What Is Flip Profit?
Flip profit = sale price − purchase price − renovation costs − closing costs − holding costs. It's what you keep after all expenses. The 70% rule and ARV math are designed to protect flip profit. Maximize it by buying right, controlling renovation budget, and shortening the flip timeline.
Flip profit is the net gain from a fix-and-flip after subtracting purchase price, renovation costs, closing costs, and holding costs from the sale price.
At a Glance
- What it is: Net gain from sale minus all costs (purchase, rehab, closing, holding)
- Why it matters: The goal of every flip; everything else is a cost
- Key detail: Don't forget closing costs on both buy and sell
- Related: ARV, holding costs, 70% rule
- Watch for: Overestimating ARV or underestimating costs erodes profit
How It Works
Revenue. Sale price (ideally at or above ARV). In a buyer's market, you may sell below ARV—model that.
Costs. Purchase price, renovation budget, closing costs (buy + sell), holding costs. Every dollar counts.
Closing costs. Often 2–3% of purchase on buy, 6–8% of sale on sell (agent commission, closing fees, prepaids). On a $300K sale, that's $18K–$24K.
Holding costs. Loan payments, taxes, insurance, utilities, staging. Multiply monthly by holding period.
Profit. Revenue − all costs = flip profit.
Real-World Example
Mike Torres flips a 1,350 sq ft in Nashville. Purchase: $172K. Renovation: $48K. Closing (buy): $4,200. Closing (sell): $21,000 (7% of $300K sale). Holding: $2,100/month × 7 months = $14,700.
Total costs: $172K + $48K + $4K + $21K + $14.7K = $259,700.
Sale: $300K.
Flip profit: $300K − $259,700 = $40,300.
His all-in investment (excluding loan): $172K + $48K + $4K = $224K. Plus $14.7K holding. Profit as % of investment: $40.3K / $238.7K ≈ 17%. He targets 15–20% on flips; this one hit the target.
If he had sold at $285K (below ARV): $285K − $259.7K = $25,300. Still profitable but $15K less. ARV accuracy matters.
Pros & Cons
- Clear metric for flip success
- Drives discipline on purchase, rehab, and timeline
- Easy to compare across deals
- Supports ROI and cash-on-cash analysis
- Depends on accurate cost estimates
- Market shifts can reduce sale price
- Timeline creep increases holding costs
- Closing costs can surprise
Watch Out
- Closing cost underestimate: Sell-side closing (commission, fees) often 6–8% of sale price
- Holding cost creep: Every extra month adds holding costs; push timeline
- ARV miss: Selling below ARV directly reduces profit; use conservative comps
Ask an Investor
The Takeaway
Flip profit is the score of every fix-and-flip. Protect it with the 70% rule, accurate ARV and renovation budget, and a tight flip timeline. Model every cost before you buy—surprises eat profit.