A flip’s return is measured against total cash invested over one short project — not an ongoing income stream — and selling costs at exit are an easy line item to underestimate.
How it works
Purchase price, rehab cost, and holding costs sum to cash invested. Selling costs (a percentage of ARV, covering commission and closing costs) are subtracted from ARV along with cash invested to find profit. ROI is profit divided by cash invested.
What this does not include
This doesn’t include financing costs if the purchase or rehab is debt-funded — interest on a hard money loan or line of credit would reduce actual profit below what this all-cash-basis calculation shows.
How to use this calculator
- Enter purchase price, rehab cost, and holding costs.
- Enter the after-repair value (ARV) and expected selling costs as a percentage of ARV.
Frequently asked questions
Why are selling costs based on ARV, not purchase price?
Because commission and closing costs are typically charged on the sale price the property actually sells for, which is the ARV, not what was originally paid for it.
What’s a good ROI for a flip?
It varies widely by market, risk tolerance, and project timeline — a shorter project can accept a lower ROI and still beat a longer one with a higher ROI on an annualized basis.
Does this account for financing costs?
No — this is an all-cash-basis calculation; a debt-funded flip would need financing interest added to holding costs to see the real ROI.
