How Much Does It Cost to Flip a House?

Purchase price: the contracted property price (often below market as distressed property). Acquisition costs: 2.5-3.5% of purchase (title, appraisal, inspections, survey, recording). Renovations: itemized contractor budget for all improvements (roof, HVAC, plumbing, electrical, flooring, paint, etc.). Permits and inspections: varies by jurisdiction and scope; assume $2-5k. Holding costs: property taxes (monthly), insurance (monthly), utilities (if vacant), lawn/maintenance. Typical holding cost $1-3k/month depending on property and location. Realtor commission: 6% of sale price when you sell (paid at closing from proceeds). Example: purchase $200k property, 3% acquisition = $6k, $50k rehab, 6 months holding at $2k/month = $12k, sale at $350k with 6% commission = $21k. Total costs: $200k + $6k + $50k + $12k + $21k = $289k. Sale proceeds: $350k. Profit: $350k - $289k = $61k (17% margin).

Renovation costs vary dramatically by property condition, location, and scope. Light rehab (cosmetic, flooring, paint): $15-30k. Standard rehab (mechanical updates, kitchen, bathroom): $40-80k. Gut rehab (full renovation, structural): $100-200k+. Example breakdown for $50k standard rehab: roof $8k, HVAC $7k, plumbing $6k, electrical $5k, flooring/paint $5k, kitchen cabinets/counters $8k, bathroom fixtures $4k, permits/inspections $3k, contingency $1k. Key: get contractor estimates, not guesses. LYNK Mortgage requires itemized contractor bids; we compare to market rates in your area. Overestimating is safer than underestimating—hidden mold, structural issues, or code failures can blow budgets. Always include 10% contingency buffer.

Holding costs multiply with timeline. 6-month flip with $2k/month holding = $12k. 12-month flip with $2k/month = $24k. This is why speed matters: every month you can shave off reduces costs, improves ROI. Holding costs include: mortgage/loan interest (already accounted for in LYNK Mortgage loan), property taxes (prorated monthly), insurance (policy during holding), utilities (if vacant), maintenance/lawn care, security (if necessary). LYNK Mortgage factors holding costs into your rehab budget; if project is $50k rehab + $12k holding (6 months) + $6k acquisition, that's $68k total, not just $50k.

The 70% rule is a rough guideline: purchase price + rehab costs should equal 70% of ARV or less. Example: ARV $350k × 70% = $245k. If you purchase at $200k and rehab at $40k, total $240k (under $245k threshold), deal pencils with margin for holding, commission, and profit. This rule is conservative and ignores holding costs and commission, but it's a quick filter. Real profitability requires: realistic ARV (based on recent comps), conservative rehab budget (+10% contingency), realistic timeline (6-month, not 3-month), and realistic commission (6%, not 5%). After financing costs and all-in expenses, expect 15-25% profit margin on strong deals. Thin-margin flips (5-10% profit) are risky; one cost overrun wipes profit. Strong flips (20%+ profit) tolerate surprises.