How to Calculate House Flip Profit (All the Costs Count)

The 70% rule tells you whether a flip is worth analyzing. This is the analysis. Flip profit is simple to state and easy to get wrong: the sale price minus every cost to acquire, renovate, hold, and sell the property. The mistakes almost always hide in the costs people forget.

The four cost buckets

• Purchase costs — the price you pay, plus closing costs and any financing points on the way in.
• Rehab costs — your itemized repair budget, contingency included.
• Holding costs — loan interest, property taxes, insurance, and utilities for every month you own it.
• Selling costs — agent commissions, closing costs, and any buyer concessions, typically 6–9% of the sale price.

The first two are obvious and the last two are where flips quietly lose money. Holding and selling costs together often run 12–18% of ARV — nearly the entire buffer the 70% rule sets aside.

A worked example

The property from our earlier examples: bought for $180,000, ARV $322,000.

Return on cost, not just dollars

A $40,000 profit means something different on a $280,000 project than on a $600,000 one. Return on cost puts profit in proportion:

This is the number to compare across deals. A larger flip with a bigger dollar profit can still be the worse use of your capital and time if its return on cost is lower.

What eats a flip's profit

• Time. Holding costs accrue every month. A renovation that slips from 4 months to 8 doesn't just delay the payday — it doubles the carry.
• An optimistic ARV. The whole model rests on the sale price. If your ARV was 5% high, that error comes straight out of profit at the closing table.
• Rehab overruns. This is why contingency exists — and why the repair budget should be itemized, not guessed.
• Financing. Hard-money loans carry high rates and points; the longer you hold, the more they compound. Model your actual loan, not a placeholder.

Once a deal clears a full profit analysis, you know not just that it works but by how much — and how much room you have before an overrun turns a winner into a break-even.