Analyze fix-and-flip profitability. Calculate net profit, ROI, and the 70% rule maximum purchase price.
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The Chen family is buying a $340,000 home in Columbus, Ohio. Combined income $115,000, 10% down payment, 30-year fixed at 7.125%.
Takeaway: Columbus/Franklin County averages are the reference baseline. Property tax rates and insurance premiums shift significantly by ZIP code and HOA status. Plug your actual numbers in above.
We default to state-average millage rates. County and municipal rates vary 40%+ within a single state. Ohio ranges from 0.8% (rural counties) to 2.4% (Cuyahoga/Cleveland area). Always cross-check your specific county assessor's published effective rate.
Property Tax by StateHomeowner association fees add $100-$800/month in condos and planned communities. Condos in urban markets often run $400-$700/month. If your property has HOA, add it manually to any payment estimate — it directly affects your debt-to-income ratio for loan qualification.
HOA Fee CalculatorClosing costs typically run 2-5% of the loan amount — around $6,000-$15,000 on a $300K home. Lender fees, title insurance, escrow, and prepaid taxes add up fast. These are due at closing in cash, not rolled into the mortgage by default.
Closing Costs CalculatorPrivate mortgage insurance (PMI) costs 0.5-1.5% of the loan annually until you reach 20% equity. On a $300K loan at 1%, that's $250/month. PMI cancels automatically at 78% LTV under federal law — but you can request removal at 80%.
National home price appreciation has averaged ~4% annually since 1968, but markets diverge dramatically. Sun Belt metros averaged 10%+ during 2020-2022; coastal markets often lag the national average during correction cycles. Local supply constraints are the main driver.
If you've lived in the home 2 of the last 5 years, you can exclude $250K (single) or $500K (married) of gain from federal capital gains tax. Many calculators show gross profit without applying this exclusion. Relevant when projecting sale proceeds.
Home Sale Capital Gains CalculatorBased on your inputs
9.0% ROI
| Purchase Price | $200,000 |
|---|---|
| Rehab Costs | $40,000 |
| Holding Costs | $9,000 |
| Selling Costs | $33,600 |
| Financing Costs | $8,000 |
| Total Costs | $293,600 |
| Sale Price (ARV) | $320,000 |
| Net Profit | $26,400 |
| ROI | 9.0% |
| 70% Rule Max Buy Price | $184,000 |
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The 70% rule: Maximum purchase price = (ARV × 70%) − Rehab Costs. If ARV is $300,000 and rehab is $40,000, don't pay more than $170,000 ($300k × 0.70 − $40k).
Successful flippers average $67,000 gross profit per flip, but after all costs, net profit is typically $20,000–$40,000. Experienced flippers in hot markets can net $50,000–$100,000.
Holding costs are ongoing expenses while you own the property: property tax, insurance, utilities, loan interest, and HOA fees. They run $1,000–$3,000/month and significantly eat into profits on slow flips.
Average flip takes 6 months total: 1–2 months to close, 2–3 months to renovate, 1–2 months to sell. Faster flips preserve more profit. Budget holding costs for at least 6 months.
Hard money loans are most common for flips, funding 70-90% of purchase plus rehab at 10-14% interest. Private money lenders offer similar terms with more flexibility. Cash purchases eliminate interest costs but tie up more capital per deal.
Kitchen and bathroom updates deliver the highest ROI for flips. Fresh paint, new flooring, updated lighting, and curb appeal improvements are low-cost high-impact changes. Avoid over-improving beyond neighborhood comparables.
Expect 2-3% closing costs when buying and 8-10% when selling (agent commissions, title, transfer taxes). On a $300,000 ARV, selling costs alone consume $24,000-$30,000. Always include both buy and sell closing costs in profit calculations.
Yes. Flip profits are taxed as ordinary income, not capital gains, because the IRS considers flipping a business activity. Self-employment tax of 15.3% also applies. Tax rates of 30-45% on profits are common for active flippers.
ARV (After Repair Value) is the estimated market value after renovations. Calculate it by finding 3-5 comparable recently sold homes in the same neighborhood with similar size and features. Use price per square foot of updated comps as your baseline.
Target distressed properties through foreclosure auctions, bank-owned REO listings, wholesalers, driving for dollars, and direct mail campaigns. Look for homes needing cosmetic updates in desirable neighborhoods. Build relationships with real estate agents who specialize in investment properties.
Net Profit = ARV − Total Costs
Total Costs = Purchase + Rehab + Holding + Closing + Selling + Financing
70% Rule: Max Price = ARV × 0.70 − Rehab Costs
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.