Faro Labs / Tools / Flip profit calculator
Flip profit calculator
The gap between the purchase price and the sale price isn't the profit. Holding and selling costs take a big bite. Model every cost to see the real net profit, return on cash, and margin.
$60,200 net on $309,800 invested: a 19% return and a 15.0% margin, with room for the usual surprises.
Faro is built for buy-and-hold rentals; this flip tool is here for context. For a quick offer ceiling, use the 70% rule calculator.
Where flip profit really comes from
net profit = sale price − total project cost
return on cash = net profit ÷ cash invested
The number that fools new flippers is the spread: buy at $250k, sell at $400k, and it looks like $150k of profit. It isn't. Rehab, months of holding costs, and 7 to 8 percent of the sale price in commissions and closing routinely turn that $150k spread into $50k or less of actual profit. Every one of those costs is real cash, and every extra month of the project eats holding costs whether or not the work is done.
The two silent killers
Holding costs accrue on a clock you don't fully control: a permit delay, a slow contractor, or a stale listing all add months of interest, taxes, and insurance. Selling costs come off the top of the sale price, so a higher sale price also means higher commissions. Budget both generously; the flips that go wrong usually go wrong here, not in the rehab estimate.
Flip questions
What profit margin should a flip target?
Experienced flippers typically want at least a 10 to 15 percent net profit on the sale price, or a 20 percent-plus return on total cash invested, to cover the risk that the sale price or rehab budget slips. Thinner margins leave no room for the surprises that flips reliably produce.
What costs do first-time flippers forget?
Holding costs and selling costs. Loan interest, taxes, insurance, and utilities accrue every month you hold the property, and realtor commissions plus seller closing costs commonly take 7 to 8 percent off the sale price. Both quietly erase paper profit, which is exactly why this calculator makes you enter them.
How does this relate to the 70% rule?
The 70 percent rule is a quick ceiling on what to pay: 70 percent of after-repair value minus repairs. This calculator is the detailed version that models every cost line. Use the rule to screen a deal in seconds, then confirm the real profit here before you commit.
Every calculator
More interested in holding than flipping?
Faro underwrites rentals for the long hold, cash flow, equity, and what to offer, from a pasted listing.
Estimates for analysis and educational use only: not financial, investment, tax, or legal advice. Verify every number independently before making a purchase decision.