Purchase price plus rehab is only part of what a flip costs. Buying, holding, financing and selling costs often add 15–20% of the after-repair value. Here's how to estimate each one.
A Full Flip, Start to Finish
| Line | How to estimate | Example ($300K ARV) |
|---|---|---|
| Purchase | Your offer | $150,000 |
| Rehab | Bids + 10–15% contingency | $60,000 |
| Buying costs | About 2% of the price | $3,000 |
| Holding (6 months) | Taxes, insurance, utilities, upkeep | $6,000 |
| Financing | Hard money ~11% a year on purchase + rehab for the hold, plus 2 points | $15,750 |
| Selling costs | About 8% of the sale price | $24,000 |
| Estimated profit | ARV minus everything above | $41,250 |
Holding Costs Grow Every Month
Property taxes, insurance, utilities, lawn care and HOA dues keep running until you close the sale. Plan on the rehab plus 1–3 months to sell, and run the numbers at 6 months even if you hope for 4.
Financing a Flip
- Hard money: fast approvals based on the deal, typically 10–12% interest plus 1–3 points; often funds part of the rehab in draws.
- Private money: friends, family or investors; terms are negotiable — put them in writing.
- Cash or a HELOC: cheapest, but ties up money you could use on the next deal.
Return on Cost
Divide the estimated profit by everything you spend (purchase, rehab, buying, holding and financing). Many flippers want 15% or more for a light rehab and 20% or more for a heavy one, because the risk is higher.
Profit on a home held less than a year is usually taxed as ordinary income, and frequent flippers may owe self-employment tax. Talk to a tax professional before your first flip, not after.
Use the same assumptions for every property you look at — the same rehab levels, months, rates and selling costs — so you're comparing deals, not optimism.