most FSBO sellers budget anywhere from 2% to 10% on print and online materials. In addition, both FSBO and flippers working with an agent are required to pay selling costs like attorney fees, transfer taxes, recording fees, and loan payoff fees.
Your final real estate flip calculator input will be the estimated sales price, commonly known by investors as the after-repair value (ARV). We are including it as part of the closing costs because the price the property is sold for directly affects the marketing, advertising, and closing costs. ARV refers to estimating a property’s value following the conclusion of all planned renovations. If you already purchased a property and planned your renovations, you can estimate your ARV with the following equation:
ARV = Property’s Current Value + Value of Renovations
You can also estimate the ARV of your property by looking at comparable properties that have recently sold in the same location as the subject property. Properties that are similar to the finished renovated property should serve as the comparables to determine your sales price. ARV is instrumental in evaluating your ROI and profitability of the flip-and-fix property.
Brand Builder content from REDX
To make sure your property sells for top dollar, market your property to interested buyers. REDX’s Brand Builder is a great way to market your property to a large audience. Record a video using the prompts and send your raw footage to the REDX team. They will transform your footage into designer content that can be posted on social media platforms like Instagram, Facebook, and LinkedIn. REDX is also a great place to prospect for FSBO, FRBO, foreclosure, and expired listing leads if you’re looking for your next fix-and-flip project.
House-flip Calculator Outputs
After you put all of your inputs into the calculator, it will use them to calculate outputs, such as your total spend, profit, if the property is a good investment, and your potential ROI. If you are contemplating a particular purchase, you can use these outputs as a comparison to other properties. If you already own the property and are getting ready to fix and flip it, you will have an understanding and estimation of the potential profitability of your project.
Total Spend
This output will be the most easily calculated because it is a summation of the amount of money you have spent on the flip project. If you are financing the project, the calculations are a bit more complicated because the monthly loan payment is required, but our calculator will do this for you based on your other inputs. Also, the timeline of the project will affect how much your carrying costs will be. In general, the simple equation is:
Total Spend = Purchase/Acquisition Costs + Rehab/Renovation Costs + Carrying Costs + Closing Costs
For example:
Cost | Amount Spent | Calculations | |
|---|---|---|---|
Purchase/Acquisition Cost | Purchase Price: $100,000 Closing Costs of Purchase: $5,000 | $105,000 | + |
Rehab/Renovation Cost | Labor: $20,000 Materials: $10,000 | $30,000 | + |
Carrying Costs | Down Payment: $20,000 Loan Term: 5 years Interest Rate: 5% (Calculated: Monthly Mortgage Payment = $1,509.70) Flip Timeline: 2 months Taxes: $1,000 Insurance: $1,500 Monthly Utilities: $100 (Calculated: Utilities $1,200 annually) | $25,719.40 | + |
Closing Costs (Based on Estimated Sales Price (ARV) of $250,000) | Marketing Costs (10%): $16,071.94 Real Estate Commission (6%): $15,000 Selling Costs (5%): $12,500 | $43,571.94 | = |
Total Spend | $204,291.34 | ||
The total spend will be used to compute the ROI and profits of your project. Compare the total spend to your estimated budget to see if you finished your flip below or above budget. If you went above your budget, look at where you allocated your money and modify that for the next flip to ensure you meet your goals.
Return on Investment
The expected return on investment (ROI) is the money you anticipate making from flipping a house. After investing time and money in a project, the goal is to maximize profit, so the higher your ROI, the better. Your profit will decrease as your ROI declines. Your ROI is influenced by the ARV, the budget, and the timeline. This is how you calculate ROI for a real estate flip:
ROI = (Estimated Sales Price (ARV) – Total Spend)/Total Spend x 100%
For example:
ROI = $250,000 – $204,291.34/$204,291.34 x 100% = 22.37% ROI
The ROI for flipping houses is displayed as a percentage to evaluate how well the investment has performed. In the case of house flipping, the lower your cost, the higher your ROI is. For general investment properties, a 10% ROI is considered good, but for fix-and-flip calculations, more than 15% is a well-performing flip.
Using the total spend calculation from above, if the flip is sold for $250,000 and you’ve spent $204,291.34 total on property, your estimated ROI is 22.37%. This is an excellent return on investment for a fix-and-flip project.
To learn more about ROI, cap rate, and cash-on-cash returns, read our article Cap Rate vs ROI vs Cash-on-Cash Returns: A Real Estate Investors Guide.
Profit
This output from the house-flip profit calculator will show you the total profit in dollars that you can expect to make on one fix-and-flip project after the sales transaction is complete. This is assuming you stay within your budget, stay within your timeline, and sell it for the estimated ARV. The equation for the flip profit calculator is:
Profit = Estimated Sales Price (ARV) – Total Spend
For example:
Profit = $250,000 – $204,291.34 = $45,708.66
Using the ARV and total spend from the equations above, to calculate profit when flipping a house you can simply subtract the two numbers to get a profit of $45,708.66. Obviously, profits will vary greatly depending on the condition, size, and location of the property as well as the number of renovations required. However, the average profit on a house flip in 2022 was $30,000. Flippers will use this profit as part of their salary and put some of it back into their business.
Bottom Line
Use a house-flipping calculator to keep track of your finances and estimate the profitability of your investment property. By inputting the costs associated with the flip, such as acquisition, rehab, carrying, and closing costs, you will be able to calculate the total spend, return on investment, and profits for each property you flip. As you learn how to calculate flipping a house from the steps above, keep an eye on these finances to ensure you stick to your timeline and budget and build a lucrative fix-and-flip business.
