Underwrite a flip with five numbers: after-repair value, purchase price, rehab budget, holding and financing costs, and selling costs. Profit is ARV minus all the others. On a $420,000 ARV with $250,000 purchase, $60,000 rehab, $33,600 selling costs and about $19,600 of financing, profit is roughly $56,800.
What Numbers Do You Need?
| Input | Where it comes from | Example |
|---|---|---|
| After-repair value (ARV) | Recent sold comparables, not list prices | $420,000 |
| Purchase price | Your contract | $250,000 |
| Rehab budget | Line-item contractor bid plus 10% contingency | $60,000 |
| Selling costs | Commission, transfer tax, closing (about 8%) | $33,600 |
| Financing and holding | Interest, points, fees, taxes, insurance, utilities | About $19,600 plus carrying costs |
Get each number from a source, not a hope. The deal is made at the purchase. The profit is lost in the estimate.
How Do You Calculate Profit?
Start with ARV and subtract everything else.
- $420,000 ARV minus $33,600 selling costs = $386,400 net sale.
- Minus $250,000 purchase and $60,000 rehab = $76,400 before financing.
- Minus about $19,600 of interest, points and fees on a 92.5% loan-to-cost loan = about $56,800.
Carrying costs like taxes, insurance and utilities come out of that too, so budget them for your full hold. The typical flip took 161 days from purchase to resale in Q2 2026 (attomdata.com). Plan for six months, not three.
Does the 70% Rule Still Work?
The 70% rule says pay no more than 70% of ARV minus repairs. On this deal: 70% of $420,000 is $294,000, minus $60,000 = $234,000 maximum offer.
Our example pays $250,000, above the rule, yet still earns about $56,800 because the ARV spread is wide. The rule is a screen, not a verdict. Use it to sort deals fast, then run the full numbers on the ones that pass or come close.
What Mistakes Kill Flip Deals?
- Aggressive ARV. Using the best sale in the neighborhood instead of the typical one.
- Thin rehab budgets. No contingency for what is behind the walls.
- Ignoring price band risk. In Q2 2026, homes bought for $50,000 or less posted a typical loss, while $100,000 to $200,000 homes earned 28% margins (attomdata.com).
- Short hold assumptions. Interest and carrying costs run every month the house is not sold.
Buying in the right season helps. October has historically had the lowest premium of any month for buyers, at 7.0% above market value (attomdata.com).
How Do Lenders Use Your Numbers?
A fix-and-flip lender looks at the same five inputs. At Clion Capital, we lend up to 92.5% of purchase plus rehab and up to 90% of ARV, so a realistic ARV and budget translate directly into your loan amount. Competition for deals is real: investors bought 27% of U.S. single-family homes from March to June 2026 (cotality.com).
See how much you can borrow, compare cash versus a loan, and read how fix-and-flip loans work. Then get your rate at apply.clioncapital.com.
Frequently Asked Questions
What is a good profit margin on a fix-and-flip?
ATTOM reported a typical gross return of 21.5% in Q2 2026. Many investors target a net profit of 10% to 15% of ARV after all costs, including financing.
What is the 70% rule in house flipping?
Pay no more than 70% of the after-repair value minus repair costs. It is a quick screen. Run the full numbers before you make a final offer.
How do I estimate after-repair value?
Use recent sold comparables of similar size, condition and location, ideally from the last three to six months. Avoid using list prices or the single best sale.
How much should I budget for holding costs?
Plan for at least six months of interest, taxes, insurance and utilities. The typical flip took 161 days in Q2 2026.
Will a lender check my numbers?
Yes. Lenders order an appraisal with an after-repair value and review your rehab budget. Realistic numbers lead to faster approvals and higher leverage.
Last updated October 27, 2026.
Sources and References
- ATTOM: Q2 2026 U.S. Home Flipping Report
- ATTOM: Best Days and Months to Buy a Home
- Cotality: Investor Report, Q2 2026
- Clion Capital: fix-and-flip loans
About the Author
Clion Capital is a direct private lender for professional real estate investors, offering fix-and-flip, bridge, new construction and DSCR rental loans. Our principals work directly with every borrower, and 70% of our business comes from repeat clients. See your rate instantly at apply.clioncapital.com or learn more about Clion Capital.