How do I calculate ROI on a house flip or rental property?
Direct answer
For a house flip, subtract the purchase, rehab, closing, lien, holding, financing, and selling costs from the resale price to get net profit. Divide that profit by the cash invested in the project, then multiply by 100. For a rental, use cash-on-cash return: annual pre-tax cash flow divided by the cash you invested, multiplied by 100.
Worked example: the Foreclosure ROI Calculator defaults
| Resale value (ARV) | $230,000 |
|---|---|
| Winning bid | - $120,000 |
| Rehab budget | - $35,000 |
| Back taxes and liens | - $8,000 |
| Purchase closing costs | - $3,000 |
| Holding costs ($900 × 6 months) | - $5,400 |
| Selling costs (8% of resale) | - $18,400 |
| Cash invested before selling costs | $171,400 |
Net profit is $40,200. Divide that by $171,400 invested: projected ROI is 23.5%.
Have a ZIP in mind?
Search live foreclosure inventory first, then bring any serious address back here for the state rules, checklist, and calculator math.
ZIP results are mixed inventory: pre-foreclosure, auction, and bank-owned REO listings.
Use the full ROI formula
Net profit equals resale price minus acquisition, rehab, liens, purchase closing, holding, financing, and selling costs. The Foreclosure ROI Calculator divides that profit by the cash invested before selling costs, then multiplies by 100. Keep the numerator and denominator consistent when you compare deals.
Start with ARV from closed sales
After-repair value is the finished resale value supported by closed comparable sales. Compare similar properties in the same neighborhood and adjust for condition, size, and features. Do not use list prices. If the property needs heavy rehab, work backward from the finished sale price and make the repair math prove the spread.
Model foreclosure-specific holding costs
Foreclosure deals can sit longer than normal purchases because auction dates slip, title clouds delay closing, or rehab starts with less access than planned. Property taxes, vacant-property insurance, utilities, security, loan interest, HOA dues, and maintenance keep running while you wait. Use a worst-case timeline before you bid.
Do not forget friction costs
Vacant-property insurance can cost far more than a standard policy. Contractor contingency, permits, inspection fees, title insurance, HOA back payments, and days-on-market carrying costs can consume 5-10% of projected profit. Put those costs in the model before you call the deal safe.
For rentals, use cash-on-cash return
Rental ROI is usually cash-on-cash return: annual net cash flow divided by total cash invested. Net cash flow is rent minus vacancy, repairs, taxes, insurance, management, utilities paid by the owner, reserves, and debt service. Total cash invested includes down payment, closing costs, rehab, reserves, and any cash left in after refinance.
Use the calculators before you compete
Start with the Property Opportunity Score to decide whether a lead deserves full underwriting. Then use the free House Flip, Foreclosure ROI, BRRRR, or Rental Property calculator that matches the exit. Each tool runs without an account, login, or credit card, so you can test different ARVs, rents, rehab budgets, financing costs, and holding timelines before you bid or make an offer.
Compare different hold periods fairly
If two flips tie up cash for different lengths of time, annualize the ROI. A six-month project with 36% ROI annualizes to 72% before reinvestment friction. That does not make the deal risk-free, but it lets you compare capital velocity across short and long rehab projects.
Related tools
Foreclosure ROI Calculator
Project total return on a foreclosure purchase after rehab and resale.
House Flip Calculator
Estimate net profit and ROI on a fix-and-flip project.
Rental Property Calculator
Analyze cap rate, cash-on-cash, and long-term rental returns.
BRRRR Calculator
Buy, Rehab, Rent, Refinance, Repeat. Measure cash left in the deal.
Property Opportunity Score
Score any lead 0-100 on distress and profit signals before you spend a minute underwriting it.
Take the checklist with you
Get the distressed-deal checklist, then use a real ZIP search to find properties worth underwriting.
Frequently asked questions
- What's the basic ROI formula for a house flip?
- ROI equals net profit divided by the cash invested in the project, multiplied by 100. Net profit is the resale price minus purchase, rehab, closing, lien, holding, financing, and selling costs. Use the same definition of invested cash every time you compare deals.
- Which costs do people forget when calculating flip ROI?
- Common misses include loan interest, property taxes, vacant-property insurance, utilities, security, permits, contractor contingency, purchase closing costs, selling commissions, and the carrying cost of a slower sale. Put each cost into the model before you trust the projected return.
- How is rental ROI different from flip ROI?
- A flip measures a one-time resale gain against the cash invested in the project. A rental is ongoing, so investors usually track cash-on-cash return: annual pre-tax cash flow divided by cash invested. Rental cash flow subtracts vacancy, operating expenses, reserves, and mortgage payments from rent.
- Do I need to underwrite every lead to find ROI?
- No. Use the Property Opportunity Score as a first-pass filter for distress, equity, motivation, and discount to ARV. It is not a buy signal, but it helps you decide which addresses deserve full repair, title, financing, holding, and exit analysis.
- Do the DistressedDealRadar calculators cost anything?
- No. All 19 investor calculators currently run free with no account, login, or credit card. The suite includes Foreclosure ROI, Maximum Bid, House Flip, Rental Property, BRRRR, and the Property Opportunity Score.
- How does my state's foreclosure law affect ROI calculation?
- State foreclosure law can change timing, sale process, title risk, possession, and possible redemption issues. Those differences can change holding costs and the time your cash stays tied up. Use the state guides as an educational starting point, then verify current rules with official county or state sources or local counsel before you bid.
- Should I annualize ROI when two flips have different timelines?
- Annualized ROI can help compare capital tied up for different lengths of time, but it does not remove execution risk or guarantee you can reinvest immediately. Compare annualized return alongside absolute profit, holding time, financing risk, and the cash at risk.