Seven Numbers Every Fix-and-Flip Investor Should Know Before Closing

A property can look like a great investment and still become an expensive mistake. Successful fix-and-flip investing requires calculating the complete cost of acquiring, financing, renovating, holding, and selling the property.

1. Purchase Price

The purchase price is the amount paid to acquire the property, but it is not the investor’s total acquisition cost. You must also account for earnest money, title fees, inspections, and insurance.

2. Renovation Budget

Your renovation budget should be based on an itemized scope of work. Walk through the property with a qualified contractor to evaluate structural repairs, mechanical systems, and cosmetic updates.

3. After-Repair Value (ARV)

ARV is the estimated market value after improvements. It should be based on recently sold comparable renovated properties, not just active listings.

4. Financing Costs

Borrowed capital has a cost. Account for interest, origination points, appraisal fees, and closing costs over a realistic project timeline.

5. Holding Costs

Every additional month reduces profit. Include property taxes, insurance, utilities, and maintenance in your monthly expense projections.

6. Selling Costs

Resale involves commissions, transfer taxes, and staging. Estimate these expenses before purchasing to avoid unpleasant surprises.

7. Contingency and Projected Profit

Renovation projects rarely unfold perfectly. A contingency reserve provides room for hidden issues or timeline delays. Test your deal under less favorable conditions to ensure it remains profitable.