House Flipping and The 70% Rule

[John Vitta]

Hello BP community

Are house flippers still using the 70% rule to evaluate if a property is a profitable flip? Especially in the Tampa Bay, Florida area.

[J Scott]

Calculating the profitability of a flip is simple enough that I don't see the need to use rules of thumb instead.

The profit potential of a flip is:

Profit = ARV - Purchase Price - Rehab Costs - Fixed Costs

Fixed costs are simply all of the costs that go into buying, holding and selling the property.  For example, closing costs, loan costs, appraisal, inspection, taxes, insurance, commissions, concessions, etc.

Plug your numbers in, and if the Profit Is reasonable given the cost, time, effort and risk, go for it.