How it works
Profit on a flip is the after-repair value minus everything it took to get there: purchase, rehab, loan interest, points, holding costs and selling costs. Cash ROI compares that profit to the cash you actually put in.
Frequently asked questions
What is a good profit margin on a flip?
Many investors target a net profit of 10–20% of the after-repair value, or apply the 70% rule (purchase + rehab ≤ 70% of ARV) as a quick screen. The right target depends on the market and the risk in the scope.
What costs do new flippers forget?
Holding costs (taxes, insurance, utilities), interest during the sale period, points, and selling costs — commissions and seller concessions often run 6–8% of the sale price.
Does financing improve ROI?
Leverage reduces the cash you put in, which usually raises cash-on-cash ROI even though interest and points lower total profit.
