Fix & Flip Deal Analysis Guide

A step-by-step framework for evaluating fix and flip opportunities before you commit capital.

1. Understanding the Numbers

Every fix and flip deal comes down to a few core numbers:

Maximum Allowable Offer (MAO) = After Repair Value (ARV) × 70–75% − Renovation Costs − Holding Costs − Desired Profit

The 70–75% factor accounts for your purchase price, closing costs, and financing. More conservative investors use 65–70%; experienced investors with strong contractors may use 75%.

Key metrics to track:

ARV (After Repair Value): What the property will be worth when fully renovated
Purchase price: What you pay for the property
Renovation budget: All-in rehab costs including labor, materials, permits, and contingency
Holding costs: Loan interest, taxes, insurance, utilities during the hold period
Selling costs: Agent commission, closing costs, staging

2. ARV Calculation Methods

Comparable Sales (Comps):

Use 3–6 recently sold properties within 0.5–1 mile
Same bedroom/bathroom count
Similar square footage (±15%)
Sold within last 90–180 days
Adjust for condition, lot size, and location

Adjustment process:

List each comp’s sale price
Add or subtract for differences (e.g., +$5K for extra bathroom, −$3K for smaller lot)
Average the adjusted values to estimate ARV

Rule of thumb: If you can’t find good comps, the deal may be too risky. Comps are your foundation.

3. Renovation Budgeting

By room (typical ranges):

Kitchen: $8,000–$25,000 (cosmetic) to $25,000–$50,000+ (full gut)
Bathroom: $5,000–$15,000 (cosmetic) to $15,000–$30,000 (full remodel)
Flooring: $3–$8 per sq ft (laminate/LVP) to $8–$15+ (hardwood)
Paint: $2–$4 per sq ft (interior)
HVAC: $4,000–$12,000 (replace)
Roof: $5,000–$15,000+ (replace)
Foundation: Get professional quotes—can be $10,000–$50,000+

Always add 10–15% contingency for unknowns. Every rehab has surprises.

4. Profit Margins

Minimum profit targets:

$20,000–$30,000 minimum per deal (many investors)
15–20% of ARV as a percentage target
Scale with risk: smaller margins on turnkey neighborhoods, larger margins on distressed areas

Factor in your time: If the deal takes 6 months and nets $25K, that’s $4,166/month. Is that worth your effort?

5. Exit Strategy Planning

Primary exit: Retail sale to owner-occupant or investor

Backup exits:

Wholesale to another investor
Rent and hold (BRRRR pivot)
Seller financing

Timeline: Plan for 4–8 months from purchase to sale. Delays happen—budget for extra holding costs.

Quick Checklist

[ ] ARV supported by 3+ solid comps
[ ] Renovation budget with 10–15% contingency
[ ] MAO calculated and verified
[ ] Profit meets your minimum ($20K+ or 15–20% of ARV)
[ ] Exit strategy and timeline defined
[ ] Financing terms and holding costs accounted for

Fix & Flip Deal Analysis Guide