Fix and flip: the numbers that matter
Flip profit is the after-repair value minus everything you spend: purchase, rehab, holding and selling costs. The two numbers that make or break a flip are an accurate ARV and a realistic rehab budget. Experienced flippers target a 15% to 20%+ return on cost.
A flip lives or dies on two estimates and a stack of costs that are easy to overlook. Get the after-repair value and rehab budget right, count every cost, and the profit takes care of itself.
The formula
Where the money goes
| Cost | Typical size |
|---|---|
| Selling costs | 8% to 10% of ARV (commission + closing) |
| Holding costs | ~2% to 4% of price over 6 to 9 months |
| Buying costs | 2% to 3% of price |
| Rehab | Project-specific; pad with a contingency |
A worked example
Buy at $200,000, spend $50,000 on rehab, hold for six months at $1,500/mo ($9,000), and sell at an ARV of $320,000 with 8% selling costs ($25,600). Total cost is about $284,600, for a profit near $35,400, roughly a 14% return on the $259,000 spent. Notice how the "hidden" holding and selling costs took $34,600 out of it.
What is a good flip margin?
Most experienced flippers want at least a 15% to 20% return on cost, and many target 25%+ to justify the risk. Worth knowing: industry flipping reports showed gross ROI falling to roughly 23% in early 2025, down from about 30% a year earlier, so margins are tighter than the old rules of thumb suggest.
Protecting your margin
Because ARV and rehab are estimates, build in a cushion. The 70% rule is the classic guardrail: cap your offer at 70% of ARV minus rehab, so there is room for costs and profit even if things slip.
Frequently asked questions
How much profit should a flip make?
Aim for at least a 15% to 20% return on your total cost; many experienced flippers target 25%+. In dollar terms, recent industry data put the median gross profit in the mid-$60,000s, but that is before holding and selling friction.
What are the hidden costs of flipping?
Holding costs (loan interest, taxes, insurance, utilities) every month you own it, and selling costs (agent commission and closing) of 8% to 10% of the resale. Both are easy to forget and can erase a thin margin.
How long does a typical flip take?
A common cycle is 6 to 9 months from purchase to sale. The longer it drags, the more holding costs eat your profit, so timeline discipline matters.
Is flipping still profitable in 2026?
It can be, but margins have compressed. Gross ROI dipped to around 23% in early 2025 from roughly 30% a year earlier, so accurate ARVs, tight rehab budgets and discounted purchases matter more than ever.