The direct answer
Flip profit is expected sale price minus acquisition, rehab, buying, holding, financing and selling costs. Percentage selling fees depend on the final sale price, so break-even sale price must account for that relationship rather than simply equal pre-sale costs.
Build costs in transaction order
Record purchase and acquisition costs first, then rehab and the period’s holding and financing amounts. Specify whether interest and other financing charges are already included in holding costs. Estimate selling expenses separately from the buyer-side acquisition costs. A budget built in this order makes duplication and missing charges easier to identify. The calculator accepts rehab costs; it does not estimate construction quantities.
To apply the approach to an editable scenario, use the House Flipping Calculator. For the neighboring question, explore ARV Calculator.
Account for fees that move with sale price
A percentage selling-cost assumption changes when the sale price changes. Pre-sale capital divided by one minus the selling-cost percentage gives the simple break-even price. Fixed sale charges need to be included consistently in the cost basis if using this formula. A zero-fee assumption can be useful for comparison but should not conceal actual transaction obligations.
Distinguish profit, ROI and cash timing
Profit is a dollar surplus. The linked model divides that profit by total pre-sale capital for a project ROI, without annualizing it or turning it into a leveraged equity return. A delayed exit can add costs even if the selling price is unchanged. Review a lower sale price and longer holding period before relying on the base case.
Worked example
At $400,000 sale price and 8% selling costs, selling expenses are $32,000. Pre-sale costs of $342,000 produce $374,000 total project cost and $26,000 profit. ROI on pre-sale capital is 7.60%; break-even sale price is $342,000 divided by 0.92, or $371,739.13.
Common mistakes and limitations
Do not deduct a commission dollar amount again when it is already in the selling-cost percentage. A renovation budget is not automatically the amount by which market value rises.
Does not estimate construction quantities or guarantee ARV/sale price. Taxes are excluded unless user includes them in costs.
Frequently asked questions
Is project ROI annualized?
No. The displayed ratio is profit relative to the entered pre-sale capital for the project.
Can profit be negative?
Yes. Costs can exceed expected sale proceeds; the model preserves the loss scenario.
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.