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Published On: July 1st, 20243.8 min read

House Flipping Cost Calculator: Preparing for Renovation, Taxes, and Other Expenses

When flipping houses, you want to be sure of your rehab expenses. HomeVestors® has been in the house flipping business since 1996, and we can assure you there are fluctuations on every house flip. Thekey is to maintain a good profit level, and that starts with being astute in calculating your costs.

Key Expenses in House Flipping

While some have attempted to create a house flipping cost calculator, we are going to walk you through creating your own. You can create a spreadsheet or work it out on paper – just be sure to account for the following potential costs:

Purchase Price

The price you pay for the property is your final fee to consider, however, it’s helpful to make an educated guess as your starting point. Consider developing three different scenarios for the purchase price so you can be prepared if your initial offer isn’t accepted. If you’re financing the purchase, record your required down payment as your first expense.

Closing Costs

While often included as part of the purchase price, you should know what your closing costs entail: an appraisal, title search, lending fees, and legal fees. If you end up not obtaining an official appraisal, that eliminated expense helps your profit, but we recommend you account for it anyway since it may save you more money in the long run.

Rehabilitation Costs

Rehab costs – materials and labor – are a key part of your house flipping cost calculator, and it’s also where expenses can be easily miscalculated.

The rehab projects you choose to do are based on the opportunity for the best resale price. Some costs may be required to bring a house up to code or comply with a homeowners’ association. Other costs can be discretionary and based on what’s likely to provide the best return on investment

You can save money doing the labor work yourself, but you will likely have to budget for some specialized labor (i.e., electrician, plumber, etc.). Know the rates for these services to develop a solid estimate.

Two more things to consider with rehab costs: First, you may need a permit to perform renovations, and second, remember to include any cosmetic improvement expenses because they can add up.

Carrying Costs

Estimate the time it will take you to complete the house flip by selling the property. The longer it takes, the longer you incur carrying costs such as a mortgage, utilities, taxes, insurance, homeowner association fees, etc.

Marketing and Selling Costs

When you’re ready to sell your flipped house, it needs to be marketed. That usually involves working with a real estate agent, so budget for their commission.

The 70% Rule

An industry-accepted guide to house flipping is the 70% rule, which says you shouldn’t spend more than 70% of the after-repair value (ARV) to purchase a home you wish to flip. For example, if your goal is to sell a house for $300,000, your purchase price shouldn’t exceed $210,000. This leaves you $90,000 to cover rehab costs plus profit.

Renovations rarely go exactly according to schedule, and there are often unanticipated fees that weren’t part of your house flipping cost calculator. Following the 70% rule gives you some leeway if that happens.

Be More Confident with House Flipping

House flipping involves a lot of variables, and for someone who is not experienced in this line of work, or who is not achieving at the level they feel is possible, becoming a HomeVestors® franchise owner could be a solution.

HomeVestors is a house flipping franchise that uses a proven business model with proprietary applications that can help build confidence in this business. The cost calculator work you have read here is one of the proprietary tools we offer, based on materials and labor rates in your area, which makes estimates more on point.  This is part of the detailed house flipping training you receive as a franchise owner.
We also provide the marketing piece to help you find homes you can purchase for cash and help you advertise them to motivated buyers. We also have good financing options with lenders who understand the industry.

Contact HomeVestors®

You can join our franchise of more than 1,000 franchise owners across 45 states in the U.S. and have an instant network of people who are a resource for you when you’re getting started and as you grow your HomeVestors business.

Reach out to us and a member of our franchise team will explain the different options for joining the HomeVestors business.


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