Flipping maths fails in one predictable place: the costs nobody puts in the spreadsheet. The purchase taxes, the six months of property tax and community fees while the builders are in, the agent’s cut on the way out — each one is small, and together they routinely eat a third of the headline profit. This calculator forces the whole stack onto one screen: purchase price and purchase costs, the renovation budget, monthly holding costs over the months until sale, and selling costs against the expected sale price (the after-repair value, or ARV). Out comes the total cash invested, the net profit, the ROI on that invested cash, a simple annualised ROI, and the profit margin on the sale price.
How the calculation runs
Total invested is the purchase price, plus purchase costs (the percentage covers transfer tax or VAT, notary, registry and any buyer’s agent), plus the renovation budget, plus holding costs — the monthly figure multiplied by the months until the sale completes. The sale side is the expected price minus selling costs. Profit is what survives: net sale minus total invested. ROI divides that profit by the total invested, because a flip ties up all of that cash, not just the renovation money. The annualised figure is simple, not compounded: ROI scaled by 12 over the months held, so a six-month flip doubles its ROI and a twelve-month flip keeps it. Treat it as a speed comparison between deals, not a promise.
A worked example
Buy at 150,000 with 10% purchase costs (15,000), spend 40,000 on the renovation, hold for 6 months at 800 a month (4,800), and sell at 260,000 with 6% selling costs (15,600). Total invested: 209,800. Net received from the sale: 244,400. Profit: 34,600 — an ROI of 16.49% on the cash in, 32.98% annualised, and a 13.31% margin on the sale price. The same deal sold two months later keeps the profit but drops the annualised figure; sold for 245,000 instead of 260,000, the profit nearly halves. Those two sensitivities — time and exit price — are where flips are actually won and lost.
The three numbers that kill flips
First, the renovation budget: it is the only line that can grow after you have committed, and a 20% overrun on 40,000 takes 8,000 straight off the profit. Second, the months: holding costs look trivial monthly and are not trivial at month nine, and a slow sale also pushes you into a worse selling season. Third, the ARV itself: it is an estimate of what a stranger will pay, and the whole calculation inherits its optimism. Run the tool at a sale price 10% below your ARV before you believe any deal — if the flip only works at the full asking fantasy, it does not work.
What this calculator does not do
It does not model a renovation loan’s draw schedule, income tax on the gain (which depends on whether you flip as an individual or a company, and on your country), or the discount you should demand for risk. It also assumes the holding figure you enter is honest — interest-only payments, insurance, utilities and community fees all belong in it. Used as a screen, though, it is enough: any deal that cannot show a solid profit with every cost loaded, at a slightly pessimistic sale price, in a slightly longer timeline, is a deal to walk away from while walking away is still free.
A quick cross-check: the 70% rule
Experienced flippers often sanity-check the purchase price with the 70% rule: pay no more than 70% of the ARV minus the renovation budget. On the example above that gives 70% of 260,000 (182,000) minus 40,000 — a ceiling of 142,000, below the 150,000 purchase price. The rule is a blunt instrument from a specific market and era, and the full calculation shows this particular deal surviving its warning only because the buying and selling percentages are moderate. When the two disagree, believe the cost stack — but treat the rule’s nervousness as a prompt to re-examine the ARV before you sign.
Related tools
Versión en español: Calculadora de Rentabilidad de Flipping Houses y Reformas Cortas: ROI, Beneficio Neto y Retorno Anualizado · Rental Property Cash Flow Calculator · Cap Rate Calculator.
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