Fix and flip (ARV) analyzer
A flip works when the after-repair value (ARV) leaves room for purchase, rehab, financing, holding and selling costs plus profit. Enter the deal to see projected profit, return on cash invested, and the maximum offer under the common 70 percent rule of thumb.
Educational estimate based on the numbers you enter and common rules of thumb. Not a loan offer, rate quote, approval or financial advice. A licensed loan officer can run your real numbers.
How this calculator works
This analyzer adds up the full cost of a flip and compares it with the after-repair value (ARV). The loan is the purchase price times the financed share you enter. Interest is figured as interest-only on that loan for the months you hold the property, at the rate you enter from your own quote; the field starts empty. Points are a share of the loan. Purchase closing costs are a share of the price, holding costs are your monthly amount times the months held, and selling costs are a share of the ARV.
Profit is the ARV minus the price, rehab, closing, holding, interest, points and selling costs. Cash needed is the part of the price you pay yourself, plus rehab, closing, points, holding costs and interest. Return on cash is profit divided by cash needed, and the annualized figure scales it to a year without compounding. The maximum offer check uses a common rule of thumb: ARV times 0.7, minus the rehab budget.
Assumptions: rehab is paid from your cash, though many flip lenders fund rehab in draws. Interest is charged on the full loan for every month held. The tool does not include taxes on profit, cost overruns, or the risk that the home takes longer to sell or sells for less than the ARV.
Lenders that finance flips usually look at the purchase price, the rehab budget and scope of work, and an appraiser's estimate of the after-repair value. Many also ask about your past projects and how much of your own cash is in the deal. Terms are short and vary widely by lender.
Example: enter a $300,000 purchase price, a $50,000 rehab budget and a $450,000 ARV, then add the rate and points from your lender's quote.
Related: BRRRR calculator · DSCR rental calculator · DSCR loans for rental properties
Common questions
What is the 70 percent rule?
A rule of thumb that says not to pay more than 70 percent of the after-repair value minus repair costs. It leaves room for financing, holding and selling costs and profit. Many investors adjust it for their market.
How is ARV estimated?
From recent sales of comparable renovated homes nearby. An appraiser or agent can help. Overestimating ARV is one of the most common ways flips lose money.
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