How to Analyze a Flip Deal

Every successful flip starts with a solid deal analysis. The numbers have to work before you make an offer — not after you're knee-deep in a renovation. Here's how to evaluate a potential flip deal like a pro.

The Core Formula

The foundation of flip analysis is the 70% Rule:

Maximum Offer = ARV × 0.70 − Repair Costs

This gives you a quick gut check. If the asking price is above your maximum offer, either negotiate harder or walk away.

Key Metrics to Calculate

After Repair Value (ARV)

The estimated market value of the property after renovations are complete. Pull comps from the last 90 days within a 0.5-mile radius. Adjust for square footage, bedroom count, and condition.

Repair Estimate

Walk the property (or use photos and inspection reports) and estimate every repair cost:

• Cosmetic (paint, flooring, fixtures): $15–25/sqft
• Moderate (kitchen, bathrooms, some structural): $30–50/sqft
• Full gut (everything down to studs): $60–100/sqft

Always add a 10–15% contingency buffer.

Holding Costs

Every month you hold the property costs money:

• Mortgage/hard money interest
• Property taxes (prorated)
• Insurance
• Utilities
• HOA fees (if applicable)

Estimate 4–6 months for a typical flip timeline.

Closing Costs

Budget 2–3% of purchase price for buying costs and 6–8% of ARV for selling costs (agent commissions, title, transfer taxes).

The Profit Calculation

Profit = ARV − Purchase Price − Repairs − Holding Costs − Closing Costs

Target a minimum net profit of $25,000 or 15% ROI on your total cash invested — whichever is greater.

Red Flags That Kill Deals

• Foundation issues — Can add $20,000+ to your budget overnight.
• Environmental hazards — Lead paint, asbestos, mold remediation is expensive and time-consuming.
• Zoning problems — Unpermitted additions or zoning violations can block your sale.
• Declining market — If comps are trending down, your ARV may be lower by the time you list.

Automate Your Analysis

DealDNA's deal analyzer runs these calculations instantly. Input the address, and our AI pulls comps, estimates repairs based on property condition, and generates a full profit projection — complete with sensitivity analysis for different ARV and repair scenarios.