Flipping a property can be a lucrative venture, but understanding how to calculate your profit is crucial to ensuring success. Here’s a simple guide to help you figure it out.
- Start with the Purchase Price
The purchase price is the amount you paid for the property. Include any closing costs or fees associated with the transaction. - Add Renovation Costs
Factor in all expenses for repairs, upgrades, and materials. Don’t forget to include labor costs if you’re hiring contractors. - Include Holding Costs
These are ongoing expenses while you own the property, such as property taxes, insurance, utilities, and loan interest. - Determine Selling Costs
Selling costs include agent commissions, staging, marketing, and closing fees when you sell the property. - Calculate the Sale Price
Estimate or use the actual selling price of the property after renovations. - Find Your Profit
Use this formula:
Profit = Sale Price – (Purchase Price + Renovation Costs + Holding Costs + Selling Costs)
By carefully tracking your expenses and using this formula, you can make informed decisions and maximize your returns on property flipping projects. Happy flipping!