How to Use a Fix & Flip Calculator to Maximize Profit

Flipping houses can be incredibly lucrative, but one miscalculation can turn a projected profit into a devastating loss. A reliable Fix and Flip Calculator is your best defense against bad deals.

The 70% Rule: A Quick Litmus Test

Before diving into a detailed calculator, most investors use the "70% Rule" for a fast "yes/no" decision. It states that you should pay no more than 70% of the After Repair Value (ARV) minus the costs of repairs.

Why You Need a Dedicated Calculator

While the 70% rule is great for speed, it essentially guesses your holding costs and profit margin. A dedicated Fix & Flip Calculator breaks down specific expenses that vary by deal:

• Holding Costs: Property taxes, insurance, and utilities while you own it.
• Financing Costs: Hard money loan points, interest payments, and closing costs.
• Selling Costs: Agent commissions (typically 5-6%) and closing fees.

Step-by-Step Guide

1. Determine ARV: Look at sold comparables in the neighborhood. Be realistic, not optimistic.
2. Estimate Repairs: Walk the property with a contractor. Always add a 10-15% contingency fund for surprises.
3. Calculate Holding Time: Be conservative. If you think it will take 3 months, budget for 5. Time is money when paying interest.
4. Input Financing Terms: Interest rates for flip loans are higher (often 10-12%). Ensure these are accounted for.

Calculating Yield on a Flip

Many flippers focus on the total dollar profit (e.g., "$30,000 profit"), but you should also track your Return on Investment (ROI).

ROI = (Net Profit / Total Cash Invested) × 100

If you put $50,000 cash into a deal and made $25,000 profit, your ROI is 50%. This metric helps you compare a flip against other investment opportunities like rental properties or stocks.

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