Underwrite flips in seconds, not spreadsheets.

A profitable house flip is decided before you ever swing a hammer — it's won or lost in the underwriting. Get the numbers right and the renovation is just execution; get them wrong and no amount of granite countertops will save the deal. Whether you run the math by hand or use a fix and flip calculator like Arvo, every flip comes down to four numbers: the after repair value, the rehab budget, your holding and selling costs, and the price you actually pay.

1. Start with the After Repair Value (ARV)

The After Repair Value is what the property will sell for once it's fully renovated. It is the single most important figure in any flip — every other number is derived from it. ARV is established with comparable sales ("comps"): recently sold, fully renovated homes of similar size, age, and condition within roughly a half-mile of your subject property. A reliable ARV uses at least three to five closed sales from the last 90 days, then adjusts for differences in square footage, bed/bath count, lot size, and finish level. Arvo pulls these comps from live MLS-backed data and runs an outlier filter so one over-improved mansion or distressed short-sale down the street doesn't skew your exit price.

2. Apply the 70% rule to find your maximum offer

The 70% rule is the flipper's rule of thumb for the most you should pay. It says your maximum allowable offer (MAO) should be no more than 70% of the ARV, minus the estimated repair costs. The 30% buffer covers your holding costs, transaction costs, financing, and — critically — your profit margin.

On a tighter, higher-priced market you might stretch to 75%; on a riskier or slower market, drop to 65%. The rule is a fast screen, not a substitute for a full profit calculation — which is why Arvo computes both the rule-of-thumb offer and the precise, line-item profit projection for every deal.

3. Budget the rehab honestly

Underestimating repairs is the most common way flippers lose money. Scope the work room by room — roof, HVAC, electrical, plumbing, kitchen, baths, flooring, paint, and exterior — and price it with current local material and labor rates. Always carry a contingency of 10–20% for the surprises hidden behind the walls (rotted subfloor, outdated wiring, foundation issues). Arvo's AI rehab engine estimates these costs by zip code, and Pro users can upload photos for a room-by-room scope.

4. Account for holding and selling costs

The "hidden" costs are what turn a paper profit into a real loss. Before you calculate profit, subtract:

• Financing costs — points and monthly interest on a hard-money or private loan.
• Holding costs — property taxes, insurance, utilities, and HOA dues for the months you own it.
• Selling costs — agent commissions (typically 5–6%), seller-paid closing costs, and staging.
• Buying costs — closing costs and inspections at acquisition.

5. Calculate your profit and ROI

With every cost on the table, your projected profit is simply the exit price minus everything you put in:

In this example the 70% rule would cap the offer at (250,000 × 0.70) − 45,000 = $130,000. Paying $140,000 still pencils to a healthy profit here because the holding period is short and selling costs are controlled — which is exactly why a full underwrite beats a rule of thumb. Arvo runs this entire calculation, plus a downside stress test, on every address in seconds. See a full sample flip report or analyze your first deal free.

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