Call (888) 688-5781

📞 Questions? Call 1 (888) 688-5781 | ✉️ info@faasfunding.com

What Is a Good ROI for a Fix and Flip

Setting ROI Expectations for House Flips

Return on investment (ROI) is the primary metric flippers use to evaluate whether a deal is worth pursuing. But ROI benchmarks vary significantly depending on the market, deal size, timeline, and how much of the capital is borrowed versus out-of-pocket.

Understanding what constitutes a good ROI helps you screen deals quickly and avoid projects that consume time and capital without adequate compensation.

How to Calculate Fix and Flip ROI

The basic ROI formula for a flip:

ROI = (Net Profit / Total Investment) x 100

Where Total Investment includes purchase price, rehab costs, holding costs, and buying closing costs. Net Profit is the sale price minus total investment minus selling costs.

If you invest $200,000 total and net $40,000 in profit, your ROI is 20%.

ROI Benchmarks by Experience Level

Beginner Flippers: 10% to 15%
New investors often accept lower returns while learning. At this stage, successfully completing a flip without losing money is valuable experience. A $25,000 profit on a $200,000 total investment (12.5% ROI) is a reasonable first flip.

Experienced Flippers: 15% to 25%
With better deal sourcing, contractor relationships, and market knowledge, seasoned flippers consistently hit this range. At a $250,000 total investment, this translates to $37,500 to $62,500 in profit per deal.

High-Performers: 25%+
Investors who source deeply discounted properties, self-perform some rehab work, or operate in high-margin markets can exceed 25%. These returns typically require either significant sweat equity or exceptional deal flow.

ROI vs. Annualized ROI

A 20% ROI on a 4-month flip is dramatically different from a 20% ROI on a 12-month flip.

Annualized ROI = ROI x (12 / Months Held)

A 20% ROI in 4 months = 60% annualized.
A 20% ROI in 12 months = 20% annualized.

This is why timeline matters as much as margin. Faster flips multiply your annual returns because you can redeploy capital sooner.

Factors That Affect Flip ROI

  1. Purchase discount. Buying below market value is the primary driver of profit margin.
  2. Rehab accuracy. Cost overruns directly reduce ROI. Detailed budgets with contingency protect margins.
  3. Timeline. Holding costs accumulate monthly. Faster completion = higher annualized ROI.
  4. Selling costs. Agent commissions (5-6%) are the largest exit expense. Every percentage point matters.
  5. Market conditions. Appreciating markets can boost ARV during the hold period. Declining markets erode it.
  6. Leverage. Using hard money or financing increases ROI on your cash invested but adds interest costs.

Minimum ROI to Accept a Flip

Most experienced flippers use two minimum thresholds:

  • Minimum net profit: $25,000 to $30,000. Below this, the risk and effort are not worth the return regardless of the percentage.
  • Minimum ROI: 15%. Below 15%, a single cost overrun or market shift can eliminate the profit entirely.

Using both filters together ensures you pursue deals with sufficient absolute dollars and margin of safety.

Model Your Flip ROI

Our free calculator computes net profit, ROI, maximum allowable offer, and total cost breakdown for any flip scenario.

Try the FAAS Funding Fix & Flip Calculator

Free Tools for Real Estate Investors

Frequently Asked Questions

What is a good ROI for a fix and flip?
Most experienced flippers target a minimum ROI of 15-25% on total cash invested. A 20% ROI on a 6-month project annualizes to approximately 40%.
How do you calculate ROI on a flip?
ROI equals net profit divided by total cash invested, multiplied by 100. Include all costs: purchase, rehab, holding costs, and selling costs.
What is the difference between ROI and profit margin?
ROI measures return relative to your cash invested. Profit margin measures profit relative to the sale price. Both are useful but ROI better reflects investor returns.
What factors reduce flip ROI?
Unexpected rehab costs, longer hold times, market downturns, higher interest rates on hard money loans, and overestimating the ARV all reduce ROI.
Is a 10% ROI good for a flip?
A 10% ROI is generally considered low for a flip given the risk and effort involved. Most investors require at least 15% to justify the time and capital.
How does financing affect flip ROI?
Using leverage (hard money or private loans) increases ROI on cash invested because you use less of your own money. However, interest costs reduce overall profit.
What ROI do professional flippers average?
Professional flippers with established systems and contractor relationships typically average 20-30% ROI. Beginners often see lower returns on their first few deals.
How do I improve my flip ROI?
Buy below market value, control rehab costs with reliable contractors, minimize holding time, and price the property competitively to sell quickly.
Should I factor in my time when calculating ROI?
Yes. Your time has value. If you spend 500 hours on a flip that nets $25,000, your effective hourly rate is $50. Factor this when comparing to other investment strategies.
Can I convert a flip into a rental if ROI is low?
Yes. If the flip market softens, you can rent the property and refinance into a DSCR loan. This preserves your investment and generates long-term cash flow.
Fix & Flip Calculator →
Analyze Your Deal