Fix-and-Flip Math: How to calculate your maximum offer
Most investors start a flip by asking what they can pay for the property. That is the last number to solve for.
Fix-and-flip math starts with two estimates you need to defend: a conservative resale price and a realistic rehab budget. Subtract the rehab, carrying and selling costs, and the profit you need from that resale price. What is left is your maximum offer.
Maximum offer = Conservative resale price - Rehab budget - Carrying and selling costs - Required profit
National Q1 2026 home-flipping data reported a typical gross spread of $66,000. Because that figure is the resale price minus the purchase price, it excludes rehab and the rest of the project expenses. It is not profit. It is the space every cost has to fit inside.
That is the point of the calculation. If the resale and rehab estimates are weak, the purchase price is guesswork. A low purchase price does not rescue a bad scope or an inflated after-repair value. Cheap can still be expensive.
Start with a conservative resale price
After-repair value, or ARV, is an opinion until the market supports it. Build the estimate from recent closed sales that match the subject in location, property type, size, layout, and finished condition. Trilith's guide to appraisals, comps, and ARV risk explains why the highest nearby sale is not automatically the right comp.
Use at least a base case and a downside case. The base case should reflect the most defensible comp set, not the number needed to make the offer work. The downside case should assume a lower price, a slower sale, or both. If the deal only works at the top of the range, the range is doing more work than the house.
Time matters because the comp set ages while the project is under way. The national flipping report put the typical acquisition-to-resale period at 165 days. Separate June 2026 national housing data put the median time on market at 53 days. Neither number predicts a local sale, but both are reasons to underwrite enough time for the rehab, listing, contract, and closing.
Local buyer depth matters more than a national average, which is why market selection belongs in fix-and-flip underwriting. The resale price also depends on scope discipline. National remodeling return data reinforces a useful rule: spend to the comp set, not to personal taste. Once the property reaches the condition buyers and appraisers will support, extra finish can become a gift to the next owner. Thoughtful staging can improve the exit, but it cannot repair an unsupported ARV.
Build the rehab budget before you make the offer
A rehab budget should come from a written scope, quantities, contractor or trade pricing, permits, and a contingency. A per-square-foot shortcut can be useful for a first screen. It is not enough for a final offer when the property has old systems, structural movement, water damage, or a layout change.
A 2026 U.S. renovation study found that 37 percent of respondents who began with a budget exceeded it. The respondents were homeowners, not professional flippers, so that percentage is not a flip benchmark. The causes are still familiar: pricing came in higher, the work was more complex, the scope changed, or demolition exposed another problem.
Separate known scope from allowances and unknowns. Then choose a contingency that fits the property instead of copying one percentage into every deal. A well-inspected cosmetic project may support a smaller cushion. A house with old plumbing, foundation concerns, or major demolition needs more room.
Financing belongs in the same plan. A fix-and-flip loan and draw structure affects when rehab cash is available and how much capital you must carry between draws. A sound budget accounts for the work and the timing of the money used to complete it.
How fix-and-flip math sets your maximum purchase price
Once the resale price and rehab budget are defensible, the maximum purchase price becomes an output. Consider a property with a conservative resale price of $380,000, a $60,000 rehab budget, $14,000 in carrying costs, $22,800 in selling costs, and a required profit of $23,200.
$380,000 - $60,000 - $14,000 - $22,800 - $23,200 = $260,000 maximum offer
That does not mean $260,000 is automatically a good offer. It means the deal can support no more than $260,000 under those assumptions. If the seller wants $273,000, you do not have the same deal with a thinner cushion. You have a different deal that needs to be underwritten again.
Carrying costs need their own estimate. A 2025 private-lending market update reported an average bridge loan rate of 10.43 percent for September, but rate alone does not determine the carry. Loan amount, points, draw timing, taxes, insurance, utilities, and hold length all belong in the calculation.
Now stress the example. Suppose you stretch 5 percent on the purchase and pay $273,000. Rehab reaches $63,000, the property sells for $361,000, carrying costs rise to $15,000, and selling costs are $21,660. Total cost becomes $372,660 against a $361,000 sale. The projected $23,200 profit becomes an $11,660 loss.
None of those misses is dramatic by itself. They all come out of the same margin. Knowing rehab costs and resale prices well is what lets you solve for a purchase price that can absorb ordinary error.
Stress-test the deal before you close
The 70 percent rule can be a useful first screen, but it is not a substitute for this calculation. Local selling costs, financing structure, property type, project duration, and required return can all justify a different threshold.
Run the deal three ways: the expected case, a realistic downside case, and the point where you would walk away. Challenge the comp selection, contractor pricing, timeline, financing assumptions, and exit costs. If the deal works only when every estimate lands perfectly, it does not have a margin. It has a wish list.
Do that work before the contract clock starts. A lender willing to question an aggressive ARV or thin rehab budget can help, which is why the lending partner belongs in the deal before closing. Passing on weak math is not missing an opportunity. It is keeping capital available for a deal whose numbers survive contact with the property.
Want a second set of eyes on the numbers before you commit capital? Click here or call (470) 771-7050 to talk through the strategy and financing path with Trilith Funding.