Enter the selling price, purchase price, renovation costs, and holding costs into the calculator to determine the Return on Investment.
House Flip Roi Formula
The following formula is used to calculate the Return on Investment (ROI) for house flipping. Variables:
ROI = (SP - (PP + RC + HC)) / (PP + RC + HC)
- ROI is the Return on Investment
- SP is the selling price of the house
- PP is the purchase price of the house
- RC is the renovation costs
- HC is the holding costs (including mortgage, insurance, taxes, etc.)
To calculate the ROI for house flipping, subtract the sum of the purchase price, renovation costs, and holding costs from the selling price. Then, divide the result by the sum of the purchase price, renovation costs, and holding costs. The result is the ROI, which represents the profit as a percentage of the total investment.
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.
How to Calculate House Flip Roi?
The following steps outline how to calculate the House Flip ROI.
- First, determine the selling price of the house (SP).
- Next, determine the purchase price of the house (PP).
- Next, determine the renovation costs (RC).
- Next, determine the holding costs (HC), including mortgage, insurance, taxes, etc.
- Next, gather the formula from above = ROI = (SP – (PP + RC + HC)) / (PP + RC + HC).
- Finally, calculate the House Flip ROI.
- After inserting the variables and calculating the result, check your answer with the calculator above.
Example Problem :
Use the following variables as an example problem to test your knowledge.
Selling price of the house (SP) = $200,000
Purchase price of the house (PP) = $150,000
Renovation costs (RC) = $20,000
Holding costs (HC) = $10,000
