How to Analyze a House Flip Deal Step by Step

How to Analyze a House Flip Deal Step by Step

Because your profit isn’t made on demo day—it’s made before you write the offer.

If you’ve ever stared at a “fixer-upper” and thought, “This feels like a deal,” pause. Feelings don’t pay closing costs. Numbers do. Here’s a no-fluff, step-by-step way to analyze any flip—before you fall in love with the porch swing.

Step 1: Lock in your Buy Box (so you don’t chase everything)

Decide where, what, and how big you’ll buy—before you look at a single house.

• Price range (as-is): e.g., $120k–$220k

• Zip codes / school zones you actually understand

• Bed/bath/sqft range (e.g., 3/2, 1,100–1,800 sqft)

• Rehab level you can handle (light / medium / heavy)
  If it’s outside your box, pass. Your future self will thank you.

Step 2: Gather the facts (no guessing)

Pull what you can before the walkthrough:

• Bed/bath/sqft, year built, lot size

• Days on market or seller situation

• Obvious condition flags (roof age, HVAC type, foundation notes)

• HOA rules / septic vs. sewer (can be deal-killers)

Step 3: Nail your ARV using real comps

After Repair Value (ARV) = what your house should sell for once the rehab is done.
How to comp it right:

• Use sales from the last 90–120 days

• Within ½–1 mile (same school zone if possible)

• Match beds, baths, and within ~15% sqft

• Similar lot type (sloped vs. flat matters), garage vs. carport, basement vs. crawl

• Throw out outliers; average the best 3 repaired comps

Quick rule: If your ARV relies on a unicorn comp from eight months ago, the deal is already shaky.

Step 4: Estimate repairs like an investor (not a dreamer)

Walk room-by-room and line-item the work. Then add a contingency.
Common buckets: roof, HVAC, electrical, plumbing, windows/doors, kitchen, baths, floors, paint, drywall/trim, exterior, landscaping, permits.

• Light rehab: $15–$25/sqft

• Medium rehab: $25–$45/sqft

• Heavy rehab: $45–$70+/sqft
  Always add 10–20% contingency. Surprises aren’t “if,” they’re “when.”

Step 5: Don’t forget holding, selling, and soft costs

These nibble your profit to death if you ignore them.

• Holding: loan interest, utilities, insurance, lawn care, taxes

• Selling: agent commissions + seller concessions + closing fees (plan 7–10% of ARV)

• Soft: permits, dumpsters, inspections, staging, photos, lockbox, etc.

Step 6: Calculate your MAO (Maximum Allowable Offer)

Use both methods below, then take the lower number. Safety first.

A) The Classic 70% Rule

MAO = (ARV × 70%) − Repairs
Example:

• ARV = $300,000

• Repairs = $50,000

• ARV × 0.70 = $210,000

• MAO = $210,000 − $50,000 = $160,000

B) The Detailed Profit Formula

MAO = ARV − (Repairs + Holding + Selling + Profit + Buffer)
Example:

• ARV = $300,000

• Repairs = $50,000

• Holding/Misc = $8,000

• Selling costs (8% of ARV) = $24,000

• Target profit = $30,000

• Buffer = $10,000

• Total costs = $50,000 + $8,000 + $24,000 + $30,000 + $10,000 = $122,000

• MAO = $300,000 − $122,000 = $178,000

Decision: The 70% Rule gave $160,000. The detailed formula gave $178,000. Take the lower—$160,000—as your cap.

Step 7: Run a quick sensitivity check (what if you’re wrong?)

• ARV down 5%: does it still work?

• Repairs up 15%: still alive?
  If a small wobble kills the profit, it’s not a deal. Move on.

Step 8: Make the offer like a pro

• Submit below your MAO (leave room to negotiate)

• Short inspection window (5–7 days), strong EMD, proof of funds

• Keep terms clean; sellers like certainty more than drama

Step 9: Red flags (instant pass)

• Foundation or structural issues you can’t price confidently

• Illegal additions / permit nightmares

• Well/septic problems with no quick fix

• ARV depends on a top-of-market outlier

• Your gut says, “This is fine,” but the math says, “Nope.”

Quick checklist (copy/paste this into your notes)

• Fits my buy box

• ARV from 3 solid comps (90–120 days, ½–1 mile)

• Repairs estimated with 10–20% contingency

• Holding + selling + soft costs included

• MAO from both methods (took the lower)

• Sensitivity check passed

• Offer terms ready (EMD, POF, timeline)

Final Word

Great flippers aren’t lucky—they’re disciplined. If you stick to the numbers, you’ll pass on 10 decent-looking houses to land the one that actually pays you.

Ready to level up?

At REAP, we don’t just hand you a calculator. We walk with you through the deal—finding it, analyzing it, funding it, and getting it sold.
Curious about hands-on help for your first flips? Our Navigator Mentorship Program is limited-capacity and built for real results.

Reach out directly: Lanny — [email protected] | Roy — [email protected]
Or jump into Flip Starter Pro to get moving now.

Dad Joke Bonus

I told my calculator we needed to talk.
It said, “You can count on me.”