Most flips that lose money did not fail on construction. They failed on the numbers before the purchase. Here is how I run a deal, from the quick screen to the real math.
Step 1: Get a believable ARV
ARV is what the house will sell for after repairs. Do not guess.
- Use sold comps from the last few months, close by, similar size, age, and condition.
- Adjust for the things buyers pay for: pool, garage, lot, updates, and school or neighborhood lines.
- Be careful with active listings. They are asking prices, not sale prices.
- In Orlando, a few streets can price very differently. Stay tight.
Step 2: The 70 percent rule
A quick screen many investors use:
Max offer = (ARV x 70%) minus repairs
Example, illustrative only: ARV $400,000. 70% is $280,000. Repairs $50,000. Max offer about $230,000.
It is a rule of thumb, not a law. In hot markets investors stretch it. In slow markets or on bigger rehabs, you may need to go lower.
Step 3: Build the real budget
| Line item | What to include |
|---|---|
| Purchase price | What you pay |
| Closing costs (buy) | Title, recording, doc stamps as applicable |
| Rehab | Contractor bids plus a contingency |
| Permits | Don't skip them |
| Holding costs | Loan interest, taxes, insurance, utilities, HOA |
| Selling costs | Commissions, closing costs, concessions |
| Profit | Your target, set in advance |
Step 4: Add a contingency
Add a cushion on the rehab. Old plumbing, roof, electrical, and surprises behind walls are normal. Do not spend your profit on surprises.
Step 5: Check the timeline
Every extra month costs money. Be honest about permits, inspections, and contractor availability. A deal that works at four months can fail at eight.
Red flags that kill flips
- Unpermitted work that has to be opened up
- Roof, electrical, or foundation problems
- Overbuilt for the neighborhood
- HOA or deed restrictions that limit what you can do
- An ARV based on one great comp
Next step
Take a house you are watching. Pull five sold comps, build the budget above, and see what offer the numbers allow. If your number is far below the asking price, that is your answer.
How I can help you do this
See the proof first: review my full track record and the before and after projects. Then join the investor list if you want to work together.
I have done 200+ flips and sold 500+ homes over 23+ years in Orlando, so I know the ARV and the rehab cost on the street you are looking at, not just the formula. When you send me a deal I help you:
- Pull and adjust the sold comps so your ARV holds up.
- Walk the house and size the rehab, including the permits and the surprises.
- Set your max offer and your timeline.
- Plan the exit and the sale. I list and sell homes for a living.
Send me the address and I will tell you what I would pay.
This is education, not financial or tax advice. Your numbers will vary by deal and market.
Common questions
About Yogi Ganeshram
Yogi Ganeshram, eXp Realty licensed REALTOR, 23+ years, 500+ homes sold, 200+ flips, 400+ short sales with deficiency waivers secured
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This article is general education, not legal or tax advice. Talk to a licensed Florida attorney or tax professional about your situation.
Yoganand Ganeshram PA · Licensed Florida Real Estate Agent — SL 3131685 · eXp Realty in Florida · Equal Housing Opportunity.