Flip net profit (simple)
Investors compare deals fast: profit headline plus ROI % as a second line—classic multi-output layout your AI can tune per market (holding costs, financing).
Example scenario
A value-add investor acquires a dated three-bed property for $265,000, budgets $58,500 in scope-controlled rehab, and underwrites a post-renovation ARV of $438,000 based on recent neighborhood comps and agent feedback. With selling costs set to 9.5% of ARV, disposition costs model at $41,610, leaving an estimated net flip profit of about $72,890 before financing carry, utilities, permits, and unexpected change orders. On invested capital of purchase plus rehab ($323,500), that scenario implies roughly 22.53% ROI in the simple model, which helps quickly screen whether the deal clears your minimum return hurdle.
Flip net profit (simple)
ARV − purchase − rehab − selling costs
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How to use the flip net profit (simple)
- Input purchase price ($) from your executed contract or realistic offer basis, not the original listing ask.
- Enter rehab budget ($) from a scoped contractor estimate with contingency for permits, material volatility, and hidden-condition risk.
- Set after-repair value / ARV ($) using the most comparable sold comps by bed/bath, square footage, and finish level in the same micro-market.
- Adjust selling costs (% of ARV) for your brokerage, transfer tax, and closing assumptions, then review both estimated net profit and ROI before deciding whether to pursue.
Flip underwriting benchmark context
- Common screening heuristic ("70% rule" variants)
- Many flippers use discounted ARV heuristics as quick filters, then replace with line-item underwriting because local labor, taxes, and holding costs vary materially.
- Disposition cost range in many resale markets
- Agent commissions, transfer taxes, title, and closing fees frequently land in the high-single-digit to low-double-digit percent range of resale price.
- Simple model vs full project P&L
- Deal outcomes often diverge from simple profit math when debt service, points, insurance, utilities, and schedule delays are included.
Best use cases
- Forecasting and scenario planning
- Client education and pre-qualification
- Budget and performance decision support
Frequently asked questions
Does this model include interest, hard-money points, and holding costs?
No. This is a simple profit screen focused on purchase, rehab, ARV, and selling costs. You should layer financing costs, taxes, insurance, utilities, and timeline risk in a full project budget.
How should I set ARV without overestimating resale value?
Anchor ARV to recent sold comps with similar condition and finish quality, then stress-test downside scenarios. Overstated ARV is one of the most common causes of failed flip pro formas.
What belongs in selling costs (%) for a flip?
Typically commissions, closing fees, transfer taxes, and seller concessions expected at resale. Keep this percentage aligned with your local market norms and brokerage agreement.
Why can ROI look strong here but cash profit still disappoint?
ROI can look attractive in a simplified model while absolute dollars shrink from delays, change orders, or carrying costs. Use this output as a first-pass filter, not a final investment memo.
Glossary
Scenario modeling
Testing multiple assumptions to estimate possible outcomes before execution.
Commercial intent
User behavior indicating readiness to buy, subscribe, or request a quote.
Related calculators
Category: Real estate investment analysisTopics: House flipping, ARV underwriting, Fix-and-flip ROI
Last reviewed: 2026-05-07
Reviewed by: Calclet Growth Team