Flip Profit Calculator Formula

Understand the math behind the flip profit calculator. Each variable explained with a worked example.

Use the Flip Profit Calculator

Formulas Used

Net Profit

profit = net_profit

Return on Investment

roi = total_cost > 0 ? (net_profit / total_cost) * 100 : 0

Total Project Cost

total_project_cost = total_cost

Total Holding Costs

holding_expense = total_holding

Total Selling Costs

selling_expense = commission + closing

Profit Per Month

profit_per_month = holding_months > 0 ? net_profit / holding_months : 0

Variables

VariableDescriptionDefault
purchase_pricePurchase Price(USD)180000
rehab_costTotal Rehab Cost(USD)40000
holding_monthsHolding Period (months)5
monthly_holding_costMonthly Holding Cost(USD)1500
sale_priceExpected Sale Price(USD)310000
agent_commission_pctAgent Commission(%)5
closing_costs_pctClosing Costs (Buyer + Seller)(%)3
total_holdingDerived value= holding_months * monthly_holding_costcalculated
commissionDerived value= sale_price * agent_commission_pct / 100calculated
closingDerived value= sale_price * closing_costs_pct / 100calculated
total_costDerived value= purchase_price + rehab_cost + total_holding + commission + closingcalculated
net_profitDerived value= sale_price - total_costcalculated

How It Works

House Flip Profit Analysis

Flipping a property involves buying below market value, renovating, and selling for a profit. Accurate cost accounting is critical because hidden costs erode margins quickly.

Formula

Net Profit = Sale Price - Purchase Price - Rehab Cost - Holding Costs - Selling Costs

Cost Components

  • Rehab: Materials, labor, permits, contingency (add 10-15% buffer)
  • Holding: Mortgage payments, property taxes, insurance, utilities during renovation
  • Selling: Agent commissions (5-6%), closing costs (2-3%), transfer taxes

    • Profit Targets

  • Most successful flippers target 15-20% return on total investment
  • Profit per month of hold time matters because time is capital tied up
  • A $20,000 profit in 3 months is better than $40,000 in 12 months on a per-month basis

    • Worked Example

    Buy at $180,000, rehab for $40,000, hold 5 months at $1,500/month, sell at $310,000 with 5% commission and 3% closing costs.

    purchase_price = 180000rehab_cost = 40000holding_months = 5monthly_holding_cost = 1500sale_price = 310000agent_commission_pct = 5closing_costs_pct = 3
    1. 01Holding costs: 5 x $1,500 = $7,500
    2. 02Commission: $310,000 x 5% = $15,500
    3. 03Closing costs: $310,000 x 3% = $9,300
    4. 04Total project cost: $180,000 + $40,000 + $7,500 + $15,500 + $9,300 = $252,300
    5. 05Net profit: $310,000 - $252,300 = $57,700
    6. 06ROI: $57,700 / $252,300 = 22.9%
    7. 07Profit per month: $57,700 / 5 = $11,540

    Frequently Asked Questions

    What is a good profit margin for a house flip?

    Experienced flippers typically target a minimum net profit of 15-20% of the total investment, or $30,000 or more per deal. The actual target depends on the deal size, risk level, and local market conditions.

    What holding costs are commonly overlooked?

    Commonly overlooked holding costs include property taxes that accrue during the hold period, utility bills during renovation, lawn care, insurance premium increases for vacant properties, and loan origination fees or points on hard money loans.

    How do I reduce risk on a flip?

    Buy at a deep enough discount that you can still profit even if the sale price is lower than expected. Get multiple rehab bids, add a 10-15% contingency, and factor in at least 2 extra months of holding costs as a buffer.

    Ready to run the numbers?

    Open Flip Profit Calculator