Enter the deal and see whether it actually works — including the costs most spreadsheets forget: financing, carrying, and selling.
A flip is profitable on four costs, not one. Most losses come from the three that get underestimated: financing (interest plus points on the money you borrow), carrying (taxes, insurance, utilities, and interest every month you own it), and selling (commissions, transfer taxes, and concessions, typically six to eight percent of the sale).
The rule of thumb says the most you should pay the seller is roughly seventy percent of the after-repair value minus your renovation budget. That thirty-percent gap is not profit — it absorbs financing, carrying, and selling costs, and what remains is the profit.
The 70% figure is a purchase-price ceiling. It is not the loan amount, and it is not what a lender will advance.
The two numbers answer different questions. The 70% ceiling asks am I buying this right? The estimated loan asks how much capital will this project attract? A deal can clear one and fail the other, which is why both appear above.
Being above the ceiling is a caution flag, not an automatic no. It means you have less cushion than the rule is designed to protect, so your after-repair value had better be well supported by sold comparables. Run the stress test at the bottom of this page before you decide.
You do not receive the loan as a single cheque. At closing, the lender wires the purchase portion — your loan less the renovation holdback — and you bring the difference between that and the purchase price as your cash to close. The renovation budget is then held back and released in draws as work is completed and inspected. The breakdown above shows both pieces.
Note also that the loan is the lower of two limits: a percentage of your total cost, and a percentage of the after-repair value. The calculator names whichever one is binding — usually the first question worth asking when a loan comes back smaller than you expected.
A deal that only works under perfect assumptions is not a deal. Run it once at your numbers, then again with a ten percent budget overrun and a five percent softer sale.
The most you should pay the seller is roughly 70% of the after-repair value minus your renovation budget. The 30% gap covers financing, carrying, and selling costs and leaves profit. It is a purchase-price ceiling and a first-pass filter — it is not the loan amount and not a full underwrite.
Investors commonly look for a profit that represents a meaningful return on the cash actually invested, evaluated on an annualized basis because a flip ties up capital for months rather than years. A thin projected margin leaves no room for the overruns that reliably occur.
No. The 70% figure is a ceiling on what you pay the seller. The loan is a separate calculation — typically the lower of a percentage of your total project cost and a percentage of the after-repair value — and it is usually a larger number because it also funds the renovation through a holdback.
Purchase closing costs are not broken out separately — add them to your purchase price or carrying figure. Selling costs are handled by the selling-cost percentage, which should include commissions, transfer taxes, and typical concessions.
Send the address, the budget, and the timeline — you will get a straight answer, not a maybe.
Submit a ProjectGround-up budget, contingency, and cost per finished square foot
Monthly cash flow, DSCR, cash-on-cash return, and cap rate
How much cash comes back at refinance, and how much stays in
These interactive calculators are made available to you as self-help tools for your independent use. They are provided for general informational and illustrative purposes only and are not intended to provide financial, legal, tax, or investment advice. All examples are hypothetical. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances, and results are estimates only — not a rate quote, a loan offer, an approval, or a commitment to lend. Actual terms, costs, and outcomes vary by borrower, property, and transaction, and all financing is subject to underwriting. We encourage you to seek personalized advice from qualified professionals regarding your project and your finances.