Offer price, financing, holding and selling costs, and return on cash
Updated October 2026
The calculator builds the total project cost from seven pieces and subtracts it from the after-repair value (ARV). With the default inputs:
| Line | How it is figured | Amount |
|---|---|---|
| Purchase price | Your offer | $220,000 |
| Buying closing costs | 2% of price | $4,400 |
| Repairs | Contractor bids | $60,000 |
| Loan interest | Loan of 85% of price + repairs = $247,000, × 11% ÷ 12 × 6 months | $13,585 |
| Loan points | 2% of the loan | $4,940 |
| Holding costs | $1,200 a month of taxes, insurance and utilities × 6 | $7,200 |
| Selling costs | 7% of the $400,000 sale | $28,000 |
| Total cost | $338,125 |
Profit is $400,000 − $338,125 = $61,875. Cash you must bring is the down payment (15% of the price, $33,000) plus closing costs, points, interest and holding costs paid along the way: $63,125. Return on cash is 98.0% for six months; compounded to a year, (1 + 0.980)12/6 − 1, it shows as 292%. The selling costs are deducted from the ARV, which is why the 70% rule leaves 30% of the ARV for financing, holding, selling and profit together.
| Scenario (other inputs at default) | Total cost | Cash needed | Profit before tax | Return on cash | After 24% tax |
|---|---|---|---|---|---|
| Default: bought at the 70% line, sold in 6 months | $338,125 | $63,125 | $61,875 | 98.0% | $47,025 |
| Sale takes 9 months | $348,518 | $73,518 | $51,482 | 70.0% | $39,127 |
| Sale takes 12 months | $358,910 | $83,910 | $41,090 | 49.0% | $31,228 |
| Repairs run 25% over ($75,000) | $354,250 | $64,250 | $45,750 | 71.2% | $34,770 |
| ARV comes in 7.5% low ($370,000) | $336,025 | $63,125 | $33,975 | 53.8% | $25,821 |
| Paid $250,000 (above the 70% line) | $370,638 | $70,138 | $29,362 | 41.9% | $22,316 |
| Repairs over, ARV low and 9 months | $362,955 | $75,055 | $7,045 | 9.4% | $5,354 |
No single setback sinks this deal, but they rarely arrive alone: repairs that run long usually stretch the timeline too. Each extra month here costs about $3,464 in interest and carrying costs, and a 7.5% miss on the ARV removes $30,000 of sale price less the selling costs on it.
If your buyer uses an FHA-insured mortgage, a resale 90 days or less after you acquired the home is not eligible. From day 91 to day 180, a resale price 100% or more above your purchase price requires the lender to get a second appraisal or document the rehab that added the value. Inherited homes, sales by banks and government agencies and some relocation sales are exempt. Plan the listing so a contract with an FHA buyer is dated after day 90.
A home held one year or less produces a short-term gain taxed at ordinary income rates (IRS Topic 409). If you flip often enough that the houses are inventory, “property held primarily for sale to customers” is excluded from capital assets under IRC 1221(a)(1), so the profit is ordinary business income and self-employment tax can apply as well. Repairs, financing costs and selling costs reduce the taxable profit; the tax-rate input is a single rate you supply, not a bracket calculation.
Interest is charged on the full loan for the whole hold, though many rehab loans release repair money in draws, so actual interest can be lower. It ignores lender fees beyond points, contingency reserves, permits, and a sale price that changes with the market during the hold. Taxes are a flat rate you enter; dealer status, state tax and self-employment tax need a tax professional, and contracts, permits and licensing a local real estate attorney.