This page explains, in full, how HouseFlipCalc turns five inputs into a profit estimate — the exact formulas used, the assumptions built into them, and what the calculation deliberately leaves out. We publish this openly so you can judge for yourself whether the estimate is trustworthy, not just take it on faith.
Besides the two formulas below, the calculator shows the difference between your purchase price and the 70% rule maximum offer, profit as a percentage of ARV (Estimated Profit divided by ARV) and return on total cost (Estimated Profit divided by Total Costs). Both percentages show 0.0% when the divisor is zero. Negative or blank inputs are treated as zero, and a loss is displayed with a minus sign, for example -$20,000. The guides on estimating ARV and holding costs use these same formulas in worked examples.
Maximum Offer = (After Repair Value × 0.70) − Estimated Repair Costs
This formula answers a narrower question than the profit estimate below: what is the most you should pay for this property, given what you expect to sell it for and what it will cost to fix up? The 30% that's subtracted out isn't arbitrary — it's a commonly used allowance meant to cover holding costs, selling costs, financing costs, and a reasonable profit margin, all in one lump discount. It is a rule of thumb used across the flipping industry, not a formula unique to this site, and like any rule of thumb it's a starting point for negotiation, not a substitute for calculating your actual expected profit.
Total Costs = Purchase Price + Repair Costs + Holding Costs + Selling Costs
Estimated Profit = After Repair Value − Total Costs
This is the calculation that actually matters for deciding whether a specific deal, at a specific purchase price, is worth doing. Unlike the 70% rule, which works backward from ARV to suggest a ceiling, this formula works forward from the numbers you plan to actually pay and spend, and tells you what's left over.
This tool does not verify your inputs, pull comparable sales data, appraise the property, check permit or zoning requirements, or account for market-specific factors like typical days-on-market in your area. It performs the arithmetic above, instantly and privately in your browser, based entirely on the numbers you provide. The quality of the estimate is only as good as the quality of your inputs — see the After Repair Value and repair-cost guidance on the FAQ and 70% Rule pages for how to arrive at defensible numbers.
Using the calculator's default figures — an ARV of $280,000, repair costs of $35,000, a purchase price of $165,000, holding costs of $4,500, and selling costs of $16,800 — the 70% rule formula gives a maximum offer of $161,000: ($280,000 × 0.70) − $35,000 = $196,000 − $35,000 = $161,000. The profit formula gives total costs of $221,300: $165,000 + $35,000 + $4,500 + $16,800 = $221,300. Subtracting that from the $280,000 ARV gives an estimated profit of $58,700: $280,000 − $221,300 = $58,700. Both formulas run independently — the 70% rule doesn't feed into the profit calculation, so it's possible, and worth checking, for a deal to pass one test and fail the other.
A hard money lender's underwriting and a licensed appraiser's valuation both go through a formal, documented process — comparable-sale adjustments, inspection reports, title review, and in a lender's case, their own risk-adjusted loan-to-ARV ceiling, which is often more conservative than a flipper's own 70% rule estimate. This calculator does none of that. It is a self-serve arithmetic tool: you supply the ARV, repair cost, purchase price, and holding/selling cost estimates, and it performs the same two formulas every time, instantly, with no underwriting judgment layered on top. That makes it fast and useful for an early screen, but it also means a lender or appraiser can reasonably arrive at a different number than this calculator does, because they are checking your inputs against outside data sources that this tool doesn't have access to.
This methodology reflects the calculator as published. If the formulas or default example values are ever changed, this page will be updated to match — the underlying arithmetic (the 70% rule and total-cost-versus-ARV) is a standard, publicly known approach used across the fix-and-flip industry, not a proprietary model.