The direct answer
A fix-and-flip break-even sale price is the sale price at which net sale proceeds equal the project’s acquisition, renovation, financing, holding and other included costs. Because some selling costs are percentage-based, break-even is not always just total cost plus a fixed closing amount.
Define the project cost base
Include acquisition price and buyer-side closing costs, rehabilitation, financing charges, property taxes, insurance, utilities, maintenance and other holding costs expected through sale. State whether investor labor, contingency and overhead are included.
To apply the approach to an editable scenario, use the House Flipping Calculator. For the neighboring question, explore ARV Calculator.
Handle sale costs according to their structure
Fixed sale costs can be added directly, while percentage-based selling costs depend on the sale price itself. If the selling-cost rate is r and fixed project costs are C, a simplified break-even price before other fixed sale charges is C divided by one minus r.
Use break-even as a boundary, not a target
A project priced only to break even has no modeled profit cushion for delays, change orders, appraisal issues or price negotiation. Compare the break-even value with a supportable resale range and run downside scenarios.
Worked example
If all pre-sale project costs total $300,000 and percentage selling costs are modeled at 8% of sale price, simplified break-even is $300,000 ÷ 0.92, or about $326,087. Additional fixed sale charges would raise that figure.
Common mistakes and limitations
Do not add an 8% selling-cost estimate to total cost as though it were 8% of cost; when the fee is based on sale price, the break-even equation must solve for that sale price.
Does not estimate construction quantities or guarantee ARV/sale price. Taxes are excluded unless user includes them in costs.
Frequently asked questions
Is break-even sale price the same as ARV?
No. ARV is a value estimate after renovation; break-even is the modeled sale price required to cover defined costs.
Should profit be included in break-even?
No. A required profit target belongs above break-even and should be modeled separately.
Sources and further reading
The article’s examples are illustrative arithmetic. The references below provide context for operating, valuation or transaction concepts; they do not endorse the assumptions or the calculator.
- Office of the Comptroller of the Currency — Comptroller's Handbook — Commercial Real Estate LendingNOI, direct capitalization, cap-rate valuation and DCF concepts for commercial real estate.
Read our editorial policy for the scope of these educational methods.