House Flip ROI Calculator

Formula

The formula to calculate the Return on Investment (ROI) for house flipping is:

\[ \text{ROI} = \frac{\text{SP} - (\text{PP} + \text{RC} + \text{HC})}{\text{PP} + \text{RC} + \text{HC}} \]

Where:

$\text{ROI}$ is the Return on Investment
$\text{SP}$ is the selling price of the house
$\text{PP}$ is the purchase price of the house
$\text{RC}$ is the renovation costs
$\text{HC}$ is the holding costs (including mortgage, insurance, taxes, etc.)

What is a House Flip ROI?

A House Flip ROI (Return on Investment) is a measure used by real estate investors to evaluate the profitability of a house-flipping project. It is calculated by dividing the net profit from the sale of the flipped house by the total cost of the investment (including purchase price, renovation costs, and any other expenses). The result, expressed as a percentage, indicates the efficiency of the investment – the higher the ROI, the more profitable the flip.

Example Calculation

Let's assume the following values:

Selling Price (SP) = $300,000
Purchase Price (PP) = $200,000
Renovation Costs (RC) = $50,000
Holding Costs (HC) = $20,000

Using the formula:

\[ \text{ROI} = \frac{300,000 - (200,000 + 50,000 + 20,000)}{200,000 + 50,000 + 20,000} \times 100 = \frac{300,000 - 270,000}{270,000} \times 100 = \frac{30,000}{270,000} \times 100 = 11.11\% \]

The Return on Investment (ROI) is 11.11%.