Definitions • Assumptions • Risk controls

Flip: What the calculator means

This page explains the terms used in the Flip analyzer and how to interpret profit/ROI metrics. Flips are extremely sensitive to rehab budget and timeline—so validate those first.

Flip Strategy

A flip is a short-term project where you buy, renovate, and sell for a profit. The Flip analyzer focuses on:

Purchase + purchase closing costs
Rehab budget
Holding costs during rehab + while listed
Sale price and selling costs
Net profit, ROI, annualized ROI, and break-even sale price

What it does not model: income taxes, contractor draw schedules, detailed debt structures, and project management overhead unless you include it in “utilities/other.”

Key Outputs

Output	Meaning
Profit (Net)	Net sale proceeds − payoff − cash invested (down + closing + points + rehab + holding).
ROI	Profit ÷ cash invested. Simple return on the cash you put at risk.
Annualized ROI	Compounded return adjusted for total holding months (rehab + market/closing).
Break-even Sale Price	Approx sale price needed to cover costs given your selling cost percentages.

ROI and annualized ROI can look great on paper if the timeline is underestimated. Add buffer months.

Sale Price, Selling Costs, and Net Proceeds

Sale Price / ARV

In the flip analyzer, “Sale Price / ARV” is the price you expect to sell for. Use conservative comps and account for market shifts.

A small error in sale price can wipe out profit, especially when holding costs are high.

Selling Costs

Selling costs include agent commission, seller closing costs, and any concessions/credits. These costs come out of the sale price to produce net sale proceeds.

If your market typically expects credits, build them in—don’t “hope” them away.

Net sale proceeds (conceptually)

Net sale proceeds ≈ Sale price − (agent commission + seller closing costs + concessions)

Holding Costs

Holding costs are usually the biggest “silent killer” in flips. The calculator estimates them using:

Component	Description
Loan payment	Interest-only or amortizing payment on the purchase loan (approx).
Taxes & insurance	Monthly estimate during the project.
Utilities / other	Utilities, lawn/snow, dumpsters, staging storage, etc.
Total holding	(Rehab months + sale months) × monthly holding components

If your timeline is uncertain, increase “sale months” by a buffer. The “perfect timeline” rarely happens.

Points & Financing Notes

“Points” are modeled as a percent of the purchase loan and treated as a cost at purchase. Hard money terms vary (points, fees, draw schedules, minimum interest).

The analyzer uses a simplified payoff assumption (payoff ≈ original loan amount). For most flips this is close enough directionally, but it isn’t exact if you use amortizing loans or pay principal down.

Common Flip Pitfalls

Underestimating rehab

Missing major systems (roof, sewer, foundation, electrical) or underestimating labor/materials is the most common profit destroyer. Keep a contingency in mind.

Timeline slip

Permits, inspections, contractor scheduling, and supply delays add time—and time adds cost. Your biggest lever is finishing on schedule.

ARV optimism

Overestimating resale value turns a marginal deal into a “great” deal on paper. Use conservative comps and adjust for condition and buyer preferences.

Selling friction

Price reductions, credits, and buyer inspection demands happen. Don’t ignore them—model them.

If the deal only works with perfect assumptions, it probably doesn’t work.

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