The formulas
Loan = price × loan % on purchase + rehab × loan % on rehab
Interest = loan × annual rate ÷ 12 × months held
Points = loan × points %
Total cost = price + rehab + buying closing + points + fees + interest + holding costs + selling costs
Profit = ARV − total cost
Cash in = total cost excluding selling costs − loan
Return on cash = profit ÷ cash in
Selling costs are paid out of the sale price, so they are not part of the cash you put in up front. See how hard money costs add up on a flip for a worked example.
Frequently asked questions
What is the 70% rule?
A common rule of thumb says a flipper should pay no more than 70% of the ARV minus the repair costs. It is a quick filter, not a guarantee of profit.
What are points on a hard money loan?
Points are an upfront fee, with each point equal to 1% of the loan amount. Terms vary by lender, so check your term sheet.
Why is my profit different from my lender's numbers?
Lenders may fund rehab money in draws, charge inspection or draw fees, or use different day counts. Enter your actual fees in Other lender fees.
What costs are missing?
Permits, change orders, overruns and a longer timeline can all reduce profit. Add a cushion to your rehab budget and months held.
Is this financial advice?
No. Cap and Flip is a free calculator and is not a lender, broker or advisor. Numbers are estimates.