How Much Does It Cost to Flip a House?
Ask a first-time flipper what a project costs and you'll hear two numbers: what they paid for the house and what the rehab runs. Those are the two everyone sees. The money that quietly eats flip profits lives in the three buckets nobody photographs — financing, holding, and the second round of closing costs when you sell.
Count all five and the real cost of a flip is a lot higher than the HGTV version suggests. Here's the whole picture.
The five buckets
Every dollar on a flip falls into one of these:
- Acquisition — the purchase price plus the costs of buying
- Rehab — the renovation, plus a contingency for what you'll find
- Financing — interest and fees on the money you borrow
- Holding — the monthly cost of owning the house while you work
- Selling — commission and closing costs when you sell
Miss any of the last three and your projected profit is fiction.
Acquisition: more than the price
Beyond the purchase price, buying an investment property carries its own closing costs — lender fees, title, escrow, inspection, and appraisal — usually 2–5% of the purchase price. On a $180,000 buy, that's a few thousand dollars before you've touched a paintbrush. If you're using hard money (more on that next), expect points on top.
Rehab: budget for surprises
The renovation is the number you can control the most and blow the most. Get real bids for the scope you know about — kitchen, baths, flooring, paint, systems — then add a contingency of 10–15%, because walls come open and reveal problems every single time. Knob-and-tube wiring, a cracked sewer line, water damage behind the tile. The contingency isn't padding; it's the money you will spend on things you can't see yet. Flippers who skip it are the ones who run out of cash at 80% done.
Financing: fast money is expensive money
Most flippers don't pay cash — they use hard money, short-term loans built for exactly this. The convenience is real: approval is based on the deal more than your credit, and you can close in days. The cost is real too. Hard money runs roughly 8–15% annual interest, plus about 2 points (2% of the loan) charged upfront.
On a $200,000 loan, that's a couple thousand dollars in points at closing and another $1,700–$2,500 a month in interest for as long as you hold it. Which is exactly why speed matters so much on a flip — every extra month is pure cost.
Holding: the meter that never stops
While you own the house, it costs money to simply exist, whether or not any work is happening. Total holding costs typically run $2,000–$4,500 a month:
- Loan interest (the big one, covered above)
- Property taxes, prorated — often $300–$600/month
- Vacant-property insurance — $150–$400/month (a normal homeowner's policy won't cover an empty renovation)
- Utilities to run tools, heat, and lighting — $150–$300/month
- HOA dues, if any — $200–$600/month
A flip you thought would take four months but takes eight can quietly burn an extra $10,000–$18,000 in holding costs alone. Timelines aren't a scheduling detail on a flip; they're a line item.
Selling: the second closing
You paid closing costs to buy. You pay again to sell — and this set is bigger. Agent commission (historically 5–6%, now more negotiable), plus seller closing costs of another 1–3%, plus any concessions the buyer negotiates. On a $300,000 resale, that's easily $18,000–$25,000 off the top.
New flippers routinely forget there are two closings, and it distorts every deal they analyze.
How the 70% rule bakes all this in
Add it up and 10–15% of a flip's after-repair value disappears into these transaction and holding costs — before a cent of profit. That's not an accident; it's precisely what the 70% rule is designed to protect. By capping your offer at 70% of ARV minus repairs, the rule leaves a ~30% band that absorbs all five buckets and still leaves a profit margin.
So when a deal only pencils if you ignore financing or assume an instant sale, the 70% rule is the thing quietly telling you to walk. Run every project through the flip calculator with honest numbers for holding time and financing before you make an offer — the buckets nobody photographs are the ones that decide whether you made money.
Frequently asked questions
How much does it cost to flip a house?
Beyond the purchase price and renovation, plan for financing (hard money at roughly 8–15% plus points), holding costs of $2,000–$4,500 a month, and selling costs of 6–9% of the resale price. All in, transaction and holding costs commonly consume 10–15% of the after-repair value before any profit.
What are holding costs when flipping a house?
The ongoing cost of owning the property during the project: loan interest, property taxes, vacant-property insurance, utilities, and any HOA dues. They typically total $2,000–$4,500 per month, so every extra month the flip takes directly reduces your profit.
Is hard money worth it for flipping?
Often yes, despite the cost. Hard money closes fast and qualifies on the deal rather than your credit, which lets you compete for properties. But at 8–15% interest plus points, it's expensive enough that it only works on flips with a strong margin and a short timeline.
How much profit should I make on a flip?
Most flippers target a net profit of at least 10–15% of the after-repair value, or a minimum dollar figure like $25,000–$40,000, to justify the risk and the work. The 70% rule is built to protect roughly that margin after all costs.