What this calculator is testing
A flip has only one moment of truth — the day it sells — and everything before that is cost accumulating against a resale price nobody has agreed to yet. This page lays that out in three parts: what the project costs in total, what the sale nets after the costs of selling, and what is left over as profit on the cash you actually put in.
The figure to watch is not profit in isolation but profit against cash invested and against time. A $14,000 profit is a different proposition on $80,000 over six months than on $30,000 over two, which is why the page reports return on cash and an annualized version of it alongside the dollar figure.
Reading the example this page loads with
The defaults describe a deal that is marginal rather than disastrous, which makes it the useful kind to study. These figures are illustrative — a teaching example, not market data for any particular city.
| Input | Value |
|---|
| Purchase price · closing costs | $185,000 · $3,500 |
| Rehab budget | $45,000 |
| Hard money: down · rate · points | 10% · 11% · 2 |
| Months to sale · monthly carry | 6 · $300 |
| Expected sale price (ARV) | $285,000 |
| Commission · closing · staging | 6% · 1.5% · $2,000 |
A 10% down payment leaves a $166,500 loan at 11% interest-only, which is $1,526 a month, or $9,158 across six months. Two points on that loan cost $3,330, and the taxes, insurance and utilities add $1,800. Stack those on the $185,000 price, $3,500 of purchase closing and $45,000 of rehab and the total project cost is $247,788.
Then the sale takes its share. A 6% commission and 1.5% of seller closing costs on a $285,000 sale price come to $21,375, plus $2,000 of staging — $23,375 gone at the closing table. What remains is a net profit of $13,838 on $81,288 of cash invested: a 17.0% return over six months, or 34.1% annualized.
Why that return is less comfortable than it looks
Seventeen percent in six months reads well until you notice how little has to move to erase it. The profit is $13,838 against a $45,000 rehab budget, so a 31% overrun on the rehab alone takes it to zero. The same is true of the sale price: the deal needs $285,000, and selling at about $270,000 instead — just over 5% below expectation — wipes out the entire profit, because the commission falls on the sale price too.
Time compounds it. The loan accrues $1,526 a month whether or not anything is happening, and the carry adds $300 on top, so every extra month costs roughly $1,826 and the annualized return falls faster still. Three months of delay on this project costs about $5,500 — nearly 40% of the profit — for doing nothing at all. That is the structural problem with thin flip margins: the costs are certain and arrive on a schedule, while the revenue is a single uncertain event at the end.
The 70% screen, and what this deal says about it
The page reports a maximum offer at 70% of ARV less the rehab, a convention used to screen deals quickly. Here that is 70% of $285,000 less $45,000, or $154,500 — and the price entered is $185,000, which is $30,500 above it. The deal fails the screen, and the thin profit the full calculation produces is what failing that screen looks like in dollars.
That correspondence is the point of the screen rather than evidence it is a law. It is a shortcut standing in for financing costs, selling costs, holding time and a margin for error, and it is calibrated for a particular combination of those. Change the inputs enough — a cash purchase with no points or interest, a short hold, a low-commission sale — and a deal above 70% can work. Our article on the 70% rule covers where it holds and where it breaks. Use it to sort a list quickly; use this page to decide.
Hard money versus cash
Switch purchase type to Cash and the financing costs disappear — no interest, no points — which adds $12,488 to the profit. But the cash invested rises from $81,288 to $235,300, because the whole purchase price now comes out of your pocket instead of 10% of it. Profit goes up and return on cash goes sharply down.
That is leverage working as designed, and the honest reading is that neither column is simply better. Borrowing converts a large return on a small stake into a smaller absolute profit, and it does so by introducing a payment that runs whether the project does or not. Cash removes the clock and the lender, and ties up capital that could have been two or three deals. The question is not which number is bigger but how many projects you intend to run at once and how confident you are in the timeline.
The inputs people get wrong
Rehab budget is the first. It is the input most often set from a walkthrough rather than a scope of work, and overruns are the normal case rather than the exception, which is why it is worth entering a figure with contingency already inside it instead of adding one mentally later.
Months to sale is the second, and it is usually too short because it tends to be set from the construction schedule alone. The honest figure runs from closing to closing: permitting and material delays, the listing period, the buyer's financing contingency and the closing itself. A six-month entry that means "four months of work" is missing the part of the timeline you control least.
Sale price is the third and the most consequential, because commission scales with it and the entire profit is a residual at the end of the arithmetic. It should come from closed comparable sales of finished properties, not from active listings, which show what sellers hoped for rather than what buyers paid. Our guide on where to find your numbers covers which sources carry closed prices.
If the exit changes
Flips that will not sell at the expected price sometimes become rentals, and that is a different calculation rather than a fallback. Run the finished property through the single-family rental analyzer to see whether the rent supports the all-in cost, and the DSCR loan qualifier to see whether a lender would refinance the hard money into a long-term loan at that rent. If the plan is to buy, rehab, rent and refinance from the start rather than as a rescue, the BRRRR calculator models that sequence properly, including how much of your capital comes back out at the refinance.