House Flipping ROI Calculator: Net Profit on a Flip

Last updated: August 17, 2026 · Reviewed by the DoCalc team

What Goes Into Flip ROI?

House flipping profit isn't just sale price minus purchase price — renovation costs, months of holding costs (loan interest, taxes, insurance, utilities while you own it), and selling costs (agent commission, closing costs, often 6-10% of sale price combined) all eat into the margin before you see a dollar of profit.

The Formula

Total Investment = Purchase Price + Renovation + (Monthly Holding Cost × Months) Selling Costs = ARV × Selling Cost % Net Profit = ARV − Total Investment − Selling Costs ROI = Net Profit ÷ Total Investment

ARV (after-repair value) is your realistic expected sale price once renovations are complete — getting this number right, usually via comparable recent sales, is the single biggest driver of flip profitability.

Worked Example

A $220,000 purchase with $45,000 renovation and $1,800/mo holding costs over 5 months ($9,000 total) brings total investment to $274,000. At a $340,000 ARV with 8% selling costs ($27,200), net profit is $340,000 − $274,000 − $27,200 = $38,800, an ROI of about 14.16% on the total investment.

What Trips Up First-Time Flippers

The two most common mistakes are underestimating renovation costs (contractors' quotes routinely run over, and unexpected issues surface once walls are opened) and underestimating time-to-sell, which stretches holding costs. A conservative flip model pads both renovation budget and expected months held beyond the optimistic case.

Pros and Cons of House Flipping

Pros: profit can be realized in months rather than years, and skilled renovation work can add value well beyond its cost.

Cons: concentrated risk in a single deal, sensitive to renovation overruns and market timing, and short-term capital gains are typically taxed at higher rates than long-term rental income.

Who Should Use This Calculator

Use it if you're evaluating a specific flip deal and want to stress-test the numbers before committing capital. Be conservative with your ARV and renovation estimates — run the numbers again with a lower ARV and higher renovation cost to see your margin of safety.

Frequently Asked Questions

What's a good ROI for a house flip?

Many flippers target 15-20%+ given the concentrated risk and short timeline, though this varies by market and risk tolerance. Below 10% often doesn't adequately compensate for the risk and effort involved.

What is ARV?

After-Repair Value — the expected sale price once renovations are complete, typically estimated from recent comparable sales of similarly renovated properties in the same area.

What counts as holding costs?

Loan interest (if financed), property taxes, insurance, utilities, and any HOA dues during the months you own the property before selling — costs that accrue regardless of renovation progress.

How much should I budget for selling costs?

6-10% of the sale price is a common range, covering real estate agent commissions (typically 5-6% combined) plus closing costs and any seller concessions.

Why do first-time flippers often underestimate costs?

Renovation budgets frequently run over due to unexpected issues found once work begins, and properties often take longer to sell than optimistically planned — both extend holding costs beyond the initial estimate.

Is house flipping profit taxed differently than rental income?

Often yes — flips held under a year are typically taxed as short-term capital gains (ordinary income rates) in the US, generally higher than long-term capital gains or rental income tax treatment. Consult a tax professional for your specific situation.

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